Final Results

RNS Number : 1801C

Cambridge Cognition Holdings PLC

13 March 2014

 



Cambridge Cognition Holdings Plc

("Cambridge Cognition" or the "Company")

Final Results for the year ended 31 December 2013

Cambridge Cognition Holdings plc, (AIM: COG), which specialises in computerised neuropsychological tests including those enabling the early detection of dementia, announces its Final Results for the year ended 31 December 2013; its first full year results since admission to AIM.

Cambridge Cognition's product portfolio consists of:

Cantab Mobile	Recently launched medical software for healthcare delivery settings
Cantab Research Suite	Cognitive assessment products for non-regulated researchers (i.e. academia)
Cantab Solutions	Products and services for use in pharmaceutical clinical trials

Operational Highlights

·      Successful admission to AIM in April 2013

·      £5.0m (before expenses) raised at 70p - to accelerate the rollout of Cantab Mobile

·      415 Cantab Mobile trial licences in use across the UK - with excellent trial conversion rates so far

·      Establishment of new Executive team with a stronger commercial focus

·      2 new commercial centres, based in Chicago and London

Financial Highlights

·      Total revenue of £4.15m (2012: £5.68m)

·      Adjusted* EBITDA of £2.19m loss (2012: £1.42m loss)

·      Loss before tax of £2.99m (2012: £1.58m loss)

·      Loss per share 21.3p (2012: 26.4p)

·      Cash balances of £2.3m (31 Dec 2012: £0.6m)

* Adjusted for restructuring costs and one-off IPO expenses

Commenting on the results Nick Kerton, Chief Executive Officer, said: 

"Cambridge Cognition now has a clear strategic focus and we have in place a commercial infrastructure which will allow us to convert our wealth of scientific know-how into sustainable and growing commercial sales. We are better positioned to deliver significant revenue growth in the future as a product focused business with effective routes to market in the UK as well as other international territories. We look forward to 2014 trading with optimism."

Enquiries:

Cambridge Cognition Holdings plc		www.cambridgecognition.com
Nick Kerton, Chief Executive Officer		Tel: [phone]
Nick Walters, Chief Financial Officer
finnCap Ltd (Nomad and Broker)		Tel: [phone]
Matthew Robinson/Henrik Persson/Simon Hicks	(Corporate Finance)
Simon Starr	(Corporate Broking)
Walbrook PR Ltd	Tel: [phone] or [e-mail]
Paul McManus/Lianne Cawthorne	Mob: [phone]

CHIEF EXECUTIVE OFFICER'S REVIEW

I am pleased to provide a report on our first full year results since our admission to AIM in April this reporting year. During the second half of the year we have continued to build a platform for future growth. We now have two commercial centres, in both the US (Chicago) and UK (London), and are well placed to accelerate our sales activities and address the growing need for advanced research, diagnosis and treatment of mental health worldwide. Cambridge remains our core science and technology hub.

In April last year, the Company listed on the AIM market of the London Stock Exchange and raised £5.0m (before expenses) from institutional investors to accelerate the roll-out of Cantab Mobile product and aid the expansion of the e-Health business in the UK and internationally. Our efforts have already attracted the attention of the Prime Minister who at the G8 Dementia Summit in December 2013 commented: "The dementia challenge is huge, but there is hope in the extraordinary work of companies like Cambridge Cognition, working to develop new tests for Alzheimer's disease."

Financial Results 

Revenue in the period was £4.15m (2012: £5.68m), with the main reduction being within our clinical trials business. Revenues from our Cantab Solutions products (formerly CANTABelect) reduced in the period to £2.50m (2012: £4.21m), as a result of fewer new studies incorporating cognitive assessments in 2013, and a shift in the timing of expected orders from pharmaceutical clients. Revenues from our academic business continued to grow with sales from Cantab Research Suite products (formerly CANTABeclipse) up 8% to £1.49m (2012: £1.38m). Cantab Mobile, the Company's newly launched iPad based product for the primary healthcare market, is progressing well from a low starting base and achieved revenues of £158,000 (2012: £98,000).

