IXICO plc
Annual Report & Accounts 2020
Advancing medicine and human health by turning data into clinically meaningful informationIXICO plc Annual Report & Accounts 2020 IXICO is a trusted partner to the global
pharmaceutical industry, developing new
therapies for neurological conditions with
unmet clinical needs including Alzheimer’s,
Parkinson’s and Huntington’s diseases.
We develop and deploy
therapeutic specific AI algorithms
to improve efficiency and reduce
risk in neurological clinical trials.
01–33
Strategic report
01 2020 performance
02 What we do
03 How we do it
04 Business model
06 Chairman’s statement
08 Chief Executive’s statement
10 Our five-point strategic growth plan
12 Technology and innovation
18 Market review and opportunities
20 Stakeholder engagement
24 People and culture
28 Financial review
30 Risk management
30 Principal risks and uncertainties
Governance 34–4534 Board of Directors36 Directors’ Report39 Directors’ Remuneration Report42 Corporate Governance Report45 Statement of Directors’ ResponsibilitiesFinancial statements 46–8446 Independent Auditor’s Report to the Members of IXICO plc52 Consolidated Statement of Comprehensive Income53 Consolidated Statement of Financial Position54 Company Statement of Financial Position55 Consolidated Statement of Changes in Equity56 Company Statement of Changes in Equity57 Consolidated and Company Statements of Cash Flows58 Notes to the financial statements84 Addresses and advisers Strategic report
2020 performance
Demonstrating resilience
in a year of uncertainty
Revenue
£9.5m
+26% (2019: £7.6m)
Gross margin
66.6%
+120bps (2019: 65.4%)
EBITDA*
Orderbook
£1.3m
+£0.8m (2019: £0.5m)
£21.7m
+£5.8m (2019: £15.9m)
– Continued delivery of strategic objectives
– Increased FTE's from 61 to 78 in the year
– Secured largest multi-year contract to date,
contributing an additional £10.5 million to the
orderbook
– Net cash of £7.9 million at 30 September 2020,
with operating cash inflows in the year of
£1.5 million
– Strong closing balance sheet to support
targeted investment programmes
Continued delivery
of profitable growth
Despite the ongoing
pandemic's impact on
global clinical trial timelines,
2020 saw another year of
significant growth for IXICO.
With a record orderbook and
clear investment programme
the Group is well positioned
for the year ahead.
Read more on pages 8 and 9
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Strategic reportGovernanceFinancial statementsIXICO plcAnnual Report & Accounts 2020* Earnings before interest, tax, depreciation and amortisation Strategic report
What we do
Advanced analytics.
Supporting our
clients in their
clinical decisions
Our specialist data analytics services and
AI technologies are supporting some of the
most important neurological clinical trials.
Intelligent insights.
Bringing safe and
effective treatment
to patients sooner
We are dedicated to enhancing insights in neuroscience.
We measure specific imaging and digital biomarkers
to enhance understanding of disease progression
and the efficacy of drug candidates.
Find out more in our technology and innovation section on pages 12 to 17
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IXICO plc Annual Report & Accounts 2020
How we do it
We help global biopharma clients to
get more from their clinical development
programmes through...
Early-phase clinical development
We have extensive experience in defining and
delivering biomarker measurements in early-phase
clinical development, in which rigorous patient safety
screening runs hand-in-hand with flexibility around
trial design and data analytics.
Late-phase clinical development
IXICO’s global network of over 2,000 imaging sites
and bespoke TrialTracker data management platform
ensures that large-scale trials can be initiated quickly
and efficiently to deliver data that is robust and
regulatory compliant.
Our services
We provide essential services to biopharmaceutical companies engaged in drug development in neuroscience,
providing analysis of medical image and wearable biosensor data generated in a clinical study. The outputs from our
data analyses are used to improve patient selection, monitor safety and assess clinical efficacy of the drug
being trialled, and to support post-marketing surveillance activities.
CLINICAL PROGRAMME
DESIGN AND CONSULTATION
Drawing on our proven neuroscience
expertise and experience, we enable our
clients to optimise biomarker measurement.
SITE SETUP AND
MANAGEMENT
We design and deploy harmonised
image acquisition protocols across
multiple international sites.
PROJECT
MANAGEMENT
Our team ensures the efficient
set-up and ongoing delivery of
our services to clinical studies.
REGULATORY
PATHWAY
Our service supports deployment
of imaging and digital biomarkers within
a regulatory-compliant framework.
DATA MANAGEMENT
AND QUALITY CONTROL
Image and data quality are
assessed through our proprietary
digital platform, TrialTrackerTM.
READING &
ANALYSIS
We develop and deploy AI data analysis
tools and neuroradiology reading workflows
tailored to the study requirements.
IXICO plc Annual Report & Accounts 2020
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Strategic reportGovernanceFinancial statements Strategic report
Business model
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IXICO’s purpose is to advance medicine
and human health in neuroscience by
converting raw clinical trial data into
clinically meaningful information. We
achieve this by providing advanced
analytics to enable intelligent insights
in neuroscience.
We innovate
Innovation plays a central role in our
business model; our adaptive AI technology
enables us to develop proprietary intelligent
algorithms to support research in drug
development. This enables our clients to
benefit from new, deeper insights into a
continually evolving suite of biomarkers.
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Our people
– We employ highly skilled people, the
majority of whom are qualified to MSc or
PhD level, combining core expertise in
neuroscience, software engineering and
image analysis.
– Our employees are equally able to work
efficiently from their home offices or from
our headquarters in London, UK.
– Our teams collaborate with a wide pool of
expertise, including key opinion leaders,
consultants, and academic partners.
Our technology
– Using our TrialTracker platform we gather
and analyse data from medical images
from clinical trial imaging centres to
provide insights on neurological disease
and symptom progression.
– We are investing in a next generation
image upload and analysis platform to
support scaling of the Group for the
medium and long term. This will be the
single biggest investment in IXICO’s
history and will establish the Group’s
ability to scale with anticipated demand
over the years to come.
– Our imaging AI algorithms quantify
changes to brain regions using medical
scans and interpret both imaging and
wearable biosensor data to measure
disease-specific symptoms.
Our clients and collaborators
– Many of the world’s leading biopharma
companies choose IXICO as their
imaging provider. Emerging
biotechnology firms also engage IXICO to
provide high-quality data analytics to
support their early-phase clinical
development programmes.
– We are members of several scientific
consortia in imaging and wearable
biosensors including major academic
industry-funded studies such as
AMYPAD, EPAD, ADNI, C-Path and FARA.
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IXICO plc Annual Report & Accounts 2020
We deploy
We support our clients by deploying
our remote access technology-driven
business model to provide objective
measures of disease progression
from clinical imaging and wearable
biosensor data.
We deliver
Our suite of services spans the full life cycle
of data management in clinical development,
from initial imaging centre training and
qualification for robust data capture through
to final reporting and data archival. Our systems
are compliant with FDA CFR 21 part 11 and our
quality systems are certified to ISO13485, the
industry standard for medical devices.
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For patients
– An objective and measurable component
of assessing progress of drug
development aimed at advancing
medicine and human health across a
broadening range of devastating
neurological conditions.
– Access to new technologies such as our
algorithms for wearable biosensors,
which have the potential to reduce the
burden of clinic visits for study
participants and improve the reliability of
the results obtained.
For clients and collaborators
– Faster, more efficient, drug development
by applying proven imaging and digital
biomarkers in their clinical programmes
to improve the return on investment
and reduce risk and uncertainty with
clinical trials.
– Richer, deeper insights to determine the
efficacy of new drugs in development.
For employees
– A meaningful purpose with the opportunity
to work with impact on areas of acute,
unmet clinical and societal need.
– A challenging and stimulating working
environment that provides development
opportunities via collaboration with key
academic centres and supporting
leading biopharmaceutical clients across
the world.
For shareholders
– Societal benefit of supporting the efforts
to bring new treatments to market for
devastating neurological diseases.
– Access to the large and growing
biopharmaceutical investment in R&D to
address the unmet clinical needs of a
global ageing population with a
diversified risk profile.
– Continued value accretion opportunities
from a profitable, well-capitalised
technology company with a proven track
record of delivery driven growth.
IXICO plc Annual Report & Accounts 2020
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Strategic reportGovernanceFinancial statements
Strategic report
Chairman’s statement
Continued
growth and
profitability
Charles Spicer
Non-Executive Chairman
I am delighted to report that
IXICO has delivered 26%
revenue growth and more than
double the profitability
compared to the prior year.
This strong achievement is on the back
of three previous years of similar growth
and underlines the effectiveness of the
strategy being pursued by the Board
and leadership team. This is particularly
pleasing when considered in the context
of the market challenges created by
COVID-19.
Despite the challenging impact of
COVID-19, the Group has a contracted
order book at 30 September 2020 of
£21.7 million, which is the highest year
end order book in the Group’s history. This
comprises multi-year contracts which give
visibility to future revenue and provide
confidence that we enter the new financial
year with a continued growth trajectory.
We close the year with a strong balance
sheet which will underpin our continued
investment in the business over the
coming years. Our investment programme
is designed to drive our ambitious growth
plans for further international market
penetration and achieve our full potential
in the growing neuroscience market.
Overview
IXICO is an Artificial Intelligence (‘AI’) data
analytics company delivering intelligent
insights in neuroscience.
Our purpose is to advance medicine and
human health in neuroscience by
converting raw clinical trial data into
clinically meaningful information. Our data
analytics services provide insights to
improve the efficiency of biopharma
clinical development. Through the
deployment of novel AI algorithms, we
analyse and interpret brain scans and
wearable biosensor data to enable better
trial design, patient selection and
ultimately clinical outcomes across all
phases of clinical evaluation.
In FY20, we have reported record revenue,
sustained strong gross margins, and
achieved over double the earnings before
interest, tax, depreciation and amortisation
(‘EBITDA’) as compared to the prior year.
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IXICO plcAnnual Report & Accounts 2020 The Board has worked closely with the
leadership team to assess the impact of this
as the pandemic continues and to ensure
plans are in place to address both the
short-term market slow down and expected
medium and long-term rapid rebound in
new clinical trials as delayed trials initiate.
At the 2021 Annual General Meeting
(‘AGM’), in accordance with the Company’s
Articles of Association, John Bradshaw
and Mark Warne will stand for re-election,
supported by the Board of Directors’
recommendation.
Shareholders
The Group holds a stable and impressive
list of leading institutions which have
invested in the Company over the last
three years and we would like to thank all
our shareholders for their continued
support and enthusiasm. As we reflect on
2020, it is also pleasing to note the
continued recognition in the market of our
commercially led growth strategy, and the
effectiveness of this in delivering value to
our clients.
Outlook
The impact of COVID-19 has been
far-reaching, and the clinical trials market
has not been immune, creating short-term
delays to new clinical trial start ups. The
Board therefore views the next financial
year as an opportunity for the Group to
focus on investing for a rapid initiation of
clinical trials as the pandemic subsides,
whilst continuing to grow. Effective
investment at this time will position the
Group well for continued high growth as
more normal times resume.
Charles Spicer
Non-Executive Chairman
1 December 2020
Governance and people
During the year, the Group rapidly
leveraged its remote working business
model to seamlessly adapt to the
requirement for all employees to work
from home. The success and speed of
this transition reflected the alignment,
accountability, and agility of the IXICO
team. This rapid response to the COVID-19
lockdown measures, alongside close and
continued communication with our clients,
meant we were able to adapt our service
offering to support the additional
challenges faced by clinical trials and add
additional value to our client programmes.
On behalf of the Board, I would like to
thank all of our employees who adapted
so promptly and positively to remote
working and pay particular tribute to our IT,
HR and team leaders who helped make it
all happen.
As in any successful, high-growth
business, IXICO’s future depends on its
people. In the past 12 months we have
invested significantly in our team,
increasing our headcount by more than
20%, attracting new expertise into the
Group whilst developing the talent already
in position. We have worked hard to
promote our values – Aspiration, Ability,
Agility and Accountability – to augment
our positive, motivated, and effective
culture which aligns our team with our
Group purpose.
The Board uses the ten principles outlined
in the Quoted Companies Alliance (‘QCA’)
Corporate Governance Code to ensure
it maintains appropriate governance
arrangements. The Board conducts itself
in a manner which places IXICO’s values
and the QCA principles at the core of the
Group’s culture.
Board
During the year we have focused as a
Board on the challenges of COVID-19. The
impact on clinical trials has been significant
with as much as a 40% reduction in new
clinical trials starting in mid-2020 compared
to 2019 (and of which 20% in 2020 are
COVID-19 related).
1 RSM Lifesciences Industry outlook insight article, July 2020.
The IXICO investment case
Trusted partner to the global
pharmaceutical industry
Medical image technology
company
– Pursuing a meaningful purpose with
high societal impact and value
– A trusted partner to blue chip
biopharma clients
Attractive neuroscience market
– Favourable macro trends, including
ageing population and developments
in scientific understanding of disease
progression
– Large unmet medical need
– Growing biopharmaceutical R&D
investments
– Increasing outsourcing
requirements
Resilient business model
– 26% revenue growth despite
COVID-19 uncertainties
– > doubling of EBITDA on prior year
– Strong balance sheet supports
further scale-up investments
Healthy orderbook supporting
growth
– Strong forward revenue visibility
– Supports sustained double-digit
profitability
Strong team
– Leadership with a consistent record
of delivering growth
– Highly skilled employee base to
support further scientific research
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Strategic reportGovernanceFinancial statementsIXICO plcAnnual Report & Accounts 2020 Strategic report
Chief Executive’s statement
A year of
growth that
demonstrates
the resilience of
our business
model
Giulio Cerroni
Chief Executive Officer
Despite the COVID-19
impacts upon global clinical
trial timelines, 2020 has been
another year of significant
profitable growth.
Investments in data analytics
service strategy delivering
profitable growth
Our considerably strengthened contracted
order book and the ability to deploy our
technology across all clinical development
phases means there are compelling
incentives to continue investing in the
scaling of our business to achieve our
ambitious long-term growth goals.
Impactful purpose and highly
differentiated proposition
IXICO’s purpose is to provide new insights
in neuroscience to improve medicine and
human health by turning data into clinically
meaningful information. With an ageing
population and the number of people
with dementia expected to increase
significantly by 2050, the urgency to
develop drugs that slow down or reverse
the progression of these diseases is acute.
Scientific expertise in
neurological disease
IXICO is well positioned to address the
increasing use of biomarkers in
neurological clinical trials. This stems from
our core capability to combine our deep
neuroscience expertise with access
to highly curated patient data from
neurological disease-specific clinical trials
and pipeline of algorithms designed to
measure biomarkers in the brain.
IXICO is built on a world-renowned
bedrock of scientific expertise in
interrogation of imaging data in
neurological disease. This means that
whenever a client speaks to someone at
IXICO they are speaking to a neuroscience
expert and this sets the Group apart from
our commercial competitors.
Our market position benefits from
participation in disease progression
studies (natural history studies) and in
private-public partnerships seeking to
better understand neurological diseases.
It is this in-house expertise and network of
collaborations that has resulted in a
unique and proprietary portfolio of proven
software algorithms deployed to identify
biomarkers associated with a diverse
range of neurological diseases.
08
IXICO plcAnnual Report & Accounts 2020 Proven underlying resilience of the
technology business model
During 2020, we demonstrated the
underlying resilience of our technology
and ability to support our clients whilst
operating remotely. We successfully
transitioned to a remote working model in
response to the pandemic, providing all
employees with access to support and
equipment to help them work effectively.
Following a detailed review of the
expected impact of COVID-19 on our
business, focused on close co-operation
with our clients, we had no requirement to
furlough employees or seek any
assistance from other financial support
schemes implemented by the UK
Government. We responded robustly to
the challenges of COVID-19 such that the
impact of the pandemic to client
deliverables and to our 2020 financial
performance was modest.
However, whilst our existing clinical trials
have broadly continued as originally
planned, several new trials anticipated to
initiate during 2020 have not yet
commenced, which is expected to create
headwinds to revenue growth into 2021.
Importantly these trials are not cancelled,
rather they are simply delayed and we
continue to work closely with our
biopharmaceutical clients to ensure
that, where trial start dates have been
impacted, we are ready to initiate quickly
when the pandemic abates.
Our forward-looking strategy of
sustained and growing profitability
Recent focus on executing our
commercially led growth strategy means
that the business is benefiting from
revenue-driven operational leverage,
positive operating cashflows and a more
than doubling of profitability to £1.3 million
EBITDA in 2020 (2019: £0.5 million); further
bolstering an already strong balance sheet.
The business has continued to build its
order book, which at the 2020 year-end
stood at a record £21.7 million (2019: £15.9
million). This provides strong forward
revenue visibility and further underpins
management’s confidence to commit to a
far-reaching investment programme to
build long-term market leadership
positions in our target markets.
Consequently, despite the challenging
COVID-19 business environment, we look
to the next year with cautious optimism
and firm conviction for our medium and
long-term prospects.
Whilst we anticipate COVID-19 will mean
our growth across the next year will be
more muted, our strong financial position
and macro trends indicating a growing
market opportunity mean we have the
confidence to further accelerate our
investment plans. This will include the
investments outlined in the textbox below
which are designed to further our
penetration of existing and adjacent
neurological disease indications, diversify
and broaden our client base to address
client concentration, build scale and
improve efficiency to further strengthen our
market position.
I sign off this year, as last year, in thanking
all my colleagues at IXICO for another year
of exceptional progress both operationally
and financially. Our increasing market
presence and sustained strong financial
performance means we are more able to
achieve our purpose of advancing medicine
and human health in neurological disease. I
look forward to 2021 being another year in
which IXICO further develops its position as
a globally trusted technology partner to the
biopharmaceutical industry.
Giulio Cerroni
Chief Executive Officer
1 December 2020
Alliance
management:
Investing to improve current
and prospective client
delivery
– Strategic leadership in
rare neurological trials
– Further developing client
relationships
– Initiating new scientific
collaborations with Big
Pharma
– Improving collaboration
delivery and expanding
business opportunities
– Focus on partnership and
goal achievement across
all alliances.
Next generation image capture
and analysis platform:
Investing in the future,
developing a platform aligned
with the Group’s growth potential
– Microsoft Azure cloud-based
infrastructure using
cutting-edge technology
– Extensible design framework
to support future growth and
expanded service offerings
– Improved imaging centre user
Growing our portfolio of
intelligent AI algorithms:
Investing in our strategic
programmes of AI capability
development across neurological
indications
– Developing our MRI analysis
offering in AD; PSP and HD
– Developing our MRI analysis
offering in adjacent indications:
PD, MSA, FA and SCA
– Developing our PET analysis
interface and experience
offering
– Further integrating the
Group’s data analytics
algorithmic offering into the
platform infrastructure
– Improving efficiency and
scalability.
– Developing our digital biomarker
offering
– Developing our internal
automation.
Process improvements led
by a strengthened team:
Investing in continuous
improvement
– A defined, carefully
scoped programme of
process and system
improvements
– Training and people
development to support a
culture of continuous
improvement
– Maintenance of validated
systems and system
developments
– Delivering increased
efficiency, streamlined,
simplified process flows
and reductions in waste.
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Strategic reportGovernanceFinancial statementsIXICO plcAnnual Report & Accounts 2020FY21 – continued investment to achieve our strategic goals Strategic report
Our five-point strategic growth plan
Delivering on our strategic goals
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Delivering scale and operational
excellence
Continued penetration
of the neuroscience clinical
trials market
Target early-phase to grow
into later clinical phases
As we win larger multi-year contracts,
we continue to invest in our people
and technology.
We have expanded our commercial
footprint to drive demand. With
investment in neuroscience
development increasing, IXICO is
well placed to capitalise on this
growing market.
We have demonstrated our ability to
deliver value to our clients at all stages
of clinical development.
– In addition to significantly building our order
book, we onboarded ten new studies,
including our largest Phase III study to date,
as announced in April 2020.
– We won new contracts in HD, cementing
IXICO as the neuroimaging partner of
choice for this rare neurological disease.
– We significantly enhanced the Group’s
commercial capabilities in hiring an
experienced Chief Commercial Officer
and enhanced our marketing capabilities.
– We appointed industry advisers at the end
of 2020 with deep scientific neurological
disease knowledge.
– Our remote-based model demonstrated
our ability to support clients despite
COVID-19. As a result, the impact on
our 2020 financial performance has
been modest.
– We received awards of several new
studies across a range of therapeutic
areas and encompassing a diverse
client mix from top 10 pharma to
emerging biotech.
– Accelerate conversion of our pipeline in
– Further scale up operational capabilities
target therapeutic indications such as AD,
PD, HD and PSP.
and be “restart” ready to support COVID-19
delayed trials.
– Invest in marketing and contract bid
capabilities to increase our capacity and
conversion rates within the sales lead to
contract process.
– Further diversify and broaden our client
base to reduce risk of reliance on key
customer.
– Enhance our scientific collaborations with
both academic and industrial partners to
ensure IXICO is at the forefront of scientific
developments, increasing the numbers of
early-phase CNS trials won.
Group implemented remote working and
invested in its technology infrastructure to
ensure efficient communications with our
clients and partners.
s – In response to the COVID-19 pandemic, the
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– We have hired employees to support both current
demand and our future growth plans. During 2020,
average full-time equivalents rose from 61 to 78.
– We invested in IT infrastructure to support faster
turnaround times and further enhanced data and
system security.
– We progressed our plans for our next generation
image capture and analysis platform. This
included building a team of development
expertise to deliver this platform across 2021.
s – Continue to invest in our people and technology
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management and data management.
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– Invest in an Alliance Management programme to
align our focus even closer to that of our clients
and partners.
– Establish a new long-term operating model
incorporating the benefits experienced from
remote working.
– Accelerate international expansion, with a particular
focus on North America. Focus on expanding
the portfolio of clients with whom we work.
– Single largest investment in the Group’s history in
delivering our next generation image capture and
analysis platform by the end of the year.
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IXICO plcAnnual Report & Accounts 2020
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Innovate: Accelerated
commercialisation of IXICO’s
proprietary AI automation and
data analytics
Investment in science and innovation
underpins our growth. We increase our
societal impact and value to stakeholders
through our development of data
analytics capabilities, unlocking
biomarker insights in clinical trials.
derived from new products. We introduced
seven new analysis products, including an
automated Tau PET pipeline in 2020.
s – We increased the proportion of revenues
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academic and industry partners to access
highly contextualised patient data to support
algorithm development and have shown our
new AI segmentation engine to be state-of-
the-art technology.
– We initiated R&D collaborations with
AI analysis tools to expand our portfolio of
proprietary services.
s – Continue to develop and commercialise new
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continue to invest in IXICO’s AI-deployment
framework to enable further diversification
within neurological therapeutic disease areas.
– Leverage clinical trial imaging data and
Enhance organic growth
with selective Mergers
& Acquisitions (‘M&A’)
Our strategic rationale for M&A:
– To be accretive to the Group’s
commitment to sustained long-term
profitable growth.
– To enable synergistic cross-selling
opportunities.
– To enhance IXICO’s advanced data
analysis solutions.
– To enhance geographical reach.
– We have continuously monitored the market
for potential accretive partnerships.
– We have strengthened our leadership team
and augmented our business support
services, better equipping the Group to
consider and execute potential partnerships.
– Continued momentum in profitable growth
from our organic investment initiatives will
support further improvements in the
Group valuation to support inorganic
growth strategies.
– Continue to explore potential partnerships
aligned to our investment criteria.
– Seek ways to further reach into patient
screening and safety solutions including
further development of IXICO’s
Assessa platform.
For full risk information
Read more on pages 30 to 32
For key performance indicators
Read more on pages 28 and 29
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Strategic reportGovernanceFinancial statementsIXICO plcAnnual Report & Accounts 2020
Strategic report
Technology and innovation
Accurate, robust and flexible
analysis powered by AI
Unlocking unprecedented detail in MRI
brain segmentation through AI
Novel AI approaches continue to be at the heart of IXICO’s innovation
programmes. As previously highlighted, we are in a period where
deep learning, fuelled by increasing computer power and large
datasets, is revolutionising every aspect of data analytics. Over the
past year, IXICO has built on a history of translating cutting-edge
technology into an application in CNS clinical trials and has started to
test, at scale, a new segmentation engine powered by deep learning.
