TIDMCOG
RNS Number : 8974Z
Cambridge Cognition Holdings PLC
20 September 2022
20 September 2022
Cambridge Cognition Holdings Plc
("Cambridge Cognition", the "Company" or the "Group")
Interim Results for the six months ended 30 June 2022
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
2022.
The Company followed its strong performance in 2021 with a 31%
growth in revenues to GBP5.9million in the first half of 2022 (H1
2021: GBP4.5 million). Order intake was in line with the Board's
expectations at GBP7.2 million, up 44% on a like-for-like basis on
H1 2021 (H1 2021:GBP8.6 million, including GBP3.6 million of
one-off orders) and the Company has a growing, qualified pipeline
of opportunities for the second half of 2022.
The contracted order book was GBP18.6 million at 30 June 2022
increasing from GBP17.1m at 31 December 2021. The order book
provides the Company with visibility over future revenues and
provides a solid foundation from which the Company can continue to
invest in product and commercial development to further expand the
business.
Trading conditions continue to be positive, and the Company has
high levels of engagement with existing and potential new clients.
With continued investment in commercial activities and product
development, the Company expects to achieve further year-on-year
revenue growth. The cash position continued to grow to GBP8.6
million at 30 June 2022 and provides the business with the platform
to make considered investments as opportunities arise.
Financial highlights
-- Growth in revenue of 31% to GBP5.9 million (H1 2021: GBP4.5 million)
-- Profit after tax in line with expectations at GBP0.02 million (H1 2021: GBP0.1 million)
-- Continued growth in cash balances to GBP8.6 million at 30
June 2022 (31 December 2021: GBP6.8 million)
-- Increase in like-for-like sales orders of 44% to GBP7.2
million (H1 2021: GBP8.6 million including GBP3.6 million of
one-off orders)
-- Increase in contracted order book of GBP1.5 million to
GBP18.6 million (31 December 2021: GBP17.1 million)
Operational highlights
-- Strengthened senior leadership team with the appointment of a
Chief Financial Officer and a Chief Scientist
-- Entered a new therapeutic area for the Company, PTSD
-- Launched an Alzheimer's validation study for the Company's
voice-based cognitive assessment solution
Commenting on the results Matthew Stork, Chief Executive Officer
of Cambridge Cognition, said: "I am delighted with our continued
progress over the last six months. Our contracted order book is at
its highest level and, along with a healthy sales order pipeline
and strong cash generation, puts us in a great position to continue
to invest in strategies to grow the business further."
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
The Company delivered a strong financial and operational
performance in the first half of 2022, with our contracted order
book growing to its highest level at GBP18.6m at the end of June
2022.
Orders received totalled GBP7.2 million ( H1 2021: GBP8.6
million including GBP3.6 million of one-off orders ). These orders
included a new major pharmaceutical client for a schizophrenia
contract worth GBP0.7m over two years, a GBP2.1 million contract
award to provide cognitive assessments for a neurodegenerative
disease trial and a GBP1.0 million contract award to provide
digital cognitive assessments for a pivotal phase III autoimmune
disease trial.
Around 79% of the Company's clinical trial orders came from
existing customers (H1 2021: 66%), with the balance from new
customers, reflecting excellent customer service and the benefits
of the Company's focus on commercialisation. These sales orders
cover a range of endpoints and clinical trial phases, evidencing
the Company's ability to deliver against a spectrum of client
requirements. Approximately 29% of our sales orders were for more
than one product (H1 2021: 17%), demonstrating the strength of the
Company's growing product offering to fulfil customer needs.
As well as achieving a record sales orders total in the first
half, I am pleased to report more milestones for Cambridge
Cognition in the period, some of which closed subsequent to the end
of June. These include:
-- Strengthened senior leadership team with the appointment of a
permanent Chief Financial Officer, Chief Scientist dedicated to
R&D and a Head of HR to manage a growing workforce
-- Entered a new, high-growth therapeutic area for the Company -
PTSD - earning contracts with a top 10 pharma company and the US
Department of Defense
-- Launched an Alzheimer's validation study for NeuroVocalix(R)
in collaboration with the University of Oxford and Novo Nordisk
Cambridge Cognition is focused on successful operational
delivery, while continuing to innovate, as is critical for a
growing technology business to meet future customer requirements.
