Financial Results for the year ended 30 Sept 2020

RNS Number : 1978H

IXICO plc

02 December 2020

 

IXICO plc

("IXICO", "the Company" or "the Group")

Financial Results for the year ended 30 September 2020

Strong double-digit revenue growth and a more than doubling of profit

IXICO plc (AIM: IXI), the AI data analytics company delivering insights in neuroscience, announces its final results for the year ended 30 September 2020, another record set of results, achieving the Company's fourth successive year of greater than 25% revenue growth and a year which has demonstrated the resilience of the business model. The Company has demonstrated double-digit revenue growth and a more than doubling of profit despite COVID-19.

Highlights

Financial

· EBITDA* of £1.3 million; more than double prior year (2019: £0.5 million) reflecting revenue growth and sales mix arising from multi-year phase III clinical trials contracts;

· A further year of record revenues, at £9.5 million (2019: £7.6 million) representing 26% growth over prior year;

· Gross margin accretion to 66.6% (2019: 65.4%) reflects sustained strong margin achievement;

· Operating profit of £0.9 million (2019: £0.4 million);

· Profit per share of 2.02 pence (2019: 0.92 pence);

· Closing cash of £7.9 million (2019: £7.3 million), with operating cash inflows of £1.5 million (2019: outflow of £0.1 million);

· 36% increase in contracted order book of £21.7 million (2019: £15.9 million); and

· Net assets increase to £9.1 million (2019: £7.9 million) reflecting cash generation and investments made for future growth.

*Earnings before interest, tax, depreciation and amortisation

Commercial and Operational

· Secured net £15.4 million of additional multi-year contracts across all phases of clinical development, including single largest contract signed in April 2020 in Huntington's disease ('HD') for £10.5 million;

· Record contracted order book of £21.7 million provides strong visibility for continued growth, although ongoing COVID-19 disruption to clinical trial start-up times is anticipated to impact growth rates in the short term;

· Expansion of key scientific collaborations to develop new artificial intelligence algorithms for imaging biomarkers; and

· Investment in headcount, process improvement and infrastructure to underpin future profitable growth and scale of operations.

Giulio Cerroni, CEO of IXICO, said: "2020 has been a fourth successive year of greater than 25% revenue growth for IXICO and one in which we have demonstrated the resilience of our business model. In addition, the Group has more than doubled its EBITDA profitability to £1.3 million, generated significant operational cashflows, strengthened the balance sheet and increased its contracted order book by 36% to £21.7 million. 

I am delighted with these financial achievements, but even more so, I am proud of the way that IXICO has responded to the COVID-19 pandemic and continued to provide valuable new insights in clinical development to our global pharmaceutical clients. Our dedicated employees adapted rapidly to the changing circumstances and redoubled their focus and efforts on supporting our clients, who in turn continue to look to IXICO for neuroimaging expertise across a wide range of therapeutic areas in new clinical trials scheduled to commence during 2021 and beyond.  With a record order book and a clear investment programme, the Group is well positioned for the year ahead."

Notice of AGM

IXICO also announces that its 2021 Annual General Meeting ("AGM") will be held at IXICO plc, 4th Floor Griffin Court, 15 Long Lane, London, EC1A 9PN on 21 January 2021 at 10:30am. However, in light of the current UK Government's public health advice in response to the COVID-19 outbreak, including to limit travel and public gatherings, and the likelihood that this advice may remain in place for the foreseeable future, there are changes to the usual AGM arrangements this year. Therefore regrettably, shareholders will be unable to attend the AGM in person and, instead, the Company is facilitating arrangements for shareholders to join the AGM via virtual link, details of which will be provided closer to the time.

The full Annual Report and Accounts, along with Notice of AGM, will be posted to shareholders on 18 December 2020 and at the same time will be made available on the Company's website in accordance with AIM Rule 20.

This announcement contains inside information for the purposes of Article 7 of Regulation (EU) No 596/2014 (MAR)

For further information please contact:

IXICO plc	[phone]
Giulio Cerroni, Chief Executive Officer
Grant Nash, Chief Financial Officer
Cenkos Securities plc (Nominated adviser and sole broker)	[phone]
Giles Balleny / Max Gould (Corporate Finance)
Michael F Johnson (Sales)
Walbrook PR Ltd	[phone]
Paul McManus / Lianne Cawthorne /	[e-mail]
Alice Woodings

About IXICO

IXICO is dedicated to delivering insights in neuroscience. Our purpose is to advance medicine and human health by turning data into clinically meaningful information, providing valuable new insights in neuroscience and our goal is to be a leading proponent of artificial intelligence in medical image analysis. We will achieve this by developing and deploying breakthrough data analytics, at scale, through our remote access technology platform, to improve the return on investment in drug development and reduce risk and uncertainty in clinical trials for our pharmaceutical clients.

More information is available on www.IXICO.com   and follow us on Twitter @IXICOplc 

Chairman's Statement

Continued growth and profitability

I am delighted to report that IXICO has delivered 26% revenue growth and more than double the profitability compared to the prior year. This strong achievement is on the back of three previous years of similar growth and underlines the effectiveness of the strategy being pursued by the Board and leadership team. This is particularly pleasing when considered in the context of the market challenges created by COVID-19.

Overview

IXICO is an Artificial Intelligence ('AI') data analytics company delivering intelligent insights in neuroscience.

Our purpose is to advance medicine and human health in neuroscience by converting raw clinical trial data into clinically meaningful information. Our data analytics services provide insights to improve the efficiency of biopharma clinical development. Through the deployment of novel AI algorithms, we analyse and interpret brain scans and wearable biosensor data to enable better trial design, patient selection and ultimately clinical outcomes across all phases of clinical evaluation.

In FY20, we have reported record revenue, sustained strong gross margins, and achieved over double the earnings before interest, tax, depreciation and amortisation ('EBITDA') as compared to the prior year.

Despite the challenging impact of COVID-19, the Group has a contracted order book at 30 September 2020 of £21.7 million, which is the highest year end order book in the Group's history. This comprises multi-year contracts which give visibility to future revenue and provide confidence that we enter the new financial year with a continued growth trajectory.

We close the year with a strong balance sheet which will underpin our continued investment in the business over the coming years. Our investment programme is designed to drive our ambitious growth plans for further international market penetration and achieve our full potential in the growing neuroscience market.

Governance and people

During the year, the Group rapidly leveraged its remote working business model to seamlessly adapt to the requirement for all employees to work from home. The success and speed of this transition reflected the alignment, accountability, and agility of the IXICO team.  This rapid response to the COVID-19 lockdown measures, alongside close and continued communication with our clients, meant we were able to adapt our service offering to support the additional challenges faced by clinical trials and add additional value to our client programmes. On behalf of the Board, I would like to thank all of our employees who adapted so promptly and positively to remote working and pay particular tribute to our IT, HR and team leaders who helped make it all happen. 

As in any successful, high-growth business, IXICO's future depends on its people. In the past 12 months we have invested significantly in our team, increasing our headcount by more than 20%, attracting new expertise into the Group whilst developing the talent already in position. We have worked hard to promote our values - Aspiration, Ability, Agility and Accountability - to augment our positive, motivated, and effective culture which aligns our team with our Group purpose.

The Board uses the ten principles outlined in the Quoted Companies Alliance ('QCA') Corporate Governance Code to ensure it maintains appropriate governance arrangements. The Board conducts itself in a manner which places IXICO's values and the QCA principles at the core of the Group's culture.

Board

During the year we have focused as a Board on the challenges of COVID-19. The impact on clinical trials has been significant with as much as a 40% reduction in new clinical trials starting in mid-2020 compared to 2019 (and of which 20% in 2020 are COVID-19 related). The Board has worked closely with the leadership team to assess the impact of this as the pandemic continues and to ensure plans are in place to address both the short-term market slow down and expected medium and long-term rapid rebound in new clinical trials as delayed trials initiate.

At the 2021 Annual General Meeting ('AGM'), in accordance with the Company's Articles of Association, John Bradshaw and Mark Warne will stand for re-election, supported by the Board of Directors' recommendation.

Shareholders

The Group holds a stable and impressive list of leading institutions which have invested in the Company over the last three years and we would like to thank all our shareholders for their continued support and enthusiasm. As we reflect on 2020, it is also pleasing to note the continued recognition in the market of our commercially led growth strategy, and the effectiveness of this in delivering value to our clients.

Outlook

The impact of COVID-19 has been far-reaching, and the clinical trials market has not been immune, creating short-term delays to new clinical trial start ups. The Board therefore views the next financial year as an opportunity for the Group to focus on investing for a rapid initiation of clinical trials as the pandemic subsides, whilst continuing to grow. Effective investment at this time will position the Group well for continued high growth as more normal times resume.

Chief Executive's Statement

A year of growth that demonstrates the resilience of our business model
Investments in data analytics service strategy delivering profitable growth

Despite the COVID-19 impacts upon global clinical trial timelines, 2020 has been another year of significant profitable growth. Our considerably strengthened contracted order book and the ability to deploy our technology across all clinical development phases means there are compelling incentives to continue investing in the scaling of our business to achieve our ambitious long-term growth goals.

Impactful purpose and highly differentiated proposition

IXICO's purpose is to provide new insights in neuroscience to improve medicine and human health by turning data into clinically meaningful information . With an ageing population and the number of people with dementia expected to increase significantly by 2050, the urgency to develop drugs that slow down or reverse the progression of these diseases is acute.

IXICO is built on a world-renowned bedrock of scientific expertise in interrogation of imaging data in neurological disease. This means that whenever a client speaks to someone at IXICO they are speaking to a neuroscience expert and this sets the Group apart from our commercial competitors.

Scientific expertise in neurological disease

IXICO is well positioned to address the increasing use of biomarkers in neurological clinical trials. This stems from our core capability to combine our deep neuroscience expertise with access to highly curated patient data from neurological disease-specific clinical trials and pipeline of algorithms designed to measure biomarkers in the brain.

Our market position benefits from participation in disease progression studies (natural history studies) and in private-public partnerships seeking to better understand neurological diseases. It is this in-house expertise and network of collaborations that has resulted in a unique and proprietary portfolio of proven software algorithms deployed to identify biomarkers associated with a diverse range of neurological diseases.

Proven underlying resilience of the technology business model

During 2020, we demonstrated the underlying resilience of our technology and ability to support our clients whilst operating remotely. We successfully transitioned to a remote working model in response to the pandemic, providing all employees with access to support and equipment to help them work effectively. Following a detailed review of the expected impact of COVID-19 on our business, focused on close co-operation with our clients, we had no requirement to furlough employees or seek any assistance from other financial support schemes implemented by the UK Government. We responded robustly to the challenges of COVID-19 such that the impact of the pandemic to client deliverables and to our 2020 financial performance was modest.

