REG - IXICO plc - Half-year Report and Trading Update
24/05/2022 07:00
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RNS Number : 5107M IXICO plc 24 May 2022
24 May 2022
IXICO plc
("IXICO", the "Company" or the "Group")
Half yearly report to 31 March 2022 and Trading Update
IXICO plc (AIM: IXI), the precision analytics company delivering intelligent
insights in neuroscience, announces its unaudited interim results for the six
months ended 31 March 2022.
Financial highlights
· Revenues of £3.9 million for the six months to 31 March 2022 (H1
2021: £4.9m);
· Gross margin at 59.8% (H1 2021: 67.6%);
· Earnings before interest, taxation, depreciation and amortisation
('EBITDA') of £0.5m (H1 2021: £0.9m);
· EBITDA margin at 13.8% (H1 2021: 18.0%);
· £5.8 million cash as at 31 March 2022 (H1 2021: £7.0m);
· £0.2m operational cash inflow (H1 2021: £0.3m outflow);
· Net assets of £11.5m (H1 2021: £10.4m); and
· Profit per share of 0.45p (H1 2021: 1.78p).
Commercial and operational highlights
· £3.8m of contracts signed during the period across several
clients and neurological therapeutic indications;
· Order book(1) of £12.6 million at 31 March 2022 (H1 2021: £19.0m)
which incorporates the negative impact of client trial cessations announced
over the past twelve months;
· £1.0m of capital investment in science and technology
capabilities during the period;
· Launch of IXIQ.Ai, the Company's new AI platform for brain
segmentation; and
· Consortium agreement signed after the period end to utilise IXIQ.Ai to
develop new standards for image analysis in Huntington's disease ('HD');
(1)Order book is contracted but unrecognised revenue adjusted down to provide
the Company's best expectations of delivery.
Trading update
Following a review of the Company's expected financial performance across the
second half of the year, the Board anticipates that the Company will
materially exceed existing market profit expectations for the full year.
Consequently, and despite the impact of recently announced client trial
cessations, it provides updated guidance that EBITDA profits will be more than
£1.2m, resulting in a further strengthened cash position.
However, while it is too early to know the full effect on FY23 with certainty,
the most significant impact of the recent client trial cessations is expected
to be felt across that period. This will mean that, whilst the Company
expects weaker revenues in the next year, it is able to leverage the continued
strengthening of its balance sheet and strong, debt free, cash position to
continue the delivery of its strategic investment plans alongside a continued
careful management of expenditure. The Company consequently expects a
short-term return to EBITDA losses, reflecting a temporary discontinuity in
the growth path that the Company has achieved over the last six years. The
Company continues to be excited about the medium and long-term market
opportunity open to it, as existing and prospective clients seek ways to
increase the precision of patient selection and biomarker measurement within
their neurological trials.
The Company's continued focus on progressing well defined investment
activities, reflects and seeks to augment further its successful recent
strategy of building and diversifying its client base. Investments that have
been made over the last two years have positioned the Company to win and
execute on more client trials, accepting that, given the long contracting
cycles, it will take a period of time, for this to translate back to
additional revenue growth and profitability.
Giulio Cerroni, CEO of IXICO, commented:
"The financial results for the half year are in line with expectations and we
anticipate stronger second half trading. I am also encouraged in our
progress in commercialising cutting edge analytics tools to provide clinically
valuable insights to our global biopharmaceutical clients. Specifically, the
release and deployment of our next generation AI platform, IXIQ.Ai onto new
client projects during the period.
Over the last twelve months we have been materially impacted by the challenges
our clients face in developing urgently needed effective and safe drugs.
However, this also highlights the critical importance and value of IXICO's
Advanced AI driven analytics services in providing improved insights in
clinical development programmes. Whilst our clients' recent trial cessations
create an interruption to our record of consistent growth, and will continue
to do so across FY23, we are positioned to support our clients in the design
and analysis of their trials to maximise their likelihood of success. The
neuroscience field is poised to leverage data to refine disease categories
such as Alzheimer's disease and Huntington's disease and identify the
biological drivers in different subpopulations. IXICO's data driven AI
analytical techniques will enable the design of more precise therapeutic
indications in targeted populations to support further scientific advances in
precision medicine in neuroscience.