During the period, the business continued to invest through R&D
initiatives and increased headcount to deliver against increased
sales orders and order backlog, and to improve back-office support
to enhance the ability to deliver future growth.
Financial results
Sales orders of GBP7.2 million ( H1 2021: GBP8.6 million
including GBP3.6 million of one-off orders ) contributed to further
growth in the Company's contracted order book, which has increased
to GBP18.6m at 30 June 2022. The contracted order book represents
confirmed orders that will be recognised as revenue in future
periods.
Revenue, recognised as our software and associated services are
used, grew to GBP5.9 million (H1 2021: GBP4.5 million), a 31%
increase and continues the consistent upward profile of our revenue
over recent periods. The contracted order book provides us with
great visibility over our future revenues.
The key components of revenue are shown in the table below:
Revenue H1 2022 H1 2021 Change Increase
GBPm GBPm GBPm %
Software 2.3 1.4 0.9 63
-------- -------- ------- ---------
Services 3.1 2.9 0.2 7
-------- -------- ------- ---------
Total Software &
Services 5.4 4.3 1.1 25
-------- -------- ------- ---------
Hardware 0.5 0.2 0.3 122
-------- -------- ------- ---------
Total Revenues 5.9 4.5 1.4 31
-------- -------- ------- ---------
Software is recognised over the course of the contract once the
product is in use and Services recognised from the start and
throughout the contract. Software revenue increased by 63% to
GBP2.3 million due to the increased number and value of contracts
being delivered. Services revenue grew by 7% to GBP3.1 million,
more modestly than previously as studies continue to be delivered
and after an increase in the number of contracts being started
early in 2021.
Hardware revenue continues to be a small part of our revenue,
though it still doubled to GBP0.5 million. The trend in customers
asking us to supply and validate hardware for their studies is
becoming more prevalent. We consider each project individually on
the basis of profitability and product development opportunities,
and expect there may be some dilutive impact on our gross margin
longer term if the trend continues.
Gross profit rose by GBP1.1 million to GBP4.7 million (H1 2021:
GBP3.5 million), with the gross profit margin of 80% flat year on
year (H1 2021: 80%).
Excluding the impact of foreign currency exchange movement,
administrative expenses increased by GBP1.2 million to GBP4.6
million (H1 2021: GBP3.4 million) reflecting our continued
investment in commercial activities and product development.
Profit before tax, profit for the period and adjusted EBITDA
were all positive in the first half of 2022, although reflected the
increase in administrative expenses as we expanded our headcount.
Basic and diluted earnings per share are at 0.1p, respectively (H1
2021: 0.3p profit on a basic and diluted basis).
Net cash inflow from operations of GBP1.7 million (H1 2021:
GBP1.2 million), drove an overall improvement in cash to GBP8.6
million at 30 June 2022; driven primarily by invoices on order for
clinical trials. The high value of sales orders in H1 2022 has
driven strong cash conversion and resulted in an increase in cash,
up GBP1.8 million since 31 December 2021 to GBP8.6 million. This
results in the recognition of deferred revenue on the balance sheet
until revenue is recognised in line with our accounting
policies.
Operational Review
The Company's increasing contracted order book is underpinned by
continued strong commercial performance and significant progress
against our strategic activities, as set out in the 2021 annual
report:
1. Healthy pipeline and contracted order book. With the return
of in-person conferences and a dedicated prospecting programme, we
have more than tripled the number of sales-leads. Successful
commercialisation activities resulted in a 44% increase in
like-for-like sales (H1 2021: GBP8.6 million including GBP3.6
million of one-off orders) and a GBP1.5 million increase in the
contracted order book since year end.
2. Developing products that secure new business. We secured
contracted development work that aligned well with our product
development plans. This synergy enables us to continue developing
products while meeting client demands and positions us well to
continually meet the evolving demands of the industry. We continue
to assess new opportunities that enhance our product offering and
produce cross selling opportunities.
3. Expanding our specialist team. We are committed to having an
engaged, capable and well-resourced team and have grown our
headcount during H1 2022. This strengthened team enables us to
deliver our growing number of contracts with the same exceptional
service our customers value.