“At IXICO we have developed an adaptive segmentation
platform that allows us to measure the volume of even the most
complex brain structures with an accuracy previously unseen.
Using deep learning, we have set up a platform that allows us
to train a segmentation algorithm for a specific clinical
question with a small number of highly curated datasets.
Together with our increasing number of clinical trial datasets in
neurological disorders and underpinned by our neuroscience
expertise, this platform allows us to develop more accurate
imaging biomarkers in our core therapeutic indications and
also to develop measurements for new indications.
Over the past year, we have presented at several conferences
how our segmentation platform approach dramatically
outperforms existing solutions to segment highly important,
yet highly challenging brain structures in HD (see our
collaboration with the HD Study Group at UCL, presented
opposite). Over the coming year, we are planning to make this
tool available for clinical trials in HD and are already working on
applications in AD and other therapeutic indications.”
Dr Robin Wolz
Senior Vice President, Science & Innovation
Robin Wolz has over 10 years’
experience in the development of
innovative analytics solutions in
healthcare with a focus on
imaging technology.
Prior to IXICO, Robin held different
roles at Philips in the Research and
Diagnostic X-Ray divisions. Robin
holds a PhD in medical imaging and
computer science from Imperial
College London, focused on early
detection of Alzheimer’s disease.
He is the co-author of more than
100 publications and holds multiple
patents in the field of medical
imaging and AI data analytics.
European Prevention of Alzheimer’s Disease (‘EPAD’)
Read more on page 16
AMYPAD
SCA Global
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IXICO plc Annual Report & Accounts 2020
ESMI
Read more on page 13
HD-RSC
CPP
Innovation collaborations through the years201620182019 G
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Establishing clinical relevance
Advanced analytics
IXICO’s technology is developed and validated in close
collaboration with experts in the different therapeutic indications
we operate in. This approach ensures that emerging clinical
hypotheses and knowledge directly feed into our product
development roadmap and that new analysis solutions are
optimised and tested with a specific clinical question in mind.
At IXICO, we are continuously advancing the measurements we
provide from imaging and wearable biosensor data by combining
our data science expertise with ever-advancing developments
in data acquisition. Examples of the latest additions to IXICO’s
suite of advanced analytics in molecular imaging, MRI and
actigraphy include:
“At the Huntington’s Disease Centre, we’ve been working with
IXICO for over 10 years since our collaboration on the TRACK-
HD programme, a set of natural history studies that have shaped
HD imaging research and are still impacting the field today. It is
great to see some of our former PhD students and post-docs
taking industry roles at IXICO, providing a highly collaborative
environment fostered by our proximity within central London.
Recently, a joint project team has shown how novel AI
technology allows to automatically segment brain structures
known to be affected by HD at an accuracy previously not
seen from automated approaches. These results are highly
encouraging and I’m looking forward to working together on
further validating the technology and eventually making it
accessible to HD research.”
Dr Rachael Scahill
Principal Research Associate, Head of Imaging
at the Huntington’s Disease Research Group,
University College London
“We have started our collaboration with IXICO as part of the
European Spinocerebellar Ataxia Type 3/Machado-Joseph
Disease (SCA3) Initiative (ESMI), which aims to develop a
revised model of SCA3 disease evolution. In the absence of
established MRI biomarkers for SCA3, our collaboration
with IXICO evolved around the development of imaging
technology to measure volume in brain structures known
to be affected by the disease. It is exciting to see how the
segmentation algorithm IXICO has developed with the wider
project team is able to detect brain changes linked to the
disease even before onset of clinical symptoms. I’m looking
forward to further validating this technology so it can support
our understanding of the disease as well as upcoming clinical
trials in SCA.”
Professor Thomas Klockgether
ESMI Principal Investigator, Professor and
Chair of Neurology, University of Bonn
Molecular imaging
Molecular imaging allows us to visualise and characterise
biological processes and is used to develop biomarkers in different
neurodegenerative diseases. In 2020 we extended our suite of
molecular imaging solutions to DAT-SPECT and Tau PET.
DAT-SPECT: DAT-SPECT (single photon emission computed
tomography) provides a measurement of dopamine levels in
the brain and is widely used in Parkinson’s disease clinical trials
to exclude those subjects that show no evidence of dopamine
deficiency, a hallmark of PD.
Tau PET: One key hypothesis in the Alzheimer’s disease cascade
involves neurofibrillary tangles caused by accumulation of a protein
called tau. Recent imaging technology developments allow us to
image tau through positron emission tomography (‘PET’), offering a
sought-after biomarker for disease staging and progression.
MRI
We are continuing to develop new imaging techniques in MRI.
Recently, we have extended our diffusion imaging solution to allow
measurement of a free water (‘FW’) index, providing increased
accuracy for existing measurements of brain diffusion. The FW
index also serves as an exploratory in-vivo measurement of neuro-
inflammation, showing high promise for treatment strategies
across CNS that involve inflammation.
Actigraphy
The measurement of rest and activity cycles from wearable
sensors is considered to have the potential to revolutionise
clinical outcomes assessments in CNS clinical trials.
We have continued to develop and validate measurements of sleep
and activity from three-axis accelerometery and have developed
first evidence for the feasibility to accurately measure gait
characteristics from a wrist-worn actigraphy device. At the 2020
conference of the Schizophrenia International Research Society,
we have co-published a study with Alkermes Inc., validating
the exploratory use of actigraphy in a randomised clinical trial
of patients with schizophrenia, demonstrating that actigraphy
monitoring is feasible in the population studied and showing
possible group differences based on treatment factors.
Critical Path for Alzheimer’s Disease (‘CPAD’)
Read more on page 17
Global Alzheimer’s Platform (‘GAP’)
Friedreich's Ataxia Research
Alliance (‘FARA’)
Alzheimer’s Disease Neuroimaging Initiative (‘ADNI’)
Read more on page 16
IXICO plc Annual Report & Accounts 2020
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Strategic report2020
Technology and innovation continued
Our therapeutic focus areas
IXICO’s scientists, operations team and regulatory specialists support an expanding
portfolio of global multi-centre trials in an increasingly diverse range
of therapeutic indications.
Alzheimer’s Disease (‘AD’)
AD is a progressive neurodegenerative disease that
produces dementia and is estimated to be affecting 50
million people globally, a number which is anticipated to
grow to 150 million people by 2050. The healthcare
costs of AD reflect this growth – rising from $1 trillion
globally in 2018 to a projected $2 trillion in 20301.
Means of preventing, delaying the onset, slowing the
progression, and improving the symptoms of AD are
urgently needed. In 2020 there are approximately 120
unique therapies in clinical trials for AD as registered on
clinicaltrials.gov. The largest number of drugs in the AD
pipeline are putative disease-modifying agents targeting
disease onset or progression and many drug trials for
those agents require the services IXICO provides.
With a rich and diverse pipeline of AD investigational
drugs, we believe that the rate of innovation in the
Alzheimer’s area will continue to increase in this
significant market for IXICO's services. A further review
of AD is shown on pages 16 and 17.
Parkinson’s Disease (‘PD’)
PD is a neurodegenerative disorder that affects predominately
dopamine-producing (‘dopaminergic’) neurons in a specific area of
the brain called substantia nigra and affects more that 10 million
people worldwide. Symptoms generally develop slowly over years.
The progression of symptoms is often different from one person to
another due to the diversity of the disease.
Like AD, PD currently has no disease modifying treatment (‘DMT’)
and the current standard of care merely provides symptom relief for
those that suffer. The clinical pipeline of treatment options for PD is
very robust with more than 200 clinical trials in progress and several
drugs about to be approved that are different from current standard
of care. The leading pharmaceutical companies are working on
development of new therapeutics for more effective and safer
treatment of Parkinson’s Disease.
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IXICO plcAnnual Report & Accounts 2020 Huntington’s Disease (‘HD’)
HD is caused by a mutation in a single gene ('HTT'), which triggers the formation
of toxic protein ('mHTT') and therefore, unlike diseases such as AD, we know
exactly what causes HD.
HD is a rare progressive neurological indication and is a devastating disease that
impacts the way people think, behave, and move. The disease impacts sufferers
much earlier in their life with clinical symptoms typically being presented at the
age of 30-50.
Like AD and PD there are no disease-modifying treatments available. According
to the World Health Organization, in the Western world, 5-7 people per 100,000
are affected with Huntington's disease, with more at risk of developing the
disease at some stage in their life due to genetic predisposition.
IXICO has an unrivalled track record of supporting HD trials and very early
on we played a pivotal role in standardising and characterising imaging
biomarkers in the landmark natural history studies such as Track-On HD and
TRACK-HD. Consequently, we have been able to provide unique expertise to
pharma sponsors and to date we have supported 14 clinical trials for this rare
indication. IXICO is supporting the largest ongoing HD trial and therefore we
are both very well known in the HD research community around the world and
have deep expertise and experience with regards to the conduct of HD trials.
Other rare neurological diseases
Our AI technology has accurately measured over 150
unique brain regions, supporting its broad application
in neurological disease. This adaptive technology
base enables us to configure suites of algorithms to
uniquely address rare diseases, expanding our
addressable market. Our current rare disease
pipeline includes Multisystem Atrophy (‘MSA’),
Progressive Supranuclear Palsy (‘PSP’), Friedreich’s
Ataxia (‘FA’) and Spinocerebellar Ataxia (‘SCA’).
Expedited review and approval timelines, well
characterised biology and the emergence of gene
therapies have increased investment in rare disease
clinical trials and continue to make this a significant
market area for IXICO to address.
1. Alzheimer’s Disease International. World Alzheimer’s report 2015: the global impact of dementia. London, UK: Alzheimer’s Disease International; 2015.
2. Cummings J, Lee G, Ritter A, Sabbagh M, Zhong K. Alzheimer’s disease drug development pipeline: 2020. Alzheimers Dement (N Y). 2020.
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Strategic reportGovernanceFinancial statementsIXICO plcAnnual Report & Accounts 2020 Strategic report
Technology and innovation continued
Alzheimer’s disease
in focus
Over recent years, our involvement in
the EPAD study and Critical Path for
Alzheimer’s Disease (‘CPAD’) consortium
have helped pave the way for the
operationalisation and regulatory approval
of novel biomarkers for AD.
European Prevention of Alzheimer’s
Disease (‘EPAD’) programme:
EPAD has set out to develop a targeted
approach for AD clinical trials by developing
better understanding of disease processes
and better tools to identify and track patients
for targeted intervention. As part of the
EPAD programme, we have shown with our
partners how novel imaging technologies
like arterial spin labelling can be
operationalised for multi-centre clinical trials,
how our LEAP algorithm can be used to
increase trial efficiency through improved
patient selection, and how AI can support
streamlined quality control of magnetic
resonance imaging (‘MRI’) data. EPAD has
formed a strong partnership across Europe
between participating sites and clinical
investigators as well as with commercial
entities and we are looking forward to
working with this network as new AD drugs
go into clinical development.
It has been almost 20 years
since the last Alzheimer’s drug
approval in the Western world.
Nonetheless, there is a
developing sense within the
scientific community that a
breakthrough is nearing.
Aducanumab, a monoclonal antibody
developed by Biogen to remove amyloid
beta (‘Aβ’), continues to be reviewed by the
FDA and, whilst the outlook for approval is
uncertain, the fact that it is under review by
the FDA represents progress in the search
for a disease modifying drug for AD. In
addition to this, over the last few years a
more diverse range of new approaches
to addressing AD are in development,
which reflect rapid developments in the
understanding of the disease. These
include drug candidates focused on tau,
neuroprotection and inflammation
alongside a range of supporting therapies
in terms of lifestyle modification, all of
which are thought to play prominent roles
in the development and progression of
the disease.
At IXICO we have been working in AD for
more than a decade and continue to be at
the forefront of developing novel imaging
technology and data analytics in this area.
In 2020 we have formally joined the public
private partnership scientific board of the
Alzheimer’s Disease Neuroimaging
Initiative (ADNI), leading the worldwide
development of emerging imaging
technologies for AD clinical trials. We have
furthermore been selected to provide our
neuroimaging and AI expertise to the
Global Alzheimer’s Platform’s innovative
Bio-Hermes trial, which is taking a novel
approach to provide digital and blood
biomarker results for comparison across
cognitively normal and impaired individuals.
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IXICO plcAnnual Report & Accounts 2020“IXICO were a pivotal partner in the EPAD programme providing excellent service throughout the 6 years to our sites and central team. Not only did they provide valued operational support they also contributed in a crucial way to design aspects of EPAD in terms of data flows and imaging science. The data from EPAD will make a huge difference to our understanding of Alzheimer’s disease in its early stages and IXICO has been pivotal in providing the best quality and relevant imaging data to that effort.”Professor Craig RitchieEPAD Principal Investigator, Chair of the Psychiatry of Ageing and Director of the Centre for Dementia Prevention at the University of Edinburgh Critical Path for Alzheimer’s
Disease (‘CPAD’) initiative:
Led by Critical Path Institute (‘C-Path’),
the Critical Path for Alzheimer’s Disease
Consortium is a public-private partnership
aimed at generating novel tools and
methods that can be applied to increase
the efficiency of the medical product
development process for AD. IXICO has
worked with CPAD over the past years to
generate the underlying evidence for the
regulatory endorsement of hippocampal
volume as an enrichment tool for AD
clinical trials, and joined CPAD as a full
partner in 2020, to provide imaging and AI
expertise into the Consortium’s
development of novel quantitative
model-based solutions for drug
development and their submission for
review and potential endorsement by
regulatory agencies.
“I am pleased to welcome
IXICO as a full member of
CPAD as they bring
tremendous expertise in
neuroimaging for AD clinical
trials and data analytics. We
have worked with IXICO on
several projects over the
years and I look forward
to strengthening this
relationship in our effort to
generate regulatory-grade
novel quantitative tools,
including a harmonized and
standardized image analysis
tool, that will enable
optimization of clinical trial
design, patient selection,
evaluation of endpoints
and outcome measures,
and accelerate the drug
development process in AD.”
Dr Sudhir Sivakumaran
Executive Director, CPAD
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Strategic reportGovernanceFinancial statementsIXICO plcAnnual Report & Accounts 2020 Strategic report
Market review and opportunities
Well-positioned in
attractive growth markets
Market overview
Reflecting a significant unmet medical
need, neuroscience is the second largest
area of Research and Development (‘R&D’)
spend for the biopharmaceutical industry.
Much is still unknown about the
mechanisms of brain disease and
disorders, and there are many challenges in
bringing a new neurological therapy to
market. However, the rewards for bringing a
treatment successfully through regulatory
approval and commercialisation are
significant. Biomarkers play an important
role in evaluating the safety and efficacy of
new drugs for the treatment of brain
disease and disorders. A growing focus on
these study measures are value drivers for
IXICO’s long-term growth prospects.
Clinical trials’ market dynamics
The global clinical trials market size was
valued at USD 46.8 billion in 2019 and is
expected to grow at a compound annual
growth rate (‘CAGR’) of 5.1% from 2020 to
2027 to reach USD 69.9 billion by 2027.
Increasing prevalence of chronic diseases
such as Alzheimer’s Disease (‘AD’) and
growing demand for clinical trials in
developing countries is fuelling market
growth. Rising interest in rare diseases
(many of which are neurological), the need
for personalised medicines, and demand for
advanced technologies are projected to fuel
growth. Factors such as globalisation of
clinical trials, technological advances, and a
bias towards contracting Contract Research
Organisations (‘CROs’) for outsourcing work
pertaining to the conduct of clinical trials
(rather than in-house drug development) are
further projected to drive growth.
Lammert Albers joined IXICO in
October 2019 with over 20 years
of experience in the life
sciences industry.
He spent his early career in research
working as a Bioscientist with
AstraZeneca before entering the
Clinical Development side of the
business. Lammert has a track record
of delivering growth across North
America, Europe and Asia. Prior to
IXICO, Lammert worked in global
leadership roles for Genaissance
Pharmaceuticals, MDS Pharma
Services and PRA Health Sciences
and spent 5 years as Chief
Commercial Officer at Cogstate.
Lammert is based in the USA.
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IXICO plcAnnual Report & Accounts 2020Impact of COVID-19The rapidly evolving threat due to the COVID-19 outbreak has impacted lives, communities, businesses, and industries around the world. The pandemic has also impacted the current ecosystem of clinical trials and affected many ongoing trials for various therapeutic areas. However, to overcome this, researchers are rapidly developing innovative therapeutics and vaccines against COVID-19.At IXICO we have seen that most of our clinical trials have continued through COVID-19, but some interruption in current trials has been experienced and the start-up timelines for some new trials have been delayed. It is our expectation that our biopharmaceutical clients will continue to prioritise the development of new investigational drugs, however, there is continued uncertainty with respect to the start times of new trials and we expect that uncertainty to remain through the next financial year. Due to our strong contracted order book, and the forward visibility of revenues this provides, we are better positioned than many companies to manage this disruption and, as a consequence, expect continued growth across the next year, albeit at a more muted level to previously. Once the pandemic abates, we would expect to see a reinvigoration of new trial start-ups and IXICO will be ready to respond to this.
IXICO deliver 36% increase in contracted order book to £21.7m
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Contracted order book at close of FY19 confirmed at £15.9m.
Lammert Albers, CCO, joined IXICO. First US based employee reflecting expansion of IXICO's
ambitions in the largest market for CNS trials.
New client wins in PSP, mental health and a contract extension announced.
The World Health Organisation first picks up reports at its China offices of a 'pneumonia of
unknown cause' originating in Wuhan state.
IXICO Commercial team is further enhanced, with appointment of a 2nd US based BD Director.
Contract extensions signed in the areas of HD and PSP with a combined
total of £2.4m.
Chinese media report first death from 'novel coronavirus'.
First cases of novel coronavirus reported in Asia outside of China, soon followed by cases in the
US, Europe, the Middle East and around the globe.
WHO formally names the novel coronavirus COVID-19.
IXICO announces funding and scientific support of the Alzheimer's Disease Neuroimaging
Initiative ('ADNI').
Europe becomes the epicentre of COVID-19. This leads to lockdowns across the region rapidly
followed by lockdowns around the world.
IXICO wins an AD contract with Vaccinex, further deepening the relationship between the parties.
IXICO operations move 100% working from home and all business travel cancelled. The
commercial team adopt remote working practices, virtual conference attendance and implement
a webinar series.
Over half of the world's population under some form of lockdown measure.
IXICO wins the largest single contract in its history, signing a 4 year, £10.5m, contract with a major
pharmaceutical company on its open label study in HD.
IXICO updates the market that it has been able to rapidly and effectively move to remote working,
ensuring the wellbeing of staff and mitigating the risk of the Company being a cause of disruption
to clients and their programs as a result of COVID-19 lock down measures.
IXICO reports strong H1 numbers including 33% revenue growth and an EBITDA margin of just
under 15%.
Global COVID-19 infections surpass 10 million.
Proven resilience of IXICO's remote working model; Group reissues market guidance for FY20 &
FY21.
Clinical trial initiations reported to be reduced by as much as 40% compared to the prior year and,
of the trials initiating, >25% are COVID-19 trials. Within CNS >70% reduction in patients enrolling in
new CNS trials compared to a year earlier.
Global COVID-19 infections surpass 20 million.
IXICO presents to investors outlining its response to COVID-19. Confirms anticipated slower
growth into FY21 across the clinical trials market due to ongoing delays in new clinical trial
timelines.
Global COVID-19 infections surpass 30 million.
IXICO announces a PET imaging contract with the Global Alzheimer's Platform ('GAP').
IXICO announces 5-year collaboration with the Freidreich's Ataxia Research Alliance ('FARA').
IXICO announces a £2m extension to an existing phase III HD contract.
Global COVID-19 infections surpass 40 million.
IXICO announces new collaboration with NYU Langone Health in Multiple System Atrophy ('MSA').
IXICO announces additional phase II and Natural History studies in HD.
Contracted order book at close of FY20 confirmed at £21.7m.
Global COVID-19 infections surpass 50 million and likely to surpass 60 million by the end of the
month.
IXICO announces 3 additional studies in AD in each of phase I, phase II and phase III.
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Strategic reportGovernanceFinancial statementsIXICO plcAnnual Report & Accounts 2020Market positionWe provide specialist data analysis services to a wide range of biopharmaceutical clients working in neurological diseases. Our deep understanding of neurological disease and data science are key vendor selection criteria for our partners, and these will remain our focus. Increased focus on rare diseases, positive developments in research and the interrogation of novel gene therapies are key drivers of increased research activity. We work with many of the world’s largest biopharmaceutical companies as well as emerging biotechnology companies which are leading early-stage development of new therapies. IXICO is commercially active across this broadening market in all phases of clinical development. In addition to working directly with biopharmaceutical sponsors, IXICO has secured Master Service Agreements (‘MSAs’) with several leading CROs. CROs are large commercial organisations and can therefore provide extended sales channels to reach a wider sponsor audience. IXICO is starting to see early signs of success following the execution of MSAs and we expect to go from strength to strength as we continue to establish more strategic relationships with CROs. IXICO Event COVID-19 Event Strategic report
Stakeholder engagement
The Board recognises that effective stakeholder engagement
enables improved, impactful decision-making. As such, it is
committed to building beneficial relationships with a broad range
of stakeholder groups impacted by the Group’s activities.
Clients
Our clients rely on our data analytics
to support critical decisions in their
clinical development programmes.
Most client contracts represent
multi-year projects, providing the
opportunity to build effective,
long-term relationships.
Shareholders
As a business listed on the AIM market,
we recognise the important role that
shareholders play via their investments
in the Group and in providing feedback to
the Board on strategy and governance.
– High levels of quality assurance
– Consistent and reliable service levels
– New product development
and innovation
– Financial and operational performance
– Business model and strategy
– Capital allocation
– Commercial pipeline and future
visibility of revenues
Our business development team has
many years of experience in the industry
and build long-term client relationships.
Each client project is led by a dedicated
project manager who is accountable for
service delivery; weekly IXICO-client
project team calls are the norm.
Our R&D team is closely involved in
the client projects to ensure that
clients are able to take advantage of
the latest advances in the IXICO
algorithm portfolio.
The Group operates under a well-
defined Quality Management System,
accredited to ISO 13485.
We use a range of tools to engage with
shareholders including LSE RNS, our
website, video interviews with senior
leadership, and social media.
We host twice-yearly results briefings to
communicate key Group developments to,
and receive feedback from, shareholders
and brokerage analysts. The briefing
presentations are also available on
our website.
In addition, our Non-Executive Chairman
and other Non-Executive Directors meet
with shareholders as appropriate.
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As a leading provider of AI data analytics
to clinical trials in neuroscience, IXICO
employs highly qualified staff in a range
of scientific roles. Providing an
environment that supports continued
learning and development improves
employee retention levels and is central
to our success.
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– The working environment, culture
and values
– Collaboration and idea sharing
– The Group’s financial performance
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as part of their annual performance and
development review to support their
personal growth as well as their wider
contribution to the Group.
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The senior leadership team hold regular
video calls to update employees on
material matters as well as sharing
progress on initiatives being pursued by
individual teams.
The Group has invested in
communication tools to support
effective remote working,
idea sharing and collaboration.
Surveys conducted before and during
the COVID-19 pandemic reflect a high
level of employee engagement.
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IXICO plcAnnual Report & Accounts 2020
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IXICO is a member of several scientific
consortia. We view our contribution to
the scientific progress achieved by
these partnerships as a critical part of
our strategy and purpose.
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Imaging Centres
Our clients work with expert imaging
centres to undertake MRI, PET and
other scans on patients involved in their
clinical trials. The centres directly
upload images to IXICO’s TrialTracker
data management platform for patient
selection, safety review and drug
efficacy analysis.
Patients
Our clients recruit patients to take part in
the clinical trials of their drug
candidates. By using IXICO’s portfolio of
algorithms these trials benefit from
objective measures of biomarkers which
are used to assess drug efficacy. The
objective nature of these measures
increases patient confidence that the
monitoring of the drug development
process is more robust.
– Training and qualification of imaging
– Objective measurement of the impact
centre personnel
of drug candidates on the brain
– Technical support and issue
resolution
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scientific collaborations in the past 12
months and continues to be an active
contributor at scientific conferences
including virtual events such as the
Huntington’s Study Group, Alzheimer’s
Association International Conference,
and Medical Imaging Understanding
and Analysis.