However, whilst our existing clinical trials have broadly continued as originally planned, several new trials anticipated to initiate during 2020 have not yet commenced, which is expected to create headwinds to revenue growth into 2021. Importantly these trials are not cancelled, rather they are simply delayed and we continue to work closely with our biopharmaceutical clients to ensure that, where trial start dates have been impacted, we are ready to initiate quickly when the pandemic abates.

Our forward-looking strategy of sustained and growing profitability  

Recent focus on executing our commercially led growth strategy means that the business is benefiting from revenue-driven operational leverage, positive operating cashflows and a more than doubling of profitability to £1.3 million EBITDA in 2020 (2019: £0.5 million); further bolstering an already strong balance sheet.

The business has continued to build its order book, which at the 2020 year-end stood at a record £21.7 million (2019: £15.9 million). This provides strong forward revenue visibility and further underpins management's confidence to commit to a far-reaching investment programme to build long-term market leadership positions in our target markets.

Consequently, despite the challenging COVID-19 business environment, we look to the next year with cautious optimism and firm conviction for our medium and long-term prospects. Whilst we anticipate COVID-19 will mean our growth across the next year will be more muted, our strong financial position and macro trends indicating a growing market opportunity mean we have the confidence to further accelerate our investment plans. This will include investments which are designed to further our penetration of existing and adjacent neurological disease indications, diversify and broaden our client base to address client concentration, build scale and improve efficiency to further strengthen our market position.

I sign off this year, as last year, in thanking all my colleagues at IXICO for another year of exceptional progress both operationally and financially. Our increasing market presence and sustained strong financial performance means we are more able to achieve our purpose of advancing medicine and human health in neurological disease. I look forward to 2021 being another year in which IXICO further develops its position as a globally trusted technology partner to the biopharmaceutical industry.

Financial review

Consolidating growth, profitability, and cash in a year of uncertainty

The Group has delivered another period of strong financial performance across the year to 30 September 2020. This builds on three previous years of strengthening financial performance, resulting in a transition to double-digit EBITDA profitability margins and net cash inflows.

This review includes a comparison of the financial KPIs that we use to measure our progress over the prior year, a summary of which is shown below:

KPI	2020 result	2019 result	Movement
Revenue	£9.5m	£7.6m	£1.9m	↑
Gross profit	£6.3m	£4.9m	£1.4m	↑
Gross margin	66.6%	65.4%	120 bps	↑
EBITDA profit	£1.3m	£0.5m	£0.8m	↑
Operating profit	£0.9m	£0.4m	£0.5m	↑
Profit per share	2.02p	0.92p	1.10p	↑
Order book	£21.7m	£15.9m	£5.8m	↑
Cash	£7.9m	£7.3m	£0.6m	↑

Revenue

Revenue for the year of £9.5 million (2019: £7.6 million) represents a year-on-year increase of 26%. This growth was driven by increasing traction within Phase III clinical trials as the Group's success in earlier phases has been carried through into this later, larger scale phase of the drug development process.

Gross profit

The Group reports gross profit of £6.3 million in the year. This is an increase of £1.4 million or 28% compared to 2019 and equates to a gross margin of 67% (2019: 65%). This strong gross profit performance reflects a combination of a favourable sales mix, linked to the growth in proportion of image analytics within its revenues driven by increased traction in Phase III clinical trials, and the leveraging of operational efficiencies as the Group grows.

Earnings before interest, tax, depreciation and amortisation ('EBITDA')

The Group more than doubled its EBITDA profit in the year, having become sustainably profitable for the first time in the prior year.  This profit of £1.3 million (2019: £0.5 million) reflects the impact of strong revenue growth, improved operational leverage (and productivity), and control of administrative costs whilst enabling a level of investment in research and development and in sales and marketing. EBITDA was positively impacted by the introduction of IFRS 16, which requires companies to recognise depreciation and interest on leases rather than as rent directly to operating expense. This increased EBITDA by £0.2 million in the year (2019: £nil).

Operating profit

Operating expenditure in the year reflected investment in people and product development:

· research and development expenses of £1.3 million (2019: £1.0 million) included the development of new algorithms to support image analysis as well as enhancements of the Group's platforms to enable operational scalability. The Group, in addition, capitalised £0.2 million of internal development expenditure in the year (2019: £0.2 million);

· sales and marketing expenses were £1.6 million (2019: £1.2 million) reflecting increased investment to support continued future growth; and

· general and administrative expenses were controlled at £3.2 million (2019: £3.0 million).

The reported operating profit of £0.9 million reflected 26% revenue growth , strong gross profit performance and controlled operating expenditures. This equated to an operating profit margin of 9% (2019: 5%).

Order book

The Group continues to benefit from a healthy contracted order book. At 30 September 2020 this totalled £21.7 million (2019: £15.9 million), which takes account of £9.5 million of business executed during the year and net £15.3 million of (both new and expanded) multi-year contracts secured across all phases of clinical development. This means that the Group retains a strong position to deliver continued revenue growth.

Cash

The Group reported operating cash inflows of £1.5 million before tax receipts in the year (2019: £0.1 million cash outflow) reflecting the Group's strengthening profitability and the beneficial timing of payments on customer contracts.

The Group had a closing cash balance at 30 September 2020 of £7.9 million (2019: £7.3 million) with the increase reflecting the operating cash inflows partly offset by capital investment in the Group to support future scalability and improved IT infrastructure. The strengthened, and substantial, debt-free cash balance means the Group is well positioned to invest for continued growth. Further consideration of the Group as a going concern is discussed in the Director's report.

Net assets

The Group's net asset position increased by £1.2 million to £9.1 million (2019: £7.9 million). This is reflective of the Group's ability to turn profitability into operating cash inflows, as well as the Group's commitment to invest in order to meet the future growth demands. This strong net asset position provides the foundation to support the Group's investment programme for the next year.

Profit per share

The Group reports a profit per share of 2.02p (2019: 0.92p) reflecting the significant uplift in financial performance achieved across the year.

The Group is delivering against its growth strategy, is profitable, and is well capitalised, providing a strong basis to further accelerate investment across 2021, despite the challenges created by COVID-19, and thereby continues to be fully focused on the execution of its commercially-led growth strategy.

Risk management

The Board holds responsibility for monitoring risks to which the Group is exposed, and for reviewing and assessing the effectiveness of the internal control framework used by the Group to manage those risks.

The Group has designed its internal controls with the aim of providing a proportionate level of assurance for the organisation, taking account of its size, stage of development and risk exposure. Whilst the Board is confident that the control framework is fit for purpose, it continues to seek ways to further mitigate against the risk of material misstatement or loss.

In assessing the risks faced by the Group, a detailed risk identification and control framework is adopted.  It is the responsibility of each department head to update the risk and control matrix for their area and these are then consolidated into a single matrix which is reviewed by the Senior Leadership Team on a quarterly basis. The Board receives a summary of the risk and control matrix which sets out the current status of controls in place to manage identified risks and ranks the risks by their potential impact and likelihood on the Group's operations. This matrix also details the additional actions which are being implemented to further manage such risks. The Board reviews and challenges the Executive Directors on this risk and control matrix as necessary.

Principal risks and uncertainties

The following table presents the principal risks and uncertainties that the Board considers could have a material impact on the Group's operational results, financial condition and prospects.

These risks and uncertainties reflect the business environment within which the Group operates, together with risks in the execution of its business strategy. The risks are separated into four specific risk areas being Strategic, Financial, Operational, and Legal/Compliance & Reputational.

Strategic risks

Principal Risks	Risk Context	Mitigation	Change in the Year
The Group fails to exploit the commercial opportunities available to it and does not deliver the full potential for shareholder (and other stakeholder) returns	The Board anticipates that its strategic initiatives will lead to increased market penetration and development of new market opportunities for the Group. The nature of the neurological drug development market means that strategic initiatives will inevitably include a degree of judgement risk. The Group may not execute on its strategic plans as effectively or efficiently as possible, thereby failing to maximise the commercial opportunity available to it.	· Annual review by the Board of Group strategy and budget priorities with progress against strategy. · Monthly leadership review of delivery of specific strategic initiatives. · Board appraisal of significant investments before funds are committed and subsequent review of each investment's delivery and performance. · External expertise and advice sought to inform strategic initiatives. · Orientation and alignment of the Senior Leadership Team to focus on delivery and an increased pace of improvement implementation. · 5-year strategic plan currently being refreshed to reflect the Group has now achieved sustainable profitable growth.	↓ Likelihood reduced following further improved strategic review process
Changes to international trading environment due to political events	New impediments to international trade resulting from political actions such as Brexit or US trade tariffs may disadvantage the Group's position in its marketplace.	· Board review of likely risks associated with Brexit and other potential changes to the trading environment. · Continued focus on non-EU markets helps reduce risk for the Group in the event of unexpected difficulties arising to trade between UK and EU. · Consultation with legal experts to assess specific areas of Brexit risk and develop mitigation plans accordingly.	↔ No significant impact is anticipated at the current time
COVID-19 pandemic creates strategic, financial and/or operational uncertainty	COVID-19 has created a significant downturn in the initiation of new clinical trials (and interruption and delays to existing clinical trials).  This is expected to create short-term growth headwinds and create a temporary reduction in demand for the Group's services. The uncertainty over the duration of the COVID-19 pandemic may disrupt the Group's strategic plans. COVID-19 has required employees to work remotely which may risk an impact on productivity.	· The Group has worked closely with clients to support adjustments required to their trials due to COVID-19. · The Group has been able to leverage its strong order book and balance sheet position to continue its investment plans. · The Group has successfully migrated and equipped all staff to working remotely effectively. · Detailed and regular forecasting and close management of expenditure have given the Group confidence in its ability to manage the COVID-19 impact.	↑ The Group's 2021 revenue growth levels are expected to be more muted than in the current year because of COVID-19. The actions of the Group mean it is confident to invest to support the expected rapid initiation in new trials once the pandemic abates.

