TIDMCOG
RNS Number : 5910N
Cambridge Cognition Holdings PLC
26 September 2023
26 September 2023
Cambridge Cognition Holdings plc
("Cambridge Cognition", the "Company" or the "Group")
Interim Results for the six months ended 30 June 2023
Cambridge Cognition Holdings plc (AIM: COG), which develops and
markets digital solutions to assess brain health, announces its
unaudited interim results for the six months ended 30 June
2023.
The Company is positioned to grow revenues and move into
profitability, having grown the contracted order book, integrated
two acquired businesses and reduced operating costs. Against a
challenging market backdrop, revenues in the first half were
maintained year-on-year and the contracted order book increased by
13% from 31 December 2022.
Financial highlights
-- Increase in contracted order book to GBP19.9 million (31 December 2022: GBP17.6 million)
-- Revenues of GBP6.0 million (H1 2022: GBP5.9 million)
-- Adjusted operating loss, reflecting business acquisitions, of
GBP2.1 million (H1 2022: GBP0.1 million profit)
-- Cash balances of GBP1.9 million as at 30 June 2023 (31 December 2022: GBP8.3 million)
Operational highlights
-- Acquired Winterlight Labs Inc ("Winterlight") early in 2023
following the acquisition of eClinicalHealth Limited ("Clinpal") in
late 2022
-- Integration of acquired businesses resulted in cost
reductions that will realise annualised savings of GBP1.5
million
-- Strengthened the team with the addition of industry leaders from Winterlight and Clinpal
-- Delivered on product development goals, including integration
of the CANTAB(TM), Winterlight and Clinpal solutions
Subsequent events
-- The Company is announcing today a GBP3.0 million secured term
loan to provide the Group with additional working capital and
support continued investment in product development and solution
integration
Commenting on the results, Matthew Stork, Chief Executive
Officer of Cambridge Cognition, said: "We have made considerable
progress over the first half of the year, both commercially and
with the integration of our expanded technology platforms following
the Winterlight and Clinpal acquisitions. Having grown the order
book and maintained revenues in a challenging clinical trials
market, we expect to report renewed revenue growth and movement
towards sustainable profitability in our full year results."
Investor webinar
Cambridge Cognition's management will be hosting an online
presentation and Q&A session at 5.30 p.m. BST on Wednesday 27
September 2023. This session is open to all existing and
prospective shareholders. Those wishing to attend should email
cog@investor-focus.co.uk and they will be provided with log in
details.
Participants will have the opportunity to submit questions
during the session, but questions are welcomed in advance and may
be sent to cog@investor-focus.co.uk .
Enquiries:
Cambridge Cognition Holdings plc Tel: 01223 810 700
Matthew Stork, Chief Executive Officer press@camcog.com
Stephen Symonds, Chief Financial Officer
Panmure Gordon (Nomad and Joint Broker) Tel: 020 7886 2500
Freddy Crossley / Emma Earl / Mark (Corporate Finance)
Rodgers
Rupert Dearden (Corporate Broking)
Dowgate Capital Limited (Joint Broker) Tel: 020 3903 7715
David Poutney / James Serjeant
IFC Advisory Ltd (Financial PR and Tel: 020 3934 6630
IR)
Tim Metcalfe / Graham Herring / Zach cog@investor-focus.co.uk
Cohen
The information communicated in this announcement contains
inside information for the purposes of Article 7 of the Market
Abuse Regulation (EU) No. 596/2014.
CHIEF EXECUTIVE OFFICER'S REVIEW
Overview
In the first half of 2023, the Company delivered an operational
and financial performance in line with the board's expectations.
The market outlook has improved and the contracted order book
increased significantly, from GBP17.6 million at the end of
December 2022 to GBP19.9 million at the end of June 2023.
Orders received in the first half of 2023 totalled GBP6.3
million, 5% ahead of the GBP6.0 million of orders taken in the
second half of 2022. These orders included two sizeable contract
awards: the first for two pivotal trials involving patients with a
rare disease affecting the Central Nervous System ("CNS") and the
second with a major pharmaceutical client to provide cognitive
assessments for a cancer therapy trial, one of the broader
applications of our offering beyond typical CNS disorders.
Trading conditions continued to be difficult in the first half
of 2023, with some drug development companies cutting costs and
others delaying clinical trials. Some companies providing solutions
and services for clinical trials have reported declining
performance in the period. While we increased the value of
contracted orders from half-to-half, we did see some delays to
contract awards that we anticipate will close in the second half of
2023 or in 2024.