Our online imaging centre support
model enables centres to engage with
training and qualification activities at a
time that suits them, and requires no
in-person visits.
We have recently introduced an
enhanced support triage system to
accelerate response times.
Whilst we do not have direct
communication with patients on clinical
trials we have engaged with patient
representatives during the year to better
understand the challenges
of living with the disease and further focus
our efforts on our Group purpose.
We have participated in panel discussions
aimed at informing friends and families of
Huntington’s disease patients about
clinical trials updates.
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Strategic reportGovernanceFinancial statementsIXICO plcAnnual Report & Accounts 2020S172 statement:As required by Section 172 of the Companies Act 2006, a director of a company must act in the way he or she considers, in good faith, would most likely promote the success of the company for the benefit of its shareholders. In so doing, the director must have regards, amongst other matters, to the: –Likely consequences of any decision in the long term; –Interests of the company’s employees; –Need to foster the company’s business relationships with suppliers, customers and others; –Impact of the company’s actions on the community and environment; –Desirability of the company maintaining a reputation for high standards of business conduct; and –Need to act fairly between members of the company.
Strategic report
Stakeholder engagement continued
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IXICO plc Annual Report & Accounts 2020
Principal Strategic Decision in 2020 – continued investment despite COVID-19:In 2020, the Group rapidly evolved its business model in response to the COVID-19 pandemic. In anticipation of restrictions on local travel and to protect employee wellbeing, the Group piloted and then rolled out remote working for all employees, enabling them to work safely and effectively from their homes. In the weeks following, the Board reviewed its planned investment programme and took the decision to continue with these plans, despite increased uncertainty in market conditions due to COVID-19. Reason for the decision:The clinical trials market has been significantly affected by the COVID-19 pandemic, with patient travel restrictions and the increased burden on healthcare facilities restricting local clinical trial activity. However, the high unmet clinical need in the disease areas which are the focus of the Group’s service offering means that its active contracted trials have been largely unaffected.Following detailed discussions with clients to understand the impact of COVID-19 on near-term trial activity and associated revenue streams, the Board felt confident that its current orderbook would continue to be delivered despite the pandemic’s impact. It also recognised that many postponed trials would be reinitiated in the medium term and that investment in extending the Group’s image capture and analysis platform and further development of its service offering would optimise the Group’s ability to maximise market share. This would support its clients and deliver value over the medium to long-term once the pandemic’s impact subsides The Board’s confidence in the Group’s relative financial strength with its strong balance sheet, significant cash reserves, absence of debt and visibility of future revenues, ultimately underpinned this decision to continue investment.Stakeholders affected and engagement: –Employees – accelerated implementation of remote working tools to enable more flexible working and enhanced communication. This includes updates on progress of Group objectives and the neuroscience clinical trials market. In addition, wider informational programmes for all departments have been initiated outlining the investment programmes within R&D, image analysis and our technology innovations. The Group’s investment plan will further provide employees with opportunities for learning and development as the Group grows and implements new technologies and service offerings. –Clients – as the Group enters its new financial year it is investing in an enhanced client alliance programme to support communications and even closer working relationships with clients. Clients will benefit from enhanced service levels, improved turnaround times and greater transparency in delivery. –Shareholders – regular communication of plans and financial performance through meetings, telephone calls, video broadcast channels, LSE RNS/Reach platforms and social media. Shareholders continue to benefit from high visibility of future revenues in an expanding market, sustained profitability and will benefit from medium- and long-term accelerated growth accruing from the programme of investments being pursued by the Group. –Scientific Partners – continued engagement with the scientific community through virtual conferencing and engaging in new partnerships to support improved understanding of neurological disease. With accelerated research and development, scientific partners (whether commercial or academic) will benefit from access to new, state-of-the-art algorithms to identify and measure new biomarkers relevant to their specific neurological indications. –Imaging Centres – access to enhanced imaging centre management tools to provide better remote training and monitoring. With planned investments in a new image capturing and analysis platform, the Group will further support the qualification of new imaging centres, thereby accelerating centre onboarding to a trial and reducing the burden on scarce healthcare resources (which have been further restricted due to local COVID-19 response). This is important for both clients and the imaging centres as this improves the potential for trials to access eligible patients efficiently from a wider geographical area. –Patients – as the Group continues to invest in its portfolio of algorithms and technology it will be able to provide new biomarker insights to enhance patient selection, safety monitoring and drug efficacy within clinical development. This will reduce the risks and uncertainty associated with the drug development process and further support beneficial outcomes for patients. Stakeholder testimonial
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this critical point; where the future
graph for HD gene carriers like me is
no longer unremittingly downward;
not just a percentage improvement,
but an arithmetical absolute; the
difference between nothing, and the
possibility of something.
The difference between hope, and
losing the will to go on. Everyone
involved in IXICO – employees,
contractors or investors – have
reason to be very proud indeed of
their crucial role in this new chapter.
Charles Sabine
Progressive platforms
For centuries, families like mine,
passing from one generation to
the next the devastating and fatal
Huntington’s disease, have lived in
a vacuum of hope for treatments.
Over the last two decades, however,
a new dawn in gene therapy has
emerged. At the centre of this
revolution has been a pivotal study of
those carrying the HD gene, whereby
unprecedented imaging techniques
have enabled pharmaceutical
companies to enter the field,
confident that any drug they develop
will have the crucial prerequisite for
authorisation – biomarkers. This
ground breaking work has been led
by London researchers (truly, a UK
success story) at UCL and IXICO.
It’s hard to convey the magnitude of
Charles Sabine (left) with his brother John,
a barrister who was five years older than
Charles, and passed away from HD just
before Christmas, 2019.
Photograph courtesy of Martin Solyst
IXICO plc Annual Report & Accounts 2020
IXICO plc Annual Report & Accounts 2020
23
Strategic report
Strategic report
People and culture
Supporting our people
Working during COVID-19
Our agile working approach enabled us to
switch to remote working overnight in
March 2020 to maintain the safety of all our
employees and productivity amid
COVID-19. All employees were supported
with the necessary health and safety
guidance to undertake workstation
assessments of their home environment,
with IXICO providing all employees with
any required workstation equipment to
ensure safe and effective working
practices. The implementation of
technology tools and weekly all-staff
meetings promoted effective collaboration
and communication. Our efforts were
notably recognised in a survey of all our
employees with 96% saying they feel IXICO
is adequately supporting remote working
during COVID-19. Following extensive risk
assessments, guidance from governmental
and health authorities and reviewing the
office configuration and protocols, we
reopened the IXICO office in July 2020 to
support those employees who are unable
to work effectively at home.
Wellbeing during COVID-19
The physical and mental wellbeing of our
employees remains a high priority to the
Group amid COVID-19. Recognising the
significant importance of wellbeing, we
promoted a range of wellbeing resources
including our Employee Assistance
Programme, Health Assured Portal and
counselling services. In addition, we have
supported wellbeing initiatives such as
Mental Health Awareness Week
highlighting important advice and
organising fundraising activities to promote
physical exercise whilst raising money for
an impactful cause: the Huntington’s
Disease Youth Organisation. With all
employee’s working remotely, we have
promoted staff engagement through Group
virtual social events, as well as engaging
Responding to COVID-19
In January 2020, IXICO instigated its
Business Continuity Plan in response to
COVID-19 to determine the potential impact
on employees, clients, and the overall
business. From the outset, our priority has
been to maintain effective operations and a
reliable service to our sponsors, whilst
supporting and providing a safe working
environment for our employees. We have
taken proactive steps to support our
employees during the crisis with particular
focus on effective remote working, health
and safety at home, and wellbeing of our
staff by maintaining a level of engagement.
Due to our ongoing investments to build a
strong and resilient company, IXICO
entered the crisis in a strong position and
was well equipped to rapidly respond and
provide significant support and resources
to our employees.
24
IXICO plcAnnual Report & Accounts 2020with employees through frequent communications including remote ‘townhall’ all-employee meetings and employee surveys to ensure everyone remains connected to the Group during these unprecedented times. Successes during COVID-19IXICO has been able to provide reassurance to our employees by ensuring no staff were furloughed, at risk of redundancy or subjected to pay cuts during the year. Furthermore, and to support our future growth ambitions, we have driven a significant increase in recruitment with 36 new starters joining the Group since the start of 2020 and 14 of those joining IXICO during the COVID-19 pandemic. This increased our employee headcount from 70 at the end of 2019, to 90 by the end of 2020. We are delighted to have experienced reduced employee sickness and turnover during this time, with our employee engagement survey highlighting that 86% of our staff still feel engaged with the Company whilst working remotely. We are confident that IXICO will emerge from the pandemic in an even stronger position having demonstrated our values and stood by our employees during this difficult time. To our employeesNothing would have been possible without the core of IXICO – all our employees – showing that pulling together in a crisis like this can still enable growth and success. A huge thank you to our incredible staff, going above and beyond and making all the difference for our clients and our business.Hannah EsfahanianHR Manager Empowering people.
Making a difference.
Our values define our purpose and are at the heart of our culture.
Aspiration
Aspiration drives us to set ambitious
goals. It combines the desire to
make things better with the
commitment to make it happen. At
IXICO, we are proud to be part of the
effort to bring life-changing
treatments to patients sooner and
demonstrate this value in our
commitment to our clients’ success.
Agility
Agility is the ability to rapidly adapt
to change. As a growing company,
our people thrive on change and
the opportunities that this presents
to delight our clients in their clinical
development programmes.
Ability
Ability reflects the value we
derive from the diverse skills and
experience of our colleagues. We
challenge ourselves to continually
develop our abilities, to deliver
greater value to our stakeholders.
Accountability
Accountability is underpinned
by reliability and personal
responsibility. At IXICO, we take
ownership of our work and
understand its impact on our
clients’ clinical development
programmes.
25
Strategic reportGovernanceFinancial statementsIXICO plcAnnual Report & Accounts 2020 Strategic report
People and culture continued
New starter
Marina Papoutsi
Biomarker Scientist
It has been a unique experience starting a
new job during a pandemic. I expected
there to be challenges, however, the
transition has been surprisingly smooth.
My first day at IXICO was like that of my
previous job, however rather than being in
an office I started at home, set up with a
laptop remotely and introduced to my new
colleagues virtually. I would like to thank
everyone at IXICO for their hard work to
help me settle in as I was up and running
within hours and felt welcomed and
included. This is by no means an easy
achievement and credit is due to
everyone involved.
Celebrating our
people’s successes
Studying
Birte Kuhnert
HR Coordinator
HR has faced many new challenges
during COVID-19, however, our priority
has been to support employees in
these uncertain times, whilst adjusting
to new ways of working. In addition to
this, earlier in 2020 I was given the
opportunity to pursue further HR
studies supported by IXICO’s
professional qualification financial
assistance. It has been, and still is, a
very busy and exciting time for the HR
function, but being able to work from
home effectively has enabled me not
only to fully support the business and
employees, but also to get ahead in
my studies and continue my
professional development.
Supporting the Group
Mark Caszo
IT Senior Systems Engineer
It has been a particularly busy period for
IT whilst we support both the Group
and employees during COVID-19. The
implementation of new and improved
technologies like Microsoft 365, Teams
and Horizon phone solution has enabled
employees to stay connected and to
collaborate well with each other and
clients. Significant improvements were also
made for data transfers and the imaging
viewer environment used by our Image
Analysis team. We achieved this and more
in addition to day-to-day support queries
and the onboarding of new starters. I am
very proud of IT’s resilience in overcoming
the challenges faced by COVID-19.
26
IXICO plcAnnual Report & Accounts 2020 Promotion
Richard Parker
Imaging Scientist
Having studied a Masters in Neuroimaging
and a PhD looking at combining AI and
diffusion MRI for the automated diagnosis
of Alzheimer’s Disease at Kings College
London, the opportunity to join IXICO in
the role of Associate Imaging Scientist
seemed like a great fit for academic
achievements. Since joining in
March 2018, I have worked with the
Imaging Science team to focus on
the development of imaging and
wearables data analysis solutions,
including recently featuring on the
IXICO webinar series presenting
work in free water imaging.
I am very thankful to IXICO for
recognising my hard work and
contribution by promoting me
to an Imaging Scientist during
this period.
Customer Interaction
Sammyat Shittu
Associate Image Analyst
The effect of COVID-19 initially raised
concerns of how we would adapt to
new ways of working. However, I can
confidently say that working remotely
has not hindered our customer
interaction and, in many ways, has in
fact improved it. It has increased
flexibility with client calls across Asia
and America easing communications
across different time zones and
increased the ability to meet urgent
requests. The increased use of calls
with our customers has promoted
building positive relationships and
reminded us that the signature we see
at the bottom of an email is in fact an
ally on the same mission to help find a
cure to neurological diseases.
Managing a Team
Rizwan Durrani
Development Director
Managing a team can be challenging at the
best of times and with COVID-19 we have had
to overcome further challenges. However, the
Group investments made into remote working
and implementing collaborative tools such as
Microsoft Teams have effectively supported
me to manage the Development team and the
onboarding of new team members during this
time. In addition to this, as a team we have
adopted certain approaches such as sharing
technical knowledge, supporting each other
with regular feedback and enhancing
communication channels. I am very lucky
to manage such a professional team in the
fulfilment of our motto, “Let’s make life
easier for everyone".
27
Strategic reportGovernanceFinancial statementsIXICO plcAnnual Report & Accounts 2020 Strategic report
Financial review
Consolidating
growth, profitability,
and cash in a year
of uncertainty
Grant Nash
Chief Financial Officer
28
IXICO plcAnnual Report & Accounts 2020The Group has delivered another period of strong financial performance across the year to 30 September 2020.This builds on three previous years of strengthening financial performance, resulting in a transition to double-digit EBITDA profitability margins and net cash inflows.This review includes a comparison of the financial KPIs that we use to measure our progress over the prior year, a summary of which is shown opposite.RevenueRevenue for the year of £9.5 million (2019: £7.6 million) represents a year-on-year increase of 26%. This growth was driven by increasing traction within Phase III clinical trials as the Group’s success in earlier phases has been carried through into this later, larger scale phase of the drug development process.Gross profitThe Group reports gross profit of £6.3 million in the year. This is an increase of £1.4 million or 28% compared to 2019 and equates to a gross margin of 67% (2019: 65%). This strong gross profit performance reflects a combination of a favourable sales mix, linked to the growth in proportion of image analytics within its revenues driven by increased traction in Phase III clinical trials, and the leveraging of operational efficiencies as the Group grows.Earnings before interest, tax, depreciation and amortisation (‘EBITDA’)The Group more than doubled its EBITDA profit in the year, having become sustainably profitable for the first time in the prior year. This profit of £1.3 million (2019: £0.5 million) reflects the impact of strong revenue growth, improved operational leverage (and productivity), and control of administrative costs whilst enabling a level of investment in research and development and in sales and marketing. EBITDA was positively impacted by the introduction of IFRS 16, which requires companies to recognise depreciation and interest on leases rather than as rent directly to operating expense. This increased EBITDA by £0.2 million in the year (2019: £nil). Operating profitOperating expenditure in the year reflected investment in people and product development: –research and development expenses of £1.3 million (2019: £1.0 million) included the development of new algorithms to support image analysis as well as enhancements of the Group’s platforms to enable operational scalability. The Group, in addition, capitalised £0.2 million of internal development expenditure in the year (2019: £0.2 million); –sales and marketing expenses were £1.6 million (2019: £1.2 million) reflecting increased investment to support continued future growth; and –general and administrative expenses were controlled at £3.2 million (2019: £3.0 million).The reported operating profit of £0.9 million reflected 26% revenue growth, strong gross profit performance and controlled operating expenditures. This equated to an operating profit margin of 9% (2019: 5%). Key performance indicators
9.5
9.5
9.5
9.5
9.5
9.5
7.6
7.6
7.6
7.6
7.6
7.6
Revenue (£m)
Revenue (£m)
Revenue (£m)
Revenue (£m)
Revenue (£m)
Revenue (£m)
Revenue (£m)
5.4
5.4
5.4
5.4
5.4
5.4
4.1
4.1
4.1
4.1
4.1
4.1
3.1
3.1
3.1
3.1
3.1
3.1
Gross margin (%)
Gross margin (%)
Gross margin (%)
Gross margin (%)
58.8
58.8
58.8
Gross margin (%)
Gross margin (%)
Gross margin (%)
58.8
58.8
58.8
56.4
56.4
56.4
56.4
56.4
56.4
44.9
44.9
44.9
44.9
44.9
44.9
65.4
65.4
65.4
65.4
65.4
65.4
66.6
66.6
66.6
66.6
66.6
66.6
‘16
‘16
‘16
‘16
‘16
‘16
‘17
‘17
‘17
‘17
‘17
‘17
‘18
‘18
‘18
‘18
‘18
‘18
‘19
‘19
‘19
‘19
‘19
‘19
‘20
‘20
‘20
‘20
‘20
‘20
‘16
‘16
‘16
‘16
‘16
‘16
‘17
‘17
‘17
‘17
‘17
‘17
‘18
‘18
‘18
‘18
‘18
‘18
‘19
‘19
‘19
‘19
‘19
‘19
‘20
‘20
‘20
‘20
‘20
‘20
EBITDA (£m)
EBITDA (£m)
EBITDA (£m)
EBITDA (£m)
EBITDA (£m)
EBITDA (£m)
EBITDA (£m)
‘16
‘16
‘16
‘16
‘16
‘16
‘17
‘17
‘17
‘17
‘17
‘17
‘18
‘18
‘18
(0.6)
(0.6)
(0.6)
‘18
‘18
‘18
(0.6)
(0.6)
(0.6)
(1.4)
(1.4)
(1.4)
(1.4)
(1.4)
(1.4)
(2.1)
(2.1)
(2.1)
(2.1)
(2.1)
(2.1)
Order book (£m)
Order book (£m)
Order book (£m)
Order book (£m)
Order book (£m)
Order book (£m)
Order book (£m)
19.3
19.3
19.3
19.3
19.3
19.3
12.7
12.7
12.7
12.7
12.7
12.7
9.9
9.9
9.9
9.9
9.9
9.9
1.3
1.3
1.3
1.3
1.3
1.3
‘20
‘20
‘20
‘20
‘20
‘20
0.5
0.5
0.5
‘19
‘19
‘19
0.5
0.5
0.5
‘19
‘19
‘19
21.7
21.7
21.7
21.7
21.7
21.7
15.9
15.9
15.9
15.9
15.9
15.9
Revenue per FTE (£000)
Revenue per FTE (£000)
Revenue per FTE (£000)
Revenue per FTE (£000)
Revenue per FTE (£000)
Revenue per FTE (£000)
Revenue per FTE (£000)
124
124
124
124
124
124
122
122
122
122
122
122
94
94
94
94
94
94
75
75
75
75
75
75
51
51
51
51
51
51
‘16
‘16
‘16
‘16
‘16
‘16
‘17
‘17
‘17
‘17
‘17
‘17
‘18
‘18
‘18
‘18
‘18
‘18
‘19
‘19
‘19
‘19
‘19
‘19
‘20
‘20
‘20
‘20
‘20
‘20
Operating profit/(loss) (£m)
Operating profit/(loss) (£m)
Operating profit/(loss) (£m)
Operating profit/(loss) (£m)
0.9
0.9
0.9
Operating profit/(loss) (£m)
Operating profit/(loss) (£m)
Operating profit/(loss) (£m)
0.9
0.9
0.9
‘16
‘16
‘16
‘16
‘16
‘16
‘17
‘17
‘17
‘17
‘17
‘17
‘18
‘18
‘18
(0.8)
(0.8)
(0.8)
‘18
‘18
‘18
(0.8)
(0.8)
(0.8)
(1.9)
(1.9)
(1.9)
(1.9)
(1.9)
(1.9)
0.4
0.4
0.4
‘19
‘19
‘19
0.4
0.4
0.4
‘19
‘19
‘19
‘20
‘20
‘20
‘20
‘20
‘20
29
‘16
‘16
‘16
‘16
‘16
‘16
‘17
‘17
‘17
‘17
‘17
‘17
‘18
‘18
‘18
‘18
‘18
‘18
‘19
‘19
‘19
‘19
‘19
‘19
‘20
‘20
‘20
‘20
‘20
‘20
(3.1)
(3.1)
(3.1)
(3.1)
(3.1)
(3.1)
Strategic reportGovernanceFinancial statementsIXICO plcAnnual Report & Accounts 2020Order bookThe Group continues to benefit from a healthy contracted order book. At 30 September 2020 this totalled £21.7 million (2019: £15.9 million), which takes account of £9.5 million of business executed during the year and net £15.3 million of (both new and expanded) multi-year contracts secured across all phases of clinical development. This means that the Group retains a strong position to deliver continued revenue growth.CashThe Group reported operating cash inflows of £1.5 million before tax receipts in the year (2019: £0.1 million cash outflow) reflecting the Group’s strengthening profitability and the beneficial timing of payments on customer contracts.The Group had a closing cash balance at 30 September 2020 of £7.9 million (2019: £7.3 million) with the increase reflecting the operating cash inflows partly offset by capital investment in the Group to support future scalability and improved IT infrastructure. The strengthened, and substantial, debt-free cash balance means the Group is well positioned to invest for continued growth. Further consideration of the Group as a going concern is discussed in the Director’s report.Net assetsThe Group’s net asset position increased by £1.2 million to £9.1 million (2019: £7.9 million). This is reflective of the Group’s ability to turn profitability in to operating cash inflows, as well as the Group’s commitment to invest in order to meet the future growth demands. This strong net asset position provides the foundation to support the Group’s investment programme for the next year.Profit per shareThe Group reports a profit per share of 2.02p (2019: 0.92p) reflecting the significant uplift in financial performance achieved across the year.The Group is delivering against its growth strategy, is profitable, and is well capitalised, providing a strong basis to further accelerate investment across 2021, despite the challenges created by COVID-19, and thereby continues to be fully focused on the execution of its commercially-led growth strategy.Grant NashChief Financial Officer1 December 2020KPI2020 result2019 resultMovementRevenue £9.5m£7.6m£1.9m hGross profit £6.3m£4.9m£1.4m h Gross margin66.6%65.4%120 bps hEBITDA profit£1.3m£0.5m£0.8m hOperating profit£0.9m£0.4m£0.5m hProfit per share2.02p0.92p1.10p hOrder book£21.7m£15.9m£5.8m hCash £7.9m£7.3m£0.6m h Strategic report
Risk management
The Board holds responsibility for monitoring risks to which the Group is exposed, and for reviewing and assessing the effectiveness of
the internal control framework used by the Group to manage those risks.
The Group has designed its internal controls with the aim of providing a proportionate level of assurance for the organisation, taking
account of its size, stage of development and risk exposure. Whilst the Board is confident that the control framework is fit for purpose, it
continues to seek ways to further mitigate against the risk of material misstatement or loss.
In assessing the risks faced by the Group, a detailed risk identification and control framework is adopted. It is the responsibility of each
department head to update the risk and control matrix for their area and these are then consolidated into a single matrix which is
reviewed by the Senior Leadership Team on a quarterly basis. The Board receives a summary of the risk and control matrix which sets
out the current status of controls in place to manage identified risks and ranks the risks by their potential impact and likelihood on the
Group’s operations. This matrix also details the additional actions which are being implemented to further manage such risks. The Board
reviews and challenges the Executive Directors on this risk and control matrix as necessary.
Principal risks and uncertainties
The following table presents the principal risks and uncertainties that the Board considers could have a material impact on the Group’s
operational results, financial condition and prospects.
These risks and uncertainties reflect the business environment within which the Group operates, together with risks in the execution of
its business strategy. The risks are separated into four specific risk areas being Strategic, Financial, Operational, and Legal/Compliance
& Reputational.
Strategic risks
Change key:
Increase
Decrease
No change
Principal Risks
Risk Context
Mitigation
Change in the Year
The Board anticipates that its strategic initiatives
will lead to increased market penetration and
development of new market opportunities for
the Group.
– Annual review by the Board of Group strategy and budget
priorities with progress against strategy.
– Monthly leadership review of delivery of specific strategic
initiatives.
Likelihood reduced
following further improved
strategic review process.