4. Multi-regional data centres. We have successfully migrated
our servers to the market leaders in cloud infrastructure - Amazon
Web Services (AWS) - so we benefit from the ability for
multi-regional data storage, which helps us meet the stringent data
privacy requirements in the sector. Furthermore, AWS offer many
micro-services that we can leverage for faster software
development.
5. Enabling efficient growth by software development in a lower
cost country. Having established a subsidiary in a lower cost
country, this has expanded our talent pool and we now have an
office with more than 10 software developers that will enable the
continued development and improvement of our full product set at a
lower cost.
Cambridge Cognition provides digital technology solutions for
clinicians and scientists and so coverage, whether explanation or
validation, in scientific publications, conferences and
exhibitions, in person or virtual, are vitally important to
success. During the period, further high-profile publications from
DiMe, 4YouandMe and Novartis were added to the Company's
bibliography of peer-reviewed papers of trials using our outcomes
assessments, taking the Company's total to over 2,600, while
Cambridge Cognition scientists represented the company at 17
conferences and exhibitions.
The business continued to provide excellent customer service
through strong operational delivery over the first half of 2022,
while at the same time managing a step-up in clinical trial volume
through contracts won over 2021 and H1 2022. Compared to December
2021, the business was running nearly 10% more clinical trials at
30 June 2022; a move made possible by configurable, cloud-based
systems.
Board Changes
As previously announced, we were pleased that Stephen Symonds,
who joined the company as Chief Financial Officer in April 2022,
was appointed to the board in August. Stephen has extensive
experience in the sector and is a valuable addition to the
board.
Outlook
The Company has made a great start to 2022, and has a positive
outlook that is not only sustainable but well positioned for
further year-on-year growth. The outlook is built on the strength
of an attractive contracted order book and a qualified pipeline of
opportunities, increasing investment in commercial activities and
continued product development, a rising cash balance and supportive
shareholder base.
There are possible challenges ahead with inflation increasing
across global economies. The Company has limited expenditure on gas
and electricity, though is subject to other inflationary pressures.
Inflation may also impact on pharmaceutical companies and dampen
demand, though we have not seen that at this time and our order
book provides the Company with visibility over revenues in the
short to medium term .
Cambridge Cognition will continue to grow in this rapidly
expanding market by leveraging our validated portfolio of digital
assessments, investing in R&D to keep pace with the evolving
demands of the industry, investing in opportunities that enhance
our product offering and safeguarding our reputation for
exceptional customer service.
Matthew Stork
Chief Executive Officer
20 September 2022
1. https://www.grandviewresearch.com/industry-analysis/virtual-clinical-trials-market
2. GlobalData. Virtual trials run by pharma x therapeutic area Jan 2021 - Aug 2022
3. GlobalData. 2021. Virtual Trials Research Report
CONDENSED CONSOLIDATED COMPREHENSIVE INCOME STATEMENT
For the six months ended 30 June 2022
6 months 6 months Year to
to 30 June to 30 June 31 December
2022 2021 2021
Unaudited Unaudited Audited
Note GBP'000 GBP'000 GBP'000
------------ ------------ -------------
Revenue 5 5,879 4,500 10,094
Cost of sales (1,192) (885) (2,015)
------------ ------------ -------------
Gross profit 4,687 3,615 8,079
Administrative expenses (4,673) (3,529) (7,829)
Other income 2 - 14
Finance costs - (2) (11)
------------ ------------ -------------
Profit before tax 16 84 253
Tax - - 197
------------ ------------ -------------
Profit for the period 16 84 450
============ ============ =============
Profit for the period 16 84 450
Other comprehensive income - items
that may be reclassified subsequently
to profit or loss:
Exchange differences on translation
of foreign operations (509) 51 14
------ ---- ----
Total comprehensive (expense)/income
for the period (493) 135 464
====== ==== ====
Earnings per share (pence) 6
Basic 0.1 0.3 1.4
Diluted 0.1 0.3 1.4
All amounts are attributable to equity holders in the parent