We implemented our plan to market combined Cambridge Cognition,
Winterlight and Clinpal solutions during the first half of 2023.
Despite the challenging market conditions, orders of Winterlight
solutions are tracking in line with the prior year and have the
potential to outperform now that we are able to combine solutions.
As expected, sales of Clinpal were modest in the first six months
of the year due to a limited pipeline of opportunities at the time
of the acquisition and the entire team had an operational focus on
developing new Clinpal modules for a luminary project. We are now
seeing the Clinpal pipeline grow as we expand integrated commercial
activities, particularly leveraging the luminary project and
cross-selling to Cambridge Cognition's existing customers.
Revenues in the first half were consistent with the comparable
period last year. Gross margins increased in the period by nearly
three percentage points. At the same time as delivering against our
operating plan, we realised synergies from the acquisitions towards
the end of the first half and enter the second half with
considerably lower operating costs.
We expect the trading environment to improve, having seen
considerable engagement from major pharmaceutical companies across
multiple CNS disorders in recent months. There is a growing number
of new therapeutic approaches being investigated for Alzheimer's
disease, Parkinson's disease and Schizophrenia amongst others and
the approval of lecanemab for Alzheimer's disease has invigorated
that field. Our sales activity levels indicate that many major
pharmaceutical companies have completed any reorganisations
prompted by the economic environment and are now progressing with
normal clinical trial activities. However, the funding environment
for biotech companies remains challenging and may not improve in
2023.
With a contracted order book approaching GBP20 million and a
healthy pipeline of opportunities, we anticipate revenue growth in
the second half of 2023 and the full year revenue being in line
with analysts' consensus expectations of approximately GBP14
million. We expect to make a major step towards profitability in
the second half of 2023.
Financial results
The Company delivered a financial performance in line with
expectations for the first half of 2023 with growth in orders,
revenues in line with the comparable period in the previous year
and a loss before tax that reflected the costs associated with the
two acquired businesses pre-integration. The contracted order book
continues to grow and is at GBP19.9 million at 30 June 2023.
This contracted order book continues to give us good visibility
over future revenues as a large proportion of our contracts are for
clinical trials, which can run over long periods and often commence
three to six months after signing of the contract.
Revenue recognised in the period split by type was as
follows:
H1 2023 H1 2022 Movement Movement
GBPmillion GBPmillion GBPmillion %
--------------------------- ------------ ------------- ------------ ---------
Software 2.8 2.3 0.5 22%
Services 2.9 3.1 (0.2) -6%
--------------------------- ------------ ------------- ------------ ---------
Total Software & Services 5.7 5.4 0.3 6%
Hardware 0.3 0.5 (0.2) -40%
--------------------------- ------------ ------------- ------------ ---------
Total Revenue 6.0 5.9 0.1 2%
--------------------------- ------------ ------------- ------------ ---------
Software revenue grew by 22% as expected with the delivery of
contracted clinical trials as software revenue is recognised over
the course of the contract once the product is in use and
assessments are used. Services are recognised from the start of the
study and throughout the contract with data management and study
support services being recognised consistently. Hardware is
procured from third parties to support specific projects and is a
small part of the Group's revenue. The Company also recognised
GBP0.2 million of grant income.
In 2022, we changed our accounting policy for costs of sales to
include pay costs directly related to revenue and have therefore
restated the 2022 interim results. The impact on the current period
was to include GBP0.4 million (H1 2022: GBP0.2 million) of pay
costs in cost of sales that would have been in administrative
expenses under the previous accounting policy.
Gross profit rose by GBP0.3 million to GBP4.8 million (H1 2022:
GBP4.5 million) and gross margin increasing to 78.8% (H1 2022:
75.9%). This improvement resulted from increased sales of software
licenses and less hardware and licensed-in products in the
period.
Administrative expenses as a category includes all sales and
marketing, product development and scientific support, research and
development and general corporate costs. The year-on-year total of
GBP7.5 million was GBP3.0 million higher than the comparable period
in 2022 due to the costs of the acquired businesses, investment in
new products and increased sales and marketing costs. During the
first half of 2023, we took action to realise synergies, improve
efficiencies, and reduce costs. We froze planned recruitment while
we integrated the new businesses and reorganised the overall
operations of the enlarged business. During the reported period we
reduced headcount by approximately 25% across the group, which
delivered annualised savings of GBP1.5 million. The reorganisation
was completed before the end of the half year and the associated
costs of GBP0.3 million is reported in non-recurring items. The
full benefits of this restructuring will be realised from early in
the second half 2023.