The Group fails
to exploit the
commercial
opportunities
available to it and
does not deliver
the full potential
for shareholder
(and other
stakeholder)
returns
Changes to
international
trading
environment due
to political
events
The nature of the neurological drug
development market means that strategic
initiatives will inevitably include a degree of
judgement risk.
The Group may not execute on its strategic
plans as effectively or efficiently as possible,
thereby failing to maximise the commercial
opportunity available to it.
New impediments to international trade
resulting from political actions such as Brexit or
US trade tariffs may disadvantage the Group’s
position in its marketplace.
– Board appraisal of significant investments before funds are
committed and subsequent review of each investment’s
delivery and performance.
– External expertise and advice sought to inform strategic
initiatives.
– Orientation and alignment of the Senior Leadership Team
to focus on delivery and an increased pace of improvement
implementation.
– 5-year strategic plan currently being refreshed to reflect
the Group has now achieved sustainable profitable growth.
– Board review of likely risks associated with Brexit and other
potential changes to the trading environment.
– Continued focus on non-EU markets helps reduce risk for
the Group in the event of unexpected difficulties arising to
trade between UK and EU.
– Consultation with legal experts to assess specific areas of
Brexit risk and develop mitigation plans accordingly.
COVID-19
pandemic
creates strategic,
financial and/or
operational
uncertainty
COVID-19 has created a significant downturn in
the initiation of new clinical trials (and
interruption and delays to existing clinical trials).
This is expected to create short-term growth
headwinds and create a temporary reduction in
demand for the Group’s services.
– The Group has worked closely with clients to support
adjustments required to their trials due to COVID-19.
– The Group has been able to leverage its strong order
book and balance sheet position to continue its
investment plans.
– The Group has successfully migrated and equipped all
The uncertainty over the duration of the
COVID-19 pandemic may disrupt the Group’s
strategic plans.
COVID-19 has required employees to work
remotely which may risk an impact on productivity.
staff to working remotely effectively.
– Detailed and regular forecasting and close management of
expenditure have given the Group confidence in its ability
to manage the COVID-19 impact.
30
No significant impact is
anticipated at the current
time.
The Group’s 2021 revenue
growth levels are expected
to be more muted than in
the current year because of
COVID-19.
The actions of the Group
mean it is confident to
invest to support the
expected rapid initiation in
new trials once the
pandemic abates.
IXICO plcAnnual Report & Accounts 2020 Operational risks
Principal Risks
Risk Context
Mitigation
Change in the Year
Failure of IT
infrastructure
A significant failure of IT infrastructure, or a
physical disaster (such as fire or flood) at the
Group’s IT hosting centre, might disrupt the
Group’s operations.
– Investment in IT infrastructure, including use of cloud
services, implementation of new and upgraded systems
and equipment has mitigated the risk of prolonged down
time as a result of hardware failure.
The Group is
reliant on key
individuals to
support its
operational and
service delivery
A cyber-attack
results in a
breach of the
Group’s IT
systems
As the Group scales, servicing an increased
number of clients and their projects, so the
Group risks overreliance on key individuals.
Any successful cyber-attack may create
operational (and potentially financial) risks and
may have a significant reputational impact for
the Group.
– The implementation of a full disaster recovery
infrastructure is underway and will be complete in
early 2021.
– The Group has increased its headcount by more than 30%
during the year. This gives the Group access to both new
skills and augmented existing skill sets.
– The Group is investing in a new image capture and analysis
platform which will reduce the reliance on key individuals
and will launch during 2021.
– Strengthened levels of control exist over the Group’s IT
infrastructure, including ongoing investments in improved
security, ‘TrialTracker’ platform enhancements, upgraded
firewalls and training for all staff provided on data security
and standard controls such as password protection
and policies.
– The Group is investing in a full upgrade to its image data
capture and analysis platform. This will be completed in
2021 and will further enhance the security of the
Group’s systems.
– The Group has submitted its IT infrastructure to
independent penetration tests as part of prospective client
audits and received strong security scores.
Likelihood reduced due to
improved infrastructure
and controls implemented
throughout 2020 and
planned for 2021.
The risk of overreliance on
several key individuals has
been reduced.
This principal risk remains
whilst the new image
capture and analysis
platform is being
developed.
Likelihood reduced as
improved controls and
infrastructure
implemented.
Roll out of new a cloud
based imaging capture
and analysis platform in
2021 will further reduce
this risk area.
31
Strategic reportGovernanceFinancial statementsIXICO plcAnnual Report & Accounts 2020Financial risksPrincipal RisksRisk ContextMitigationChange in the YearEarly termination of a client’s clinical trial The Group’s client contracts bear a risk of early termination in the event of: –an interim data review demonstrating no material benefit; or –a serious adverse event. –Commercial contracts can include up-front payment, close-out cost recovery and termination notice clauses. –Material contracts are late-phase or open label studies meaning they are less likely to have an early termination event than earlier phase studies.No material change in risk compared to prior year.Loss of a key commercial relationship with a clientThe Group has material contracts with a single client. There is therefore a risk that, if that client terminated its relationship with the Group, there would be a significant impact on the Group’s short and/or medium-term revenue expectations. –Leadership monitors service levels across projects and has dedicated additional resources to supporting its largest client. The strengthening of the Group’s relationship with this client will reduce the likelihood of relationship damage or loss. –Further development of the sales pipeline, via the appointment of additional business development resources, is targeted at new client acquisition; accelerating the broadening of the client portfolio and reducing the impact of losing a major client.New client contracts were won during the year. In addition to this however, further contracts were also awarded by the Group’s largest client. This has increased the Group’s reliance on its largest client. During 2021, the Group will seek to further diversify its client portfolio by winning a greater number of contracts across a broader range of clients. Strategic report
Principal risks and uncertainties continued
Change key:
Increase
Decrease
No change
32
IXICO plcAnnual Report & Accounts 2020Financial risks continuedPrincipal RisksRisk ContextMitigationChange in the YearFinancial risks are set out in further detail under note 24 to the financial statements and include:Liquidity risksCredit risksCurrency risksTax planning risksThe Group is exposed to financial risks typical of all commercial companies. These include the risks of a cash shortfall, experiencing a significant client payment delay, exposure to a foreign currency rate fluctuation which is against the interests of the Group and/or the Group fails to plan for tax and therefore is exposed to tax liabilities beyond the level necessary. –Standard controls are applied around all of these risks. –The Group has a strong and strengthening cash position and a client portfolio which includes large, well-funded organisations. –Most contracts are denominated in GBP and currency levels are forecast and reviewed monthly. –Tax planning initiatives implemented with support of external tax advisers.Reduced foreign exchange exposure due to a greater proportion of client contracts being denominated in GBP.Well controlled trade receivables position.Cash generative.Review of tax losses conducted during the year.Legal/Compliance & Reputational risksPrincipal RisksRisk ContextMitigationChange in the YearReputational damage due to error or system failure in delivery of analysis servicesIf the Group provided incorrect results in the course of delivering its services to a clinical trial this may impact on the trial and/or patient outcomes and result in reputational damage for the Group. –Operational checks are used to control data error, duplication or transfer issues and to highlight when an analysis fails. –Continued investment in training and automation to scale controls used to identify potential errors. –Significant upgrade to existing data platform is in progress which will further strengthen system controls in place.Improved controls have reduced risk, with further system developments due to be implemented in 2021.Breach of data protection regulationsThe Group captures personal data from clinical trial subjects. As such, it must be appropriately managed according to GDPR or other equivalent data protection regulations. –Data captured from client sites is pseudonymised on receipt into the Group’s ‘TrialTracker’ software. –Controls over the protection of personal data have been implemented. Data outputs to clients and key stakeholders are issued following the application of controls designed to reduce, as far as possible, the likelihood of unintended release. –Data protection legislation requirements (such as GDPR) are integrated within the Group’s processing activities and practices.Likelihood reduced as the Group has implemented further IT infrastructure enhancements and augmented data management policies and training. Failure to comply with the requirements of its VCT/EIS fundingIt was a requirement of the VCT/EIS funding raised by the Group in May 2018 that it be employed within a period of 2 years. Failure to do so would result in the VCT/EIS investors losing some of the tax benefits associated with their investment. –The Board and Senior Leadership Team regularly reviewed the deployment of funds. –Detailed plans, budgets and forecasts were used to guide the employment of funds. –The Group engaged external expertise to review investments made during the course of the 2-year investment period to ensure compliance with VCT/EIS funding obligations.Risk mitigated with funds employed as at May 2020. Pillars of strength
for continued growth
01
A growing portfolio of
innovative AI
applications for clinical
research
Our portfolio offers a broad suite
of validated IXICO AI technology
to objectively measure specific biomarkers
in many therapeutic areas being targeted
by biopharma R&D programmes in
neuroscience.
03
Scientific and
technological advances
within neuroscience
Scientific understanding of the causes and
progression of neurological disease is
improving. Developments in brain image
analysis, genomics and other ‘omic’
evaluations, alongside longitudinal studies
of disease progression combined with
rapidly improving infrastructure to manage
and interrogate ‘big data’ are identifying
new approaches to neurological drug
discovery and development not previously
possible.
An attractive market
02
An aging population, increasing global
healthcare costs of treating and
supporting those suffering neurological
diseases and a regulatory environment
supportive of drugs showing even
relatively modest efficacy, provides a
compelling investment thesis for the
biopharmaceutical industry.
A Group orientated to
invest and grow
04
We are a proven, trusted partner with
robust and regulatory-compliant
operations, delivering highly innovative
data analyses across all phases of clinical
trials, in an expanding range of therapeutic
areas. 4 years of rapid growth, clear
visibility of future revenues and a strong,
debt free, balance sheet provide IXICO
with a strong financial position from which
to invest to grow.
The Strategic Report was approved by the Board on 1 December 2020 and signed by order of the Board by
Giulio Cerroni
Chief Executive Officer
1 December 2020
33
Strategic reportGovernanceFinancial statementsIXICO plcAnnual Report & Accounts 2020 Governance
Board of Directors
Balancing the skills, experience and knowledge
required to achieve our strategic goals.
Charles Spicer
Non-Executive Chairman
Giulio Cerroni
Chief Executive Officer
Grant Nash
Chief Financial Officer
and Company Secretary
Charles is an experienced Director of, and
adviser to, public and private companies
primarily in the medtech and life sciences
sectors. He is Non-Executive Chairman of
Creo Medical Group plc and M J Hudson
Group plc and chairs the UK Department
of Health Invention for Innovation Funding
Panel.
Giulio has over 35 years of experience in
the life sciences sector and a track record
of growing business operations in Europe,
the US and Asia. Prior to IXICO, Giulio held
global leadership roles at Thermo Fisher
Scientific, Inc. and LGC Limited, where he
transformed the scale of LGC’s Genomics
division, completing 3 acquisitions in
under 18 months. Giulio was a member of
the executive leadership team responsible
for the successful sale of LGC Limited to
global investment firm, KKR & Co. Inc.
Grant has worked in the life sciences
sector for over 15 years. In his Executive
Director role, Grant leads the Group’s
Finance, Legal, HR, IT and Quality
functions. Grant joined IXICO from UK
Biobank, an international health research
data resource, where he had been Finance
Director since 2014. Previous to this he
was SVP Finance at Evotec, an early stage
drug discovery CRO. Grant is a member of
the Share Transaction Committee and also
acts as Secretary to the Board and its
subcommittees.
Appointment to Board
October 2013
Appointment to Board
February 2017
Appointment to Board
August 2019
Committee membership
Committee membership
Committee membership
—
—
S
34
IXICO plcAnnual Report & Accounts 2020 Mark Warne
Non-Executive Director
and Senior Independent Director
John Bradshaw
Non-Executive Director
Mark is Chief Executive Officer of
DeepMatter Group plc and is a
Non-Executive Director of Open Orphan
plc. He is widely recognised in the UK and
international life sciences sector, having
spent almost 10 years at IP Group Plc,
a leading intellectual property
commercialisation company, where he
led the Healthcare team. Mark is Senior
Independent Director and chairs the
Remuneration Committee and Share
Transaction Committee and is also a
member of the Audit Committee.
John is a chartered accountant with more
than 20 years’ experience as a Chief
Financial Officer with venture-capital-
backed and listed companies. He is the
Chief Financial Officer of Syncona
Investment Management Limited, the
Investment Manager of Syncona Limited.
He is a Non-Executive Director and Audit
Committee chair of Creo Medical Group
plc. John chairs the Audit Committee and
is a member of the Remuneration
Committee.
Appointment to Board
September 2016
Appointment to Board
October 2013
Committee membership
Committee membership
R
A
S
R
A
Committee membership
R
A
S
Remuneration Committee
Audit Committee
Share Transaction Committee
—
None
Denotes Committee Chair
35
IXICO plcAnnual Report & Accounts 2020GovernanceStrategic reportFinancial statements Governance
Directors’ Report
for the year ended 30 September 2020
The Board of Directors of IXICO plc (registered in England and Wales: 03131723) presents its report together with the audited
consolidated Group and Company financial statements for the year ended 30 September 2020.
Principal activities
The Group provides specialist data analytics services to the global biopharmaceutical industry. The services include the collection,
analysis, management and reporting on data generated in the course of a clinical study. The outputs from the data analysis are used to
improve patient selection, monitor drug safety and assess clinical efficacy of the drug under development.
Results and dividends
The Group achieved a net profit after tax of £1.0 million for the year (2019: £0.4 million).
The Board of Directors does not recommend the payment of a dividend.
Financial risk management
The financial risk management and objectives of the Group are set out in note 24 of the consolidated financial statements. Specific
financial risks are set out on pages 31 and 32 of the Strategic Report.
Political donations
The Group made no political donations during the period (2019: £nil).
Charitable donations
The Group made charitable donations of £5,000 during the period (2019: £5,000) as part of our corporate social responsibility activities.
Directors
The Directors of the Company, who served during the period and up to the date of this report, unless otherwise indicated, are
as follows:
Director
Capacity
Giulio Cerroni
Grant Nash
Charles Spicer
John Bradshaw
Mark Warne
Chief Executive Officer
Chief Financial Officer
Company Secretary
Non-Executive Chairman
Non-Executive Director
Non-Executive and Senior Independent Director
Biographical details of IXICO plc’s Directors are shown on pages 34 and 35.
Appointed date
6 February 2017
21 August 2019
31 May 2019
14 October 2013
14 October 2013
16 September 2016
Directors’ remuneration and share options
Details of the Directors’ remuneration and share options are set out in the Directors’ Remuneration Report on pages 39 to 41.
Re-election of Directors
At the 2020 AGM, in accordance with the Company’s Articles of Association, Giulio Cerroni and Grant Nash were reappointed as
Directors. At the 2021 AGM, in accordance with the Company’s Articles of Association, John Bradshaw and Mark Warne will retire.
Being eligible, and with the Board’s recommendation, they will offer themselves for re-election.
In accordance with section 992 of the Companies Act 2006, the Directors disclose that the rules regarding the appointment and
replacement of Directors are contained in the Company’s Articles of Association, which may be amended with shareholder approval
in accordance with relevant legislation. The powers of the Directors are contained in the Company’s Articles of Association or in
accordance with the provisions of the Companies Act 2006. The Companies Act 2006 provides that Directors may issue and buy back
the Company’s shares on behalf of the Company, subject to authority being given to the Directors by shareholders in a general meeting.
No authority to buy back the Company’s ordinary shares of 1 pence has been sought.
36
IXICO plcAnnual Report & Accounts 2020 Directors’ interests
At 25 November 2020, the table below sets out the interests in the Company’s shares of Directors who served during the period and
their connected persons:
Director
Giulio Cerroni
Grant Nash
Charles Spicer
John Bradshaw
Mark Warne
Ordinary shares of
1 pence
2020
Ordinary shares of
1 pence
2019
109,600
–
333,196
35,500
5,400
84,800
–
333,196
35,500
5,400
During the year ended 30 September 2020, the Directors’ interests in the Company’s shares changed as a result of the transacting of
shares in the market as approved under the Group’s share trading policies.
The Directors’ interests are beneficially held by each Director unless otherwise stated. Apart from these interests and share options, no
Director had any further interest in the period in the share capital of the Company or other Group companies. There have been no
changes in the Directors’ interests in the share capital of the Group since the year end.
Directors’ indemnities
The Group has in place for the whole of the period, and at the date of signing the consolidated financial statements, qualifying
third-party indemnity insurance for all Directors and officers.
Going concern
The ongoing COVID-19 pandemic is causing significant uncertainty across global markets for the short and medium term. During 2020,
the Group reacted quickly to this by preparing a series of financial scenario forecasts based on discussions with clients over the likely
impact of the pandemic on their clinical trials. In parallel the Group moved rapidly to a fully remote model, which included providing
additional equipment to employees enabling all to work from home effectively and allowing the Group to trade uninterrupted
throughout the year. Whilst there was a notable decrease in new trials starting, trials already ongoing saw only a modest reduction in
patient visits, limiting the impact on the Group to date. With the delay in new trials starting, the impact of COVID-19 is expected to have
more of an impact in the next financial year compared to 2020.
In assessing going concern, management has prepared detailed sensitised forecasts which consider different scenarios throughout
the course of the next 12 months. These include the risk to current projects and expected future sales pipelines, the ability for patients
to attend imaging centres (due to global COVID-19 lockdown restrictions) and potential delays in new trial start-up timelines. The
Directors have considered these forecasts, alongside the Group’s strong balance sheet and cash balance as well as the ability for the
Group to mitigate costs if necessary. After due consideration of these forecasts, the Directors concluded with confidence that the
Group has adequate financial resources to continue in operation for the foreseeable future.
Structure of the Company’s capital
The Company’s share capital comprises a single class of ordinary shares of 1 pence each, each carrying 1 voting right and all ranking
equally with each other. At 30 September 2020, 47,091,292 (2019: 46,902,294) shares were allotted and fully paid. Note 22 of the
consolidated financial statements provides full details of movements in the Company’s share capital.
Holders of ordinary shares are entitled to receive all shareholder documents, to attend, speak and exercise voting rights, either in
person or by proxy, on resolutions proposed at general meetings and participate in any distribution of income or capital. There are no
restrictions on the transfer of shares in the Company or in respect of voting rights attached to the shares. None of the shares carries
any special rights with regard to the control of the Company.
37
IXICO plcAnnual Report & Accounts 2020GovernanceStrategic reportFinancial statements Governance
Directors’ Report continued
for the year ended 30 September 2020
Participants in employee share option schemes have no voting or other rights in respect of the shares subject to their awards until the
options are exercised, at which time the shares rank pari passu in all respects with shares already in issue. Details of employee share
option schemes are set out in note 23 of the consolidated financial statements.
There are no restrictions on the transfer of securities in the Group.
Authority to issue shares
At the general meeting held on 17 January 2020, shareholders authorised the Directors to allot relevant securities up to an aggregate
nominal value of £156,341 (representing 33.33% of the issued share capital) and to allot equity securities up to an aggregate nominal
value of £312,682 in connection with a fully pre-emptive rights issue (representing 66.67% of the issued share capital) in accordance
with industry guidance (Investment Association and PLSA), and to allot for cash equity securities having a nominal value not exceeding
in aggregate £46,902 (representing 10.0% of the issued share capital).
These authorities expire at the close of business on 16 January 2021, or if earlier, the conclusion of the next AGM. At the 2021 AGM,
similar authorities will be sought from shareholders, and the Company does not intend to seek authority for a fully pre-emptive
rights issue.
Substantial shareholdings
At 25 November 2020, the Company had received notification from the following financial institutions of their and their clients’ interest
in the following disclosable holdings, which represent 3% or more of the voting rights of the issued share capital of the Company.
Shareholders having a major interest
BGF Investment Management
Octopus Investments
Gresham House Asset Management
Amati Global Investors
Canaccord Genuity Group Inc.
Number of
shares held
9,354,000
6,408,400
5,357,100
5,031,300
4,683,071
% of issued
shares
19.86
13.61
11.38
10.68
9.94
AGM
The notice convening and giving details of the 2021 AGM will be posted to shareholders on or before 18 December 2020. The 2021
AGM of the Company will be held at the offices of IXICO plc, 4th Floor, Griffin Court, 15 Long Lane, London, EC1A 9PN, along with an
interactive live stream being made available to all shareholders on Thursday 21 January 2021.
Disclosure of information to auditors
The Directors confirm that:
– so far as each Director is aware, there is no relevant audit information (as defined in the Companies Act 2006) of which the Group’s
auditors are unaware; and
– the Directors have taken all steps that they ought to have taken as Directors in order to make themselves aware of any relevant audit
information and to establish that the Group’s auditors are aware of that information.
This confirmation is given and should be interpreted in accordance with the provisions of section 418 of the Companies Act 2006.
On behalf of the Board of Directors
Charles Spicer
Non-Executive Chairman
1 December 2020
38
IXICO plcAnnual Report & Accounts 2020 Governance
Directors’ Remuneration Report
for the year ended 30 September 2020
Remuneration policy for Executive Directors
The remuneration policy and practice are intended to align the remuneration of Executive Directors with the Group’s business model
and achievement of the Group’s strategy. The policy seeks to strike an appropriate balance between a base salary and a discretionary,
performance-related element.
Base salary
The Remuneration Committee approves the base salary of Executive Directors, having regard to the individual role and responsibilities.
Pension contribution
The Group operates a money purchase Group personal pension plan for all employees. The Group contributes to the scheme 8% of
base salary in respect of the Chief Financial Officer. The Chief Executive Officer receives a payment of 8% of base salary in lieu of
pension contributions.
Performance-related bonus
The Group operates a discretionary bonus scheme that takes account of the underlying financial performance of the Group, meeting
KPIs and achieving strategic objectives. All performance targets are set by the Remuneration Committee. The award of bonus
payments to employees, including Executive Directors, are subject to the Remuneration Committee’s review and approval. For the year
to 30 September 2020, the Remuneration Committee determined that bonus related KPIs and strategic objectives were largely met,
resulting in the majority of bonus entitlements being achieved.
Bonus payments are not pensionable.
IXICO EMI Share Option Plan 2014
Share options granted to Executive Directors are in accordance with the rules of the IXICO EMI Share Option Plan 2014. The share
options include performance-related vesting criteria related to the achievement of strategic goals or a significant corporate
development transaction. The exercise of share options is subject to the Remuneration Committee’s review, and approval, of whether
such performance targets have been achieved.
Long-Term Incentive Plan
The Group operates a Long-Term Incentive Plan (‘LTIP’) which is subject to the rules of the IXICO EMI Share Option Plan 2014. The LTIP
is distinguished from other awards under the EMI Share Option Plan 2014 only by the characteristic of issuing awards with an exercise
price of £0.01.
Share dilution limits
The aggregate number of new ordinary shares which may be issued on the realisation of the EMI Share Option Plan 2014 (including the
LTIP plan) in any 10-year period may not exceed 12.5% of the number of ordinary shares in issue.
At 30 September 2020 and assuming satisfaction of all performance conditions, the total number of the Company’s shares issuable
under awards made under the EMI Share Option Plan 2014 and (including the LTIP and any awards already exercised) was 4,438,512 or
9.4% of the number of ordinary shares in issue at that date.
Other benefits
The Executive Directors are part of a Group Life Assurance scheme that is maintained and paid by the Group for all employees.
Private medical insurance and income protection insurance are not provided.