Operational risks

Principal Risks	Risk Context	Mitigation	Change in the Year
Failure of IT infrastructure	A significant failure of IT infrastructure, or a physical disaster (such as fire or flood) at the Group's IT hosting centre, might disrupt the Group's operations.	· Investment in IT infrastructure, including use of cloud services, implementation of new and upgraded systems and equipment has mitigated the risk of prolonged down time as a result of hardware failure. · The implementation of a full disaster recovery infrastructure is underway and will be complete in early 2021.	↓ Likelihood reduced due to improved infrastructure and controls implemented throughout 2020 and planned for 2021.
The Group is reliant on key individuals to support its operational and service delivery	As the Group scales, servicing an increased number of clients and their projects, so the Group risks overreliance on key individuals.	· The Group has increased its headcount by more than 30% during the year. This gives the Group access to both new skills and augmented existing skill sets. · The Group is investing in a new image capture and analysis platform which will reduce the reliance on key individuals and will launch during 2021.	↔ The risk of overreliance on several key individuals has been reduced. This principal risk remains whilst the new image capture and analysis platform is being developed.
A cyber-attack results in a breach of the Group's IT systems	Any successful cyber-attack may create operational (and potentially financial) risks and may have a significant reputational impact for the Group.	· Strengthened levels of control exist over the Group's IT infrastructure, including ongoing investments in improved security, 'TrialTracker' platform enhancements, upgraded firewalls and training for all staff provided on data security and standard controls such as password protection and policies. · The Group is investing in a full upgrade to its image data capture and analysis platform.  This will be completed in 2021 and will further enhance the security of the Group's systems. · The Group has submitted its IT infrastructure to independent penetration tests as part of prospective client audits and received strong security scores.	↓ Likelihood reduced as improved controls and infrastructure implemented. Roll out of new a cloud based imaging capture and analysis platform in 2021 will further reduce this risk area.

Financial risks

Principal Risks	Risk Context	Mitigation	Change in the Year
Early termination of a client's clinical trial	The Group's client contracts bear a risk of early termination in the event of: · an interim data review demonstrating no material benefit; or · a serious adverse event.	· Commercial contracts can include up-front payment, close-out cost recovery and termination notice clauses. · Material contracts are late-phase or open label studies meaning they are less likely to have an early termination event than earlier phase studies.	↔ No material change in risk compared to prior year.
Loss of a key commercial relationship with a client	The Group has material contracts with a single client.  There is therefore a risk that, if that client terminated its relationship with the Group, there would be a significant impact on the Group's short and/or medium-term revenue expectations.	· Leadership monitors service levels across projects and has dedicated additional resources to supporting its largest client. The strengthening of the Group's relationship with this client will reduce the likelihood of relationship damage or loss. · Further development of the sales pipeline, via the appointment of additional business development resources, is targeted at new client acquisition; accelerating the broadening of the client portfolio and reducing the impact of losing a major client.	↑ New client contracts were won during the year. In addition to this however, further contracts were also awarded by the Group's largest client. This has increased the Group's reliance on its largest client. During 2021, the Group will seek to further diversify its client portfolio by winning a greater number of contracts across a broader range of clients.
Financial risks are set out in further detail under note 24 to the financial statements and include: Liquidity risks Credit risks Currency risks Tax planning risks	The Group is exposed to financial risks typical of all commercial companies. These include the risks of a cash shortfall, experiencing a significant client payment delay, exposure to a foreign currency rate fluctuation which is against the interests of the Group and/or the Group fails to plan for tax and therefore is exposed to tax liabilities beyond the level necessary.	· Standard controls are applied around all of these risks. · The Group has a strong and strengthening cash position and a client portfolio which includes large, well-funded organisations. · Most contracts are denominated in GBP and currency levels are forecast and reviewed monthly. · Tax planning initiatives implemented with support of external tax advisers.	↓ Reduced foreign exchange exposure due to a greater proportion of client contracts being denominated in GBP. Well controlled trade receivables position Cash generative Review of tax losses conducted during the year.

Legal/Compliance & Reputational risks

Principal Risks	Risk Context	Mitigation	Change in the Year
Reputational damage due to error or system failure in delivery of analysis services	If the Group provided incorrect results in the course of delivering its services to a clinical trial this may impact on the trial and/or patient outcomes and result in reputational damage for the Group.	· Operational checks are used to control data error, duplication or transfer issues and to highlight when an analysis fails. · Continued investment in training and automation to scale controls used to identify potential errors. · Significant upgrade to existing data platform is in progress which will further strengthen system controls in place.	↓ Improved controls have reduced risk, with further system developments due to be implemented in 2021
Breach of data protection regulations	The Group captures personal data from clinical trial subjects. As such, it is exposed to data security risks.	· Data captured from client sites is pseudonymised on receipt into the Group's 'TrialTracker' software. · Controls over the protection of personal data have been implemented. Data outputs to clients and key stakeholders are issued following the application of controls designed to reduce, as far as possible, the likelihood of unintended release. · Data protection legislation requirements (such as GDPR) are integrated within the Group's processing activities and practices.	↓ Likelihood reduced as the Group has implemented further IT infrastructure enhancements and augmented data management policies and training.
Failure to comply with the requirements of its VCT/EIS funding	It was a requirement of the VCT/EIS funding raised by the Group in May 2018 that it be employed within a period of 2 years. Failure to do so would result in the VCT/EIS investors losing some of the tax benefits associated with their investment.	· The Board and Senior Leadership Team regularly reviewed the deployment of funds. · Detailed plans, budgets and forecasts were used to guide the employment of funds. · The Group engaged external expertise to review investments made during the course of the 2-year investment period to ensure compliance with VCT/EIS funding obligations .	↓ Risk mitigated with funds employed as at May 2020.

Corporate Governance Report

The Board has adopted, and complies with, the Quoted Companies Alliance ('QCA') Corporate Governance Code ('Code') and has published a statement on the Group website that sets out, in broad terms, how the Group complies with the Code at the date of this report. The Board provides annual updates about compliance with the Code. The Board is responsible for ensuring that IXICO is managed for the long-term benefit of all shareholders, through effective and efficient decision-making. Corporate governance is an important part of the Board's role by providing oversight and guidance to help manage risk and build long-term value.

The Code comprises 10 principles, with which companies undertake to comply as part of their corporate governance arrangements.  The Board conducts itself in a manner which places IXICO's values and the principles of the Code at the core of the Group's culture.

A summary of how the Group complies with these principles is outlined below with further detail being available on the Group's website (https://ixico.com/investors/governance/oversight/).

Focus Area	Governance Principle	Group Approach	Further Reading
Deliver value in a manner aligned to shareholder and wider stakeholder aspirations	1: Establish a strategy and business model which promotes long-term value for shareholders	The Group delivers insights to biopharmaceutical companies developing drugs to address neurological disease. To achieve our business goals, the Group is accelerating growth and has grown profitability in the financial year to 30 September 2020 by: · building scale and market presence for our technology solutions; and · developing and commercialising new products and services. These activities promote and are delivering long-term value for shareholders.	Our 5-point growth plan is detailed in the full annual report. Our approach to innovation and recent product launches are described in the full annual report.
	2: Seek to understand and meet shareholder needs and expectations	The Board is committed to encouraging open communication between itself and shareholders. The Chief Executive Officer and Chief Financial Officer arrange to meet with major shareholders at least twice a year to update them on strategy, progress against this strategy and obtain feedback. The Chairman also makes himself available for discussions with major shareholders as and when appropriate. Further, should the Board consider any significant divergence from strategy it will seek feedback from major shareholders as part of its deliberations. The Board uses publications on its website and its Annual Report to keep all shareholders informed of its progress. It uses the AGM to invite feedback from any shareholder. The CEO and CFO are responsible for investor relations and any feedback received from shareholders is communicated to the wider Board.
	3: Take into account wider stakeholder and social responsibilities and their implications for long-term success	The Group is highly conscious of the requirements of its wider stakeholders in supporting its long-term success. It views its wider stakeholders as its clients, suppliers, employees and the patients participating in the clinical trials it serves. The Board has implemented approaches to support the requirements of each group and, where it identifies, or is notified of, any risks or concerns in respect of any of these stakeholder groups, it puts in place actions to address these.	Our stakeholders and how we engage with them are described in in the full annual report.
	4: Embed effective risk management, considering both opportunities and threats, throughout the organisation	The Board has ultimate responsibility for the Group's system of risk management and internal control and for reviewing its effectiveness. The Board instils control to the Group's operations by overseeing the following: · competent and prudent management; · sound planning; · adequate systems of control, including regular review of risk; · adequate and accurate accounting records; and · compliance with statutory and regulatory obligations.	The Risk Management Report is provided above.
Maintain a strong and dynamic management framework that places value on developing the Group in an ethical manner	5: Maintain the Board as a well-functioning, balanced team led by the Chair	The Board comprises the Non-Executive Chairman, two Executive Directors and two Non-Executive Directors, one of whom acts as Senior Independent Director. The Board has an appropriate balance between independence and knowledge of the Group and its target markets which allows it to discharge its duties and responsibilities effectively. The Directors use their independent judgement and challenge matters affecting the business whether strategic or operational. The Non-Executive Directors are in regular contact with the Executive Directors and the Chairman has regular one-to-one meetings with the Chief Executive Officer. The Board has access to independent external advisers to support it in its decisions, where additional skills or expertise is deemed necessary. The Board has procedures in place to deal with a situation in which a Director has, or may have, a conflict of interest. The Board is aware of other commitments and interests as they are disclosed by each Board member. The Board meets formally (either face-to-face or via video conference) not fewer than four times per year in addition to the annual strategy day. The Board is also supported by three subcommittees: the Audit Committee, the Remuneration Committee and the Share Transaction Committee.  The Board and its subcommittees all operate against terms of reference which are summarised on the Company website (https://ixico.com/investors/governance/).	More information on Board membership is provided in the full annual report.
	6: Ensure that between them the Directors have the necessary up-to-date experience, skills and capabilities	The Board has an effective and appropriate balance of skills and experience and is mindful of the need to continuously review the needs of the business to ensure that this remains true, so that the Group can drive performance as well as comply with regulations. The Group's Articles of Association require that all Directors must stand for re-election every three years and that any new Directors appointed during the year must stand for election at the AGM following their appointment.	Further details of the Board's skills and experience can be found in the full annual report.
	7: Evaluate all elements of Board performance based on clear and relevant objectives, seeking continuous improvement	The Board undertakes self-reviews from time to time in order to assess its performance. The Chairman provides leadership to the Board and assesses the individual Directors to ensure that their contribution is relevant and effective and that they are committed members of the Board.
	8: Promote a corporate culture that is based on ethical values and behaviours	The Group operates in a highly regulated environment in accordance with an integrated Management System (including ISO 13485:2016) which is subject to third-party audit. The Group is focused on a therapeutic area which has a high unmet medical need and our employees are motivated to support our clients in their quest to develop and provide safe, effective treatments for people living with neurological diseases. The Group employs a diverse workforce and embraces a culture where employees are treated equitably within an environment of mutual respect and understanding. The eradication of fraud and bribery in the way in which the Group operates is also of great importance to securing the trust and confidence of its clients and partners. Therefore, the Group adopts a zero-tolerance position to fraud and bribery and is committed to pursuing this approach throughout its operational practices.	The Group's values are described in the full annual report.
	9: Maintain governance structures and processes that are fit for purpose and support good decision-making by the Board	The Board is collectively responsible for the long-term success of the Group. Its principal function is to provide the Group with a framework of prudent and effective controls, which enables risk to be assessed and managed and its strategy executed. Further details as to how the governance processes are structured to achieve this are outlined within this Governance Report.	The Group's risk management approach is described above.
Build trust based on open communication with stakeholders	10: Communicate how the Group is governed and is performing by maintaining a dialogue with shareholders and other relevant stakeholders	The Group communicates with shareholders (and other stakeholders) via its website, its Annual Report and the AGM as well as via issuing RNS announcements and presenting to major shareholders and analysts. This Governance Report, alongside the wider Strategic and Directors' Reports are designed to provide full and relevant updates on how the Group is governed and how it is performing.  These are drafted with both shareholders and the wider stakeholder community in mind.	The full Strategic Report, Directors' report and stakeholder engagement in the year can be found in the full annual report. Financial Review can be found above.