The loss before tax was in line with the board's expectations
and, with the integration of acquisitions now complete, we expect
to move closer to profitability during the second half of 2023. The
basic and diluted loss per share were 9.6p (H1 2022: 0.1p profit on
a basic and diluted basis). We have presented a non-GAAP measure of
adjusted operating loss to enable year to year comparison of
results, which excludes non-recurring items associated with the
acquisitions and restructuring, non-cash charges associated with
acquisitions and share-based payment charges, as follows:
H1 2023 H1 2022
GBPmillion GBPmillion
---------------------------------- ------------ -------------
Operating (loss)/profit (3.42) 0.02
Amortisation of acquired
intangibles 0.28 0.00
Share based payment charges 0.14 0.04
Non-recurring items 0.94 0.00
---------------------------------- ------------ -------------
Adjusted operating (loss)/profit (2.06) 0.06
---------------------------------- ------------ -------------
Cash reduced from GBP8.3 million to GBP1.9 million over the
period. Net cash outflow from operations was GBP3.5 million (H1
2021: GBP1.7 million inflow) reflecting the impact from the
inclusion of the two acquisitions that we anticipated would use
cash resources during the first half of 2023. The cash spent
directly on acquisitions included GBP3.0 million of cash
consideration for the acquisition of Winterlight (in line with the
anticipated payments being reported at the time of the
acquisitions) as well as GBP0.5 million of acquisition related
expenses.
Operational Review
During the first half of 2023 we made significant progress
against our strategic growth priorities set out in the annual
report:
Driving sales of existing products and winning a greater volume
of clinical trial work for our broader portfolio. We have
reorganised our commercial team and focused on cross-selling
solutions to a broader customer-base. With this focus, we have
extended our reach to major pharmaceutical companies and are
currently engaging in discussions with many of the top global
pharmaceutical businesses.
Evaluating partnerships with high-impact organisations in the
sector. We are executing our strategy and are discussing possible
partnerships with clinical research organisations and major
pharmaceutical companies.
Investing in innovation to maintain our market position and
complete the development of our offering.
We achieved planned product milestones in the first half of the
year, including:
-- Integration of the CANTAB(TM), Winterlight and Clinpal solutions
-- Completed development and launch of Clinpal for the
600-patient grant-funded Trials@Home study
-- Developed the Winterlight automated quality assurance
solution and pre-sold it into a live opportunity
-- Finished migration to AWS with services now in North America,
Europe and Asia to provide greater coverage
Realising synergies from the acquisitions. We have completed the
organisational integration of Cambridge Cognition, Winterlight and
Clinpal. We are pleased to have welcomed outstanding individuals
from both businesses and are seeing the benefits of one combined
organisational structure.
Outlook
We have seen a renewed level of engagement from major
pharmaceutical companies with a high degree of interest in digital
cognitive assessments. We expect a further improvement in market
conditions as interest rates drop and investment in the sector
flows more freely.
The Company can look forward to a new growth phase built on the
strength of a growing contracted order book and an expanding
pipeline of opportunities. This is supported by the recent contract
wins, luminary trials using our solutions and encouraging
partnership activities. We entered the second half of 2023 with an
efficient operating structure and sustainable cost base that is
representative of the stage of the Company. With well-managed
costs, we anticipate progress towards profitability in the second
half of 2023 and to be profitable in 2024.
Cambridge Cognition will benefit from a wider portfolio and
increased investment in the sector in the near-term. We are well
positioned for further growth in the sizeable market of clinical
trials for central nervous system disorders.