Executive Directors’ service contracts and termination provisions
The service contracts of Executive Directors are approved by the Remuneration Committee and then the Board. The service contracts
may be terminated by either party giving notice to the other as set out below:
Giulio Cerroni
Grant Nash
Date of contract
Notice period
6 February 2017
29 April 2019
12 months
6 months
39
IXICO plcAnnual Report & Accounts 2020GovernanceStrategic reportFinancial statements Governance
Directors’ Remuneration Report continued
for the year ended 30 September 2020
Non-Executive Directors
The Non-Executive Directors have letters of appointment with the Company. Fees paid to the Non-Executive Directors are determined
by the Board, giving due consideration to market rates and comparative businesses. The Non-Executive Directors do not receive
pension contributions and do not participate in any discretionary bonus or Company share option schemes. Current contracts together
with notice periods are as follows:
Charles Spicer (as Chairman)
John Bradshaw
Mark Warne
Directors’ remuneration
Executive
Giulio Cerroni
Grant Nash
Susan Lowther
Non-Executive
Charles Spicer
Tim Sharpington
John Bradshaw
Mark Warne
Date of contract
Notice period
16 September 2016
14 October 2013
16 September 2016
3 months
3 months
3 months
Year ended 30 September 2020
Year ended 30 September 2019
Salary
and fees
£
279,239
149,300
–
428,539
44,100
–
23,625
23,400
91,125
Bonus
£
Pension
contributions
£
258,421
38,196
–
296,617
–
11,944
–
11,944
–
–
–
–
–
–
–
–
–
–
Salary
and fees
£
215,865
59,410
108,510
383,785
44,100
27,563
23,625
18,900
114,188
497,973
Bonus
£
Pension
contributions
£
330,300
47,142
–
377,442
–
–
–
–
–
–
4,753
2,774
7,527
–
–
–
–
–
377,442
7,527
Aggregate emoluments
519,664
296,617
11,944
Susan Lowther and Tim Sharpington ceased being directors of the Company on 11 December 2018 and 30 September 2019 respectively.
No Directors waived emoluments in the year ended 30 September 2020 (2019: £nil).
40
IXICO plcAnnual Report & Accounts 2020 Directors’ options
Details of options over shares in the Company held by Directors who served during the period, all of which have been granted at no
cost to the Directors, are set out below:
Number of options
Granted
during
the year
Exercised
during
the year
Lapsed
during
the year
At
30 September
2020
Giulio Cerroni
Grant Nash
At
30 September
2019
676,582
584,525
584,525
–
–
1,845,632
–
–
–
Susan Lowther
181,852
–
–
–
245,000
245,000
490,000
300,000
300,000
600,000
–
Total
2,027,484
1,090,000
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
676,582
584,525
584,525
245,000
245,000
2,335,632
300,000
300,000
600,000
181,852
3,117,484
Exercise
price
£0.365
£0.010
£0.010
£0.010
£0.010
Date of
grant
Expiry
date
7-Feb-17
4-Jun-18
4-Jun-18
5-Dec-19
5-Dec-19
6-Feb-20
3-Jun-21
3-Jun-22
4-Dec-22
4-Dec-23
£0.010
£0.010
5-Dec-19
5-Dec-19
4-Dec-22
4-Dec-23
£0.010
4-Jun-18
3-Jun-21
The share options granted to Giulio Cerroni and Grant Nash in the year were granted in accordance with the Company’s 2014 Option
Scheme Plan.
During the year ended 30 September 2020, the Company’s share price ranged from £0.42 to £0.98.
Further details of the share option schemes are set out in note 23 of the consolidated financial statements.
41
IXICO plcAnnual Report & Accounts 2020GovernanceStrategic reportFinancial statements Governance
Corporate Governance Report
The Board has adopted, and complies with, the Quoted Companies Alliance (‘QCA’) Corporate Governance Code (‘Code’) and has
published a statement on the Group website that sets out, in broad terms, how the Group complies with the Code at the date of this
report. The Board provides annual updates about compliance with the Code. The Board is responsible for ensuring that IXICO is
managed for the long-term benefit of all shareholders, through effective and efficient decision-making. Corporate governance is an
important part of the Board’s role by providing oversight and guidance to help manage risk and build long-term value.
The Code comprises 10 principles, with which companies undertake to comply as part of their corporate governance arrangements.
The Board conducts itself in a manner which places IXICO’s values and the principles of the Code at the core of the Group’s culture.
A summary of how the Group complies with these principles is outlined below with further detail being available on the Group’s website
(https://ixico.com/investors/governance/oversight/).
Governance Principle
Group Approach
Further Reading
Deliver value in a manner aligned to shareholder and wider stakeholder aspirations
1: Establish a strategy and
business model which
promotes long-term value
for shareholders
The Group delivers insights to biopharmaceutical companies developing drugs to address
neurological disease. To achieve our business goals, the Group is accelerating growth and has
grown profitability in the financial year to 30 September 2020 by:
Our 5-point growth plan
is detailed on pages 10
and 11.
− building scale and market presence for our technology solutions; and
− developing and commercialising new products and services.
These activities promote and are delivering long-term value for shareholders.
Our approach to innovation
and recent product
launches are described
on pages 12 and 13.
2: Seek to understand and
meet shareholder needs
and expectations
The Board is committed to encouraging open communication between itself and shareholders.
The Chief Executive Officer and Chief Financial Officer arrange to meet with major
shareholders at least twice a year to update them on strategy, progress against this strategy
and obtain feedback. The Chairman also makes himself available for discussions with major
shareholders as and when appropriate.
Further, should the Board consider any significant divergence from strategy it will seek
feedback from major shareholders as part of its deliberations.
The Board uses publications on its website and its Annual Report to keep all shareholders
informed of its progress. It uses the AGM to invite feedback from any shareholder.
The CEO and CFO are responsible for investor relations and any feedback received from
shareholders is communicated to the wider Board.
3: Take into account wider
stakeholder and social
responsibilities and their
implications for long-term
success
The Group is highly conscious of the requirements of its wider stakeholders in supporting its
long-term success. It views its wider stakeholders as its clients, suppliers, employees and the
patients participating in the clinical trials it serves. The Board has implemented approaches to
support the requirements of each group and, where it identifies, or is notified of, any risks or
concerns in respect of any of these stakeholder groups, it puts in place actions to address these.
4: Embed effective risk
management, considering
both opportunities and
threats, throughout the
organisation
The Board has ultimate responsibility for the Group’s system of risk management and internal
control and for reviewing its effectiveness.
The Board instils control to the Group’s operations by overseeing the following:
− competent and prudent management;
− sound planning;
− adequate systems of control, including regular review of risk;
− adequate and accurate accounting records; and
− compliance with statutory and regulatory obligations.
Our stakeholders are
described in our business
model on pages 4 and 5
and in our stakeholder
engagement on pages 20
to 23.
The Risk Management
Report is provided on
page 30.
42
IXICO plcAnnual Report & Accounts 2020 Governance Principle
Group Approach
Further Reading
Maintain a strong and dynamic management framework that places value on developing the Group in an ethical manner
More information on Board
membership is provided on
pages 34 and 35.
5: Maintain the Board as a
well-functioning, balanced
team led by the Chair
The Board comprises the Non-Executive Chairman, two Executive Directors and two
Non-Executive Directors, one of whom acts as Senior Independent Director.
The Board has an appropriate balance between independence and knowledge of the Group
and its target markets which allows it to discharge its duties and responsibilities effectively.
The Directors use their independent judgement and challenge matters affecting the business
whether strategic or operational. The Non-Executive Directors are in regular contact with the
Executive Directors and the Chairman has regular one-to-one meetings with the Chief
Executive Officer. The Board has access to independent external advisers to support it in its
decisions, where additional skills or expertise is deemed necessary.
The Board has procedures in place to deal with a situation in which a Director has, or may
have, a conflict of interest. The Board is aware of other commitments and interests as they are
disclosed by each Board member.
The Board meets formally (either face-to-face or via video conference) not fewer than four
times per year in addition to the annual strategy day.
The Board is also supported by three subcommittees: the Audit Committee, the Remuneration
Committee and the Share Transaction Committee. The Board and its subcommittees all
operate against terms of reference which are summarised on the Company website
(https://ixico.com/investors/governance/).
6: Ensure that between
them the Directors have
the necessary up-to-date
experience, skills and
capabilities
The Board has an effective and appropriate balance of skills and experience and is mindful of
the need to continuously review the needs of the business to ensure that this remains true, so
that the Group can drive performance as well as comply with regulations.
The Group’s Articles of Association require that all Directors must stand for re-election every
three years and that any new Directors appointed during the year must stand for election at the
AGM following their appointment.
Further details of the
Board’s skills and
experience can be found
on pages 34 and 35.
7: Evaluate all elements of
Board performance based
on clear and relevant
objectives, seeking
continuous improvement
8: Promote a corporate
culture that is based on
ethical values and
behaviours
The Board undertakes self-reviews from time to time in order to assess its performance. The
Chairman provides leadership to the Board and assesses the individual Directors to ensure that
their contribution is relevant and effective and that they are committed members of the Board.
The Group operates in a highly regulated environment in accordance with an integrated
Management System (including ISO 13485:2016) which is subject to third-party audit. The
Group is focused on a therapeutic area which has a high unmet medical need and our
employees are motivated to support our clients in their quest to develop and provide safe,
effective treatments for people living with neurological diseases.
The Group employs a diverse workforce and embraces a culture where employees are treated
equitably within an environment of mutual respect and understanding.
The eradication of fraud and bribery in the way in which the Group operates is also of great
importance to securing the trust and confidence of its clients and partners. Therefore, the
Group adopts a zero-tolerance position to fraud and bribery and is committed to pursuing this
approach throughout its operational practices.
The Group’s values are
described on page 25.
9: Maintain governance
structures and processes
that are fit for purpose and
support good decision-
making by the Board
The Board is collectively responsible for the long-term success of the Group. Its principal
function is to provide the Group with a framework of prudent and effective controls, which
enables risk to be assessed and managed and its strategy executed. Further details as to how the
governance processes are structured to achieve this are outlined within this Governance Report.
The Group’s risk
management approach
is described on page 30.
Build trust based on open communication with stakeholders
10: Communicate how the
Group is governed and is
performing by maintaining
a dialogue with
shareholders and other
relevant stakeholders
The Group communicates with shareholders (and other stakeholders) via its website, its
Annual Report and the AGM as well as via issuing RNS announcements and presenting to
major shareholders and analysts.
This Governance Report, alongside the wider Strategic and Directors’ Reports are designed to
provide full and relevant updates on how the Group is governed and how it is performing.
These are drafted with both shareholders and the wider stakeholder community in mind.
Strategic Report pages
1 to 33.
Stakeholder engagement
on pages 20 to 23.
Directors’ Report pages
36 to 38.
Financial Review pages
28 and 29.
43
IXICO plcAnnual Report & Accounts 2020GovernanceStrategic reportFinancial statements Governance
Corporate Governance Report continued
The Board and its subcommittees
The Board meets at least 4 times per year in accordance with a pre-determined meeting calendar. The Board is supported by 3
subcommittees: the Audit Committee, the Remuneration Committee and the Share Transaction Committee. The subcommittees discharge
responsibilities on behalf of the Board and are entitled to such internal or external advice as is required to allow them to fulfil their duties.
The table below shows the membership of the Board and each subcommittee as at the end of 30 September 2020:
Board
Audit
Committee
Remuneration
Committee
Share Transaction
Committee
Charles Spicer (Non-Executive Chairman)
Giulio Cerroni (Chief Executive Officer)
Grant Nash (Chief Financial Officer & Company Secretary) Member & Secretary
Mark Warne (Senior Independent Non-Executive Director) Member
Member
John Bradshaw (Independent Non-Executive Director)
Chairman
Member
–
–
Secretary
Member
Chairman Member
–
–
Secretary Member & Secretary
Chairman
Chairman
–
–
–
The Board and its subcommittees receive appropriate and timely information prior to each meeting including a formal agenda. Any
Director may challenge Group proposals. Decisions are taken democratically after appropriate discussion. Specific actions arising from
Board meetings are agreed by the Board or relevant subcommittee and are then followed up by the Executive Directors.
The Board and subcommittees all operate against terms of reference which are summarised on the Group website
(https://ixico.com/investors/governance/).
Audit Committee
The Audit Committee is chaired by John Bradshaw. Mark Warne is a member of the Committee. The terms of reference of the Audit
Committee include the following responsibilities:
– monitor the integrity of the Group’s financial statements and application of accounting policies;
– review the effectiveness of the Group’s internal control and risk management systems; and
– oversight of the Group’s external auditors, including assessment of their independence from the Group.
Audit Committee meetings are usually held twice per financial year.
During the year, the Audit Committee reviewed other services provided by the Group's auditor and took the decision to move tax
advisory and compliance services to another firm. This means the Group auditor now only provides audit services to the Group.
Remuneration Committee
The Remuneration Committee is chaired by Mark Warne. John Bradshaw is a member of the Committee. The terms of reference of the
Remuneration Committee include the following responsibilities:
– determine and agree with the Board the framework or broad policy for the remuneration of the Executive Directors and other such
members of the executive management as it is designated to consider;
– approve the design of, and determine targets for, any performance-related pay schemes and approve the total annual payments
made under such schemes;
– approve all long-term incentive scheme structures and option schemes;
– approve all option grants for ratification by the Board; and
– within the terms of the agreed policy, determine the total individual remuneration package of each Executive Director including,
where appropriate, bonuses, incentive payments and share options.
Remuneration Committee meetings are usually held twice per financial year.
Share Transaction Committee
The Share Transaction Committee is chaired by Mark Warne. Grant Nash is a member of the Committee. The terms of reference of the
Share Transaction Committee include the following responsibilities:
– review, consider and, where deemed appropriate, approve the exercise of share options by option holders of the Group and the
issuance of shares in connection with such exercises; and
– review, consider and approve the request to transact shares by employees or other individuals closely related to the Group (and all ancillary
matters) in accordance with the relevant policies of the Group, applicable law and any directions of the Group’s nominated adviser.
The Share Transaction Committee meetings are held on an ad hoc basis as required.
44
IXICO plcAnnual Report & Accounts 2020 Governance
Statement of Directors’ Responsibilities
The Directors are responsible for preparing the Annual Report and the financial statements in accordance with applicable law
and regulations.
Company law requires the Directors to prepare financial statements for each financial year. Under that law the Directors have elected to
prepare the Group and Parent Company financial statements in accordance with International Financial Reporting Standards (‘IFRS’) as
adopted by the European Union (‘EU’). Under Company Law the Directors must not approve the financial statements unless they are
satisfied that they give a true and fair view of the state of affairs and profit or loss of the Company and Group for that period. In preparing
these financial statements, the Directors are required to:
– select suitable accounting policies and then apply them consistently;
– make judgements and accounting estimates that are reasonable and prudent;
– state whether applicable IFRS as adopted by the EU have been followed, subject to any material departures disclosed and explained
in the financial statements; and
– prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Group will continue in
business, in which case there should be supporting assumptions or qualifications as necessary.
The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Group’s transactions
and disclose with reasonable accuracy at any time the financial position of the Company and the Group and enable them to ensure that
the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the Company
and the Group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the Group’s
website. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from
legislation in other jurisdictions.
By order of the Board of Directors
Charles Spicer
Non-Executive Chairman
1 December 2020
45
IXICO plcAnnual Report & Accounts 2020GovernanceStrategic reportFinancial statements Independent Auditor’s Report to the Members of IXICO plc
Financial statements
46
IXICO plcAnnual Report & Accounts 2020OpinionOur opinion on the financial statements is unmodifiedWe have audited the financial statements of IXICO plc (the ‘parent company’) and its subsidiaries (the ‘group’) for the year ended 30 September 2020 which comprise the Consolidated Statement of Comprehensive Income, Consolidated Statement of Financial Position, Company Statement of Financial Position, Consolidated Statement of Changes in Equity, Company Statement of Changes in Equity, Consolidated and Company Statements 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 their preparation is applicable law and International Financial Reporting Standards (IFRSs) as adopted by the European Union and, as regards the parent company financial statements, as applied in accordance with the provisions of the Companies Act 2006.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 30 September 2020 and of the group’s profit for the year then ended; –the group financial statements have been properly prepared in accordance with IFRSs as adopted by the European Union; –the parent company financial statements have been properly prepared in accordance with IFRSs as adopted by the European Union and as applied in accordance with the provisions of the Companies Act 2006; and –the financial statements have been prepared in accordance with the requirements of the Companies Act 2006.Basis for opinionWe 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.The impact of macro-economic uncertainties on our auditOur audit of the financial statements requires us to obtain an understanding of all relevant uncertainties, including those arising as a consequence of the effects of macro-economic uncertainties such as COVID-19 and Brexit. All audits assess and challenge the reasonableness of estimates made by the directors and the related disclosures and the appropriateness of the going concern basis of preparation of the financial statements. All of these depend on assessments of the future economic environment and the group’s and the parent company’s future prospects and performance.COVID-19 and Brexit are amongst the most significant economic events currently faced by the UK, and at the date of this report their effects are subject to unprecedented levels of uncertainty, with the full range of possible outcomes and their impacts unknown. We applied a standardised firm-wide approach in response to these uncertainties when assessing the group’s and the parent company’s future prospects and performance. However, no audit should be expected to predict the unknowable factors or all possible future implications for a group or a parent company associated with these particular events.Conclusions relating to going concernWe have nothing to report in respect of the following matters in relation to which the ISAs (UK) require us to report to you where: –the directors’ use of the going concern basis of accounting in the preparation of the financial statements is not appropriate; or –the directors have not disclosed in the financial statements any identified material uncertainties that may cast significant doubt about the group’s or the parent company’s ability to continue to adopt the going concern basis of accounting for a period of at least twelve months from the date when the financial statements are authorised for issue.In our evaluation of the directors’ conclusions, we considered the risks associated with the group’s and the parent company’s business, including effects arising from macro-economic uncertainties such as COVID-19 and Brexit, and analysed how those risks might affect the group’s and the parent company’s financial resources or ability to continue operations over the period of at least twelve months from the date when the financial statements are authorised for issue. In accordance with the above, we have nothing to report in these respects. However, as we cannot predict all future events or conditions and as subsequent events may result in outcomes that are inconsistent with judgements that were reasonable at the time they were made, the absence of reference to a material uncertainty in this auditor’s report is not a guarantee that the group or the parent company will continue in operation. 47
IXICO plcAnnual Report & Accounts 2020Financial statementsStrategic reportGovernanceOverview of our audit approach –Overall materiality: £191,000 which represents 2% of the group’s revenue; –Key audit matters were identified as revenue recognition and going concern; and –We performed full scope audit procedures on the financial statements of IXICO plc and on the financial information of IXICO Technologies Limited, and specified audit procedures on the financial information of IXICO Technologies Inc. All other group companies are not significant.Key audit mattersKey audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements of the current period and include the most significant assessed risks of material misstatement (whether or not due to fraud) that we identified. These matters included those that had the greatest effect on: the overall audit strategy, the allocation of resources in the audit; and directing the efforts of the engagement team. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.Key Audit Matters – GroupHow the matter was addressed in the audit – GroupRevenue Recognition Under ISA (UK) 240 ‘The Auditor’s Responsibilities Relating to Fraud in an Audit of Financial Statements’, there is a rebuttable presumption that there are risks of fraud in revenue recognition. There are judgements within IFRS 15 ‘Revenue from Contracts with Customers’ that give rise to the risk.The group has one revenue stream: service revenue. Service revenue from many of the group’s contracts comprises multiple performance obligations, which the group denotes as ‘tasks’, including, but not limited to, project and site set-up, project and site management, site training and materials, TrialTracker configuration and access, data reading and analysis, scientific reports, licence revenue, and change orders.Revenue recognition is therefore dependent upon identifying the relevant distinct performance obligation, ensuring the revenue allocated to the performance obligation is based on standalone pricing and ensuring that revenue is appropriately recognised in accordance with the delivery of the performance obligation. During the year, change orders have also been agreed which amount to contract modifications and this also impacts on revenue recognition.We therefore identified revenue recognition as a significant risk, which was the most significant assessed risk of material misstatement.Our audit work included, but was not restricted to: –Completing an evaluation of revenue recognition policies for consistency and compliance with IFRS 15; –Gaining an understanding of the performance and progress of material contracts through discussions with the operational project managers to corroborate that revenue has been recognised as performance obligations have been satisfied; –For a sample of tasks: –Agreeing the planning sheets to contracts, which have been reconciled through to the trial balance; –Corroborating the tasks’ unit price to signed contracts; –Agreeing the number of units to the group’s internal project tracker system; and –Assessing whether the performance obligations of each task are being recognised in accordance with IFRS 15. –Inspecting new contracts awarded in the year and agreeing key details through to the group’s internal project tracker system; –Inspecting contracts signed near the year end to assess whether the revenue has been recognised in the correct period; –Corroborating a sample of accrued and deferred income balances to supporting project planning sheets and considering the revenue recognised on at risk work completed at the year-end; –Reconciling pass-through revenue, which are costs that are passed on directly to the customer, to costs incurred; and –Reperforming calculations of the foreign exchange variances on contracts priced in currencies other than sterling.The group’s accounting policy on revenue, including its recognition, is shown in note 4.1 to the financial statements and related disclosures are included in notes 6 and 7.Key observationsOur audit work did not identify any material misstatements in the revenue recognised in the year or any material instances of revenue not being recognised in accordance with stated accounting policies. Independent Auditor’s Report to the Members of IXICO plc continued
Financial statements
48
IXICO plcAnnual Report & Accounts 2020Key Audit Matters – GroupHow the matter was addressed in the audit – GroupGoing concernAs stated in the ‘The impact of macro-economic uncertainties on our audit’ section of our report, COVID-19 is amongst the most significant economic events currently faced by the UK, and at the date of this report its effects are subject to unprecedented levels of uncertainty. This event could adversely impact the future trading performance of the group and the parent company and as such increases the extent of judgement and estimation uncertainty associated with management’s decision to adopt the going concern basis of accounting in the preparation of the financial statements. As such we identified going concern as a significant risk, which was one of the most significant assessed risks of material misstatement.Our audit work included, but was not restricted to: –Obtaining management’s base case cash flow forecasts covering the period from 1 October 2020 to 31 December 2021, assessing how these cash flow forecasts were compiled and assessing their appropriateness by applying relevant sensitivities to the underlying assumptions, and challenging those assumptions; –Assessing the accuracy of management’s past forecasting by comparing management’s forecasts for last year to the actual results for last year and considering the impact on the base case cash flow forecast; –Obtaining management’s worst-case scenario prepared to assess the potential impact of COVID-19 on the business. We evaluated management’s assumptions regarding the impact of early termination of clinical trials, failure to convert expected bookings to contracted bookings and the impact of COVID-19 on patient enrolment and ongoing image acquisition. We considered whether the assumptions are consistent with our understanding of the business derived from other detailed audit work undertaken; –Assessing the impact of the mitigating factors available to management in respect of the ability to restrict cash impact, including the level of available facilities; and –Assessing the adequacy of related disclosures within the annual report & accounts. The group’s accounting policy and related disclosures on going concern are shown in note 1(d) to the financial statements.Key observationsWe have nothing to report in addition to that stated in the ‘Conclusions relating to going concern’ section of our report.We did not identify any key audit matters relating to the audit of the financial statements of the parent company. Overall materiality – Group
Overall materiality – Parent company
25%
25%
75%
75%
49
IXICO plcAnnual Report & Accounts 2020Financial statementsStrategic reportGovernanceOur application of materialityWe define materiality as the magnitude of misstatement in the financial statements that makes it probable that the economic decisions of a reasonably knowledgeable person would be changed or influenced. We use materiality in determining the nature, timing and extent of our audit work and in evaluating the results of that work.Materiality was determined as follows:Materiality measureGroupParentFinancial statements as a whole£191,000, which is 2% of the group’s revenue. This benchmark is considered the most appropriate because revenue is a key performance indicator used by management and shareholders in assessing the performance of the business.Materiality for the current year is higher than the level that we determined for the year ended 30 September 2019, using the same basis. This reflects the increase in revenue in the current year.£186,000, which is 2% of the parent company’s total assets restricted to its component materiality, which is a percentage of group materiality. This benchmark is considered the most appropriate because the parent company is a holding company for the trading group. Materiality for the current year is higher than the level that we determined for the year ended 30 September 2019 to reflect the increase in the measurement percentage used from 1% last year to 2% this year, and the restriction to a percentage of group materiality, which was higher this year.Performance materiality used to drive the extent of our testing75% of financial statement materiality.75% of financial statement materiality.Specific materialityWe determined a lower level of specific materiality for certain areas such as directors’ remuneration and related party transactions.We determined a lower level of specific materiality for certain areas such as directors’ remuneration and related party transactions.Communication of misstatements to the audit committee£9,600 and misstatements below that threshold that, in our view, warrant reporting on qualitative grounds.£9,300 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 – GroupOverall materiality – Parent company75%25%75%25%Overall materiality – GroupOverall materiality – Parent companyTolerance for potential uncorrected mis-statements Performance materiality Independent Auditor’s Report to the Members of IXICO plc continued