The Board and its subcommittees

The Board meets at least 4 times per year in accordance with a pre-determined meeting calendar. The Board is supported by 3 subcommittees: the Audit Committee, the Remuneration Committee and the Share Transaction Committee. The subcommittees discharge responsibilities on behalf of the Board and are entitled to such internal or external advice as is required to allow them to fulfil their duties.

The table below shows the membership of the Board and each subcommittee as at the end of 30 September 2020:

	Board	Audit Committee	Remuneration Committee	Share Transaction Committee
Charles Spicer (Non-Executive Chairman)	Chairman	-	-	-
Giulio Cerroni (Chief Executive Officer)	Member	-	-	-
Grant Nash (Chief Financial Officer & Company Secretary)	Member & Secretary	Secretary	Secretary	Member & Secretary
Mark Warne (Senior Independent Non-Executive Director)	Member	Member	Chairman	Chairman
John Bradshaw (Independent Non-Executive Director)	Member	Chairman	Member	-

The Board and its subcommittees receive appropriate and timely information prior to each meeting including a formal agenda. Any Director may challenge Group proposals. Decisions are taken democratically after appropriate discussion. Specific actions arising from Board meetings are agreed by the Board or relevant subcommittee and are then followed up by the Executive Directors.

The Board and subcommittees all operate against terms of reference which are summarised on the Group website (https://ixico.com/investors/governance/).

Audit Committee

The Audit Committee is chaired by John Bradshaw. Mark Warne is a member of the Committee.  The terms of reference of the Audit Committee include the following responsibilities:

· monitor the integrity of the Group's financial statements and application of accounting policies;

· review the effectiveness of the Group's internal control and risk management systems; and

· oversight of the Group's external auditors, including assessment of their independence from the Group.

Audit Committee meetings are usually held twice per financial year.

During the year, the Audit Committee reviewed other services provided by the Group's auditor and took the decision to move tax advisory and compliance services to another firm.  This means the Group auditor now only provides audit services to the Group.

Remuneration Committee

The Remuneration Committee is chaired by Mark Warne. John Bradshaw is a member of the Committee.

The terms of reference of the Remuneration Committee include the following responsibilities:

· determine and agree with the Board the framework or broad policy for the remuneration of the Executive Directors and other such members of the executive management as it is designated to consider;

· approve the design of, and determine targets for, any performance-related pay schemes and approve the total annual payments made under such schemes;

· approve all long-term incentive scheme structures and option schemes;

· approve all option grants for ratification by the Board; and

· within the terms of the agreed policy, determine the total individual remuneration package of each Executive Director including, where appropriate, bonuses, incentive payments and share options.

Remuneration Committee meetings are usually held twice per financial year.

Share Transaction Committee

The Share Transaction Committee is chaired by Mark Warne. Grant Nash is a member of the Committee.

The terms of reference of the Share Transaction Committee include the following responsibilities:

· review, consider and, where deemed appropriate, approve the exercise of share options by option holders of the Group and the issuance of shares in connection with such exercises; and

· review, consider and approve the request to transact shares by employees or other individuals closely related to the Group (and all ancillary matters) in accordance with the relevant policies of the Group, applicable law and any directions of the Group's nominated adviser.

The Share Transaction Committee meetings are held on an ad hoc basis as required.

Consolidated Statement of Comprehensive Income

for the years ended 30 September 2020 and 30 September 2019

		2020	2019
	Note	£000	£000
Revenue	6	9,532	7,561
Cost of sales		(3,186)	(2,619)
Gross profit		6,346	4,942
Other income	8	606	588
Operating expenses
Research and development expenses		(1,309)	(986)
Sales and marketing expenses		(1,579)	(1,154)
General and administrative expenses		(3,208)	(3,026)
Total operating expenses	11	(6,096)	(5,166)
Operating profit		856	364
Finance income		20	2
Finance expense		(18)	-
Profit on ordinary activities before taxation		858	366
Taxation credit	12	94	66
Profit attributable to equity holders for the period		952	432
Other comprehensive expense:
Items that will be reclassified subsequently to profit or loss
Foreign exchange translation differences		(1)	(1)
Total other comprehensive expense		(1)	(1)
Total comprehensive income attributable to equity holders for the period		951	431
Profit per share (pence)	13
Basic profit per share		2.02	0.92
Diluted profit per share		2.00	0.92

Consolidated Statement of Financial Position

as at 30 September 2020, 30 September 2019 and 30 September 2018

				2020	2019	2018
					Restated	Restated
			Note	£000	£000	£000
Assets
Non-current assets
Property, plant and equipment			14	1,014	316	77
Intangible assets			15	796	292	32
Total non-current assets				1,810	608	109
Current assets
Trade and other receivables			17	2,082	2,379	2,140
Current tax receivables			12	259	450	229
Cash and cash equivalents				7,945	7,264	7,861
Total current assets				10,286	10,093	10,230
Total assets				12,096	10,701	10,339
Liabilities and equity
Non-current liabilities
Trade and other payables			18	167	-	-
Provisions			19	90	-	-
Lease liabilities			20	45	-	-
Total non-current liabilities				302	-	-
Current liabilities
Trade and other payables			18	2,407	2,782	3,013
Provisions			19	100	-	-
Lease liabilities			20	168	-	-
Total current liabilities				2,675	2,782	3,013
Total liabilities				2,977	2,782	3,013
Equity
Ordinary shares			22	471	469	467
Share premium			22	84,499	84,436	84,389
Merger relief reserve			22	1,480	1,480	1,480
Reverse acquisition reserve			22	(75,308)	(75,308)	(75,308)
Foreign exchange translation reserve			22	(97)	(81)	(80)
Capital redemption reserve			22	7,456	7,456	7,456
Accumulated losses				(9,382)	(10,533)	(11,078)
Total equity				9,119	7,919	7,326
Total liabilities and equity				12,096	10,701	10,339

Company Statement of Financial Position

as at 30 September 2020, 30 September 2019 and 30 September 2018

				2020	2019	2018
					Restated	Restated
			Note	£000	£000	£000
Assets
Non-current assets
Investments in Group undertakings			16	5,623	5,516	5,434
Total non-current assets				5,623	5,516	5,434
Current assets
Trade and other receivables			17	4,255	4,710	685
Cash and cash equivalents				1,705	2,187	7,229
Total current assets				5,960	6,897	7,914
Total assets				11,583	12,413	13,348
Liabilities and equity
Current liabilities
Trade and other payables			18	73	112	140
Total current liabilities				73	112	140
Equity
Ordinary shares			22	471	469	467
Share premium			22	84,499	84,436	84,389
Merger relief reserve			22	1,480	1,480	1,480
Capital redemption reserve			22	7,456	7,456	7,456
Accumulated losses				(82,396)	(81,540)	(80,584)
Total equity				11,510	12,301	13,208
Total liabilities and equity				11,583	12,413	13,348

Parent Company Income Statement

As permitted by Section 408 of the Companies Act 2006, the income statement of the Company is not presented as part of these financial statements. The Company's loss for the financial year was £1,040,000 (2019: £1,069,000).

Consolidated Statement of Changes in Equity

for the years ended 30 September 2020 and 30 September 2019

					Foreign
			Merger	Reverse	exchange	Capital
	Ordinary	Share	relief	acquisition	translation	redemption	Accumulated
	shares	premium	reserve	reserve	reserve	reserve	losses	Total
	Restated £000	£000	£000	£000	£000	Restated £000	£000	£000
Balance at 1 October 2018	7,923	84,389	1,480	(75,308)	(80)	-	(11,078)	7,326
Prior period adjustment (note 3)	(7,456)	-	-	-	-	7,456	-	-
Restated balance at 1 October 2018	467	84,389	1,480	(75,308)	(80)	7,456	(11,078)	7,326
Total comprehensive income/(expense)
Profit for the period	-	-	-	-	-	-	432	432
Other comprehensive expense:
Foreign exchange translation	-	-	-	-	(1)	-	-	(1)
Total comprehensive income/(expense)	-	-	-	-	(1)	-	432	431
Transactions with owners
Charge in respect of share options	-	-	-	-	-	-	113	113
Exercise of share options	2	47	-	-	-	-	-	49
Total transactions with owners	2	47	-	-	-	-	113	162
Balance at 30 September 2019	469	84,436	1,480	(75,308)	(81)	7,456	(10,533)	7,919
Total comprehensive income/(expense)
Profit for the period	-	-	-	-	-	-	952	952
Other comprehensive expense:
Realised losses on foreign exchange	-	-	-	-	(15)	-	15	-
Foreign exchange translation	-	-	-	-	(1)	-	-	(1)
Total comprehensive income/(expense)	-	-	-	-	(16)	-	967	951
Transactions with owners
Charge in respect of share options	-	-	-	-	-	-	184	184
Exercise of share options	2	63	-	-	-	-	-	65
Total transactions with owners	2	63	-	-	-	-	184	249
Balance at 30 September 2020	471	84,499	1,480	(75,308)	(97)	7,456	(9,382)	9,119

Company Statement of Changes in Equity

for the years ended 30 September 2020 and 30 September 2019

			Merger	Capital
	Ordinary	Share	relief	redemption	Accumulated
	shares	premium	reserve	reserve	losses	Total
	Restated £000	£000	£000	Restated £000	£000	£000
Balance at 1 October 2018	7,923	84,389	1,480	-	(80,584)	13,208
Prior period adjustment (note 3)	(7,456)	-	-	7,456	-	-
Restated balance at 1 October 2018	467	84,389	1,480	7,456	(80,584)	13,208
Total comprehensive expense for the period	-	-	-	-	(1,069)	(1,069)
Transactions with owners
Charge in respect of share options	-	-	-	-	113	113
Exercise of share options	2	47	-	-	-	49
Total transactions with owners	2	47	-	-	113	162
Balance at 30 September 2019	469	84,436	1,480	7,456	(81,540)	12,301
Total comprehensive expense for the period	-	-	-	-	(1,040)	(1,040)
Transactions with owners
Charge in respect of share options	-	-	-	-	184	184
Exercise of share options	2	63	-	-	-	65
Total transactions with owners	2	63	-	-	184	249
Balance at 30 September 2020	471	84,499	1,480	7,456	(82,396)	11,510