Matthew Stork
Chief Executive Officer
26 September 2023
CONDENSED CONSOLIDATED COMPREHENSIVE INCOME STATEMENT
For the six months ended 30 June 2023
6 months 6 months Year to
to 30 June to 30 June 31 December
2023 2022 2022
Unaudited Unaudited Audited
(Restated(1)
)
Note GBP'000 GBP'000 GBP'000
----------------------------------------- ----- ------------ ------------- -------------
Revenue 5 6,039 5,879 12,613
Cost of sales (1,281) (1,414) (3,291)
----------------------------------------- ----- ------------ ------------- -------------
Gross profit 4,758 4,465 9,322
Administrative expenses excluding
non-recurring items (7,465) (4,451) (9,616)
Administrative expenses - non-recurring
items 6 (940) - (479)
----------------------------------------- ----- ------------ ------------- -------------
Total administrative expenses (8,405) (4,451) (10,095)
Other operating income 230 2 156
----------------------------------------- ----- ------------ ------------- -------------
Operating (loss)/profit (3,417) 16 (617)
Adjusted operating (loss)/profit (2,060) 63 68
Adjusting items(2) 6 (1,357) (47) (685)
Operating (loss)/profit (3,417) 16 (617)
----------------------------------------- ----- ------------ ------------- -------------
Interest receivable 6 - 9
Finance costs (6) - (16)
----------------------------------------- ----- ------------ ------------- -------------
(Loss)/profit before tax (3,417) 16 (624)
Tax credit 106 - 215
----------------------------------------- ----- ------------ ------------- -------------
(Loss)/profit for the period (3,311) 16 (409)
----------------------------------------- ----- ------------ ------------- -------------
Other comprehensive (loss)/income
Other comprehensive income - items
that may be reclassified subsequently
to profit or loss:
Exchange differences on translation
of foreign operations 41 (509) (302)
----------------------------------------- -------- ------ ------
Total comprehensive (loss)/income
for the period (3,270) (493) (711)
----------------------------------------- -------- ------ ------
(Loss)/earnings per share (pence)
Basic 7 (9.6) 0.1 (1.3)
Diluted 7 (9.6) 0.1 (1.3)
----------------------------------- ------ ---- ------
All amounts are attributable to equity holders in the
parent.
The above results relate to continuing operations.
1. See note 3.
2. Adjusting items comprise amortisation of acquisition related
intangible assets of GBP282,000 (H1 2022: GBPnil, 2022: GBP32,000),
non-recurring items of GBP940,000 (H1 2022: GBPnil, 2022:
GBP479,000) and share-based payments of GBP135,000 (H1 2022:
GBP47,000, 2022: GBP174,000). See note 6 for further details on
non-recurring items and note 9 for intangible assets.
Consolidated statement of financial position
At 30 June 2023
At 30 June At 30 June At 31 December
2023 2022 2022
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
----------------------------------- --- ----------- ----------- ---------------
Assets
Non-current assets
Intangible assets 9 8,086 370 1,421
Property, plant and equipment 177 77 188
Investments 49 49 49
----------------------------------- --- ----------- ----------- ---------------
Total non-current assets 8,312 496 1,658
----------------------------------- --- ----------- ----------- ---------------
Current assets
Inventories 244 255 216
Trade and other receivables 3,698 5,443 4,680
Current tax receivable 138 168 231
Cash and cash equivalents 1,891 8,561 8,322
----------------------------------- --- ----------- ----------- ---------------
Total current assets 5,971 14,427 13,449
----------------------------------- --- ----------- ----------- ---------------
Total assets 14,283 14,923 15,107
----------------------------------- --- ----------- ----------- ---------------
Liabilities
Current liabilities
Trade and other payables 3,127 2,623 2,718
Deferred income on contracts with
customers 10,158 12,113 12,294
----------------------------------- --- ----------- ----------- ---------------
Total liabilities 13,285 14,736 15,012
----------------------------------- --- ----------- ----------- ---------------
Equity
Share capital 10 349 312 312
Share premium account 15,152 11,151 11,151
Other reserves 5,864 5,616 5,823
Own shares (71) (78) (71)
Retained earnings (20,296) (16,814) (17,120)
----------------------------------- --- ----------- ----------- ---------------
Total equity 998 187 95
----------------------------------- --- ----------- ----------- ---------------
Total liabilities and equity 14,283 14,923 15,107
----------------------------------- --- ----------- ----------- ---------------
Consolidated statement of changes in equity
Share Share Other Own shares Retained
capital premium reserve earnings Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
--------------------------- --------- --------- --------- ----------- ---------- --------
At 1 January 2022
(audited) 312 11,151 6,125 (78) (16,878) 632
Profit for the period - - - - 16 16
Other comprehensive
expense - - (509) - - (509)
--------------------------- --------- --------- --------- ----------- ---------- --------
Total comprehensive
(loss)/income for
the period - - (509) - 16 (493)
Credit to equity
for share-based payments - - - - 48 48
--------------------------- --------- --------- --------- ----------- ---------- --------
Transactions with