Financial statements
50
IXICO plcAnnual Report & Accounts 2020An overview of the scope of our auditOur audit approach was a risk-based approach founded on a thorough understanding of the group’s business, its environment and risk profile and in particular included: –IXICO plc has centralised processes and controls over the key areas of audit focus. Group management are responsible for all judgemental processes and significant risk areas. All accounting is centralised and we have tailored our audit response accordingly. In assessing the risk of material misstatement to the group financial we considered the transactions undertaken by each entity and therefore where the focus of our audit work was required; –An evaluation by the group audit team of identified components to assess the significance of that component and to determine the planned audit response based on a measure of materiality; –For significant components requiring a full-scope approach, we evaluated the design and implementation of controls over the financial reporting systems identified as part of our risk assessment. We then undertook substantive testing on significant transactions and material account balances; –Full-scope audit procedures were performed on the financial statements of the parent company IXICO plc and the financial information of the trading entity IXICO Technologies Limited, which is the only component which is individually financially significant to the group; –Specified audit procedures were performed on the financial information of IXICO Technologies Inc.; –The total percentage coverage using full-scope audit procedures over the group’s revenue was 100%; –The total percentage coverage using full-scope audit procedures over the group’s total assets was 99.8%; and –Our audit approach in the current year is consistent with the audit approach adopted for the year ended 30 September 2019 being substantive in nature.Other informationThe directors are responsible for the other information. The other information comprises the information included in the annual report & accounts, other than the financial statements and our auditor’s report thereon. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon.In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether there is a material misstatement in the financial statements or a material misstatement of the other information. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.Our opinion on other matters prescribed by the Companies Act 2006 is unmodifiedIn 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. Matters on which we are required to report under the Companies Act 2006In the light of the knowledge and understanding of the group and the parent company and its environment obtained in the course of the audit, we have not identified material misstatements in the strategic report or the directors’ report.Matters on which we are required to report by exceptionWe 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. 51
IXICO plcAnnual Report & Accounts 2020Financial statementsStrategic reportGovernanceResponsibilities of directors for the financial statementsAs explained more fully in the statement of directors’ responsibilities set out on page 45, 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 statementsOur objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council’s website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report.Use of our reportThis report is made solely to the company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company’s members those matters we are required to state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company’s members as a body, for our audit work, for this report, or for the opinions we have formed.Paul NaylorSenior Statutory Auditor for and on behalf of Grant Thornton UK LLPStatutory Auditor, Chartered AccountantsCambridge1 December 2020 Financial statements
Consolidated Statement of Comprehensive Income
for the years ended 30 September 2020 and 30 September 2019
52
IXICO plcAnnual Report & Accounts 2020Note2020£0002019£000Revenue69,5327,561Cost of sales(3,186)(2,619)Gross profit6,3464,942Other income8606588Operating expensesResearch and development expenses(1,309)(986)Sales and marketing expenses(1,579)(1,154)General and administrative expenses(3,208)(3,026)Total operating expenses11(6,096)(5,166)Operating profit856364Finance income202Finance expense(18)–Profit on ordinary activities before taxation858366Taxation credit129466Profit attributable to equity holders for the period952432Other comprehensive expense: Items that will be reclassified subsequently to profit or lossForeign exchange translation differences(1)(1)Total other comprehensive expense(1)(1)Total comprehensive income attributable to equity holders for the period951431Note20202019Profit per share (pence)13Basic profit per share2.020.92Diluted profit per share2.000.92 Consolidated Statement of Financial Position
as at 30 September 2020, 30 September 2019 and 30 September 2018
53
IXICO plcAnnual Report & Accounts 2020Financial statementsStrategic reportGovernanceNote2020£0002019Restated£0002018Restated£000ASSETS Non-current assetsProperty, plant and equipment141,01431677Intangible assets1579629232Total non-current assets1,810608109Current assetsTrade and other receivables172,0822,3792,140Current tax receivables12259450229Cash and cash equivalents7,9457,2647,861Total current assets10,28610,09310,230Total assets12,09610,70110,339LIABILITIES AND EQUITY Non-current liabilitiesTrade and other payables18167––Provisions1990––Lease liabilities 2045––Total non-current liabilities302––Current liabilitiesTrade and other payables182,4072,7823,013Provisions19100––Lease liabilities20168––Total current liabilities2,6752,7823,013Total liabilities2,9772,7823,013EquityOrdinary shares22471469467Share premium2284,49984,43684,389Merger relief reserve221,4801,4801,480Reverse acquisition reserve22(75,308)(75,308)(75,308)Foreign exchange translation reserve22(97)(81)(80)Capital redemption reserve227,4567,4567,456Accumulated losses(9,382)(10,533)(11,078)Total equity9,1197,9197,326Total liabilities and equity12,09610,70110,339The financial statements on pages 52 to 83 were approved by the Board of Directors and authorised for issue on 1 December 2020 and were signed on its behalf by:Grant NashChief Financial Officer1 December 2020IXICO plc, Registered number: 03131723 Financial statements
Company Statement of Financial Position
as at 30 September 2020, 30 September 2019 and 30 September 2018
54
IXICO plcAnnual Report & Accounts 2020Note2020£0002019Restated£0002018Restated£000ASSETS Non-current assetsInvestments in Group undertakings165,6235,5165,434Total non-current assets5,6235,5165,434Current assetsTrade and other receivables174,2554,710685Cash and cash equivalents1,7052,1877,229Total current assets5,9606,8977,914Total assets11,58312,41313,348LIABILITIES AND EQUITY Current liabilitiesTrade and other payables1873112140Total current liabilities73112140EquityOrdinary shares22471469467Share premium2284,49984,43684,389Merger relief reserve221,4801,4801,480Capital redemption reserve227,4567,4567,456Accumulated losses(82,396)(81,540)(80,584)Total equity11,51012,30113,208Total liabilities and equity11,58312,41313,348Parent Company Income StatementAs permitted by Section 408 of the Companies Act 2006, the income statement of the Company is not presented as part of these financial statements. The Company’s loss for the financial year was £1,040,000 (2019: £1,069,000).The financial statements on pages 52 to 83 were approved by the Board of Directors and authorised for issue on 1 December 2020 and were signed on its behalf by:Grant NashChief Financial Officer1 December 2020IXICO plc, Registered number: 03131723 Consolidated Statement of Changes in Equity
for the years ended 30 September 2020 and 30 September 2019
Balance at 1 October 2018
Prior period adjustment (note 3)
Ordinary
shares
Restated
£000
7,923
(7,456)
Share
premium
£000
84,389
–
Merger
relief
reserve
£000
1,480
–
Reverse
acquisition
reserve
£000
(75,308)
–
Restated balance at 1 October 2018
467
84,389
1,480
(75,308)
Total comprehensive income/(expense)
Profit for the period
Other comprehensive expense:
Foreign exchange translation
Total comprehensive income/(expense)
Transactions with owners
Charge in respect of share options
Exercise of share options
Total transactions with owners
–
–
–
–
2
2
–
–
–
–
47
47
–
–
–
–
–
–
–
–
–
–
–
–
Foreign
exchange
translation
reserve
£000
Capital
redemption
reserve
Restated
£000
Accumulated
losses
£000
(80)
–
(80)
–
(1)
(1)
–
–
–
–
7,456
7,456
(11,078)
–
(11,078)
–
–
–
–
–
–
432
–
432
113
–
113
Total
£000
7,326
–
7,326
432
(1)
431
113
49
162
Balance at 30 September 2019
469
84,436
1,480 (75,308)
(81)
7,456
(10,533)
7,919
Total comprehensive income/(expense)
Profit for the period
Other comprehensive expense:
Realised losses on foreign exchange
Foreign exchange translation
Total comprehensive income/(expense)
Transactions with owners
Charge in respect of share options
Exercise of share options
Total transactions with owners
–
–
–
–
–
2
2
–
–
–
–
–
63
63
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(15)
(1)
(16)
–
–
–
–
–
–
–
–
–
–
952
952
15
–
–
(1)
967
951
184
–
184
184
65
249
Balance at 30 September 2020
471
84,499
1,480 (75,308)
(97)
7,456
(9,382)
9,119
55
IXICO plcAnnual Report & Accounts 2020Financial statementsStrategic reportGovernance Financial statements
Company Statement of Changes in Equity
for the years ended 30 September 2020 and 30 September 2019
Balance at 1 October 2018
Prior period adjustment (note 3)
Restated balance at 1 October 2018
Total comprehensive expense for the period
Transactions with owners
Charge in respect of share options
Exercise of share options
Total transactions with owners
Balance at 30 September 2019
Total comprehensive expense for the period
Transactions with owners
Charge in respect of share options
Exercise of share options
Total transactions with owners
Balance at 30 September 2020
Ordinary
shares
Restated
£000
7,923
(7,456)
467
–
–
2
2
Share
premium
£000
84,389
–
84,389
–
–
47
47
Merger
relief
reserve
£000
1,480
–
1,480
–
–
–
–
Capital
redemption
reserve
Restated
£000
–
7,456
7,456
–
–
–
–
Accumulated
losses
£000
(80,584)
–
Total
£000
13,208
–
(80,584)
13,208
(1,069)
(1,069)
113
–
113
113
49
162
469
84,436
1,480
7,456
(81,540)
12,301
–
–
2
2
–
–
63
63
–
–
–
–
–
–
–
–
(1,040)
(1,040)
184
–
184
184
65
249
471
84,499
1,480
7,456
(82,396)
11,510
56
IXICO plcAnnual Report & Accounts 2020 Consolidated and Company Statements of Cash Flows
for the years ended 30 September 2020 and 30 September 2019
Cash flows from operating activities
Profit/(loss) for the period
Finance income
Finance expense
Taxation
Depreciation
Amortisation of intangibles
Disposal of fixed assets
Impairment of intangible assets
Research and development expenditure credit
Share option charge
Changes in working capital
Decrease/(increase) in trade and other receivables
(Decrease)/increase in trade and other payables
Cash generated from/(used in) operations
Taxation received
Net cash generated from/(used in) operating activities
Cash flows from investing activities
Purchase of property, plant and equipment
Purchase of intangible assets including staff costs capitalised
Finance income
Net cash (used in)/generated from investing activities
Cash flows from financing activities
Issue of shares
Repayment of lease liability
Interest paid
Net cash (used in)/generated from financing activities
Movements in cash and cash equivalents in the period
Cash and cash equivalents at start of period
Effect of exchange rate fluctuations on cash held
Cash and cash equivalents at end of period
Group
Company
2020
£000
952
(20)
18
(94)
356
82
1
2
(162)
184
1,319
297
(128)
1,488
447
1,935
(686)
(456)
20
(1,122)
65
(177)
(18)
(130)
683
7,264
(2)
7,945
2019
£000
432
(2)
–
(66)
72
40
–
–
(155)
113
434
(239)
(325)
(130)
–
(130)
(217)
(300)
4
(513)
48
–
–
48
2020
£000
2019
£000
(1,040)
(4)
1
–
–
–
–
–
–
76
(967)
455
(39)
(551)
–
(551)
–
–
4
4
65
–
–
65
(1,069)
(40)
–
–
–
–
–
–
–
31
(1,078)
(3,983)
(29)
(5,090)
–
(5,090)
–
–
–
–
48
–
–
48
(595)
7,861
(2)
7,264
(482)
(5,042)
2,187
–
1,705
7,229
–
2,187
57
IXICO plcAnnual Report & Accounts 2020Financial statementsStrategic reportGovernance Financial statements
Notes to the financial statements
for the years ended 30 September 2020 and 30 September 2019
1. Presentation of the financial statements
a. General information
IXICO plc (the ‘Company’) is a public limited company incorporated in England and Wales and is admitted to trading on the AIM market
of the London Stock Exchange under the symbol IXI. The address of its registered office is 4th Floor, Griffin Court, 15 Long Lane,
London EC1A 9PN.
The Company is a parent of a number of subsidiaries detailed in note 16, together referred to throughout as ‘the Group’. The Group is an
established provider of technology-enabled services to the global biopharmaceutical industry. The Group’s services are used to select
patients for clinical trials and assess the safety and efficacy of new drugs in development within the field of neurological disease.
b. Basis of preparation
The consolidated financial statements have been prepared on a going concern basis and in accordance with IFRS as adopted by the
EU, IFRIC interpretations and the Companies Act 2006 applicable to companies operating under IFRS.
The consolidated financial statements comprise a Statement of Comprehensive Income, a Statement of Financial Position, a Statement
of Changes in Equity, a Statement of Cash Flows, and accompanying notes. These financial statements have been prepared under the
historical cost convention modified by the revaluation of certain financial instruments.
The consolidated financial statements are presented in Great British Pounds (‘£’ or ‘GBP’) and are rounded to the nearest thousand
unless otherwise stated. This is the predominant functional currency of the Group, and is the currency of the primary economic
environment in which it operates. Foreign currency transactions are accounted in accordance with the policies set out below.
c. Basis of consolidation
The consolidated financial statements incorporate the accounts of the Company and its subsidiary companies adjusted to eliminate
intra-Group balances and any unrealised gains and losses or income and expenses arising from intra-Group transactions. The
Company’s subsidiaries are detailed in note 16. When necessary, adjustments are made to the financial statements of subsidiaries to
bring their accounting policies into line with the Group’s accounting policies.
The Group controls a subsidiary when the Group is exposed to, or has rights to, variable returns from its involvement with a subsidiary
and has the ability to affect those returns through its power over a subsidiary. In assessing control, potential voting rights that are
currently exercisable or convertible are taken into account.
The results of subsidiary companies are included in the consolidated financial statements from the date that control commences until
the date that control ceases. The assets and liabilities of foreign operations are translated into GBP at exchange rates prevailing at the
end of the reporting period. Income statements and cash flows of foreign operations are translated into GBP at average monthly
exchange rates which approximate foreign exchange rates at the date of the transaction. Foreign exchange differences arising on
retranslation are recognised directly in a separate translation reserve.
d. Going concern
At the time of approving the consolidated financial statements, the Directors have considered the expected future performance
together with the Group’s estimated future cash inflows from existing long-term contracts and sales pipeline.
The ongoing COVID-19 pandemic is causing significant uncertainty across global markets for the short and medium term. During 2020,
the Group reacted quickly to this by preparing a series of financial scenario forecasts based on discussions with clients over the likely
impact of the pandemic on their clinical trials. In parallel the Group moved rapidly to a fully remote model, which included providing
additional equipment to employees enabling all to work from home effectively and allowing the Group to trade uninterrupted
throughout the year.
In assessing going concern, management has prepared detailed sensitised forecasts which consider different scenarios throughout
the course of the next 12 months. These include the risk to current projects and expected future sales pipelines, the ability for patients
to attend imaging centres (due to global COVID-19 lockdown restrictions) and potential delays in new trial start-up timelines. The
Directors have considered these forecasts, alongside the Group’s strong balance sheet and cash balance as well as the ability for the
Group to mitigate costs if necessary.
After due consideration of these forecasts, the Directors concluded with confidence that the Group has adequate financial resources
to continue in operation for the foreseeable future.
58
IXICO plcAnnual Report & Accounts 2020 2. New and amended accounting standards and interpretations
a. Adoption of new accounting standards for the year ended 30 September 2020
The Group has adopted all new and amended accounting standards and interpretations issued by the International Accounting Standards
Board (‘IASB’) that are mandatory for the current reporting period. Analysis of the impacts of these standards are set out below.
IFRS 16 – Leases
The Group adopted IFRS 16 from 1 October 2019. IFRS 16 requires a lessee to recognise lease assets and liabilities, previously
accounted for as operating leases, on the Statement of Financial Position. Subsequently, depreciation of the lease assets and interest
on the lease liabilities is recognised within the Statement of Comprehensive Income over the remaining term of the lease. The Group
has applied the modified retrospective approach requiring the Group to calculate lease assets and liabilities at the beginning of the
current period and therefore the comparative information has not been restated and continues to be reported under IAS 17.
The adoption of this new Standard has resulted in the Group recognising a right-of-use asset and related lease liability in connection
with all operating leases except for those identified as low-value or having a remaining lease term of less than 12 months which
continue to be recognised on a straight-line basis as a lease expense over the remaining lease term. The incremental borrowing rate
used for discounting purposes and applied to the lease liabilities recognised under the new Standard is 6%, being the expected rate at
which the Group could reasonably borrow at from banking institutions.
The following is a reconciliation of the financial statement line items from IAS 17 to IFRS 16 at 30 September 2019 to the carrying
amount at 1 October 2019:
Property, plant and equipment
Provisions
Lease liabilities
Carrying amount at
30 September 2019
£000
Remeasurement
£000
Carrying amount at
1 October 2019
£000
316
–
–
462
90
372
778
90
372
The following is a reconciliation of total operating lease commitments at 30 September 2019 (as disclosed in the financial statements to
30 September 2019) to the lease liabilities recognised at 1 October 2019:
Total operating lease commitments disclosed at 30 September 2019
Recognition exemptions: Leases of low-value
Operating lease liabilities before discounting
Discounted using incremental borrowing rate
Total lease liabilities recognised under IFRS 16 at 1 October 2019
£000
441
(1)
440
(68)
372
b. Accounting developments affecting financial statements in subsequent periods
At the date of authorisation of these financial statements, several new, but not yet effective, standards and amendments to existing
standards and interpretations have been published by the IASB. The standards and amendments that are not yet effective and have not
been adopted early by the Group include:
– Amendments to References to Conceptual Framework in IFRS Standards
– Definition of Material (Amendments to IAS 1 and IAS 8)
– Interest Rate Benchmark Reform (Amendments to IFRS 9, IAS 39 and IFRS 7)
The Directors anticipate, based on current business processes, that the introduction of the above standards and amendments will not
have a material impact on the Group and Company financial statements and therefore the impact of these changes on the financial
statements have not been made.
59
IXICO plcAnnual Report & Accounts 2020Financial statementsStrategic reportGovernance Financial statements
Notes to the financial statements continued
for the years ended 30 September 2020 and 30 September 2019
60
IXICO plcAnnual Report & Accounts 20203. Prior period adjustmentDuring the year to 30 September 2016, a subdivision of shares occurred, dividing the existing share capital of 15,215,664 ordinary shares of nominal value £0.50 into 15,215,664 ordinary shares of nominal value £0.01 and 15,215,664 deferred shares of nominal value £0.49. The deferred shares were rendered effectively worthless by virtue of the rights attached to them. On 22 December 2016, the deferred shares were repurchased for £1 and subsequently cancelled, however no accounting entries were made in respect of this transaction.As a result of the deferred share cancellation, the share capital for the years ended 30 September 2017, 30 September 2018 and 30 September 2019 is overstated by £7,455,675, whilst the capital redemption reserve is understated in the same periods by £7,455,675.Share capital£000Capital redemption reserve£000Balance as at 30 September 20177,727–Repurchase and cancellation of deferred shares (7,456)7,456Restated balance as at 30 September 20172717,456Balance as at 30 September 20187,923–Repurchase and cancellation of deferred shares (7,456)7,456Restated balance as at 30 September 20184677,456Balance as at 30 September 20197,925–Repurchase and cancellation of deferred shares (7,456)7,456Restated balance as at 30 September 20194697,456There is no impact on total profit or loss in any year and subsequently no impact on taxation. The number of shares in issue in each of the periods was correct and therefore there is no impact on the earnings per share or diluted earnings per share in each of the periods.4. Significant accounting policies4.1 RevenueRevenue is principally derived from service revenue. This revenue is measured at the fair value of the consideration received or receivable and represents amounts receivable for services provided in the normal course of business, net of discounts, VAT and other sales-related taxes.In determining whether to recognise revenue, the Group follows a 5-step process:1. Identifying the contract with a client;2. Identifying the performance obligations;3. Determining the transaction price;4. Allocating the transaction price to the performance obligations; and5. Recognising revenue when/as performance obligation(s) are satisfied.Each type of revenue has separate recognition criteria depending on the type of service provided. These services are agreed at the inception of a project through contracts with clients. A critical part of the contract is a detailed schedule of work that provides the list of services to be provided by the Group. Performance obligations are attached to each service, with revenue being recognised once these are satisfied. The transaction price associated to each performance obligation is allocated based on their relative stand-alone selling price. Revenue types
The Group’s contracts comprise a variety of performance obligations. These obligations are all considered streams of a single revenue
type, being service revenue. The Group’s most significant streams of service revenue are outlined below and have the respective
recognition criteria:
Project and site set-up
At the point a client approaches the Group to complete work, a project manager is assigned. The project manager co-ordinates the
project set-up and ongoing delivery of the service. At inception, the project manager will also prepare the clinical study protocol and
other essential study documents.
Once the project and/or the site is set up, all performance obligations are satisfied. These services are therefore recognised at a point
in time, being when the Group has delivered the relevant material to the client.
Project and site management
Each contract requires various project management activities, provided by the project manager. These services are provided
throughout the duration of a contract. Site management services are provided throughout the duration of a site being operational,
typically being shorter than the project management cycle.
The services provided for project and site management represents a provision of on going services. Therefore, revenue for these items
is recognised on a straight-line basis.
Site training and materials
A contract will typically include training of each individual site. Various materials are prepared in advance and provided to clients as
tools for site training. Site training is provided either through live online training or through a self-paced training module. These activities
are combined in one revenue transaction per site.
Revenue from site training is recognised when each site has completed the training activity.
TrialTracker configuration and access
The TrialTracker platform delivers a robust and comprehensive set of centralised imaging services designed to efficiently manage the
complex imaging workflow from: image upload, quality control, reading and analysis. The platform also allows for reporting and data transfer.
The Group has identified 2 separate performance obligations in the TrialTracker platform:
1. A set-up fee is recognised at a point in time once TrialTracker access is provided to the client;
2. An ongoing access fee is recognised over the duration of the project, with revenue being recognised on a straight-line basis.
Data reading and analysis
The Group provides data analysis services across a range of biomarkers, providing high-quality, clinically meaningful data. Fees are
charged to clients on a ‘per data read’.
As these services have no ongoing obligations from the Group, revenue is recognised once the data read and analysis has taken place.
Data management and quality control
Ensuring data are managed appropriately and that the data are of a high quality is critical in the delivery of the Group’s service. The data
management and imaging teams work in collaboration to ensure ongoing integrity of data.
The performance of data management represents the provision of an on going service and so the straight-line method of recognition is used.
Revenue recorded from data quality control is recognised at a point in time when the Group has delivered the service to the client.
61
IXICO plcAnnual Report & Accounts 2020Financial statementsStrategic reportGovernance Financial statements
Notes to the financial statements continued
for the years ended 30 September 2020 and 30 September 2019
62
IXICO plcAnnual Report & Accounts 20204. Significant accounting policies continued4.1 Revenue continuedRevenue types continuedScientific reportsScientific reports are provided at interim points and at the end of a study. Such reports contain data analysis and statistical interpretation. These reports represent an individual performance obligation with no further work required by the Group. Revenue from these services is recognised at a point in time when the Group provides the report to the client. Licence revenueRevenue relating to licensing is entirely attributable to TrialTracker. Each agreement will grant the user rights to use the software and receive associated technical support during the licence period. The licence is a distinct performance obligation and revenue is recognised over the contract term. Change ordersThroughout the duration of a contract, the client may request additional services or service changes to be made. For revenue recognition purposes, the Group treats a change order or contract modification to a client agreement as a separate contract, if both: –the scope changes due to the addition of ‘distinct’ services; and –the price change reflects the services stand-alone selling prices (‘SSP’) under the circumstances of the modified contract.The revenue recognition for the change order is applied in the same way as the original contract, as detailed above, with the original client agreement remaining unchanged.4.2 Other incomeGovernment grantsA government grant is recognised only when there is reasonable assurance that the Group will comply with any conditions attached to the grant and the grant will be received. The grants are recognised as income over the period necessary to match them with the related costs, for which they are intended to compensate, on a systematic basis. The Group recognises grant income as an item of other income. Research and Development Expenditure Credit (‘RDEC’)The Group has elected to take advantage of the RDEC introduced in the Finance Act 2013. A company may surrender corporation tax losses on research and development expenditure incurred on or after 1 April 2013 for a corporation tax refund. Relief is given as a taxable credit on 13% (which increased from 12% from 1 April 2020) of qualifying research and development expenditure. The Group recognises research and development expenditure credit as an item of other income, taking advantage of the ‘above the line’ presentation, and is recognised in the year for which the research and development relates.4.3 Research and development expenditureIn all instances across the Group, research expenditure is expensed through the income statement. For development expenditure, items will be expensed where the recognition criteria for internally generated intangible assets is not met. The main criteria used to assess this, as required under IAS 38 – Intangible Assets, are: –Demonstrating technical feasibility of completing the intangible asset; –Intention to complete the asset; –Ability to use or sell the asset in order to generate future economic benefit; –Availability of adequate technical or other resources to complete development; and –Ability to measure reliably the expenditure attributable to the asset.It was determined that the Group continued to meet the above criteria in respect of specific developments to its TrialTracker platform and data analytics service offering. As a result, associated development costs are capitalised in the year in relation to TrialTracker and an intangible asset is recognised as set out in note 15. 4.4 Share-based payments
Equity-settled share-based payments are measured at the fair value of the equity instruments at the grant date. 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.