Consolidated and Company Statements of Cash Flows

for the years ended 30 September 2020 and 30 September 2019

	Group		Company
	2020	2019	2020	2019
	£000	£000	£000	£000
Cash flows from operating activities
Profit / (loss) for the period	952	432	(1,040)	(1,069)
Finance income	(20)	(2)	(4)	(40)
Finance expense	18	-	1	-
Taxation	(94)	(66)	-	-
Depreciation	356	72	-	-
Amortisation of intangibles	82	40	-	-
Disposal of fixed assets	1	-	-	-
Impairment of intangible assets	2	-	-	-
Research and development expenditure credit	(162)	(155)	-	-
Share option charge	184	113	76	31
	1,319	434	(967)	(1,078)
Changes in working capital
Decrease/(increase) in trade and other receivables	297	(239)	455	(3,983)
(Decrease)/increase in trade and other payables	(128)	(325)	(39)	(29)
Cash generated from / (used in) operations	1,488	(130)	(551)	(5,090)
Taxation received	447	-	-	-
Net cash generated from / (used in) operating activities	1,935	(130)	(551)	(5,090)
Cash flows from investing activities
Purchase of property, plant and equipment	(686)	(217)	-	-
Purchase of intangible assets including staff costs capitalised	(456)	(300)	-	-
Finance income	20	4	4	-
Net cash (used in) / generated from investing activities	(1,122)	(513)	4	-
Cash flows from financing activities
Issue of shares	65	48	65	48
Repayment of lease liability	(177)	-	-	-
Interest paid	(18)	-	-	-
Net cash (used in) / generated from financing activities	(130)	48	65	48
Movements in cash and cash equivalents in the period	683	(595)	(482)	(5,042)
Cash and cash equivalents at start of period	7,264	7,861	2,187	7,229
Effect of exchange rate fluctuations on cash held	(2)	(2)	-	-
Cash and cash equivalents at end of period	7,945	7,264	1,705	2,187

Notes to the financial statements

For the years ended 30 September 2020 and 30 September 2019

The financial information set out in these results does not constitute the company's statutory accounts for 2020 or 2019. Statutory accounts for the years ended 30 September 2020 and 30 September 2019 have been reported on by the Independent Auditors; their report was (i) unqualfied; (ii) did not draw attention to any matters by way of emphasis; and (iii) did not contain a statement under 498 (2) or 498 (3) of the Companies act 2006.

Statutory accounts for the year ended 30 September 2019 have been filed with the Registrar of Companies. The statutory accounts for the year ended 30 September 2020 will be delivered to the Registrar in due course. Copies of the Annual Report 2020 will be posted to shareholders on or about 18 December 2020.

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 detailed in note 16 , together referred to throughout as 'the Group'. The Group is an established provider of technology-enabled 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 consolidated financial statements have been prepared on a going concern basis and in accordance with IFRS as adopted by the EU, IFRIC interpretations and the Companies Act 2006 applicable to companies operating under IFRS.

The consolidated 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 consolidated financial statements are presented in Great British Pounds ('£' or 'GBP') and are rounded to the nearest thousand unless otherwise stated. This is the predominant functional currency of the Group, and is the currency of the primary economic environment in which it operates. Foreign currency transactions are accounted in accordance with the policies set out below.

c.  Basis of consolidation

The consolidated 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. The Company's subsidiaries are detailed in note 16 . 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 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 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.

The ongoing COVID-19 pandemic is causing significant uncertainty across global markets for the short and medium term. During 2020, the Group reacted quickly to this by preparing a series of financial scenario forecasts based on discussions with clients over the likely impact of the pandemic on their clinical trials. In parallel the Group moved rapidly to a fully remote model, which included providing additional equipment to employees enabling all to work from home effectively and allowing the Group to trade uninterrupted throughout the year.

In assessing going concern, management has prepared detailed sensitised forecasts which consider different scenarios throughout the course of the next 12 months. These include the risk to current projects and expected future sales pipelines, the ability for patients to attend imaging centres (due to global COVID-19 lockdown restrictions) and potential delays in new trial start-up timelines. 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.  New and amended accounting standards and interpretations

a.  Adoption of new accounting standards for the year ended 30 September 2020

The Group has adopted all new and amended accounting standards and interpretations issued by the International Accounting Standards Board ('IASB') that are mandatory for the current reporting period. Analysis of the impacts of these standards are set out below.

IFRS 16 - Leases
The Group adopted IFRS 16 from 1 October 2019. IFRS 16 requires a lessee to recognise lease assets and liabilities, previously accounted for as operating leases, on the Statement of Financial Position. Subsequently, depreciation of the lease assets and interest on the lease liabilities is recognised within the Statement of Comprehensive Income over the remaining term of the lease. The Group has applied the modified retrospective approach requiring the Group to calculate lease assets and liabilities at the beginning of the current period and therefore the comparative information has not been restated and continues to be reported under IAS 17.

The adoption of this new Standard has resulted in the Group recognising a right-of-use asset and related lease liability in connection with all operating leases except for those identified as low-value or having a remaining lease term of less than 12 months which continue to be recognised on a straight-line basis as a lease expense over the remaining lease term. The incremental borrowing rate used for discounting purposes and applied to the lease liabilities recognised under the new Standard is 6%, being the expected rate at which the Group could reasonably borrow at from banking institutions.

The following is a reconciliation of the financial statement line items from IAS 17 to IFRS 16 at 30 September 2019 to the carrying amount at 1 October 2019:

	Carrying amount at 30 September 2019 £000	Remeasurement £000	Carrying amount at 1 October 2019 £000
Property, plant and equipment	316	462	778
Provisions	-	90	90
Lease liabilities	-	372	372

The following is a reconciliation of total operating lease commitments at 30 September 2019 (as disclosed in the financial statements to 30 September 2019) to the lease liabilities recognised at 1 October 2019:

		£000
Total operating lease commitments disclosed at 30 September 2019		441
Recognition exemptions: Leases of low-value		(1)
Operating lease liabilities before discounting		440
Discounted using incremental borrowing rate		(68)
Total lease liabilities recognised under IFRS 16 at 1 October 2019		372

b.  Accounting developments affecting financial statements in subsequent periods

At the date of authorisation of these financial statements, several new, but not yet effective, standards and amendments to existing standards and interpretations have been published by the IASB. The standards and amendments that are not yet effective and have not been adopted early by the Group include:

• Amendments to References to Conceptual Framework in IFRS Standards

• Definition of Material (Amendments to IAS 1 and IAS 8)

• Interest Rate Benchmark Reform (Amendments to IFRS 9, IAS 39 and IFRS 7)

The Directors anticipate, based on current business processes, that the introduction of the above standards and amendments will not have a material impact on the Group and Company financial statements and therefore the impact of these changes on the financial statements have not been made.

3.  Prior period adjustment

During the year to 30 September 2016, a subdivision of shares occurred, dividing the existing share capital of 15,215,664 ordinary shares of nominal value £0.50 into 15,215,664 ordinary shares of nominal value £0.01 and 15,215,664 deferred shares of nominal value £0.49. The deferred shares were rendered effectively worthless by virtue of the rights attached to them. On 22 December 2016, the deferred shares were repurchased for £1 and subsequently cancelled, however no accounting entries were made in respect of this transaction.

As a result of the deferred share cancellation, the share capital for the years ended 30 September 2017, 30 September 2018 and 30 September 2019 is overstated by £7,455,675, whilst the capital redemption reserve is understated in the same periods by £7,455,675.

		Share capital	Capital redemption reserve
		£000	£000
Balance as at 30 September 2017		7,727	-
Repurchase and cancellation of deferred shares		(7,456)	7,456
Restated balance as at 30 September 2017		271	7,456
Balance as at 30 September 2018		7,923	-
Repurchase and cancellation of deferred shares		(7,456)	7,456
Restated balance as at 30 September 2018		467	7,456
Balance as at 30 September 2019		7,925	-
Repurchase and cancellation of deferred shares		(7,456)	7,456
Restated balance as at 30 September 2019		469	7,456

There is no impact on total profit or loss in any year and subsequently no impact on taxation. The number of shares in issue in each of the periods was correct and therefore there is no impact on the earnings per share or diluted earnings per share in each of the periods.

4.  Significant accounting policies

4.1  Revenue

Revenue is principally derived from service revenue. This revenue is measured at the fair value of the consideration received or receivable and represents amounts receivable for services provided in the normal course of business, net of discounts, VAT and other sales-related taxes.

In determining whether to recognise revenue, the Group follows a 5-step process:

1.  Identifying the contract with a client;

2.  Identifying the performance obligations;

3.  Determining the transaction price;

4.  Allocating the transaction price to the performance obligations; and

5.  Recognising revenue when/as performance obligation(s) are satisfied.

Each type of revenue has separate recognition criteria depending on the type of service provided. These services are agreed at the inception of a project through contracts with clients. A critical part of the contract is a detailed schedule of work that provides the list of services to be provided by the Group. Performance obligations are attached to each service, with revenue being recognised once these are satisfied. The transaction price associated to each performance obligation is allocated based on their relative stand-alone selling price.

Revenue types

The Group's contracts comprise a variety of performance obligations. These obligations are all considered streams of a single revenue type, being service revenue. The Group's most significant streams of service revenue are outlined below and have the respective recognition criteria:

Project and site set-up

At the point a client approaches the Group to complete work, a project manager is assigned. The project manager co-ordinates the project set-up and ongoing delivery of the service. At inception, the project manager will also prepare the clinical study protocol and other essential study documents.

Once the project and/or the site is set up, all performance obligations are satisfied. These services are therefore recognised at a point in time, being when the Group has delivered the relevant material to the client.

Project and site management

Each contract requires various project management activities, provided by the project manager. These services are provided throughout the duration of a contract. Site management services are provided throughout the duration of a site being operational, typically being shorter than the project management cycle.

The services provided for project and site management represents a provision of on going services. Therefore, revenue for these items is recognised on a straight-line basis.

Site training and materials

A contract will typically include training of each individual site. Various materials are prepared in advance and provided to clients as tools for site training. Site training is provided either through live online training or through a self-paced training module. These activities are combined in one revenue transaction per site.

Revenue from site training is recognised when each site has completed the training activity.

TrialTracker configuration and access

The TrialTracker platform delivers a robust and comprehensive set of centralised imaging services designed to efficiently manage the complex imaging workflow from: image upload, quality control, reading and analysis. The platform also allows for reporting and data transfer.

The Group has identified 2 separate performance obligations in the TrialTracker platform:

1.  A set-up fee is recognised at a point in time once TrialTracker access is provided to the client;

2.  An ongoing access fee is recognised over the duration of the project, with revenue being recognised on a straight-line basis.