owners - - - - 48 48
--------------------------- --------- --------- --------- ----------- ---------- --------
At 30 June 2022
(unaudited) 312 11,151 5,616 (78) (16,814) 187
Loss for the period - - - - (425) (425)
Other comprehensive
income - - 207 - - 207
--------------------------- --------- --------- --------- ----------- ---------- --------
Total comprehensive
income/(loss) for
the period - - 207 - (425) (218)
Transfer of own shares - - - 7 (7) -
Credit to equity
for share-based payments - - - - 126 126
--------------------------- --------- --------- --------- ----------- ---------- --------
Transactions with
owners - - - 7 119 126
--------------------------- --------- --------- --------- ----------- ---------- --------
At 31 December 2022
(audited) 312 11,151 5,823 (71) (17,120) 95
Loss for the period - - - - (3,311) (3,311)
Other comprehensive
income - - 41 - - 41
--------------------------- --------- --------- --------- ----------- ---------- --------
Total comprehensive
income/ (loss) for
the period - - 41 - (3,311) (3,270)
Issue of new shares
in relation to business
combination 34 3,966 - - - 4,000
Issue of new shares
in relation to exercise
of employee share
options 3 35 - - - 38
Credit to equity
for share-based payments - - - - 135 135
--------------------------- --------- --------- --------- ----------- ---------- --------
Transactions with
owners 37 4,001 - - 135 4,173
--------------------------- --------- --------- --------- ----------- ---------- --------
At 30 June 2023
(unaudited) 349 15,152 5,864 (71) (20,296) 998
--------------------------- --------- --------- --------- ----------- ---------- --------
Consolidated statement of cash flows
For the 6 months ended 30 June 2023
6 months 6 months Year to
to 30 June to 30 June 31 December
2023 2022 2022
Unaudited Unaudited Audited
Note GBP'000 GBP'000 GBP'000
------------------------------------- ----- ------------ ------------ -------------
Net cash flows (used in)/generated
from operating activities 11 (3,499) 1,679 1,668
------------------------------------- ----- ------------ ------------ -------------
Investing activities
Acquisition of subsidiary, net (3,002) - -
of cash acquired
Interest received 6 2 9
Purchase of property, plant and
equipment (31) (43) (189)
------------------------------------- ----- ------------ ------------ -------------
Net cash flow (used in) investing
activities (3,027) (41) (180)
------------------------------------- ----- ------------ ------------ -------------
Financing activities
Proceeds from exercise of share
options 38 - 1
Repayment of borrowings - - (133)
------------------------------------- ----- ------------ ------------ -------------
Net cash flows generated from/(used
in) financing activities 38 - (132)
------------------------------------- ----- ------------ ------------ -------------
Net (decrease)/increase in cash
and cash equivalents (6,488) 1,638 1,356
Cash and cash equivalents at start
of period 8,322 6,810 6,810
Exchange differences on cash and
cash equivalents 57 113 156
------------------------------------- ----- ------------ ------------ -------------
Cash and cash equivalents at end
of period 1,891 8,561 8,322
------------------------------------- ----- ------------ ------------ -------------
NOTES TO THE INTERIM FINANCIAL STATEMENTS
1. General information
Cambridge Cognition Holdings plc ('the Company') and its
subsidiaries (together, 'the Group') develops and markets digital
solutions to assess brain healt h for sale worldwide, principally
in the UK, the US and Europe.
The Company is a public limited company listed on the
Alternative Investment Market ('AIM') of the London Stock Exchange
(symbol: COG) and is incorporated and domiciled in the UK. The
address of its registered office is Tunbridge Court, Tunbridge
Lane, Bottisham, Cambridge, CB25 9TU.
The condensed consolidated interim financial statements were
approved by the Board of Directors for issue on 26 September 2023.
The condensed consolidated interim financial statements do not
comprise statutory accounts within the meaning of section 434 of
the Companies Act 2006.
Statutory accounts of the Group for the year ended 31 December
2022 were approved by the Board of Directors on 2 May 2023 and
delivered to the Registrar of Companies. The report of the auditors
on those accounts was unqualified, did not contain an emphasis of
matter paragraph and did not contain any statement under section
498 of the Companies Act 2006.
The condensed consolidated interim financial statements together
with the comparative information for the six months ended 30 June
2022 have not been audited.
2. Basis of preparation
Going concern basis
The Group's forecasts and projections, taking account of
reasonably possible changes in trading performance, support the
conclusion that there is a reasonable expectation that the Group
has adequate resources to continue in operational existence for the
foreseeable future, a period of not less than twelve months from
the date of this report. Whilst having proper regard to the
continuing uncertainties brought by the pandemic, the Directors
believe that the Group will remain a going concern for the
foreseeable future. The Group therefore continues to adopt the
going concern basis in preparing its condensed consolidated interim
financial statements.