Our investment priorities are being delivered and our capabilities
strengthened in a growing market which further strengthens my conviction for
the Company's long-term prospects as we move forward."
A recording of the results presentation will be made available on the Group's
website here: https://ixico.com/investors/company-information/investor-videos/
(https://ixico.com/investors/company-information/investor-videos/)
The information contained within this announcement is deemed by the Company to
constitute inside information as stipulated under the Market Abuse Regulation
(EU) No. 596/2014 as amended by The Market Abuse (Amendment) (EU Exit)
Regulations 2019. Upon the publication of this announcement via the Regulatory
Information Service, this inside information is now considered to be in the
public domain.
For further information please contact:
IXICO plc +44 (0)20 3763 7499
Giulio Cerroni, Chief Executive Officer
Grant Nash, Chief Financial Officer
Cenkos Securities PLC (Nominated adviser and sole broker) +44 (0)20 7397 8900
Giles Balleny / Max Gould (Corporate Finance)
Michael F Johnson / Tamar Cranford-Smith (Sales)
About IXICO
IXICO is dedicated to delivering insights in neuroscience to help transform
the advancement of investigational therapies for neurological diseases, such
as Huntington's disease, Parkinson's disease and Alzheimer's disease. The
Company's purpose is to advance medicine and human health by turning data into
clinically meaningful information, providing valuable new insights in
neuroscience by supporting pharmaceutical companies across all phases of CNS
clinical research. IXICO's goal is to be a leading advocate of artificial
intelligence in medical image analysis.
IXICO has developed and deployed breakthrough data analytics, at scale,
through its remote access technology platform, to improve the return on
investment in drug development and reduce risk and uncertainty in clinical
trials for the Company's pharmaceutical clients.
More information is available on www.IXICO.com (http://www.IXICO.com)
CHIEF EXECUTIVE OFFICER'S STATEMENT
Statement from Giulio Cerroni
Across the past six months, we have reported revenues of £3.9 million as
compared to £4.9m in H1 2021 and as at 31 March 2022, our contracted order
book totalled £12.6 million (H1 2021: £19.0 million). These contractions
reflect the impact of the client clinical trial cessations we have disclosed
to the market over the past twelve months and the length of cycle times within
the industry to sign and initiate new trials, which have been further extended
by the impact of COVID-19.
This emphasises the importance of continued investment by all CROs to build
scale and client diversification to mitigate short term impacts when
biopharmaceutical clients terminate clinical development programmes of their
investigational new drugs (INDs). The priority attributed to achieving scale
at IXICO underpins our decision to invest £1.0m over the last six months in
our Microsoft Azure cloud-based next-generation technology platform (which is
expected to launch later in 2022) and in new and enhanced analytical tools as
we strengthen and diversify our offering across neurological therapeutic
indications specialisms.
Positively, whilst in a period of rebuilding our order book and revenue
levels, we have continued to report strong gross profit margins at 59.8% (H1
2021: 67.6%) with an increased proportion of early-phase projects. These
projects are lower margin than phase III studies, as they are smaller and
require relatively lower levels of analysis. Nonetheless, expanding our
portfolio of these projects is an important success factor for long term
growth as it is these trials which have the potential to grow into
larger-later phase trials which are analysis heavy and drive operating
leverage for the Company. By winning these trials at an early stage we take
a position of strength in continuing to serve these clients and drug
candidates if and when they progress through the development pipeline.
Similarly, I am pleased with the balance we have struck between investments in
our technology and scientific offering, both of which further strengthen our
commercial offering, with careful cost management. Consequently, we have
reported lower operating expenditure at £2.5m compared to the prior year (H1
2021: £2.9m) thereby retaining a robust EBITDA position of £0.5m (H1 2021:
£0.9m) and achieving an operating cash inflow of £0.2m which compares
favourably with the same period in the prior year (H1 2021: £0.3m outflow).
Significantly, we have entered some particularly exciting new contracts in
recent months. The launch of IXIQ.Ai, our new deep learning AI-based
analytics platform which provides increased sensitivity, accuracy and
flexibility, responds to our clients' need for more efficient clinical
trials. The precision enhancements provided by IXIQ.Ai support the reduction
of trial sizes and therefore costs, whilst increasing the likelihood of trial
success by supporting new insights in patient selection via biomarker
measures. This has directly led to new contract wins, the most significant
being the recently announced consortium agreement in HD which has strong
potential to expand further over the next year or so.