Data reading and analysis

The Group provides data analysis services across a range of biomarkers, providing high-quality, clinically meaningful data. Fees are charged to clients on a 'per data read'.

As these services have no ongoing obligations from the Group, revenue is recognised once the data read and analysis has taken place.

Data management and quality control

Ensuring data are managed appropriately and that the data are of a high quality is critical in the delivery of the Group's service. The data management and imaging teams work in collaboration to ensure ongoing integrity of data.

The performance of data management represents the provision of an on going service and so the straight-line method of recognition is used.

Revenue recorded from data quality control is recognised at a point in time when the Group has delivered the service to the client.

Scientific reports
Scientific reports are provided at interim points and at the end of a study. Such reports contain data analysis and statistical interpretation.

These reports represent an individual performance obligation with no further work required by the Group. Revenue from these services is recognised at a point in time when the Group provides the report to the client.

Licence revenue

Revenue relating to licensing is entirely attributable to TrialTracker. Each agreement will grant the user rights to use the software and receive associated technical support during the licence period.

The licence is a distinct performance obligation and revenue is recognised over the contract term. 

Change orders

Throughout the duration of a contract, the client may request additional services or service changes to be made. For revenue recognition purposes, the Group treats a change order or contract modification to a client agreement as a separate contract, if both:

· the scope changes due to the addition of 'distinct' services; and

· the price change reflects the services stand-alone selling prices ('SSP') under the circumstances of the modified contract.

The revenue recognition for the change order is applied in the same way as the original contract, as detailed above, with the original client agreement remaining unchanged.

4.2  Other income

Government grants

A government grant is recognised only when there is reasonable assurance that the Group will comply with any conditions attached to the grant and the grant will be received. The grants are recognised as income over the period necessary to match them with the related costs, for which they are intended to compensate, on a systematic basis. The Group recognises grant income as an item of other income.

Research and Development Expenditure Credit ('RDEC')

The Group has elected to take advantage of the RDEC introduced in the Finance Act 2013. A company may surrender corporation tax losses on research and development expenditure incurred on or after 1 April 2013 for a corporation tax refund. Relief is given as a taxable credit on 13% (which increased from 12% from 1 April 2020) of qualifying research and development expenditure. The Group recognises research and development expenditure credit as an item of other income, taking advantage of the 'above the line' presentation, and is recognised in the year for which the research and development relates.

4.3  Research and development expenditure

In all instances across the Group, research expenditure is expensed through the income statement. For development expenditure, items will be expensed where the recognition criteria for internally generated intangible assets is not met.

The main criteria used to assess this, as required under IAS 38 - Intangible Assets, are:

-  Demonstrating technical feasibility of completing the intangible asset;

-  Intention to complete the asset;

-  Ability to use or sell the asset in order to generate future economic benefit;

-  Availability of adequate technical or other resources to complete development; and

-  Ability to measure reliably the expenditure attributable to the asset.

It was determined that the Group continued to meet the above criteria in respect of specific developments to its TrialTracker platform and data analytics service offering. As a result, associated development costs are capitalised in the year in relation to TrialTracker and an intangible asset is recognised as set out in note 15 .

4.4  Share-based payments

Equity-settled share-based payments are measured at the fair value of the equity instruments at the grant date. The fair value determined at the grant date of the equity-settled share-based payments is expensed on a straight-line basis over the vesting period, based on the Group's estimate of equity instruments that will eventually vest. At each reporting date, the Group revises its estimate of the number of equity instruments expected to vest as a result of the effect of non-market-based vesting conditions.

Any changes that impact the original estimates, for example the effect of employees who have left the Group in the year and have forfeited their options, is recognised in the Consolidated Statement of Comprehensive Income such that the cumulative expense reflects the revised estimate, with a corresponding adjustment to equity reserves.

Details regarding the determination of the fair value of equity-settled share-based transactions are set out in note 23 of the consolidated financial statements.

4.5  Employee benefits

All employee benefit costs are recognised in the Consolidated Statement of Comprehensive Income as they are incurred. These principally relate to holiday pay and contributions to the Group defined contribution plan.

The assets of the Group scheme are held separately from those of the Group in independently administered funds. The Group does not offer any other post-retirement benefits.

4.6  Leased assets

A lease is defined as a contract that gives the Group the right to use an asset for a period of time in exchange for consideration. The Group identifies from the contract the total length and cost of the lease contract, and determines whether it meets the definition of a right-of-use asset. Recognition of a right-of-use asset is met if it is longer than 12 months and of a high value. For those leases that do not meet these criteria, the rental charge payable under these leases are charged to the Consolidated Statement of Comprehensive Income on a straight-line basis over the lease term.

The initial recognition and subsequent measurement of right-of-use asset leases are:

Initial recognition

At the commencement date, the Group measures the lease liability at the present value of future lease payments, discounted using the Group's incremental borrowing rate. The Group also recognises a right-of-use asset which is measured at cost, which is made up of the initial measurement of the lease liability, any initial direct costs and an estimate of any costs to reinstate the asset to its original condition. 

Subsequent measurement

The lease liability is reduced for payments made and increased for interest, and is remeasured for any modifications made to the lease. The right-of-use asset is depreciated on a straight-line basis over the expected lease term. The asset is also assessed for impairment when such indicators exist.

On the statement of financial position, right-of-use assets are included in property, plant and equipment and lease liabilities within trade and other payables.

4.7  Property, plant and equipment

Property, plant and equipment is stated at cost less accumulated depreciation and, where appropriate, less provisions for impairment. The initial recognition and subsequent measurement of property, plant and equipment are:

Initial recognition

Property, plant and equipment is initially recognised at acquisition cost, including any costs directly attributable to bringing the assets to the location and condition necessary for them to be capable of operating. In most circumstances, the cost will be its purchase cost, together with the cost of delivery.

Subsequent measurement

An asset will only be depreciated once it is ready for use. Depreciation is charged so as to write off the cost of property, plant and equipment, less its estimated residual value, over the expected useful economic lives of the assets.

Depreciation is charged on a straight-line basis as follows:

Office buildings	over expected lease term
Leasehold improvements	shorter of 5 years or the lease term
Fixtures and fittings	3 years
Equipment	3 years

The disposal or retirement of an asset is determined by comparing the sales proceeds with the carrying amount. Any gains or losses are recognised within the Consolidated Statement of Comprehensive Income.

4.8  Intangible assets

Acquired intangibles

Intangible assets that are acquired through business combinations are recognised as an intangible asset if it is separable from the acquired business or arises from contractual or legal rights. These assets will only be recognised if they are also expected to generate future economic benefits and its fair value can be reliably measured.

Initial recognition

Intangible assets acquired separately are measured on initial recognition at cost. The cost of intangible assets acquired in a business combination is their fair value at the date of acquisition.

Subsequent measurement

Following capitalisation, the intangible assets are carried at cost less any accumulated amortisation, and where appropriate, less provisions for impairment.

Intangible assets are amortised using the straight-line method over their estimated useful economic life as follows:

Intangibles acquired through business combinations	5 years
Other acquired intangible assets
-  Computer software	3 years
-  Data acquisition	5 years

Amortisation is charged to the Consolidated Statement of Comprehensive Income and is included within cost of sales for those items directly related to project activities, or otherwise within general and administrative expenses.

Internally generated intangible assets

Intangible assets that are capitalised internally are deemed to have met the recognition criteria set out in IAS 38. These items relate to research and development costs and are considered in note 4.3 .

Initial recognition

Internally generated intangible assets are initially recognised at cost once the recognition criteria of IAS 38 are met.

Subsequent measurement

Any assets that are not yet ready for use will be capitalised as assets under construction and will not be amortised. Once the asset is ready for use, amortisation will begin. The amortisation rates adopted are based on the expected useful economic life of the projects to which they relate. The assets useful economic life is as follows:

Internally generated technology

3 - 5 years

4.9  Impairment of non-current assets

Each category of non-current assets is reviewed for impairment both annually and when there is an indication that an asset may be impaired, being when events or changes in circumstances indicate that the carrying value may not be recoverable. An impairment loss is recognised in the Consolidated Statement of Comprehensive Income for the amount by which the asset's carrying value exceeds its recoverable amount.

The recoverable amount is the higher of an asset's fair value less cost to sell and value in use. Non-financial assets, other than goodwill, which have suffered an impairment are reviewed for possible reversal of the impairment at each reporting date.

4.10  Investments in Group undertakings

Investments in Group undertakings are initially recognised at cost and subsequently measured at cost less any impairment provision. Investments are subject to an annual impairment review, with any impairment charge being recognised through the Consolidated Statement of Comprehensive Income. Additions to investments are amounts relating to share options for the services performed by employees of the subsidiaries of the Company and are classified as capital contributions within note 16 . 

4.11  Trade and other receivables

Trade and other receivables are initially recognised at fair value and subsequently stated at amortised cost using the effective interest method, less provision for impairment. A provision for impairment of trade receivables is established when there is objective evidence that the Group will not be able to collect all amounts due according to the original terms of the receivables. Significant financial difficulties of the debtor, probability that the debtor will enter bankruptcy or financial reorganisation, and default or significant delinquency in payments (exceeding credit terms) are considered indicators that the trade receivable should be impaired.

The amount of the provision is the difference between the asset's carrying amount and the present value of estimated future cash flows, discounted at the original effective interest rate. The carrying amount of the asset is reduced through the use of an allowance account, and the amount of the loss is recognised in the Consolidated Statement of Comprehensive Income within general and administrative expenses. When a trade receivable is uncollectible, it is written off against the allowance account for trade receivables. Subsequent recoveries of amounts previously written off are credited against general and administrative expenses in the Consolidated Statement of Comprehensive Income.

4.12  Taxation

Current tax
Current tax represents amounts recoverable within the United Kingdom and is provided at amounts expected to be recovered using the tax rates and laws that have been enacted at the Statement of Financial Position date.

Research and development credits
The benefit associated with UK-based research and development is recognised under the UK's Research and Development Expenditure Credit scheme. Details of the recognition are set out in note 4.3 .

Deferred taxation
Deferred tax is provided in full, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the consolidated financial statements in accordance with IAS 12 - Income taxes. Deferred tax liabilities are recognised for all taxable temporary differences. A deferred tax asset is recognised only to the extent that it is probable that sufficient taxable profit will be available in future years to utilise the temporary difference. Deferred tax is not accounted for if it arises from initial recognition of an asset or liability in a transaction, other than a business combination, that at the time of the transaction affects neither the accounting, nor taxable profit or loss.

Deferred income tax is determined using tax rates (and laws) that have been enacted or substantively enacted by the Statement of Financial Position date and are expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled.

