REG - Cambridge Cognition - Interim Results
26/09/2023 07:15
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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 £19.9 million (31 December
2022: £17.6 million)
· Revenues of £6.0 million (H1 2022: £5.9 million)
· Adjusted operating loss, reflecting business acquisitions, of
£2.1 million (H1 2022: £0.1 million profit)
· Cash balances of £1.9 million as at 30 June 2023 (31 December
2022: £8.3 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 £1.5 million
· Strengthened the team with the addition of industry leaders from
Winterlight and Clinpal
· Delivered on product development goals, including integration of
the CANTAB™, Winterlight and Clinpal solutions
Subsequent events
· The Company is announcing today a £3.0 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 (mailto: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 (mailto: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 Rodgers (Corporate Finance)
Rupert Dearden (Corporate Broking)
Dowgate Capital Limited (Joint Broker) Tel: 020 3903 7715
David Poutney / James Serjeant
IFC Advisory Ltd (Financial PR and IR) Tel: 020 3934 6630
Tim Metcalfe / Graham Herring / Zach Cohen cog@investor-focus.co.uk
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 £17.6
million at the end of December 2022 to £19.9 million at the end of June 2023.
Orders received in the first half of 2023 totalled £6.3 million, 5% ahead of
the £6.0 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 £20 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 £14 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 £19.9 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
£million £million £million
%
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 £0.2 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 £0.4 million (H1
2022: £0.2 million) of pay costs in cost of sales that would have been in
administrative expenses under the previous accounting policy.
Gross profit rose by £0.3 million to £4.8 million (H1 2022: £4.5 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 £7.5 million was £3.0
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 £1.5 million. The reorganisation was completed before the end of
the half year and the associated costs of £0.3 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
£million £million
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 £8.3 million to £1.9 million over the period. Net cash
outflow from operations was £3.5 million (H1 2021: £1.7 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 £3.0 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 £0.5 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™, 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 to 30 June 2023 6 months to 30 June 2022 Year to 31 December 2022
Unaudited Unaudited Audited
(Restated(1))
Note £'000 £'000 £'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 £282,000 (H1 2022: £nil, 2022: £32,000), non-recurring items of
£940,000 (H1 2022: £nil, 2022: £479,000) and share-based payments of
£135,000 (H1 2022: £47,000, 2022: £174,000). 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 2023 At 30 June 2022 At 31 December 2022
Unaudited Unaudited Audited
£'000 £'000 £'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 capital Share premium Other reserve Own shares Retained earnings
Total
£'000 £'000 £'000 £'000 £'000 £'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 to 30 June 2023 6 months to 30 June 2022 Year to 31 December
2022
Unaudited Unaudited Audited
Note £'000 £'000 £'000
Net cash flows (used in)/generated from operating activities 11 (3,499) 1,679 1,668
Investing activities
Acquisition of subsidiary, net of cash acquired (3,002) - -
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
health 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 £222,000 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 to 30 June 2023 6 months to 30 June 2022 Year to 31 December 2022
£'000 £'000 £'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 to 30 June 2023 6 months to 30 June 2022 Year to 31 December 2022
£'000 £'000 £'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 to 30 June 2023 6 months to 30 June 2022 Year to 31 December 2022
£'000 £'000 £'000
(Loss)/earnings
(Loss)/earnings for the purposes of basic and diluted (loss)/earnings per (3,311) 16 (409)
share being net (loss)/profit attributable to owners of the Company
6 months to 30 June 2023 6 months to 30 June 2022 Year to 31 December 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 to 30 June 2023 6 months to 30 June 2022 Year to 31 December 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
£7.0 million, comprising £3.0 million in cash and £4.0 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 at acquisition Fair value adjustment Provisional fair value
£'000 £'000 £'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
Goodwill Technology based assets Marketing based assets Customer based assets Licences Total
£'000 £'000 £'000 £'000 £'000 £'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 £'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 £34,456 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
£2,371 (6 months to 30 June 2022: £nil) pursuant to the exercise of shares
options.
11. Reconciliation of operating result to operating cash flows
6 months to 30 June 2023 6 months to 30 June 2022 Year to 31 December 2022
£'000 £'000 £'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 £3.0 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
(http://www.cambridgecognition.com) .
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