Looking forward to the second half of the year, we retain our focus on the
business fundamentals of winning new contracts, across a diverse client base
and an increasing breadth of neuroscience indications. We are, by strategic
intent, a neuroscience specialist and our investments are accordingly entirely
focussed on ensuring we offer the best possible services to our clients in
this field.
Despite weaker first half results compared to our recent record of growth, we
anticipate a stronger second half of the year as we deliver recently signed
agreements and complete close out activities on the terminated phase III HD
studies. We are focussed on the medium and longer term, address a growing
market and have clear strategic priorities in which we will continue to invest
to ensure we secure the opportunity the market provides.
We anticipate the second half of the year to result in a material
outperformance of existing EBITDA market expectations. This is driven by
one-off close-down activities on HD phase III trials, a profitability impact
resulting from recent contract wins, the capitalisation of internal costs as
we continue to invest in our next generation image capture and analysis
platform as well as careful management of expenditure.
The Group is well-capitalised, debt-free and profitable, with a strong balance
sheet containing a cash balance of £5.8 million as at 31 March 2022. Our
priority remains ensuring delivery of leading services to our clients as the
industry adjusts to new ways of working and becomes increasingly focussed on a
precision analytics approach to clinical trial protocols and delivery. In so
doing we will ensure we maximise value for all our stakeholders.
Financial Review
KPI H1-22 H1-21 Movement FY21
Revenue £3.9m £4.9m 20.4% â £9.2m
Gross profit £2.3m £3.3m 30.3% â £6.0m
Gross margin 59.8% 67.6% 7.8% â 65.6%
EBITDA profit £0.5m £0.9m £0.4m â £1.7m
EBITDA margin 13.8% 18.0% 4.2% â 18.9%
Operating profit / (loss) £0.2m £0.6m £0.4m â £1.2m
Profit / (loss) per share 0.45p 1.78p 1.33p â 3.30p
Orderbook(1) £12.6m £19.0m £6.4m â £18.8m
Cash £5.8m £7.0m £1.2m â £6.7m
Net Assets £11.5m £10.4m £1.1m á £11.2m
(1)Orderbook is contracted but not yet recognised revenue adjusted down to
reflect the Company's best estimate of delivery.
Revenue
· Revenue of £3.9 million (H1 2021: £4.9m) representing a 20.4%
decrease on the prior period. This reduction was primarily the result of
several client trials being cancelled over the past twelve months, the impact
of these on ongoing revenue streams and the contract cycle times typical of
the clinical trials market, further extended by COVID-19, to rebuild the
contracted order book.
Gross profit and margin
· Gross profit of £2.3 million (H1 2021: £3.3m) with a gross
margin of 59.8% (H1 2021: 67.6%). The year on year change reflects the
reduced revenues in the period, and a greater proportion of this revenue
consisting of services to smaller-scale early-phase clinical trials.
Operating expenses
· Operating expenditure of £2.5 million (H1 2021: £2.9m),
reflecting the careful management of expenditure across the period.
· Capitalised R&D expenditure increased in the period to £1.0
million (H1 2021: £0.5m), demonstrating the Company's continued commitment to
investment in building scale and capabilities to drive growth.
EBITDA and operating profit
· EBITDA of £0.5 million (H1 2021: £0.9m) and operating profit of
£0.2m (H1 2021: £0.6m). Both reflecting the revenues achieved in the
period and the effective management of operating expenditures.
Orderbook
· Order book of £12.6m at 31 March 2022 (H1 2021: £19.0m). The
reduction in the contracted orderbook reflects the adjustment resulting from
previously announced clinical trial failures and the recognition of revenue in
the period partially offset by new contract wins.
Cash
· Cash of £5.8 million at 31 March 2022 (H1 2021: £7.0m). This
reflects an operating cash inflow of £0.2 million (H1 2021: outflow of
£0.3m) offset by capital investment of £1.1m (H1 2021: £0.9m).