Overall gross profit came in at £3.66m (2012: £4.47m), showing an improvement in gross profit margin to 88.2% (2012: 78.6%). Adjusted EBITDA (adjusted for restructuring costs and one-off expenses associated with the Admission to AIM) showed a loss of £2.19m (2012: £1.42m loss) and we recorded a loss before tax of £2.99m (2012: £1.58m loss). This translated into a loss per share of 21.3p (2012: 26.4p).

There was a net cash outflow from operations during the period of £2.47m (2012: outflow of £0.70m). During the period the Company received £4.41m in net proceeds from the placing of new ordinary shares with institutional investors and, after the payment of a further £0.3m of deferred consideration, cash balances at 31 December 2013 amounted to £2.26m (as at 31 December 2012: £0.64m). 

Operating Review

2013 was very much a year of structural change for Cambridge Cognition to enable the Company to focus on our commercial strategy and to take advantage of our unique position within the process of understanding and treating mental health - from initial research, through to drug discovery and into the diagnosis and treatment of patients.

An important aspect of this structural change was to establish a robust commercial infrastructure to drive future growth, funded through the £1.4m reduction in the overall cost base established in the first half of the year. During the year we established a new commercial sales office in Chicago with four full time employees, led by an experienced US national as Chief Commercial Officer, overseeing the commercialisation of our products and developing targeted line extensions. 

We now have full customer service teams in Chicago, Illinois, and Central London, with Cambridge remaining our centre of excellence for the Company's core science and technology.

During the year I took on the role of Chief Executive Officer of the Company and Nick Walters was appointed as Chief Financial Officer. We further strengthened the board following the year end with the appointment of Eric Dodd as a Non-Executive Director. Eric brings significant corporate and financial experience and knowledge, including within public companies, to the board of Cambridge Cognition and I look forward to working with Eric at this exciting stage of our development.

We have established a new three year strategic focus for the business and set demanding management objectives to deliver growth across the Company. We have also put into place a new corporate identity and corporate branding to reflect our new commercial focus. Our newly launched website is available at www.cambridgecognition.com and we expect to increase the commercial functionality of the website over time.

Cantab Mobile (Mobile e-Health)

Cantab Mobile is our approved CE-marked Class II medical device, which addresses the need to rapidly detect early memory loss or signs of cognitive impairment. The product runs on an iPad and is targeted at mainstream primary healthcare markets and is based on tests previously only available to pharmaceutical companies and academia for specialist trials and research.

Last month Health Secretary Jeremy Hunt renewed the Government's commitment to speed up diagnosis times for suspected dementia sufferers pledging £90m in additional funding. Cantab Mobile is perfectly suited to achieve this goal, enabling healthcare providers to quickly detect the earliest sign of dementia using a simple iPad test. In addition, the new direct enhanced services (DES) that are offered to GPs to reward practices for undertaking additional services specifically address the timely assessment of patients who may be at risk of dementia. Cantab Mobile is an attractive product for GPs looking to qualify for funds under the Quality and Outcomes Framework for the provision of these services.

Whilst the establishment of our UK sales and marketing team has taken longer than expected, we are now well positioned to capitalise on the opportunity for wider dementia diagnosis in the UK. We now have over 415 Cantab Mobile licences being used in trials throughout the UK and a total of 145 Cantab Mobile customers who have either purchased or are running pilots, including 24 Clinical Commissioning Groups (CCGs), a number of private healthcare groups, a pharmacy chain and clinical centres in Germany and Sweden.

We still have an excellent trial conversion rate, however given the timing of the full commercial launch last year many of the CCGs we are working with have already fixed annual spending budgets. Despite this, interest for the product remains strong and we expect to benefit from the allocation of 2014 budgets. We are currently engaged in active discussions with 126 of the 211 CCGs in the UK. The new financial year has already seen an uplift in Cantab Mobile sales and we expect to benefit from much greater awareness of Cantab Mobile across CCGs.