3. Accounting policies
As explained in note 4 of the Group's 2022 Annual Report, the
Group reassessed its accounting policies to include staff and
related costs relating to the delivery of certain services within
cost of sales. The results for the six months to 30 June 2022 have
been restated to reflect an increase in cost of sales of GBP222,000
with a corresponding decrease in administrative expenses. The
overall operating profit for the period remains unchanged.
The Group has also separately presented Deferred income on
contracts with customers on the balance sheet for the first time.
For comparative periods, this was included within Trade and other
payables. Total liabilities and Total current liabilities remain
unchanged.
The accounting policies adopted in the preparation of the
condensed consolidated interim financial statements are consistent
with those followed in the preparation of the Group's consolidated
financial statements for the year ended 31 December 2022, with the
exception of the two items noted below.
Non-GAAP measures
The Group now presents Adjusted operating profit/loss on the
face of the consolidated income statement, where it is reconciled
to profit from operations. A non-GAAP measure of profit was not
previously presented. Consequently, this measure has also been
presented for previous periods within these interim financial
statements for the first time. The Directors believe that this
alternative measure of profit provides a reliable and consistent
measure of the Group's underlying performance. Adjusted operating
profit/loss is defined as operating loss/profit before:
-- non-recurring items;
-- amortisation of acquisition related intangible assets; and
-- share-based payment charge.
Non-recurring items are identified by virtue of either their
size or their nature. These items may include, but are not
restricted to:
-- fees associated with business combinations and integrations of acquired businesses;
-- costs of significant restructuring exercises; and
-- material impairments.
Further details of non-recurring items are provided in note
6.
Non-GAAP measures are not defined within International Financial
Reporting Standards ('IFRS') and therefore may not be comparable
with similarly titled measure of other companies. They are not
intended to be a substitute for, nor superior to, GAAP
measures.
Intangible assets - amortisation
As part of the acquisition of Winterlight Labs Inc in January
2023, the Group recognised intangible assets relating to:
-- Goodwill;
-- Technology based assets;
-- Marketing based assets; and
-- Customer based assets.
The Group previously did not hold marketing or customer based
intangible assets. The estimated useful lives of these intangible
assets are as follows:
-- Marketing based assets: straight line over 15 years
-- Customer based assets: straight line over 7-10 years
The remainder of the Group's intangible asset policy is
unchanged.
4. Critical accounting judgements and key sources of estimation
uncertainty
There have been no changes to the Group's significant judgements
and estimates since the year ended 31 December 2022.
5. Segmental information
The analysis of revenue by product type is as follows:
6 months 6 months Year to
to 30 June to 30 June 31 December
2023 2022 2022
GBP'000 GBP'000 GBP'000
---------- ------------ ------------ -------------
Software 2,872 2,240 5,027
Services 2,891 3,096 6,528
Hardware 276 543 1,058
---------- ------------ ------------ -------------
6,039 5,879 12,613
---------- ------------ ------------ -------------
6. Non-recurring items
6 months 6 months Year to
to 30 June to 30 June 31 December
2023 2022 2022
GBP'000 GBP'000 GBP'000
-------------------------------------------- ------------ ------------ -------------
Acquisition and integration of Clinpal 214 - 236
Acquisition and integration of Winterlight
Labs Inc 459 - 243
Restructuring 267 - -
-------------------------------------------- ------------ ------------ -------------
940 - 479
-------------------------------------------- ------------ ------------ -------------
Non-recurring items are included on the consolidated income
statement within Administrative expenses - non-recurring items.
Acquisition and integration of eClinicalHealth Limited
('Clinpal')
The Group acquired Clinpal in October 2022. See note 14 of the
Group's 2022 Annual Report. Costs in the year ended 31 December
2022 related to adviser fees. Costs in the six months to 30 June
2023 included movements in deferred consideration, retention awards
for key staff, and onerous lease provisions and fixed asset
impairment relating to Clinpal's office. Future expense within this
category will primarily relate to movements in the deferred
consideration and retention awards. They are anticipated to
continue into the year ended 31 December 2024.
Acquisition and integration of Winterlight Labs Inc
('Winterlight')
The Group acquired Winterlight Labs Inc in January 2023. See
note 8 below. Costs in the year ended 31 December 2022 related to
adviser fees. Costs in the six months to 30 June 2023 primarily
included retention awards for key staff and adviser fees. These are
anticipated to continue until July 2024.