The above results relate to continuing operations
CONDENSED Consolidated statement of financial position
At 30 June 2022
At 31
At 30 At 30 December
June 2022 June 2021 2021
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
----------- ----------- ----------
Assets
Non-current assets
Intangible assets 370 376 373
Property, plant and equipment 77 105 52
Investments 49 49 49
Total non-current assets 496 530 474
Current assets
Inventories 255 138 126
Trade and other receivables 5,611 5,025 5,130
Cash and cash equivalents 8,561 4,168 6,810
----------- ----------- ----------
Total current assets 14,427 9,331 12,066
----------- ----------- ----------
Total assets 14,923 9,861 12,540
=========== =========== ==========
Liabilities
Current liabilities
Trade and other payables 14,736 9,600 11,908
Total liabilities 14,736 9,600 11,908
----------- ----------- ----------
Equity
Share capital 312 312 312
Share premium account 11,151 11,151 11,151
Other reserves 5,616 6,162 6,125
Own shares (78) (78) (78)
Retained earnings (16,814) (17,286) (16,878)
----------- ----------- ----------
Total equity 187 261 632
----------- ----------- ----------
Total liabilities and equity 14,923 9,861 12,540
=========== =========== ==========
CONDENSED Consolidated statement of changes in equity
Share Share Other Own Retained
capital premium reserve shares earnings Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
---------------------- --------- --------- --------- -------- ---------- --------
Balance at 1 January
2021 312 11,151 6,111 (78) (17,439) 57
Profit for the
period - - - - 84 84
Other comprehensive
income - - 51 - - 51
--------- --------- --------- -------- ---------- --------
Total comprehensive
income for the
period - - 51 - 84 135
--------- --------- --------- -------- ---------- --------
Credit to equity
for share-based
payments - - - - 69 69
--------- --------- --------- -------- ---------- --------
Transactions with
owners - - - - 69 69
--------- --------- --------- -------- ---------- --------
Balance at 30
June 2021 312 11,151 6,162 (78) (17,286) 261
Balance at 1 July
2021 312 11,151 6,162 (78) (17,286) 261
Profit for the
period - - - - 366 366
Other comprehensive
expense - - (37) - - (37)
--------- --------- --------- -------- ---------- --------
Total comprehensive
income for the
period - - (37) - 366 329
--------- --------- --------- -------- ---------- --------
Credit to equity
for share-based
payments - - - - 42 42
--------- --------- --------- -------- ---------- --------
Transactions with
owners - - - - 42 42
--------- --------- --------- -------- ---------- --------
Balance at 31
December 2021 312 11,151 6,125 (78) (16,878) 632
---------------------- --------- --------- --------- -------- ---------- --------
Balance at 1 January
2022 312 11,151 6,125 (78) (16,878) 632
Profit for the
period - - - - 16 16
Other comprehensive
expense - - (509) - - (509)
--------- --------- --------- -------- ---------- --------
Total comprehensive
expense for the
period - - (509) - 16 (493)
--------- --------- --------- -------- ---------- --------
Credit to equity
for share-based
payments - - - - 48 48
--------- --------- --------- -------- ---------- --------
Transactions with
owners - - - - 48 48
--------- --------- --------- -------- ---------- --------
Balance at 30
June 2022 312 11,151 5,616 (78) (16,814) 187
--------- --------- --------- -------- ---------- --------
CONDENSED Consolidated statement of cash flows
For the 6 months ended 30 June 2022
6 months 6 months Year to
to 30 June to 30 June 31 December
2022 2021 2021
Unaudited Unaudited Audited
Note GBP'000 GBP'000 GBP'000
------------ ------------ -------------
Net cash flows from operating
activities 7 1,679 1,236 3,945
Investing activities
Interest received 2 - -
Purchase of intangible assets - - -
Purchase of property, plant and
equipment (43) (38) (56)
Purchase of investment - (49) (49)
------------ ------------ -------------
Net cash flow used in investing
activities (41) (87) (105)
Financing activities
Interest payments - - (11)
Lease payments - (36) (86)
------------ ------------ -------------
Net cash flows from financing
activities - (36) (97)
Net increase in cash and cash
equivalents 1,638 1,113 3,743
Cash and cash equivalents at start
of period 6,810 3,047 3,047
Exchange differences on cash and
cash equivalents 113 8 20
------------ ------------ -------------
Cash and cash equivalents at end
of period 8,561 4,168 6,810
============ ============ =============
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 20 September 2022.