The UK Brain Health Centre Initiative funded under the Technology Strategy Board Biomedical Catalyst Programme is progressing on plan. The major technical development stages of the cognitive and neurological assessment tools are now complete, including a specialist version of the Cantab Mobile product. The integrated data platform and the clinical and operations teams are in place, with the component technologies undergoing usability testing in patients.

We were very pleased to see our first sales of Cantab Mobile into Europe during the period with new customers in clinical centres in Germany and Sweden. We are in the early stages of looking into channel partnerships to accelerate our routes into new geographical markets (particularly the US and Europe) and we expect to provide a further update at our next financial results.

Cantab Solutions(Clinical Trials)

Our clinical trials business continues to be challenging with revenues down on the comparative period to £2.50m (2012: £4.21m). As mentioned at the time of our half yearly results pharmaceutical companies are being more cautious in their implementation of trials relating to the Central Nervous System (CNS). Despite having little control of the timing of orders we have taken a number of steps to address this businesses performance and return to growth.

Given the marked reduction in the number of 'big pharma' conducting CNS trials and an increase in activity from smaller biotech companies we have focused the team on smaller clinical trials. In particular we have identified a number of Human Abuse Liability studies, looking at the potential a drug has for addiction or whether a patient can build up a tolerance to a drug, where our Cantab Solutions products can be applied.  These studies have a greater success rate and an increased chance to migrate to Phase 2-4 and so represent a good opportunity for us.

With the opening of the Chicago office we have relocated our sales efforts with a greater emphasis on the US where we see a much richer opportunity for new business and our UK focus remains on rebuilding our pipeline and maintaining a steady flow of sales from UK based clinical trials.

Cantab Research Suite (Academic)

The academic business continues to make a steady contribution to the Company, with revenues up 8% over the previous year. Whilst this business has historically provided good quality earnings with good visibility, we have applied little proactive marketing effort to this business. The team has been refocused and with a stronger sales push we have seen a healthy uplift in leads and orders at the end of 2013 and we are on track to deliver to challenging growth targets for 2014.

Outlook

Cambridge Cognition now has a clear strategic focus and we have in place a commercial infrastructure which will allow us to convert our wealth of scientific know-how into sustainable and growing commercial sales. We are better positioned to deliver significant revenue growth in the future as a product focused business with effective routes to market in the UK as well as other international territories. We look forward to 2014 trading with optimism.

We have been very pleased with the positive start to trading in the first quarter of the new financial year. We have seen a number of NHS procurement submissions for Cantab Mobile early in the year which we expect to see convert into sales presently. Outside of the UK we are encouraged by the first assessment of Cantab Mobile in the US and we recorded our first sale into Sweden for this product. Whilst the first quarter was a slow start for our clinical trials business we have seen a subsequent acceleration of sales and have recently signed contracts relating to six new studies and so we remain on target to deliver growth in this market in 2014. We also expect to see the benefits of our newly appointed Business Development Director for Europe, who alongside our new US VP Business Development will work to drive our clinical trials sales.

We are on target to launch three new products in Q3 for both clinical and academic applications. We have successfully completed the first stage of beta testing for these products which will provide the basis of a new platform for future product development.  

I would like to thank my colleagues for their hard work, as well as our shareholders and customers for their support during 2013. We have worked hard to refocus the business on commercial success and I am confident that we will return the business to growth in 2014.

Nick Kerton

Chief Executive Officer

12 March 2014

CONSOLIDATED Statement of COMPREHENSIVE INCOME

For the year to 31 December 2013

	Notes	Year to 31 December 2013 £'000			Year to 31 December 2012 £'000
Revenue	2	4,148			5,684
Cost of sales		(490)			(1,217)
Gross profit		3,658			4,467
Administrative expenses		(6,761)			(5,921)
Other income		145			-
Operating (loss)		(2,958)			(1,454)
Analysed as:
Adjusted EBITDA		(2,193)			(1,417)
Depreciation		(40)			(37)
Restructuring costs		(352)			-
AIM listing expenses		(373)			-
Operating (loss)		(2,958)			(1,454)
Finance income		3			-
Finance costs		(35)			(122)
(Loss) before tax		(2,990)			(1,576)
Income tax		129			-
Loss and total comprehensive income for the period attributable to the equity shareholders of the parent		(2,861)			(1,576)
Earnings per share (pence)	4
Basic earnings per share			(21.3)		(26.4)
Diluted earnings per share			(21.3)		(26.4)

The above results relate to continuing operations.