Restructuring
The Group completed a significant, multi-department
restructuring exercise in the six months to 30 June 2023. See Chief
Executive Officer's Review above for further details. No further
expense is anticipated.
7. Earnings per share
Calculation of profit per share is based on the following profit
and numbers of shares:
6 months 6 months Year to
to 30 June to 30 June 31 December
2023 2022 2022
GBP'000 GBP'000 GBP'000
--------------------------------------------- ------------ ------------ -------------
(Loss)/earnings
(Loss)/earnings for the purposes of
basic and diluted (loss)/earnings per
share being net (loss)/profit attributable
to owners of the Company (3,311) 16 (409)
--------------------------------------------- ------------ ------------ -------------
6 months 6 months Year to
to 30 June to 30 June 31 December
2023 2022 2022
'000 '000 '000
--------------------------------------------- ------------ ------------ -------------
Number of shares
Weighted average number of ordinary
shares for the purposes of basic EPS 34,347 31,097 31,170
Effect of dilutive share options(1) - 2,154 -
--------------------------------------------- ------------ ------------ -------------
Weighted average number of ordinary
shares for the purposes of diluted EPS 34,347 33,251 31,170
--------------------------------------------- ------------ ------------ -------------
1. The effect of share options are anti-dilutive in the six
months ended 30 June 2023 and the year ended 31 December 2022 due
to the Group recognising a net loss for the period. They are
therefore excluded from the diluted earnings per share
calculation.
6 months 6 months Year to
to 30 June to 30 June 31 December
2023 2022 2022
Pence Pence Pence
--------------------------- ------------ ------------ -------------
(Loss)/earnings per share
Basic (9.6) 0.1 (1.3)
Diluted (9.6) 0.1 (1.3)
--------------------------- ------------ ------------ -------------
The basic weighted average number of shares excludes shares held
by an Employee Benefit Trust. Fully diluted earnings per share is
calculated after showing the effect of outstanding options in
issue, except for where this would be anti-dilutive.
See note 10 for details of the total number of shares in
issue.
8. Business combinations
Winterlight
On 10 January 2023, the Company acquired the entire share
capital of Winterlight, a Toronto, Canada based company developing
speech-based digital biomarkers for assessing cognitive function.
The total amount payable was GBP7.0 million, comprising GBP3.0
million in cash and GBP4.0 million in shares of Cambridge Cognition
Holdings plc.
The preliminary fair value of identifiable assets and
liabilities acquired, purchase consideration and goodwill of
Winterlight are as follows:
Carrying value Fair value Provisional
at acquisition adjustment fair value
GBP'000 GBP'000 GBP'000
-------------------------------- ---------------- ------------ ------------
Assets
Property, plant and equipment 18 - 18
Intangible assets
* Technology based assets - 3,055 3,055
* Marketing based assets - 520 520
* Customer based assets - 308 308
Trade and other receivables 233 - 233
Other current assets 37 - 37
Cash and cash equivalents - - -
Deferred tax assets on losses - 1,065 1,065
-------------------------------- ---------------- ------------ ------------
Total assets 288 4,948 5,236
Liabilities
Trade and other payables (182) - (182)
Deferred tax liabilities - (1,065) (1,065)
Other current liabilities (272) (29) (301)
-------------------------------- ---------------- ------------ ------------
Total liabilities (454) (1,094) (1,548)
-------------------------------- ---------------- ------------ ------------
Net assets acquired 3,688
Purchase consideration 7,002
-------------------------------- ---------------- ------------ ------------
Goodwill 3,314
-------------------------------- ---------------- ------------ ------------
Final fair values will be reported in the Group's Annual Report
for the year ended 31 December 2023. Goodwill represents the value
of the assembled workforce and future synergies expected to arise
from combining the two businesses.