Deferred tax assets and liabilities are offset only when there is a legally enforceable right to set off current tax assets against current tax liabilities, they relate to income taxes levied by the same taxation authority and the Group intends to settle these on a net basis.

4.13  Cash and cash equivalents

Cash and cash equivalents comprise cash at bank and in hand with original maturities at inception of 3 months or less.

4.14  Foreign currency translation

Transactions denominated in foreign currencies are translated into Great British Pounds at actual rates of exchange prevailing at the date of transaction. Monetary assets and liabilities expressed in foreign currencies are translated into Great British Pounds at rates of exchange prevailing at the end of the financial year. All foreign currency exchange differences are taken to the Consolidated Statement of Comprehensive Income in the year in which they arise.

Non-monetary items are not retranslated at year end and are measured at historical cost (translated using the exchange rates at the transaction date), except for non-monetary items measured at fair value which are translated using the exchange rates at the date when fair value was determined.

4.15  Trade and other payables

Trade and other payables are non-interest-bearing and are initially recognised at fair value and subsequently stated at amortised cost.

4.16  Provisions, contingent assets and contingent liabilities

Provisions are recognised when the Group has a present legal or constructive obligation as a result of a past event, it is probable that an outflow of economic resources will be required from the Group and amounts can be estimated reliably. The timing of such outflows may still be uncertain. Such provisions are measured at the estimated expenditure required to settle the present obligation based on the most reliable estimate available at the reporting date, discounted to the present value where material.

Any reimbursement that the Group is virtually certain to collect from a third party in relation to the related provision will be recognised as a separate asset.

Liabilities are not recognised where the outflow of economic resources is not probable, but are instead disclosed as contingent liabilities.

4.17  Equity instruments

Equity instruments issued by the Group are recorded at the proceeds received, net of direct issue costs.

4.18  Financial instruments

Financial assets and financial liabilities are recognised on the Consolidated Statement of Financial Position when the Group or the Company becomes a party to the contractual provisions of the instrument. Debt and equity instruments are classified as either financial liabilities or as equity in accordance with the substance of the contractual arrangement.

Further information relating to financial instruments and the policies adopted by the Group to manage risk is found in note 24 .

5.  Significant management judgement in applying accounting policies and estimation uncertainty

When preparing the consolidated 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.

Revenue recognition

The Group recognises revenue in accordance with amounts charged to clients under service contracts. All contracts include an agreed, detailed work order which defines the deliverables. The service contracts are typically multi-year and may be amended through a change order process, which may include changes to data volumes (increased or decreased), different methods of data analysis or changes to the timing of providing the deliverables. 

Revenue is recognised upon achievement of deliverables set out in the service contract. The recognition is expected to approximate to the timing of the physical performance of the contracts. The Group records the performance of the contractual obligations to determine that the deliverables and actual work performed is in accordance with the contract and agreed change orders. The scope of the project and contract terms are reviewed to determine whether the Group is acting as principal or agent in respect of the project, which depends on facts and circumstances and requires judgement.

Client contracts include an agreed work order so the transaction price for a contract is allocated against distinct performance obligations based on their relative stand-alone selling prices. Management determines the fair value of individual components based on actual amounts charged by the Group on a stand-alone basis. The transaction price for a contract excludes any amounts collected on behalf of third parties.

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 year ended 30 September 2020, total research and development expenses totalled £1,553,000 (2019: £1,147,000). Of this amount, £244,000 (2019: £161,000) was capitalised as an intangible asset. The balance of expenditure being £1,309,000 (2019: £986,000) 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. Further information on the Group's deferred tax asset can be found in note 21 of the consolidated financial statements.

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.

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. Details of the estimations used in determining the fair value of the options in issue are detailed in note 23 .

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.  

Provisions

The amounts included in both long- and short-term provisions are based on estimates provided by professionals relevant to the field the provision relates. These were reviewed by management and are considered to be a reasonable estimate of the expected cost of fulfilling these provisions.

6.  Revenue

An analysis of the Group's revenue by type is as follows:

					2020	2019
					£000	£000
Service revenue					9,532	7,561

For the year ended 30 September 2020, revenue includes £227,000 (2019: £1,271,000) held in contract liabilities within trade and other payables at the beginning of the period.

7.  Segmental information

The Board considers there to be only one core operating segment for the Group's activities. This is based on the Group's development, commercial and operational delivery teams operating across the entirety of the Group, which is wholly based in the United Kingdom. The projects undertaken by the Group are managed by project managers, who receive inputs for each project by other team members. Performance information is reported as a single business unit to the leadership team, who review the Group's management information.

The information gathered for each project is subsequently reported to the Group's Chief Executive Officer, who is considered to be the chief operating decision-maker. This information is used for resource allocation and assessment of performance. Therefore, the entirety of the Group's revenue and assets can be attributed wholly to this operating segment with reference to the Consolidated Statement of Comprehensive Income and Consolidated Statement of Financial Position.

During the year ended 30 September 2020, the Group had 1 client (2019: 2 clients) that exceeded 10% of total revenue. In 2020 the individual percentage revenue associated with this client was 65% (£6,232,000). In 2019 the individual percentage revenue associated with this client was 39% (£2,976,000) and 14% (£1,086,000) related to the other client which exceeded 10% of total revenue.

Geographical information

The Group's revenue can be categorised by type of revenue and by country, based on the contracting client location of the contracting client entity.

					2020	2019
					£000	£000
United States					1,990	3,388
United Kingdom					6,374	2,764
Europe					1,168	1,404
Rest of World					-	5
Revenue					9,532	7,561

As the Group is domiciled in the United Kingdom, the entirety of the revenue originates from this location.

8.  Other income

Items of other income principally relate to government grants received, originating solely in the United Kingdom. Grants are recognised as income over the period required to match them with the related costs, for which they are intended to compensate, on a systematic basis.

The Group also recognises Research and Development Expenditure Credit ('RDEC') as other income.

	2020	2019
	£000	£000
Grant income	444	433
RDEC	162	155
Other income	606	588

9.  Auditor's remuneration

	2020	2019
	£000	£000
Audit services
- Group and Parent Company	33	31
- subsidiary companies	22	20
Total audit fees	55	51
Audit-related assurance services	6	6
Tax compliance services	-	9
Tax advisory services	-	1
Total auditor's remuneration	61	67

10.  Employees and Directors

The average monthly number of persons (including Executive and Non-Executive Directors) employed by the Group was:

	2020	2019
	Number	Number
Administration	15	17
Operations, research and development	67	51
Average total persons employed	82	68

The aggregate remuneration of employees in the Group was:

	2020	2019
	£000	£000
Wages and salaries	5,480	4,630
Social security costs	845	535
Other pension costs	203	177
Share-based payments charge	184	113
Total remuneration for staff	6,712	5,455
Staff costs capitalised	(244)	(161)
Net staff costs	6,468	5,294

The Group operates a defined contribution pension scheme for employees. The assets of the scheme are held separately from those of the Group in independently administered funds. The amounts outstanding at 30 September 2020 in respect of pension costs were £31,000 (2019: £27,000).

The remuneration of the Group's Directors is set out in the Directors' Remuneration Report in the full annual report, as well as in note 25 under related party transactions.

The Company did not directly employ any staff and therefore there is no cost recognised in respect of staff costs.

11.  Operating profit

An analysis of the Group's operating profit has been arrived at after charging:

	2020	2019
	£000	£000
Research and development expenses	1,309	986
Sales and marketing expenses	1,579	1,154
Operating lease charges: land, buildings and printers	21	144
Depreciation of tangible assets	356	72
Loss on disposal of tangible and intangible assets	3	-
Amortisation of intangible assets	26	40
Foreign exchange (gain) / loss	(17)	27
Administrative expenses	2,819	2,743
Total operating expenses	6,096	5,166

There is a further amortisation charge of £56,000 (2019: £nil) recognised in cost of sales for those items directly related to project activities. The total amortisation charge for the year is £82,000 (2019: £40,000).

12.  Taxation

The tax charge for each period can be reconciled to the result per the Consolidated Statement of Comprehensive Income as follows:

	2020		2019
	£000		£000
Profit on ordinary activities before taxation	858		366
Profit before tax at the effective rate of corporation tax
in the United Kingdom of 19% (2019: 19%)	163		70
Effects of:
Expenses not deductible for tax purposes	16		(2)
Temporary differences	(131)		(85)
Research and development uplifts net of losses surrendered for tax credits	(145)		(28)
Prior period adjustment	3		(21)
Tax credit for the period	(94)		(66)

The tax credit for each period can be reconciled as follows:

	2020		2019
	£000		£000
Small or medium enterprise research and development credit	(127)		(74)
Deduction for corporation tax on RDEC	30		29
Prior period adjustment	3		(21)
Tax credit for the period	(94)		(66)

The Group has elected to take advantage of the RDEC, introduced in the Finance Act 2013 whereby a company may surrender corporation tax losses on research and development expenditure incurred on or after 1 April 2013 for a corporation tax refund.

The following is a reconciliation between the tax charge and the tax receivable within the Consolidated Statement of Financial Position:

	2020	2019
	£000	£000
Current tax receivable at start of period	450	229
Current period credit	256	221
Corporation tax repayment	(447)	-
Current tax receivable at end of period	259	450

The tax credit for each period can be reconciled to the current period credit recognised in tax receivable within the Consolidated Statement of Financial Position in each period as follows:

	2020	2019
	£000	£000
Tax credit for the year	94	66
Deferred tax movement on amortisation	-	-
RDEC gross of corporation tax deduction	162	155
Current period credit	256	221

13.  Earnings per share

The calculation of basic and diluted earnings per share ('EPS') of the Group is based on the following data:

	2020		2019
Earnings
Earnings for the purposes of basic and diluted EPS, being net profit attributable to the owners of the Company (£000)	952		432
Number of shares
Weighted average number of shares for the purposes of basic EPS	47,036,398		46,786,375
Effect of potentially dilutive ordinary shares:
-  Weighted average number of share options	513,521		9,182
Weighted average number of shares for the purposes of diluted EPS	47,549,919		46,795,557

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 year. 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 year.

The basic and diluted earnings per share for the Group and Company is:

	2020	2019
Basic earnings per share	2.02p	0.92p
Diluted earnings per share	2.00p	0.92p

14.  Property, plant and equipment

Group

	Office	Leasehold	Fixtures and
	building	improvement	fittings	Equipment	Total
Cost	£000	£000	£000	£000	£000
At 1 October 2018	-	62	7	140	209
Additions	-	102	5	204	311
Disposals	-	(62)	(7)	(61)	(130)
At 30 September 2019	-	102	5	283	390
Adjustment on transition to IFRS 16	462	-	-	-	462
Additions	-	44	-	549	593
Disposals	-	-	-	(1)	(1)
At 30 September 2020	462	146	5	831	1,444
Accumulated depreciation
At 1 October 2018	-	53	7	72	132
Charge for the period	-	11	2	59	72
Disposals	-	(62)	(7)	(61)	(130)
At 30 September 2019	-	2	2	70	74
Charge for the period	191	45	2	118	356
Disposals	-	-	-	-	-
At 30 September 2020	191	47	4	188	430
Net book value
At 30 September 2019	-	100	3	213	316
At 30 September 2020	271	99	1	643	1,014

The only right-of-use asset is held within the office building category. At 30 September 2020, the carrying amount of the right-of-use asset was £271,000 (2019: £nil).