Net Assets
· Net assets increased to £11.5m at 31 March 2022 (H1 2021:
£10.4m) reflecting the capital investments made by the Company over the past
twelve months.
Consolidated Statement of Comprehensive Income
For the six months ended 31 March 2022 - unaudited
31-Mar-22 31-Mar-21 30-Sep-21
6 months 6 months 12 months
Unaudited Unaudited Audited
Notes £000 £000 £000
Revenue 3,922 4,913 9,190
Cost of sales (1,576) (1,593) (3,166)
Gross profit 2,346 3,320 6,024
Other income 393 224 448
Operating expenses
Research and development expenses (631) (650) (1,240)
Sales and marketing expenses (497) (651) (1,146)
General and administrative expenses (1,394) (1,604) (2,905)
Total operating expenses (2,522) (2,905) (5,291)
Operating profit 217 639 1,181
Finance income - 1 1
Finance expense (16) (5) (22)
Profit on ordinary activities before taxation 201 635 1,160
Taxation 15 208 415
Profit attributable to equity holders for the period 216 842 1,575
Other comprehensive expense:
Items that will be reclassified subsequently to profit or loss
Foreign exchange translation differences 12 9 9
Movement in cash flow hedges (5) - -
Total other comprehensive expense 7 9 9
Total comprehensive income attributable 223 851 1,584
to equity holders for the period
Profit per share (pence)
Basic profit per share 3 0.45 1.78 3.30
Diluted profit per share 3 0.43 1.68 3.12
Consolidated Statement of Financial Position
As at 31 March 2022 - unaudited
31-Mar-22 31-Mar-21 30-Sep-21
6 months 6 months 12 months
Unaudited Unaudited Audited
Notes £000 £000 £000
Assets
Non-current assets
Property, plant and equipment 890 1,183 1,081
Intangible assets 3,647 1,711 2,710
Total non-current assets 4,537 2,894 3,791
Current assets
Trade and other receivables 2,589 2,887 3,194
Current tax receivables 658 558 480
Cash and cash equivalents 5,801 7,011 6,684
Total current assets 9,048 10,456 10,358
Total assets 13,585 13,350 14,149
Liabilities and equity
Non-current liabilities
Trade and other payables 51 159 114
Lease liabilities 469 548 519
Total non-current liabilities 520 707 633
Current liabilities
Trade and other payables 1,441 2,050 2,217
Provisions - 175 -
Lease liabilities 76 29 78
Total current liabilities 1,517 2,254 2,295
Total liabilities 2,037 2,961 2,928
Equity
Ordinary shares 4 482 480 482
Share premium 4 84,802 84,802 84,802
Merger relief reserve 1,480 1,480 1,480
Reverse acquisition reserve (75,308) (75,308) (75,308)
Cash flow hedge reserve (5) - -
Foreign exchange translation reserve (76) (88) (88)
Capital redemption reserve 7,456 7,456 7,456
Accumulated losses (7,283) (8,433) (7,603)
Total equity 11,548 10,389 11,221
Total liabilities and equity 13,585 13,350 14,149
Consolidated Statement of Changes in Equity
For the six months ended 31 March 2022 - unaudited
Foreign Cash
Merger Reverse exchange flow Capital
Ordinary Share relief acquisition translation hedge redemption Accumulated
shares premium reserve reserve reserve reserve reserve Losses Total
£000 £000 £000 £000 £000 £000 £000 £000 £000
Balance at 30 September 2020 471 84,499 1,480 (75,308) (97) - 7,456 (9,382) 9,119
Total comprehensive income
Profit for the period - - - - - - - 1,575 1,575
Other comprehensive income:
Foreign exchange translation - - - - 9 - - - 9
Total comprehensive income - - - - 9 - - 1,575 1,584
Transactions with owners
Charge in respect of share options - - - - - - - 204 204
Exercise of share options 11 303 - - - - - - 314
Total transactions with owners 11 303 - - - - - 204 518
Balance at 30 September 2021 482 84,802 1,480 (75,308) (88) - 7,456 (7,603) 11,221
Total comprehensive income / (expense)
Profit for the period - - - - - - - 216 216
Other comprehensive income / (expense): - - - - - - - - -
Foreign exchange translation - - - - 12 - - - 12
Movement in cash flow hedges - - - - - (5) - - (5)
Total comprehensive income / (expense) - - - - 12 (5) - 216 223
Transactions with owners
Charge in respect of share options - - - - - - - 104 104
Exercise of share options - - - - - - - - -
Total transactions with owners - - - - - - - 104 104
Balance at 31 March 2022 482 84,802 1,480 (75,308) (76) (5) 7,456 (7,283) 11,548
Consolidated Statement of Cashflows