9. Intangible assets
Acquisition related intangible assets
---------------------------------------------------------
Technology Marketing Customer
Goodwill based assets based assets based assets Licences Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
---------------------- --------- -------------- -------------- -------------- --------- --------
Cost
At 1 January 2022 352 - - - 40 392
---------------------- --------- -------------- -------------- -------------- --------- --------
At 30 June 2022 352 - - - 40 392
Acquired in business
combinations 130 955 - - - 1,085
---------------------- --------- -------------- -------------- -------------- --------- --------
At 31 December
2022 482 955 - - 40 1,477
Acquired in business
combinations 3,314 3,055 520 308 - 7,197
Exchange adjustment (114) (105) (18) (10) - (247)
---------------------- --------- -------------- -------------- -------------- --------- --------
At 30 June 2023 3,682 3,905 502 298 40 8,427
---------------------- --------- -------------- -------------- -------------- --------- --------
Amortisation and
impairment
At 1 January 2022 - - - - 19 19
Amortisation charge - - - - 3 3
---------------------- --------- -------------- -------------- -------------- --------- --------
At 30 June 2022 - - - - 22 22
Amortisation charge - 32 - - 2 34
---------------------- --------- -------------- -------------- -------------- --------- --------
At 31 December
2022 - 32 - - 24 56
Amortisation charge - 249 17 16 3 285
Exchange adjustment - - - - - -
---------------------- --------- -------------- -------------- -------------- --------- --------
At 30 June 2023 - 281 17 16 27 341
---------------------- --------- -------------- -------------- -------------- --------- --------
Net book value
At 1 January 2022 352 - - - 21 373
At 30 June 2022 352 - - - 18 370
At 31 December
2022 482 923 - - 16 1,421
---------------------- --------- -------------- -------------- -------------- --------- --------
At 30 June 2023 3,682 3,624 485 282 13 8,086
---------------------- --------- -------------- -------------- -------------- --------- --------
10. Share capital
Number GBP'000
-------------------------------------------------------- ----------- --------
At 1 January 2022 31,170,093 312
-------------------------------------------------------- ----------- --------
At 30 June 2022 31,170,093 312
-------------------------------------------------------- ----------- --------
At 31 December 2022 31,170,093 312
Issue of new shares for the acquisition of Winterlight 3,445,595 34
Exercise of share options 237,145 3
-------------------------------------------------------- ----------- --------
At 30 June 2023 34,852,833 349
-------------------------------------------------------- ----------- --------
All ordinary shares are issued and fully paid, and carry equal
voting and distribution rights. There are no other classes of
shares.
On 10 January 2023, the Company issued 3,445,595 ordinary shares
of 0.01 pence with a nominal value of GBP34,456 as part of the
consideration for the acquisition of Winterlight (see note 8).
During the six months to 30 June 2023, the Company issued
237,145 (6 months to 30 June 2022: nil) ordinary shares of 0.01
pence each with a nominal value of GBP2,371 (6 months to 30 June
2022: GBPnil) pursuant to the exercise of shares options.
11. Reconciliation of operating result to operating cash
flows
6 months 6 months Year to
to 30 June to 30 June 31 December
2023 2022 2022
GBP'000 GBP'000 GBP'000
--------------------------------------------- ------------ ------------ -------------
(Loss)/profit before tax (3,417) 16 (624)
Adjustments for:
Depreciation of property, plant and
equipment 46 18 57
Impairment of property, plant and equipment 3 - -
Amortisation of intangible assets 285 3 37
Share-based payments charge 135 47 174
Finance costs - - -
Acquisition related expenses deferred
amounts 202 - 6
Interest receivable (6) (2) (9)
--------------------------------------------- ------------ ------------ -------------
Operating cash flows before movements
in working capital (2,752) 82 (359)
Increase in inventories (28) (126) (88)
Decrease/(increase) in trade and other
receivables 1,242 (246) 1,012
Increase/(decrease) in trade and other
payables 3 (528) (1,718)
(Decrease)/increase in deferred income
on contracts with customers (1,963) 2,497 2,630
--------------------------------------------- ------------ ------------ -------------
Cash (used in)/generated from operations
before tax (3,498) 1,679 1,477
Taxation credit received less tax paid (1) - 191
--------------------------------------------- ------------ ------------ -------------
Net cash flows (used in)/generated
from operations (3,499) 1,679 1,668
--------------------------------------------- ------------ ------------ -------------
12. Subsequent events
Subsequent to the period end, the Company has obtained a GBP3.0
million secured term loan.
13. Copies of interim financial statements
Copies of the interim financial statements are available from
the Company at its registered office at Tunbridge Court, Tunbridge
Lane, Bottisham, Cambridge, CB25 9TU. The interim financial
information document will also be available on the Company's
website www.cambridgecognition.com .
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END
IR FLFVDADIEFIV
(END) Dow Jones Newswires
September 26, 2023 02:01 ET (06:01 GMT)
Cambridge Cognition (AQSE:COG.GB)
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