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
2021 were approved by the Board of Directors on 13 May 2022 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
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 2021.
4. Critical accounting judgements and key sources of estimation
uncertainty
In the application of the Group's accounting policies the
directors are required to make judgements, estimates and
assumptions about the carrying amounts of assets and liabilities
that are not readily apparent from other sources. The estimates and
associated assumptions are based on historical experience and other
factors that are considered to be relevant. Actual results may
differ from these estimates.
The estimates and underlying assumptions are reviewed on an
ongoing basis.
The following are the critical judgements that the directors
have made in the process of applying the Group's accounting
policies.
Revenue recognition
Judgements may be required in recognising revenue and cost.
These judgements include
-- The extent to which, and the way in which, contracts are
separated into their component parts and the values attributed to
those parts;
-- Whether software licences are granted to allow the customer
the benefit of use of our intellectual property over a period of
time (including benefitting from future maintenance and
improvements) or whether that right is given as the intellectual
property exists at the point of time the licence is granted. In the
case of the former, software is recognised over the period of use,
for the latter revenue is recognised when the licence commences and
the customer is able to use the software;
-- The adoption of the portfolio approach for lower value sales
and the recognition criteria applied;
-- Where performance obligations are satisfied over time, the
length of time remaining for performance, and whether this needs
revising over time; and
-- The length of time for performance also dictates the initial
deferral and subsequent recognition of commissions in cost of
sales.
Goodwill
The Group reviews the carrying value of its goodwill balances by
carrying out impairment tests at least on an annual basis. These
tests require estimates to be made of the value in use of its CGUs
which are dependent on estimates of future cash flows and long-term
growth rates of the CGUs.
Capitalisation of development costs
The point at which development costs meet the criteria for
capitalisation is critically dependent on management judgment of
the probability of future economic benefits.
Recovery of deferred tax assets
Deferred tax assets have not been recognised for deductible
temporary differences, share options and tax losses as management
considers that there is not sufficient certainty that future
taxable profits will be available to utilise those temporary
differences and tax losses.
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
2022 2021 2020
GBP'000 GBP'000 GBP'000
Software 2,240 1,374 3,609
Services 3,096 2,882 5,638
Hardware 543 244 847
5,879 4,500 10,094
------------ ------------ -------------
6. Earnings per share
The calculation of earnings 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
2022 2021 2021
GBP'000 GBP'000 GBP'000
Earnings
Earnings for the purposes of basic and
diluted earnings per share being net profit
attributable to owners of the Company 16 84 450
'000 '000 '000
Number of shares
Weighted average number of ordinary shares
for the purposes of basic EPS 31,097 31,097 31,170
Effect of dilutive share options 2,154 2,177 349
------------ ------------ -------------
Weighted average number of ordinary shares
for the purposes of diluted EPS 33,251 33,274 31,519
------------ ------------ -------------
6. Earnings per share (continued)
Pence Pence Pence
Earnings per share
Basic 0.1 0.3 1.4
Diluted 0.1 0.3 1.4
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.
The number of shares in issue at 30 June 2022 was 31,170,903 (31
December 2021: 31,170,903).
7. Reconciliation of operating result to operating cash
flows
6 months 6 months
to 30 June to 30 June Year to 31
2022 2021 December 2021
GBP'000 GBP'000 GBP'000
Profit/(loss) before tax 16 84 253
Adjustments for:
Depreciation of property plant
and equipment 18 70 142
Amortisation of software licences 3 3 6
Share-based payments charge 47 69 111
Finance costs - 2 11
Interest received (2) - -
Operating cash flows before
working capital movements 82 228 523
Change in inventories (126) (86) (75)
Change in trade and other
receivables (246) (2,416) (2,285)
Change in trade and other
payables 1,969 3,512 5,782
------------ ------------ ---------------
Cash generated by operations 1,679 1,238 3,945
Taxation paid - (2) -
------------ ------------ ---------------
Net cash flows from operations 1,679 1,236 3,945
------------ ------------ ---------------
8. 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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