For the six months ended 31 March 2022 - unaudited
31-Mar-22 31-Mar-21 30-Sep-21
6 months 6 months 12 months
Unaudited Unaudited Audited
£000 £000 £000
Cash flows from operating activities
Profit for the period 217 842 1,575
Finance income - (1) (1)
Finance expense 16 5 22
Taxation (15) (208) (415)
Depreciation of fixed assets 228 247 464
Amortisation of intangibles 91 50 145
Dilapidation provision release - (53) (53)
Research & development expenditure credit (153) (92) (160)
Share option charge 104 107 204
488 897 1,781
Changes in working capital
Decrease/(increase) in trade and other receivables 609 (755) (1,112)
(Decrease)/increase in trade and other payables (869) (436) (410)
Cash generated from/(used in) operations 228 (294) 259
Taxation received - - 354
Taxation paid (10) - -
Net cash generated from/(used in) operating activities 218 (294) 613
Cash flows from investing activities
Purchase of property, plant and equipment (37) (36) (170)
Purchase of intangible assets including staff costs capitalised (1,032) (877) (1,984)
Finance income - 1 1
Net cash used in investing activities (1,069) (912) (2,153)
Cash flows from financing activities
Issue of shares - 312 314
Repayment of lease liabilities (44) (44) (44)
Interest paid - (5) -
Net cash generated from financing activities (44) 263 270
Movements in cash and cash equivalents in the period (895) (943) (1,270)
Cash and cash equivalents at start of period 6,684 7,945 7,945
Effect of exchange rate fluctuations on cash held 12 9 9
Cash and cash equivalents at end of period 5,801 7,011 6,684
Notes to the financial statements
1. Presentation of the financial statements
a. General information
IXICO plc (the 'Company') is a public limited company incorporated in England
and Wales and is admitted to trading on the AIM market of the London Stock
Exchange under the symbol IXI. The address of its registered office is 4th
Floor, Griffin Court, 15 Long Lane, London EC1A 9PN.
The Company is a parent of a number of subsidiaries, together referred to
throughout as 'the Group'. The Group is an established provider of
technology-enabled imaging services to the global biopharmaceutical industry.
The Group's services are used to select patients for clinical trials and
assess the safety and efficacy of new drugs in development within the field of
neurological disease.
b. Basis of preparation
The condensed consolidated interim financial statements were approved by the
Board of Directors for issue on 23(rd) May 2022. The condensed consolidated
interim financial statements do not comprise statutory accounts within the
meaning of section 434 of the Companies Act 2006. The condensed consolidated
interim financial statements for the six months ended 31 March 2022, together
with the comparative information for the six months ended 31 March 2021, are
unaudited.
The statutory accounts of the Company for the year ended 30 September 2021
were approved by the Board of Directors on 6 December 2021 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 comprise a Statement
of Comprehensive Income, a Statement of Financial Position, a Statement of
Changes in Equity, a Statement of Cash Flows, and accompanying notes. These
financial statements have been prepared under the historical cost convention
modified by the revaluation of certain financial instruments.
The condensed consolidated interim financial statements are presented in Great
British Pounds ('£' or 'GBP') and are rounded to the nearest thousand unless
otherwise stated. This is the functional currency of the Group, and is the
currency of the primary economic environment in which it operates. Foreign
currency transactions are accounted for in accordance with the policies set
out below.
c. Basis of consolidation
The condensed consolidated interim financial statements incorporate the
accounts of the Company and its subsidiary companies adjusted to eliminate
intra-Group balances and any unrealised gains and losses or income and
expenses arising from intra-Group transactions. When necessary, adjustments
are made to the financial statements of subsidiaries to bring their accounting
policies into line with the Group's accounting policies.