Total comprehensive income equates to the loss for the period reported above.

Consolidated statement of changes in equity

For the year ended 31 December 2013

	Share capital	Share premium	Own shares	Other reserve	Equity reserves	Retained earnings	Total
	£'000	£'000	£'000	£'000	£'000	£'000	£'000
Balance at 1 January 2012	61	-	(204)	5,860	196	(6,289)	(376)
Total comprehensive income for the year	-	-	-	-	-	(1,576)	(1,576)
Reserve transfer	-	-	-	-	(28)	28	-
Issue of new share capital	7	-	-	121	-	-	128
Credit to equity for equity settled share based payments	-	-	-	-	-	141	141
Transactions with owners	7	-	-	121	(28)	169	269
Balance at 31 December 2012	68	-	(204)	5,981	168	(7,696)	(1,683)
Balance at 1 January 2013	68	-	(204)	5,981	168	(7,696)	(1,683)
Total comprehensive income for the period	-	-	-	-	-	(2,861)	(2,861)
Reserve transfer	-	-	-	-	(168)	168	-
Issue of new share capital	101	-	-	-	-	-	101
Premium of new share capital	-	6,922	-	-	-	-	6,922
Share issue costs	-	(587)	-	-	-	-	(587)
Credit to equity for equity-settled share-based payments	-	-	-	-	-	238	238
Transactions with owners	101	6,335	-	-	(168)	406	6,674
Balance at 31 December 2013	169	6,335	(204)	5,981	-	(10,151)	2,130

Consolidated statement of financial position

For the year ended 31 December 2013

	Notes	At 31  December  2013 £'000	At 31 December 2012 £'000
Assets
Non-current assets
Goodwill		352	352
Property, plant and equipment		53	72
Total non-current assets		405	424
Current assets
Inventories		123	113
Trade and other receivables		976	1,219
Cash and cash equivalents		2,261	641
Total Current assets		3,360	1,973
Total assets		3,765	2,397
Liabilities
Current liabilities
Trade and other payables		1,635	3,780
Provisions		-	300
Total liabilities		1,635	4,080
Equity
Share capital	3	169	68
Share premium account		6,335	-
Other reserve		5,981	5,981
Own shares		(204)	(204)
Equity reserve		-	168
Retained earnings		(10,151)	(7,696)
Total equity		2,130	(1,683)
Total liabilities and equity		3,765	2,397

Consolidated statement of cash flows

For the year ended 31 December 2013

	Notes	Year to 31 December 2013 £'000	Year to 31 December 2012 £'000
Net cash flows from operating activities	5	(2,472)	(701)
Investing activities
Payment of deferred consideration		(300)	-
Purchase of property, plant and equipment		(21)	(55)
Net cash flow used in investing activities		(321)	(55)
Financing activities
Proceeds from the issue of share capital net		4,413	6
Net cash flows from financing activities		4,413	6
Net increase in cash and cash equivalents		1,620	(750)
Cash and cash equivalents at start of period		641	1,391
Cash and cash equivalents at end of period		2,261	641

NOTES TO THE INTERIM FINANCIAL STATEMENT

1. General information

Cambridge Cognition Holdings plc ('the Company') and its subsidiaries (together, 'the Group') develops and commercialises computerised neuropsychological tests for sale worldwide, principally in the UK, the US and Europe.  The group trades through its UK subsidiary Cambridge Cognition Limited ("CCL").

The Company is a public limited company which listed on the Alternative Investment Market ('AIM') of the London Stock Exchange (COG) in April 2013 and is incorporated and domiciled in the UK. The address of its registered office is Tunbridge Court, Tunbridge Lane, Bottisham, Cambridge, CB25 9TU.