Any changes that impact the original estimates, for example the effect of employees who have left the Group in the year and have
forfeited their options, is recognised in the Consolidated Statement of Comprehensive Income such that the cumulative expense
reflects the revised estimate, with a corresponding adjustment to equity reserves.
Details regarding the determination of the fair value of equity-settled share-based transactions are set out in note 23 of the
consolidated financial statements.
4.5 Employee benefits
All employee benefit costs are recognised in the Consolidated Statement of Comprehensive Income as they are incurred. These
principally relate to holiday pay and contributions to the Group defined contribution plan.
The assets of the Group scheme are held separately from those of the Group in independently administered funds. The Group does not
offer any other post-retirement benefits.
4.6 Leased assets
A lease is defined as a contract that gives the Group the right to use an asset for a period of time in exchange for consideration. The
Group identifies from the contract the total length and cost of the lease contract, and determines whether it meets the definition of a
right-of-use asset. Recognition of a right-of-use asset is met if it is longer than 12 months and of a high value. For those leases that do
not meet these criteria, the rental charge payable under these leases are charged to the Consolidated Statement of Comprehensive
Income on a straight-line basis over the lease term.
The initial recognition and subsequent measurement of right-of-use asset leases are:
Initial recognition
At the commencement date, the Group measures the lease liability at the present value of future lease payments, discounted using
the Group’s incremental borrowing rate. The Group also recognises a right-of-use asset which is measured at cost, which is made
up of the initial measurement of the lease liability, any initial direct costs and an estimate of any costs to reinstate the asset to its
original condition.
Subsequent measurement
The lease liability is reduced for payments made and increased for interest, and is remeasured for any modifications made to the lease.
The right-of-use asset is depreciated on a straight-line basis over the expected lease term. The asset is also assessed for impairment
when such indicators exist.
On the statement of financial position, right-of-use assets are included in property, plant and equipment and lease liabilities within trade
and other payables.
63
IXICO plcAnnual Report & Accounts 2020Financial statementsStrategic reportGovernance Financial statements
Notes to the financial statements continued
for the years ended 30 September 2020 and 30 September 2019
64
IXICO plcAnnual Report & Accounts 20204. Significant accounting policies continued4.7 Property, plant and equipmentProperty, plant and equipment is stated at cost less accumulated depreciation and, where appropriate, less provisions for impairment. The initial recognition and subsequent measurement of property, plant and equipment are:Initial recognitionProperty, plant and equipment is initially recognised at acquisition cost, including any costs directly attributable to bringing the assets to the location and condition necessary for them to be capable of operating. In most circumstances, the cost will be its purchase cost, together with the cost of delivery.Subsequent measurementAn asset will only be depreciated once it is ready for use. Depreciation is charged so as to write off the cost of property, plant and equipment, less its estimated residual value, over the expected useful economic lives of the assets.Depreciation is charged on a straight-line basis as follows:Office buildings over expected lease term Leasehold improvements shorter of 5 years or the lease termFixtures and fittings 3 yearsEquipment 3 yearsThe disposal or retirement of an asset is determined by comparing the sales proceeds with the carrying amount. Any gains or losses are recognised within the Consolidated Statement of Comprehensive Income.4.8 Intangible assetsAcquired intangibles Intangible assets that are acquired through business combinations are recognised as an intangible asset if it is separable from the acquired business or arises from contractual or legal rights. These assets will only be recognised if they are also expected to generate future economic benefits and its fair value can be reliably measured. Initial recognitionIntangible assets acquired separately are measured on initial recognition at cost. The cost of intangible assets acquired in a business combination is their fair value at the date of acquisition.Subsequent measurementFollowing capitalisation, the intangible assets are carried at cost less any accumulated amortisation, and where appropriate, less provisions for impairment. Intangible assets are amortised using the straight-line method over their estimated useful economic life as follows:Intangibles acquired through business combinations 5 yearsOther acquired intangible assets –Computer software 3 years –Data acquisition 5 yearsAmortisation is charged to the Consolidated Statement of Comprehensive Income and is included within cost of sales for those items directly related to project activities, or otherwise within general and administrative expenses.Internally generated intangible assetsIntangible assets that are capitalised internally are deemed to have met the recognition criteria set out in IAS 38. These items relate to research and development costs and are considered in note 4.3.Initial recognitionInternally generated intangible assets are initially recognised at cost once the recognition criteria of IAS 38 are met. Subsequent measurementAny assets that are not yet ready for use will be capitalised as assets under construction and will not be amortised. Once the asset is ready for use, amortisation will begin. The amortisation rates adopted are based on the expected useful economic life of the projects to which they relate. The assets useful economic life is as follows:Internally generated technology 3 - 5 years 4.9 Impairment of non-current assets
Each category of non-current assets is reviewed for impairment both annually and when there is an indication that an asset may be
impaired, being when events or changes in circumstances indicate that the carrying value may not be recoverable. An impairment loss
is recognised in the Consolidated Statement of Comprehensive Income for the amount by which the asset’s carrying value exceeds its
recoverable amount.
The recoverable amount is the higher of an asset’s fair value less cost to sell and value in use. Non-financial assets, other than goodwill,
which have suffered an impairment are reviewed for possible reversal of the impairment at each reporting date.
4.10 Investments in Group undertakings
Investments in Group undertakings are initially recognised at cost and subsequently measured at cost less any impairment provision.
Investments are subject to an annual impairment review, with any impairment charge being recognised through the Consolidated
Statement of Comprehensive Income. Additions to investments are amounts relating to share options for the services performed by
employees of the subsidiaries of the Company and are classified as capital contributions within note 16.
4.11 Trade and other receivables
Trade and other receivables are initially recognised at fair value and subsequently stated at amortised cost using the effective interest
method, less provision for impairment. A provision for impairment of trade receivables is established when there is objective evidence
that the Group will not be able to collect all amounts due according to the original terms of the receivables. Significant financial
difficulties of the debtor, probability that the debtor will enter bankruptcy or financial reorganisation, and default or significant
delinquency in payments (exceeding credit terms) are considered indicators that the trade receivable should be impaired.
The amount of the provision is the difference between the asset’s carrying amount and the present value of estimated future cash
flows, discounted at the original effective interest rate. The carrying amount of the asset is reduced through the use of an allowance
account, and the amount of the loss is recognised in the Consolidated Statement of Comprehensive Income within general and
administrative expenses. When a trade receivable is uncollectible, it is written off against the allowance account for trade receivables.
Subsequent recoveries of amounts previously written off are credited against general and administrative expenses in the Consolidated
Statement of Comprehensive Income.
4.12 Taxation
Current tax
Current tax represents amounts recoverable within the United Kingdom and is provided at amounts expected to be recovered using the
tax rates and laws that have been enacted at the Statement of Financial Position date.
Research and development credits
The benefit associated with UK-based research and development is recognised under the UK’s Research and Development
Expenditure Credit scheme. Details of the recognition are set out in note 4.3.
Deferred taxation
Deferred tax is provided in full, using the liability method, on temporary differences arising between the tax bases of assets and
liabilities and their carrying amounts in the consolidated financial statements in accordance with IAS 12 – Income taxes. Deferred tax
liabilities are recognised for all taxable temporary differences. A deferred tax asset is recognised only to the extent that it is probable
that sufficient taxable profit will be available in future years to utilise the temporary difference. Deferred tax is not accounted for if it
arises from initial recognition of an asset or liability in a transaction, other than a business combination, that at the time of the
transaction affects neither the accounting, nor taxable profit or loss.
Deferred income tax is determined using tax rates (and laws) that have been enacted or substantively enacted by the Statement of
Financial Position date and are expected to apply when the related deferred income tax asset is realised or the deferred income tax
liability is settled.
Deferred tax assets and liabilities are offset only when there is a legally enforceable right to set off current tax assets against current
tax liabilities, they relate to income taxes levied by the same taxation authority and the Group intends to settle these on a net basis.
65
IXICO plcAnnual Report & Accounts 2020Financial statementsStrategic reportGovernance Financial statements
Notes to the financial statements continued
for the years ended 30 September 2020 and 30 September 2019
66
IXICO plcAnnual Report & Accounts 20204.13 Cash and cash equivalentsCash and cash equivalents comprise cash at bank and in hand with original maturities at inception of 3 months or less.4.14 Foreign currency translationTransactions denominated in foreign currencies are translated into Great British Pounds at actual rates of exchange prevailing at the date of transaction. Monetary assets and liabilities expressed in foreign currencies are translated into Great British Pounds at rates of exchange prevailing at the end of the financial year. All foreign currency exchange differences are taken to the Consolidated Statement of Comprehensive Income in the year in which they arise.Non-monetary items are not retranslated at year end and are measured at historical cost (translated using the exchange rates at the transaction date), except for non-monetary items measured at fair value which are translated using the exchange rates at the date when fair value was determined.4.15 Trade and other payablesTrade and other payables are non-interest-bearing and are initially recognised at fair value and subsequently stated at amortised cost. 4.16 Provisions, contingent assets and contingent liabilitiesProvisions are recognised when the Group has a present legal or constructive obligation as a result of a past event, it is probable that an outflow of economic resources will be required from the Group and amounts can be estimated reliably. The timing of such outflows may still be uncertain. Such provisions are measured at the estimated expenditure required to settle the present obligation based on the most reliable estimate available at the reporting date, discounted to the present value where material.Any reimbursement that the Group is virtually certain to collect from a third party in relation to the related provision will be recognised as a separate asset.Liabilities are not recognised where the outflow of economic resources is not probable, but are instead disclosed as contingent liabilities.4.17 Equity instrumentsEquity instruments issued by the Group are recorded at the proceeds received, net of direct issue costs.4.18 Financial instrumentsFinancial assets and financial liabilities are recognised on the Consolidated Statement of Financial Position when the Group or the Company becomes a party to the contractual provisions of the instrument. Debt and equity instruments are classified as either financial liabilities or as equity in accordance with the substance of the contractual arrangement.Further information relating to financial instruments and the policies adopted by the Group to manage risk is found in note 24.5. Significant management judgement in applying accounting policies and estimation uncertaintyWhen preparing the consolidated financial statements, the Directors make a number of judgements, estimates and assumptions about the recognition and measurement of assets, liabilities, income and expenses.Significant management judgementsThe following are significant management judgements in applying the accounting policies of the Group that have the most significant effect on the consolidated financial statements.Revenue recognitionThe Group recognises revenue in accordance with amounts charged to clients under service contracts. All contracts include an agreed, detailed work order which defines the deliverables. The service contracts are typically multi-year and may be amended through a change order process, which may include changes to data volumes (increased or decreased), different methods of data analysis or changes to the timing of providing the deliverables.Revenue is recognised upon achievement of deliverables set out in the service contract. The recognition is expected to approximate to the timing of the physical performance of the contracts. The Group records the performance of the contractual obligations to determine that the deliverables and actual work performed is in accordance with the contract and agreed change orders. The scope of the project and contract terms are reviewed to determine whether the Group is acting as principal or agent in respect of the project, which depends on facts and circumstances and requires judgement. Client contracts include an agreed work order so the transaction price for a contract is allocated against distinct performance
obligations based on their relative stand-alone selling prices. Management determines the fair value of individual components based
on actual amounts charged by the Group on a stand-alone basis. The transaction price for a contract excludes any amounts collected
on behalf of third parties.
Capitalisation of internally developed software
Distinguishing the research and development phases of a new software product and determining whether the requirements for the
capitalisation of development costs are met requires judgement. Management will assess whether a project meets the recognition
criteria as set out in IAS 38 based on an individual project basis. Where the criteria are not met, the research and development
expenditure will be expensed in the Consolidated Statement of Comprehensive Income. Where the recognition criteria are met, the
items will be capitalised as an intangible asset.
During the year ended 30 September 2020, total research and development expenses totalled £1,553,000 (2019: £1,147,000). Of this
amount, £244,000 (2019: £161,000) was capitalised as an intangible asset. The balance of expenditure being £1,309,000 (2019:
£986,000) is recognised in the Consolidated Statement of Comprehensive Income as an expense.
Recovery of deferred tax assets
Deferred tax assets have not been recognised for deductible temporary differences and tax losses. The Directors consider that there is
not sufficient certainty that future taxable profits will be available to utilise those temporary differences and tax losses. Further
information on the Group’s deferred tax asset can be found in note 21 of the consolidated financial statements.
Estimation uncertainty
Information about estimates and assumptions that have the most significant effect on recognition and measurement of assets, liabilities,
income and expenses is provided below. Changes to these estimations may result in substantially different results for the year.
Share-based payments
The Group measures the cost of equity-settled transactions with employees by reference to the fair value of the equity instruments at
the date at which they are granted. The fair value of the options granted is measured using an option valuation model, taking into
account the terms and conditions upon which the options were granted. Details of the estimations used in determining the fair value of
the options in issue are detailed in note 23.
Useful lives of depreciable assets
The useful lives of depreciable assets are determined by management at the date of purchase based on the expected useful lives of
the assets. These are subsequently monitored and reviewed annually and where there is objective evidence of changes in the useful
economic lives, these estimates are adjusted. Any changes to these estimates may result in significantly different results for the period.
Provisions
The amounts included in both long- and short-term provisions are based on estimates provided by professionals relevant to the field the
provision relates. These were reviewed by management and are considered to be a reasonable estimate of the expected cost of
fulfilling these provisions.
6. Revenue
An analysis of the Group’s revenue by type is as follows:
Service revenue
2020
£000
9,532
2019
£000
7,561
For the year ended 30 September 2020, revenue includes £227,000 (2019: £1,271,000) held in contract liabilities within trade and other
payables at the beginning of the period.
67
IXICO plcAnnual Report & Accounts 2020Financial statementsStrategic reportGovernance Financial statements
Notes to the financial statements continued
for the years ended 30 September 2020 and 30 September 2019
68
IXICO plcAnnual Report & Accounts 20207. Segmental informationThe Board considers there to be only one core operating segment for the Group’s activities. This is based on the Group’s development, commercial and operational delivery teams operating across the entirety of the Group, which is wholly based in the United Kingdom. The projects undertaken by the Group are managed by project managers, who receive inputs for each project by other team members. Performance information is reported as a single business unit to the leadership team, who review the Group’s management information. The information gathered for each project is subsequently reported to the Group’s Chief Executive Officer, who is considered to be the chief operating decision-maker. This information is used for resource allocation and assessment of performance. Therefore, the entirety of the Group’s revenue and assets can be attributed wholly to this operating segment with reference to the Consolidated Statement of Comprehensive Income and Consolidated Statement of Financial Position. During the year ended 30 September 2020, the Group had 1 client (2019: 2 clients) that exceeded 10% of total revenue. In 2020 the individual percentage revenue associated with this client was 65% (£6,232,000). In 2019 the individual percentage revenue associated with this client was 39% (£2,976,000) and 14% (£1,086,000) related to the other client which exceeded 10% of total revenue.Geographical informationThe Group’s revenue can be categorised by type of revenue and by country, based on the contracting client location of the contracting client entity.2020£0002019£000United States1,9903,388United Kingdom6,3742,764Europe1,1681,404Rest of World–5Revenue9,5327,561As the Group is domiciled in the United Kingdom, the entirety of the revenue originates from this location.8. Other incomeItems of other income principally relate to government grants received, originating solely in the United Kingdom. Grants are recognised as income over the period required to match them with the related costs, for which they are intended to compensate, on a systematic basis.The Group also recognises Research and Development Expenditure Credit (‘RDEC’) as other income.2020£0002019£000Grant income444433RDEC162155Other income606588 9. Auditor’s remuneration
Audit services
– Group and Parent Company
– Subsidiary companies
Total audit fees
Audit-related assurance services
Tax compliance services
Tax advisory services
Total auditor’s remuneration
2020
£000
33
22
55
6
–
–
61
2019
£000
31
20
51
6
9
1
67
10. Employees and Directors
The average monthly number of persons (including Executive and Non-Executive Directors) employed by the Group was:
Administration
Operations, research and development
Average total persons employed
The aggregate remuneration of employees in the Group was:
Wages and salaries
Social security costs
Other pension costs
Share-based payments charge
Total remuneration for staff
Staff costs capitalised
Net staff costs
2020
Number
2019
Number
15
67
82
2020
£000
5,480
845
203
184
6,712
(244)
6,468
17
51
68
2019
£000
4,630
535
177
113
5,455
(161)
5,294
The Group operates a defined contribution pension scheme for employees. The assets of the scheme are held separately from those of
the Group in independently administered funds. The amounts outstanding at 30 September 2020 in respect of pension costs were
£31,000 (2019: £27,000).
The remuneration of the Group’s Directors is set out in the Directors’ Remuneration Report on pages 39 to 41, as well as in note 25
under related party transactions.
The Company did not directly employ any staff and therefore there is no cost recognised in respect of staff costs.
69
IXICO plcAnnual Report & Accounts 2020Financial statementsStrategic reportGovernance Financial statements
Notes to the financial statements continued
for the years ended 30 September 2020 and 30 September 2019
11. Operating profit
An analysis of the Group’s operating profit has been arrived at after charging:
Research and development expenses
Sales and marketing expenses
Operating lease charges: land, buildings and printers
Depreciation of tangible assets
Loss on disposal of tangible and intangible assets
Amortisation of intangible assets
Foreign exchange (gain)/loss
Administrative expenses
Total operating expenses
2020
£000
1,309
1,579
21
356
3
26
(17)
2,819
6,096
2019
£000
986
1,154
144
72
–
40
27
2,743
5,166
There is a further amortisation charge of £56,000 (2019: £nil) recognised in cost of sales for those items directly related to project
activities. The total amortisation charge for the year is £82,000 (2019: £40,000).
12. Taxation
The tax charge for each period can be reconciled to the result per the Consolidated Statement of Comprehensive Income as follows:
Profit on ordinary activities before taxation
Profit before tax at the effective rate of corporation tax in the United Kingdom of 19% (2019: 19%)
Effects of:
Expenses not deductible for tax purposes
Temporary differences
Research and development uplifts net of losses surrendered for tax credits
Prior period adjustment
Tax credit for the period
The tax credit for each period can be reconciled as follows:
Small or medium enterprise research and development credit
Deduction for corporation tax on RDEC
Prior period adjustment
Tax credit for the period
2020
£000
858
163
16
(131)
(145)
3
(94)
2020
£000
(127)
30
3
(94)
2019
£000
366
70
(2)
(85)
(28)
(21)
(66)
2019
£000
(74)
29
(21)
(66)
The Group has elected to take advantage of the RDEC, introduced in the Finance Act 2013 whereby a company may surrender corporation
tax losses on research and development expenditure incurred on or after 1 April 2013 for a corporation tax refund.
70
IXICO plcAnnual Report & Accounts 2020 The following is a reconciliation between the tax charge and the tax receivable within the Consolidated Statement of Financial Position:
Current tax receivable at start of period
Current period credit
Corporation tax repayment
Current tax receivable at end of period
2020
£000
450
256
(447)
259
The tax credit for each period can be reconciled to the current period credit recognised in tax receivable within the Consolidated
Statement of Financial Position in each period as follows:
Tax credit for the year
Deferred tax movement on amortisation
RDEC gross of corporation tax deduction
Current period credit
2020
£000
94
–
162
256
2019
£000
229
221
–
450
2019
£000
66
–
155
221
13. Earnings per share
The calculation of basic and diluted earnings per share (‘EPS’) of the Group is based on the following data:
Earnings
Earnings for the purposes of basic and diluted EPS, being net profit attributable to the owners of the
Company (£000)
Number of shares
Weighted average number of shares for the purposes of basic EPS
Effect of potentially dilutive ordinary shares:
- Weighted average number of share options
Weighted average number of shares for the purposes of diluted EPS
2020
2019
952
432
47,036,398
46,786,375
513,521
47,549,919
9,182
46,795,557
Basic earnings per share is calculated by dividing earnings attributable to the owners of the Company by the weighted average number
of shares in issue during the year. The diluted EPS is calculated by dividing earnings attributable to the owners of the Company by the
weighted average number of shares in issue taking into account the share options outstanding during the year.
The basic and diluted earnings per share for the Group and Company is:
Basic earnings per share
Diluted earnings per share
2020
2.02p
2.00p
2019
0.92p
0.92p
71
IXICO plcAnnual Report & Accounts 2020Financial statementsStrategic reportGovernance
Financial statements
Notes to the financial statements continued
for the years ended 30 September 2020 and 30 September 2019
14. Property, plant and equipment
Group
Cost
At 1 October 2018
Additions
Disposals
At 30 September 2019
Adjustment on transition to IFRS 16
Additions
Disposals
At 30 September 2020
Accumulated depreciation
At 1 October 2018
Charge for the period
Disposals
At 30 September 2019
Charge for the period
Disposals
At 30 September 2020
Net book value
At 30 September 2019
At 30 September 2020
Office
building
£000
Leasehold
improvement
£000
Fixtures and
fittings
£000
Equipment
£000
–
–
–
–
462
–
–
462
–
–
–
–
191
–
191
–
271
62
102
(62)
102
–
44
–
146
53
11
(62)
2
45
–
47
100
99
7
5
(7)
5
–
–
–
5
7
2
(7)
2
2
–
4
3
1
140
204
(61)
283
–
549
(1)
831
72
59
(61)
70
118
–
188
213
643
Total
£000
209
311
(130)
390
462
593
(1)
1,444
132
72
(130)
74
356
–
430
316
1,014
The only right-of-use asset is held within the office building category. At 30 September 2020, the carrying amount of the right-of-use
asset was £271,000 (2019: £nil).
Company
At 30 September 2020 and 30 September 2019, the Company had no property, plant and equipment.
72
IXICO plcAnnual Report & Accounts 2020 15. Intangible assets
Group
Cost
At 1 October 2018
Additions
Disposals
At 30 September 2019
Additions
Impairment
At 30 September 2020
Accumulated amortisation
At 1 October 2018
Amortisation
Disposals
At 30 September 2019
Amortisation
Impairment
At 30 September 2020
Net book value
At 30 September 2019
At 30 September 2020
Intangibles
acquired through
business
combinations
£000
Other acquired
intangibles
£000
Internally
developed
technology
£000
1,804
–
(1,804)
–
–
–
–
1,804
–
(1,804)
–
–
–
–
–
–
46
139
(3)
182
75
–
257
14
23
(3)
34
31
–
65
148
192
–
161
–
161
513
(4)
670
–
17
–
17
51
(2)
66
144
604
Total
£000
1,850
300
(1,807)
343
588
(4)
927
1,818
40
(1,807)
51
82
(2)
131
292
796
Amortisation is charged to the Consolidated Statement of Comprehensive Income and is included within cost of sales for those items
directly related to project activities, or otherwise within general and administrative expenses.
Internally developed technology
The Group has capitalised research and development costs during the year in relation to the development of its proprietary TrialTracker
software. Development includes TrialTracker platform upgrades as well as additional algorithm development. The costs capitalised
include time and expenses in relation to staff costs. In recognising these assets, the Group has applied the recognition criteria of IAS 38
relating to internally generated intangible assets, where costs in relation to the development phase must be capitalised under certain
circumstances. More information in relation to this is included in the accounting policies of the Group in notes 4 and 5.
Company
At 30 September 2020 and 30 September 2019, the Company had no intangible assets.