The Group controls a subsidiary when the Group is exposed to, or has rights
to, variable returns from its involvement with a subsidiary and has the
ability to affect those returns through its power over a subsidiary. In
assessing control, potential voting rights that are currently exercisable or
convertible are taken into account.
The results of subsidiary companies are included in the condensed consolidated
financial statements from the date that control commences until the date that
control ceases. The assets and liabilities of foreign operations are
translated into GBP at exchange rates prevailing at the end of the reporting
period. Income statements and cash flows of foreign operations are translated
into GBP at average monthly exchange rates which approximate foreign exchange
rates at the date of the transaction. Foreign exchange differences arising on
retranslation are recognised directly in a separate translation reserve.
d. Going concern
At the time of approving the condensed consolidated financial statements, the
Directors have considered the expected future performance together with the
Group's estimated future cash inflows from existing long-term contracts and
sales pipeline.
In assessing going concern, management prepare forecasts which are updated
monthly that consider different scenarios throughout the course of the
financial year, as well as ad-hoc forecasts that extend into future years. The
Directors have considered these forecasts, alongside the Group's strong
balance sheet and cash balance as well as the ability for the Group to
mitigate costs if necessary.
After due consideration of these forecasts, the Directors concluded with
confidence that the Group has adequate financial resources to continue in
operation for the foreseeable future.
2. Significant accounting policies, judgements, and estimation
uncertainty
The unaudited condensed consolidated interim financial statements have been
prepared using the accounting policies as described in the 30 September 2021
audited year end Annual Report and have been consistently applied.
When preparing the condensed consolidated interim financial statements, the
Directors make a number of judgements, estimates and assumptions about the
recognition and measurement of assets, liabilities, income and expenses.
Significant management judgements
The following are significant management judgements in applying the accounting
policies of the Group that have the most significant effect on the
consolidated financial statements.
Determination of acting as agent or principal
The scope of the project or contract terms are reviewed to determine whether
the Group is acting as principal or agent. This determination depends on the
facts and circumstances of each individual project or contract and requires
judgement, which are made in accordance with the applicable standards. The
primary indicator used to determine whether the Group is acting as a principal
is whether control of the good or service is gained prior to the good or
service transferring to the client. If control is gained, revenue is
recognised on a gross basis. If no control is achieved, then revenue is
recognised on a net basis. The Group has entered into a contract with a client
to arrange the delivery of products from a third party to various client trial
sites. The Group determined this was an agency relationship. If this judgement
was incorrect and the Group was acting as principal, it would result in a
material increase in revenue and cost of sales recognised in the period and a
decrease in profit margins achieved.
Capitalisation of internally developed software
Distinguishing the research and development phases of a new software product
and determining whether the requirements for the capitalisation of development
costs are met requires judgement. Management will assess whether a project
meets the recognition criteria as set out in IAS 38 based on an individual
project basis. Where the criteria are not met, the research and development
expenditure will be expensed in the Consolidated Statement of Comprehensive
Income. Where the recognition criteria are met, the items will be capitalised
as an intangible asset.
During the period ended 31 March 2022, total research and development expenses
totalled £1,678,000 (H1 2021: £1,136,000). Of this amount, £1,027,000 (H1
2021: £486,000) was capitalised as an intangible asset. The balance of
expenditure being £631,000 (H1 2021: £650,000) is recognised in the
Consolidated Statement of Comprehensive Income as an expense.
Recovery of deferred tax assets
Deferred tax assets have not been recognised for deductible temporary
differences and tax losses. The Directors consider that there is not
sufficient certainty that future taxable profits will be available to utilise
those temporary differences and tax losses.
Estimation uncertainty
Information about estimates and assumptions that have the most significant
effect on recognition and measurement of assets, liabilities, income and
expenses is provided below. Changes to these estimations may result in
substantially different results for the year.
Determination of transaction prices in revenue recognition
Client contracts include an agreed work order so the transaction price for a
contract is allocated against each distinct performance obligations for each
service, based on their relative stand-alone selling prices. For legacy
contracts prior to the adoption of IFRS 15, management were required to
estimate the standalone price allocated to each distinct service that were
previously grouped in a single price. For new contracts, the fair value of
individual components is based on actual amounts charged by the Group on a
stand-alone basis. Management have determined that for items recognised on a
straight-line basis, including project, site and data management, the demands
of this on the company are spread evenly over the life of the revenue stream.