As part of the IPO process, Cambridge Cognition Holdings plc, a newly incorporated entity, became the new group holding company with effect from 12 April 2013. The consolidated financial statements are presented as a continuation of the financial statements of the legal subsidiary except the equity structure reflects the equity of the new parent, as restated using the exchange ratio established in the share exchange agreement dated April 2013.

The Group develops and commercialises computerised neuropsychological tests. In the decade since CCL's formation in 2002, it has created a well-established business through sales of its proprietary CANTAB® (Cambridge Neuropsychological Test Automated Battery) software into academic and pharmaceutical research locations around the world.

The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards ('IFRS') as adopted by the European Union, IFRIC interpretations and the Companies Act 2006 applicable to companies operating under IFRS.  The accounting policies adopted are consistent with those followed in the preparation of the consolidated financial statements for the year ended 31 December 2012 incorporated in the AIM admission document.

The Group has chosen to utilise the exemption available under IFRS 1, 'First time adoption of IFRS', for reassessing acquisitions completed before 31 December 2009. The goodwill arising on business combinations of the Group prior to 31 December 2009 remains unchanged up to 1 January 2010 and is subject to an annual impairment review.

2. Revenue

An analysis of revenue is as follows:

	2013 £'000	2012 £'000
Continuing operations
Sales of goods, software licences and associated services:
Cantab Mobile (E-Health)	158	98
Cantab Research Suite (Academic)	1,493	1,379
Cantab Solutions (Clinical Trials)	2,497	4,207
	4,148	5,684

3. Share capital

	2013 £
Issued and fully paid
16,885,105 Ordinary Shares of £0.01 each	169

6,852,658 Ordinary Shares were issued to the holders of shares in Cambridge Cognition Limited in exchange for their shares immediately prior to the public offering in April 2013. 

2,889,589 Ordinary Shares were issued in exchange for the surrender of the Convertible Loan Note

7,142,858 Ordinary Shares were placed with investors at a price of 70p per share in April 2013.  

No other shares were issued during the year.

4. Earnings per share

From continuing operations

The calculation of the basic and diluted earnings per share is based on the following data:

Earnings

	2013 £'000	2012 £'000
Earnings for the purposes of basic and diluted earnings per share being net loss attributable to owners of the Company	(2,861)	(1,576)
Number of shares
	2013 '000	2012 '000
Weighted average number of ordinary shares for the purposes of basic and diluted earnings per share	13,423	5,979

The denominators used are the same as those detailed above for both basic and diluted earnings per share from continuing operations.

5. Notes to the cash flow statement

	2013 £'000	2012 £'000
Loss for the year	(2,990)	(1,576)
Adjustments for:
Finance costs	35	122
Depreciation of property, plant and equipment	40	37
Share-based payment expense	238	141
Increase/(decrease) in provisions	-	300
Operating cash flows before movements in working capital	(2,677)	(976)
(Increase)/Decrease in inventories	(10)	59
Decrease in receivables	372	470
(Decrease) in payables	(157)	(247)
Cash generated by operations	(2,472)	(694)
Interest received/(paid)	-	(7)
Net cash from operating activities	(2,472)	(701)

Cash and cash equivalents

	2013 £'000	2012 £'000
Cash and bank balances	2,261	641

Cash and cash equivalents comprise cash and short-term bank deposits with an original maturity of three months or less, net of outstanding bank overdrafts. The carrying amount of these assets is approximately equal to their fair value.

Financing activities

Proceeds from the issue of share capital (£4,413,000) excludes non cash consideration in respect of the conversion of the loan during the year.

6. Annual Report & Annual General Meeting

The Annual Report will be available from the Company's website, and posted to shareholders by 14^th April 2014. The Annual Report contains notice of the Annual General Meeting of the Company which will be held at 10.00am on 8^th May 2014 at the offices of finnCap, 60 New Broad Street, London, EC2M 1JJ.

 

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