73
IXICO plcAnnual Report & Accounts 2020Financial statementsStrategic reportGovernance Financial statements
Notes to the financial statements continued
for the years ended 30 September 2020 and 30 September 2019
16. Investments
The consolidated financial statements of the Group as at 30 September 2020 and at 30 September 2019 include:
Name of subsidiary
Class of share
Country of incorporation
Principal activities
Directly held:
IXICO Technologies Limited
IXITech Limited
Indirectly held:
IXICO US LLC
Optimal Medicine Limited
IXICO Technologies Inc.
Ordinary
Ordinary
United Kingdom
United Kingdom
Data collection and analysis of neurological diseases
Dormant – dissolved on 26 November 2019
Members’ interest
Ordinary
Ordinary
United States
United Kingdom
United States
Dormant
Dormant – dissolved on 26 November 2019
Sales and marketing
The Company and Group has no investments other than the holdings in the above subsidiaries that are all 100% owned. The carrying
amounts of the investments in subsidiaries for the Company are:
Investments in subsidiary undertakings
At beginning of the period
Capital contribution
Total investments at end of the period
Company
2020
£000
5,516
107
5,623
2019
£000
5,434
82
5,516
The capital contribution represents the charge in the year for share-based awards issued by the Company to employees of IXICO
Technologies Limited and IXICO Technologies Inc.
All investments in subsidiaries, other than IXICO Technologies Limited and IXICO Technologies Inc., are not expected to be recoverable,
have been impaired in previous periods and have carrying values of £nil (2019: £nil).
17. Trade and other receivables
Trade receivables
Less provision for bad and doubtful debts
Net carrying amount of trade receivables
Other taxation and social security
Prepayments and accrued income
Amounts due from subsidiary undertakings
Trade and other receivables
Group
Company
2020
£000
1,395
–
1,395
137
550
–
2,082
2019
£000
1,933
–
1,933
27
419
–
2,379
2020
£000
–
–
–
19
30
4,206
4,255
2019
£000
–
–
–
5
34
4,671
4,710
All amounts are classified as short-term and are expected to be received within one year. The average credit period granted to clients
ranges from 30 to 90 days (2019: 30 to 90 days).
A provision for bad and doubtful debts is made when there is uncertainty over the ability to collect the amounts outstanding from
clients. This is determined based on specific circumstances relating to each individual client. The Directors consider that there are no
expected credit losses (2019: no expected credit losses) due to the calibre of customers the Group has and so the carrying amount of
trade and other receivables approximates their fair value.
Within the Company, there are no expected credit losses (2019: no expected credit losses) from subsidiary companies due to the level
of cash available in the subsidiaries which would allow the repayment of these receivables immediately.
74
IXICO plcAnnual Report & Accounts 2020 As at the year-end, the ageing of trade receivables which are past due but not impaired is as follows:
Amounts not past due
Past due:
Less than 30 days
31–60 days
61–90 days
More than 90 days
Total trade receivables
Group
2020
£000
1,372
23
–
–
–
2019
£000
1,812
91
30
–
–
1,395
1,933
Company
2020
£000
2019
£000
–
–
–
–
–
–
–
–
–
–
–
–
The maximum exposure to credit risk at the reporting date is the carrying value of each class of financial assets disclosed in note 24.
18. Trade and other payables
Current liabilities
Trade payables
Other taxation and social security
Contract liabilities
Accrued expenses
Other payables
Non-current liabilities
Accrued expenses
Trade and other payables
Group
2020
£000
176
171
761
1,294
5
2,407
167
2,574
2019
£000
597
196
414
1,569
6
2,782
–
2,782
Company
2020
£000
13
–
–
60
–
73
–
73
2019
£000
59
–
–
53
–
112
–
112
Trade payables and accrued expenses principally comprise amounts outstanding for trade purchases and ongoing costs. No interest is
charged on the trade payables. The Group’s policy is to ensure that payables are paid within the pre-agreed credit terms and to avoid
incurring penalties and/or interest on late payments.
The fair value of trade and other payables approximates their current book values.
19. Provisions
The provision balance consists of dilapidations and other provisions. The movements and carrying amounts in the provision account
are as follows:
Carrying amount 1 October 2019
Additional provisions
Carrying amount 30 September 2020
Current
Non-current
Total
£000
–
190
190
100
90
75
IXICO plcAnnual Report & Accounts 2020Financial statementsStrategic reportGovernance Financial statements
Notes to the financial statements continued
for the years ended 30 September 2020 and 30 September 2019
19. Provisions continued
The dilapidations provision relates to the office building and is the estimated cost of returning the property in its original condition at
the end of the lease.
The remaining provision relates to an ongoing legal matter and reflects the expected costs associated with bringing this to a
conclusion.
20. Leases
All lease liabilities are presented in the statement of financial position as follows:
Current
Non-current
Group
2020
£000
168
45
213
2019
£000
–
–
–
The Group uses leases throughout the business for office space and IT equipment. With the exception of short-term leases and leases
of low value, each lease is reflected on the balance sheet as a right-of-use asset in property, plant and equipment and a lease liability.
Each lease generally imposes a restriction that, unless there is a contractual right for the Group to sublet the asset to another party, the
right-of-use asset can only be used by the Group. For leases over office buildings, the Group must keep those properties in a good state
of repair and return the properties in their original condition at the end of the lease. The cost of this is capitalised.
The Group has identified one lease relating to the office building that meets the definition of a right-of-use asset. There is no option to
purchase and payments are not linked to an index. The remaining lease term is 17 months, has the ability to be extended at the end of
this term and can be terminated with six months’ notice.
Right-of-use asset and lease liability
Additional information on the right-of-use asset is as follows:
Office building
Asset
£000
372
Dilapidations
£000
Depreciation
£000
Carrying amount
£000
90
(191)
271
The undiscounted maturity analysis of lease liabilities at 30 September 2020 is as follows:
Office building
Within 1 year
1–2 years
168
45
Total
213
Lease payments not recognised as a liability
The Group has elected to not recognise a lease liability for short-term leases, being 12 months or less, or for leases of low value.
Payments for these are expensed on a straight-line basis. The expense relating to payments not included in the measurement of the
lease liability is as follows:
Leases of low value
At 30 September 2020, the Group’s commitment to short term and low-value leases was £nil (2019: £1,000).
Group
2020
£000
1
1
2019
£000
1
1
76
IXICO plcAnnual Report & Accounts 2020
21. Deferred tax
Deferred tax asset (unrecognised)
Tax effect of temporary differences:
Depreciation in excess of tax allowances
Accumulated losses
Deductible temporary differences
Deferred tax asset (unrecognised)
Group
2020
£000
292
(12,657)
(140)
(12,505)
2019
£000
102
(11,268)
(49)
(11,215)
Company
2020
£000
(1)
(1,966)
(14)
(1,981)
2019
£000
(1)
(1,699)
(5)
(1,705)
The unrecognised deferred tax asset is based on material temporary differences that have originated but not reversed at the
Consolidated Statement of Financial Position date from transactions or events that result in an obligation to pay more tax in the future
or a right to pay less tax in the future.
The unrecognised deferred tax asset is measured on an undiscounted basis at the tax rates that are expected to apply in the periods in
which temporary differences will reverse. Based on tax rates and laws enacted or substantively enacted at the latest balance sheet
date, the rate when the above temporary differences are expected to reverse is currently 19% (2019: 17%).
22. Issued capital and reserves
Ordinary shares and share premium
The Company has 1 class of ordinary shares. The share capital issued has a nominal value of £0.01 and each share carries the right to
one vote at shareholders’ meetings and all shares are eligible to receive dividends. Share premium is recognised when the amount paid
for a share is in excess of the nominal value.
The Group and Company’s opening and closing share capital and share premium reserves are:
Group and Company
Authorised, issued and fully paid
At 30 September 2019
Share options exercised
At 30 September 2020
Exercise of share options
During the period, the following share options were exercised:
Ordinary
shares
Number
46,902,294
188,998
47,091,292
Date of exercise
15 January 2020
15 January 2020
15 January 2020
15 January 2020
Total
Key management
personnel
Shares
45,176
113,706
–
–
158,882
Other
employees
Shares
15,058
–
7,529
7,529
30,116
Total
Shares
60,234
113,706
7,529
7,529
188,998
This resulted in an increase in share capital of £1,890 and an increase in share premium of £61,579.
Share
capital
£000
469
2
471
Exercise
price
Pence
30.5
34.0
36.5
49.0
–
Share
premium
£000
84,436
63
84,499
Value
£000
19
39
3
4
65
77
IXICO plcAnnual Report & Accounts 2020Financial statementsStrategic reportGovernance Financial statements
Notes to the financial statements continued
for the years ended 30 September 2020 and 30 September 2019
22. Issued capital and reserves continued
Other reserves
Accumulated losses
This reserve relates to the cumulative results made by the Group and Company in the current and prior periods.
Merger relief reserve
In accordance with Section 612 of the Companies Act 2006 ‘Merger Relief’, the Company issuing shares as consideration for a
business combination, accounted at fair value, is obliged, once the necessary conditions are satisfied, to record the share premium to
the merger relief reserve.
Reverse acquisition reserve
Reverse accounting under IFRS 3 ‘Business Combinations’ requires that the difference between the equity of the legal parent and the
issued equity instruments of the legal subsidiary, pre-combination is recognised as a separate component of equity.
Capital redemption reserve
This reserve holds shares that were repurchased and cancelled by the Company.
Foreign exchange translation reserve
This reserve represents the impact of retranslation of overseas subsidiaries on consolidation.
23. Share-based payments
Certain Directors and employees of the Group hold options to subscribe for shares in the Company under share option schemes. There
are 2 distinct structures to the share options in operation in the Group (2019: 2). Both structures relate to a single scheme outlined in the
EMI Share Option Plan 2014.
The scheme is open, by invitation, to both Executive Directors and employees. Participants are granted share options in the Company
which contain vesting conditions. These are subject to the achievement of individual employee and Group performance criteria as
determined by the Board. The vesting period varies by award and the conditions approved by the Board. Options are usually forfeited if
the employee leaves the Group before the options vest.
Total share options outstanding have a range of exercise prices from £0.01 to £0.70 per option and the weighted average contractual
life is 3.6 years (2019: 4.6 years). The total charge for each period relating to employee share-based payment plans for continuing
operations is disclosed in note 10 of the consolidated financial statements.
Details of the share options under the scheme outstanding during the period are as follows:
Outstanding at start of the period
Granted
Exercised
Lapsed
Outstanding at end of the period
Exercisable at end of the period
2020
2019
Number
3,690,572
1,990,000
(188,998)
(1,053,062)
4,438,512
1,118,581
Weighted
average
exercise price
£0.18
£0.17
£0.34
£0.17
£0.17
£0.36
Number
5,279,745
–
(125,294)
(1,463,879)
3,690,572
1,068,110
Weighted
average
exercise price
£0.18
–
£0.38
£0.17
£0.18
£0.36
During the year to 30 September 2020, there were two issues of share options awarded (2019: no options were awarded). Details of
these awards are provided below.
78
IXICO plcAnnual Report & Accounts 2020 5 December 2019
On 5 December 2019, the Company issued a total of 1,540,000 options to the two executive directors and two senior management
personnel with an exercise price of £0.01. These options are subject to both revenue and share price performance over a 3-year period,
with the share price performance measured against the volume-weighted average price of the Company’s ordinary shares in the 20
days immediately prior to the third anniversary of the date of the grant. The options eligible to vest are then split, with 50% eligible to
vest on the third anniversary of the date of the grant and 50% eligible to vest on the fourth anniversary of the date of the grant. These
options must also achieve a compound annual growth rate of 10% on annual revenues over the three financial years to 30 September
2022. The performance conditions of this option award are measured against a share price of £0.32 and are as follows:
– 0% of the LTIP will vest if the share price increases by less than a compound annual growth rate of 12.5%;
– 25% of the LTIP will vest if the share price increases on a compound annual growth rate of 12.5%;
– 25% - 100% of the LTIP will vest on a straight-line basis if the share price increases up by up to a compound annual growth rate of 25.0%.
6 July 2020
Share options were granted on 6 July 2020 to employees of the Group. In this grant there were two tranches issued.
The first tranche totalling 300,000 options was issued to three senior management personnel with an exercise price of £0.70. These
options are subject to both revenue and share price performance over a 3-year period, with the share price performance measured
against the volume-weighted average price of the Company’s ordinary shares in the 20 days immediately prior to the third anniversary
of the date of the grant. The options eligible to vest are then split, with 50% eligible to vest on the third anniversary of the date of the
grant and 50% eligible to vest on the fourth anniversary of the date of the grant. These options must also achieve a compound annual
growth rate of 10% on annual revenues over the three financial years to 30 September 2023. The performance conditions of this option
award are measured against a share price of £0.70 and are as follows:
– 0% of the LTIP will vest if the share price increases by less than a compound annual growth rate of 12.5%;
– 25% of the LTIP will vest if the share price increases on a compound annual growth rate of 12.5%;
– 25% - 100% of the LTIP will vest on a straight-line basis if the share price increases up by up to a compound annual growth rate of 25.0%.
The second tranche totalling 150,000 options was issued to 6 management personnel in the Group with an exercise price of £0.70 and
was linked to profitability and service, with a performance period of 3 years and vesting on achievement of the performance criteria by
the end of this period.
The model used to value the grants was the Monte Carlo method followed by ‘Hull White’ trinomial lattice and the inputs used were
as follows:
Weighted average share price
Weighted average exercise price
Expected volatility
Expected life
Expected dividend yield
Risk-free interest rate
5 December 2019
6 July 2020
£0.70
£0.01
66.7%
5 years
0%
0.55%
£0.70
£0.70
64.4%
10 years
0%
-0.05%
4 June 2018 - modification
On 4 June 2018, the Company issued options with an exercise price of £0.01. The original share options granted are subject to
share price performance, measured against the 3-month volume-weighted average price of the Company’s ordinary shares. The
measurement date will be made in the 3 months prior to the third anniversary from the date of the grant. The performance conditions
of this award are as follows:
– 0% of the LTIP will vest if the share price increases by less than 50%;
– 25% of the LTIP will vest if the share price increases by 50% from the date of issue of the grant;
– 25% - 100% of the LTIP will vest on a straight-line basis if the share price increases by up to 100% from the date of issue of the grant.
79
IXICO plcAnnual Report & Accounts 2020Financial statementsStrategic reportGovernance Financial statements
Notes to the financial statements continued
for the years ended 30 September 2020 and 30 September 2019
23. Share-based payments continued
4 June 2018 - modification continued
On 5 December 2019, the share options granted to those still employed at the Group were modified. This modification removed a
minimum floor price of £0.50 and aligned the vesting and holding periods to that of the 5 December 2019 award. A revised valuation
model was used to determine the incremental fair value of the modified share options. The model used to value the grants was the
Monte Carlo method followed by ‘Hull White’ trinomial lattice and the inputs used were as follows:
Weighted average share price
Weighted average exercise price
Expected volatility
Expected life
Expected dividend yield
Risk-free interest rate
Original
£0.35
£0.01
46.7%
6 years
0%
1.05%
Modified
£0.70
£0.01
66.9%
4.5 years
0%
0.62%
24. Financial risk management
In common with all other areas of the business, the Group is exposed to risks that arise from the use of financial instruments. This note
describes the Group’s objectives, policies and processes for managing those risks and the methods used to measure them.
The main risks arising from the Group’s financial instruments are liquidity, interest rate, foreign currency and credit risk. The Group’s
financial instruments comprise cash and various items such as trade receivables and trade payables, which arise directly from its operations.
Categories of financial instruments
Financial assets held at amortised cost
Trade and other receivables excluding prepayments
Cash and cash equivalents
Financial liabilities held at amortised cost
Trade and other payables excluding statutory liabilities
Group
2020
£000
1,960
7,945
9,905
2,216
2,216
2019
£000
2,082
7,264
9,346
2,197
2,197
Company
2020
£000
4,225
1,705
5,930
73
73
2019
£000
4,671
2,187
6,858
112
112
Fair value of financial assets and liabilities
There is no material difference between the fair value and the carrying values of the financial instruments because of the short maturity
period of these financial instruments or their intrinsic size and risk.
Liquidity risk management
Liquidity risk is the risk that the Group will not be able to meet its obligations as they fall due through having insufficient resources. The
Group monitors its levels of working capital to ensure that it can meet its liabilities as they fall due. Ultimate responsibility for liquidity
risk management rests with the Board, which has built an appropriate framework for the management of the Group’s short-, medium-
and long-term funding and liquidity requirements.
The principal current asset of the business is cash and cash equivalents and is therefore the principal financial instrument employed by
the Group to meet its liquidity requirements. The Board ensures that the business maintains surplus cash reserves to minimise any
liquidity risk.
The financial liabilities of the Group and Company are all mostly due within 3 months (2019: 3 months) of the Consolidated Statement of
Financial Position date. The Group does not have any borrowings or payables on demand which would increase the risk of the Group
not holding sufficient reserves for repayment. Those liabilities older than 3 months are all denominated in Great British Pounds and are
not expected to materially affect the business’ liquidity.
80
IXICO plcAnnual Report & Accounts 2020 Market risk
Interest rate risk management
Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market
interest rate. The Group operates an interest rate policy designed to minimise interest costs and reduce volatility in reported earnings.
The Group holds all cash and cash equivalents with institutions with a recognised high credit rating. Interest rates on current accounts
are floating. Changes in interest rates may increase or decrease the Group’s finance income.
The Group does not have any committed interest-bearing borrowing facilities and consequently there is no material exposure to
interest rate risk in respect of financial liabilities.
Foreign currency risk management
Foreign currency risk is the risk that the fair value or future cash flows of a foreign currency exposure will fluctuate because of changes
in foreign exchange rates.
The Group’s exposure to the risk of changes in foreign exchange rates relates to the Group’s overseas operating activities, primarily
denominated in US Dollars, Euros and Swiss Francs. There is also an investment by the Company in a foreign subsidiary. The Group’s
exposure to foreign currency changes for all other currencies is not material.
During the year, the Group has not made use of financial instruments to minimise any foreign exchange gains or losses, and
fluctuations in foreign exchange movements are reflected in the results from operating activities. The Group seeks to minimise the
exposure to foreign currency risk by matching local currency income with local currency costs where possible. The Group will use
financial instruments to minimise foreign exchange fluctuations where it is appropriate to do so.
The carrying amounts of the Group’s foreign currency denominated monetary assets and monetary liabilities as at 30 September are
as follows:
US Dollar exposure
Balance at end of period
Monetary assets
Monetary liabilities
Total exposure
Euro exposure
Balance at end of period
Monetary assets
Monetary liabilities
Total exposure
Swiss Franc exposure
Balance at end of period
Monetary assets
Monetary liabilities
Total exposure
Group
Company
2020
USD000
2019
USD000
2020
USD000
2019
USD000
469
(170)
299
Group
2020
EUR000
304
(32)
272
Group
2020
CHF000
944
(89)
855
–
–
–
Company
–
–
–
2019
EUR000
2020
EUR000
2019
EUR000
284
(112)
172
–
–
–
Company
–
–
–
2019
CHF000
2020
CHF000
2019
CHF000
10
(10)
–
99
(123)
(24)
–
–
–
–
–
–
81
IXICO plcAnnual Report & Accounts 2020Financial statementsStrategic reportGovernance Financial statements
Notes to the financial statements continued
for the years ended 30 September 2020 and 30 September 2019
24. Financial risk management continued
Foreign currency sensitivity analysis
As at 30 September 2020, the sensitivity analysis assumes a +/-10% change of the USD/GBP, EUR/GBP and CHF/GBP exchange rates,
which represents management’s assessment of a reasonably possible change in foreign exchange rates (2019: 10%). The sensitivity
analysis was applied on the fair value of financial assets and liabilities.
US Dollar
Euro
Swiss Franc
2020
2019
10% weaker1
£000
10% stronger
£000
10% weaker
£000
10% stronger
£000
(23)
(25)
–
(48)
23
25
–
48
(70)
(15)
2
(83)
70
15
(2)
83
1. 10% weaker relates to the Great British Pound strengthening against the currency and therefore the Group would be in a weaker monetary position.
Credit risk management
Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the Group. The
Group’s financial assets are cash and cash equivalents and trade and other receivables. The carrying value of these assets represents
the Group’s maximum exposure to credit risk in relation to financial assets.
The Group’s credit risk is primarily attributable to its trade receivables. The amounts presented in the Consolidated Statement of Financial
Position are net of allowances for any expected credit losses, estimated by the Group’s management based on prior experience and
their assessment of the current economic environment, and any specific criteria identified in respect of individual trade receivables. An
allowance for expected credit losses is made where there is an identified loss event, which, based on previous experience, is evidence of
a reduction in the recoverability of future cash flows. There are no outstanding expected credit losses identified at 30 September 2020
(2019: nil).
Prior to entering into an agreement to provide services, the Group makes appropriate enquiries of the counterparty and independent
third parties to determine creditworthiness. The Group has not identified any significant credit risk exposure to any single counterparty
or Group of counterparties as at the period end.
The Group and Company continually reviews client credit limits based on market conditions and historical experience. Any provision for
impairment, as well as the ageing analysis of overdue trade receivables, is set out in note 17.
The Group and Company’s policy is to minimise the risks associated with cash and cash equivalents by placing these deposits with
institutions with a recognised high credit rating.
Capital risk management
The Group considers capital to be shareholders’ equity as shown in the Consolidated Statement of Financial Position, as the Group is
primarily funded by equity finance and is not yet in a position to pay a dividend. The Group had no borrowings at 30 September 2020
(2019: £nil).
The objectives when managing capital are to safeguard the Group’s ability to continue as a going concern in order to provide returns
for shareholders and for other stakeholders. In order to maintain or adjust the capital structure the Group may return capital to
shareholders or issue new shares.
82
IXICO plcAnnual Report & Accounts 2020 25. Related party transactions
Transactions between the Company and its subsidiaries, which are related parties, have been eliminated on consolidation and are not
disclosed in this note.
Remuneration and transactions of Directors and key management personnel
Key management remuneration:
Short-term employee benefits
Post-employment benefits
Other long-term benefits
Termination benefits
Share-based payments
Total remuneration
2020
£000
1,905
27
104
74
170
2,280
2019
£000
1,604
29
–
70
76
1,779
Key management includes Executive Directors, Non-Executive Directors and senior management who have the responsibility for
managing, directly or indirectly, the activities of the Group.
The aggregate Directors’ remuneration, including employers’ National Insurance and share-based payments’ expense, was £1,256,000
(2019: £1,043,000) and aggregate pension of £12,000 (2019: £8,000). Further detail of Directors’ remuneration is disclosed in the
Directors’ Remuneration Report on page 39 to 41.
83
IXICO plcAnnual Report & Accounts 2020Financial statementsStrategic reportGovernance Financial statements
Addresses and advisers
84
IXICO plcAnnual Report & Accounts 2020IXICO plcRegistered office:4th Floor, Griffin Court15 Long LaneLondon, EC1A 9PNTel: +44 (0)20 3763 7499Website: www.IXICO.comRegistered number: 03131723Domiciled in the United KingdomRegistered in England and WalesChartered accountants and statutory auditorsGrant Thornton UK LLPChartered Accountants and Statutory Auditors101 Cambridge Science ParkMilton RoadCambridge, CB4 0FYTel: +44 (0)122 322 5600Website: www.grantthornton.co.ukNominated adviser and brokerCenkos Securities Plc6 – 8 Tokenhouse YardLondon, EC2R 7ASTel: +44 (0)20 7397 8900Website: www.cenkos.comRegistrarEquiniti Registrars LimitedAspect HouseSpencer RoadLancingWest Sussex, BN99 6DATel: +44 (0)871 384 2030Website: www.equiniti.comLegal advisersBristows LLP100 Victoria EmbankmentLondon, EC4Y 0DHTel: + 44 (0)20 7400 8000Website: www.bristows.comFinancial public relationsWalbrook PR Limited4 Lombard StreetLondon, EC3V 9HDTel: +44 (0)20 7933 8780Website: www.walbrookpr.co.uk IXICO plc
4th Floor
Griffin Court
15 Long Lane
London
EC1A 9PN
www.ixico.com
IXICO plc Annual Report & Accounts 2020