This was determined through an understanding of the work required to deliver
the various revenue streams and the obligations within the contract needing to
be met.
Share-based payments
The Group measures the cost of equity-settled transactions with employees by
reference to the fair value of the equity instruments at the date at which
they are granted. The fair value of the options granted is measured using an
option valuation model, taking into account the terms and conditions upon
which the options were granted.
Useful lives of depreciable assets
The useful lives of depreciable assets are determined by management at the
date of purchase based on the expected useful lives of the assets. These are
subsequently monitored and reviewed annually and where there is objective
evidence of changes in the useful economic lives, these estimates are
adjusted. Any changes to these estimates may result in significantly different
results for the period.
3. Earnings per share
The calculation of basic and diluted earnings per share ('EPS') of the Group
is based on the following data:
31 Mar 22 31 Mar 21 30 Sep 21
6 months 6 months 12 months
Unaudited Unaudited Audited
Earnings
Earnings for the purposes of basic and diluted EPS, being net profit 216 842 1,575
attributable to the owners of the Company (£000)
Number of shares
Weighted average number of shares for the purposes of basic EPS 48,151,373 47,259,617 47,664,319
Effect of potentially dilutive ordinary shares:
- Weighted average number of share options 2,487,018 2,950,951 2,749,423
Weighted average number of shares for the purposes of diluted EPS 50,638,391 50,210,568 50,413,742
Basic earnings per share is calculated by dividing earnings attributable to
the owners of the Company by the weighted average number of shares in issue
during the period. The diluted EPS is calculated by dividing earnings
attributable to the owners of the Company by the weighted average number of
shares in issue taking into account the share options outstanding during the
period.
The basic and diluted earnings per share for the Group and Company is:
31 Mar 21 31 Mar 21 30 Sep 21
6 months 6 months 12 months
Unaudited Unaudited Audited
Basic earnings per share 0.45p 1.78p 3.30p
Diluted earnings per share 0.43p 1.68p 3.12p
4. Issued capital and reserves
Ordinary shares and share premium
The Company has one class of ordinary shares. The share capital issued has a
nominal value of £0.01 and all carry the right to one vote at shareholders'
meetings and are eligible to receive dividends. Share premium is recognised
when the amount paid for a share is in excess of the nominal value.
The Group and Company's opening and closing share capital and share premium
reserves are:
Group and Company
Ordinary Share Share
shares capital premium
Number £000 £000
Authorised, issued and fully paid
At 30 September 2021 48,151,373 482 84,802
Share options exercised - - -
At 31 March 2022 48,151,373 482 84,802
Exercise of share options
No share options were exercised in the period.
5. Share-based payments
Certain Directors and employees of the Group hold options to subscribe for
shares in the Company under share option schemes. There are 2 distinct
structures to the share options in operation in the Group (H1 2021: 2). Both
structures relate to a single scheme outlined in the EMI Share Option Plan
2014.
The scheme is open, by invitation, to both Executive Directors and employees.
Participants are granted share options in the Company which contain vesting
conditions. These are subject to the achievement of individual employee and
Group performance criteria as determined by the Board. The vesting period
varies by award and the conditions approved by the Board. Options are usually
forfeited if the employee leaves the Group before the options vest.
Total share options outstanding have a range of exercise prices from £0.01 to
£0.70 per option and the weighted average contractual life is 7.3 years (H1
2021: 8.3 years). The total charge for the period relating to employee
share-based payment plans for continuing operations is £104,000 (H1 2021:
£107,000).
Details of the share options under the scheme outstanding during the period
are as follows:
As at 31 March 2022 As at 30 September 2021
Number Weighted average exercise price Number Weighted average exercise price
Outstanding at start of the period 3,815,931 £0.18 4,438,512 £0.17
Granted 300,000 £0.01 475,000 £0.52
Exercised - - (1,060,081) £0.30
Lapsed (75,000) £0.58 (37,500) £0.36
Outstanding at end of the period 4,040,931 £0.16 3,815,931 £0.18
Exercisable at end of the period 998,766 £0.11 998,766 £0.11
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