Company

At 30 September 2020 and 30 September 2019, the Company had no property, plant and equipment.

15.  Intangible assets

Group

	Intangibles acquired through business combinations	Other acquired intangibles	Internally developed technology	Total
	£000	£000	£000	£000
Cost
At 1 October 2018	1,804	46	-	1,850
Additions	-	139	161	300
Disposals	(1,804)	(3)	-	(1,807)
At 30 September 2019	-	182	161	343
Additions	-	75	513	588
Impairment	-	-	(4)	(4)
At 30 September 2020	-	257	670	927
Accumulated amortisation
At 1 October 2018	1,804	14	-	1,818
Amortisation	-	23	17	40
Disposals	(1,804)	(3)	-	(1,807)
At 30 September 2019	-	34	17	51
Amortisation	-	31	51	82
Impairment	-	-	(2)	(2)
At 30 September 2020	-	65	66	131
Net book value
At 30 September 2019	-	148	144	292
At 30 September 2020	-	192	604	796

Amortisation is charged to the Consolidated Statement of Comprehensive Income and is included within cost of sales for those items directly related to project activities, or otherwise within general and administrative expenses.

Internally developed technology

The Group has capitalised research and development costs during the year in relation to the development of its proprietary TrialTracker software. Development includes TrialTracker platform upgrades as well as additional algorithm development. The costs capitalised include time and expenses in relation to staff costs. In recognising these assets, the Group has applied the recognition criteria of IAS 38 relating to internally generated intangible assets, where costs in relation to the development phase must be capitalised under certain circumstances. More information in relation to this is included in the accounting policies of the Group in notes 4 and 5 .

Company

At 30 September 2020 and 30 September 2019, the Company had no intangible assets.

16.  Investments

The consolidated financial statements of the Group as at 30 September 2020 and at 30 September 2019 include:

Name of subsidiary	Class of share	Country of incorporation	Principal activities
Directly held:
IXICO Technologies Limited	Ordinary	United Kingdom	Data collection and analysis of neurological diseases
IXITech Limited	Ordinary	United Kingdom	Dormant - dissolved on 26 November 2019
Indirectly held:
IXICO US LLC	Members' interest	United States	Dormant
Optimal Medicine Limited	Ordinary	United Kingdom	Dormant - dissolved on 26 November 2019
IXICO Technologies Inc.	Ordinary	United States	Sales and marketing

The Company and Group has no investments other than the holdings in the above subsidiaries that are all 100% owned. The carrying amounts of the investments in subsidiaries for the Company are:

	Company
	2020	2019
	£000	£000
Investments in subsidiary undertakings
At beginning of the period	5,516	5,434
Capital contribution	107	82
Total investments at end of the period	5,623	5,516

The capital contribution represents the charge in the year for share-based awards issued by the Company to employees of IXICO Technologies Limited and IXICO Technologies Inc.

All investments in subsidiaries, other than IXICO Technologies Limited and IXICO Technologies Inc., are not expected to be recoverable, have been impaired in previous periods and have carrying values of £nil (2019: £nil).

17.  Trade and other receivables

	Group		Company
	2020	2019	2020	2019
	£000	£000	£000	£000
Trade receivables	1,395	1,933	-	-
Less provision for bad and doubtful debts	-	-	-	-
Net carrying amount of trade receivables	1,395	1,933	-	-
Other taxation and social security	137	27	19	5
Prepayments and accrued income	550	419	30	34
Amounts due from subsidiary undertakings	-	-	4,206	4,671
Trade and other receivables	2,082	2,379	4,255	4,710

All amounts are classified as short-term and are expected to be received within one year. The average credit period granted to clients ranges from 30 to 90 days (2019: 30 to 90 days).

A provision for bad and doubtful debts is made when there is uncertainty over the ability to collect the amounts outstanding from clients. This is determined based on specific circumstances relating to each individual client. The Directors consider that there are no expected credit losses (2019: no expected credit losses) due to the calibre of customers the Group has and so the carrying amount of trade and other receivables approximates their fair value.

Within the Company, there are no expected credit losses (2019: no expected credit losses) from subsidiary companies due to the level of cash available in the subsidiaries which would allow the repayment of these receivables immediately.

As at the year-end, the ageing of trade receivables which are past due but not impaired is as follows:

	Group		Company
	2020	2019	2020	2019
	£000	£000	£000	£000
Amounts not past due	1,372	1,812	-	-
Past due:
Less than 30 days	23	91	-	-
31 - 60 days	-	30	-	-
61 - 90 days	-	-	-	-
More than 90 days	-	-	-	-
Total trade receivables	1,395	1,933	-	-

The maximum exposure to credit risk at the reporting date is the carrying value of each class of financial assets disclosed in note 24 .

18.  Trade and other payables

	Group		Company
	2020	2019	2020	2019
	£000	£000	£000	£000
Current liabilities
Trade payables	176	597	13	59
Other taxation and social security	171	196	-	-
Contract liabilities	761	414	-	-
Accrued expenses	1,294	1,569	60	53
Other payables	5	6	-	-
	2,407	2,782	73	112
Non-current liabilities
Accrued expenses	167	-	-	-
Total trade and other payables	2,574	2,782	73	112

Trade payables and accrued expenses principally comprise amounts outstanding for trade purchases and ongoing costs. No interest is charged on the trade payables. The Group's policy is to ensure that payables are paid within the pre-agreed credit terms and to avoid incurring penalties and/or interest on late payments.

The fair value of trade and other payables approximates their current book values.

19.  Provisions

The provision balance consists of dilapidations and other provisions. The movements and carrying amounts in the provision account are as follows:

				Total
				£000
Carrying amount 1 October 2019				-
Additional provisions				190
Carrying amount 30 September 2020				190
Current				100
Non-current				90

The dilapidations provision relates to the office building and is the estimated cost of returning the property in its original condition at the end of the lease.

The remaining provision relates to an ongoing legal matter and reflects the expected costs associated with bringing this to a conclusion.

20.  Leases

All lease liabilities are presented in the statement of financial position as follows:

			Group
			2020	2019
			£000	£000
Current			168	-
Non-current			45	-
			213	-

The Group uses leases throughout the business for office space and IT equipment. With the exception of short-term leases and leases of low value, each lease is reflected on the balance sheet as a right-of-use asset in property, plant and equipment and a lease liability.

Each lease generally imposes a restriction that, unless there is a contractual right for the Group to sublet the asset to another party, the right-of-use asset can only be used by the Group. For leases over office buildings, the Group must keep those properties in a good state of repair and return the properties in their original condition at the end of the lease. The cost of this is capitalised.

The Group has identified one lease relating to the office building that meets the definition of a right-of-use asset. There is no option to purchase and payments are not linked to an index. The remaining lease term is 17 months, has the ability to be extended at the end of this term and can be terminated with six months' notice.

Right-of-use asset and lease liability

Additional information on the right-of-use asset is as follows:

	Asset	Dilapidations	Depreciation	Carrying amount
	£000	£000	£000	£000
Office building	372	90	(191)	271

The undiscounted maturity analysis of lease liabilities at 30 September 2020 is as follows:

		Within 1 year	1 - 2 years	Total
Office building		168	45	213

Lease payments not recognised as a liability

The Group has elected to not recognise a lease liability for short-term leases, being 12 months or less, or for leases of low value. Payments for these are expensed on a straight-line basis. The expense relating to payments not included in the measurement of the lease liability is as follows:

			Group
			2020	2019
			£000	£000
Leases of low value			1	1
			1	1

At 30 September 2020, the Group's commitment to short term and low-value leases was £nil (2019: £1,000).

21.  Deferred tax

Deferred tax asset (unrecognised)

	Group		Company
	2020	2019	2020	2019
	£000	£000	£000	£000
Tax effect of temporary differences:
Depreciation in excess of tax allowances	292	102	(1)	(1)
Accumulated losses	(12,657)	(11,268)	(1,966)	(1,699)
Deductible temporary differences	(140)	(49)	(14)	(5)
Deferred tax asset (unrecognised)	(12,505)	(11,215)	(1,981)	(1,705)

The unrecognised deferred tax asset is based on material temporary differences that have originated but not reversed at the Consolidated Statement of Financial Position date from transactions or events that result in an obligation to pay more tax in the future or a right to pay less tax in the future.

The unrecognised deferred tax asset is measured on an undiscounted basis at the tax rates that are expected to apply in the periods in which temporary differences will reverse. Based on tax rates and laws enacted or substantively enacted at the latest balance sheet date, the rate when the above temporary differences are expected to reverse is currently 19% (2019: 17%).

22.  Issued capital and reserves

Ordinary shares and share premium

The Company has 1 class of ordinary shares. The share capital issued has a nominal value of £0.01 and each share carries the right to one vote at shareholders' meetings and all shares 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 2019	46,902,294	469	84,436
Share options exercised	188,998	2	63
At 30 September 2020	47,091,292	471	84,499

Exercise of share options

During the period, the following share options were exercised:

	Key management personnel	Other employees	Total	Exercise price	Value
Date of exercise	Shares	Shares	Shares	Pence	£000
15 January 2020	45,176	15,058	60,234	30.5	19
15 January 2020	113,706	-	113,706	34.0	39
15 January 2020	-	7,529	7,529	36.5	3
15 January 2020	-	7,529	7,529	49.0	4
Total	158,882	30,116	188,998	-	65

This resulted in an increase in share capital of £1,890 and an increase in share premium of £61,579.

Other reserves

Accumulated losses

This reserve relates to the cumulative results made by the Group and Company in the current and prior periods.

Merger relief reserve

In accordance with Section 612 of the Companies Act 2006 'Merger Relief', the Company issuing shares as consideration for a business combination, accounted at fair value, is obliged, once the necessary conditions are satisfied, to record the share premium to the merger relief reserve.

Reverse acquisition reserve

Reverse accounting under IFRS 3 'Business Combinations' requires that the difference between the equity of the legal parent and the issued equity instruments of the legal subsidiary, pre-combination is recognised as a separate component of equity.

Capital redemption reserve

This reserve holds shares that were repurchased and cancelled by the Company.

Foreign exchange translation reserve

This reserve represents the impact of retranslation of overseas subsidiaries on consolidation.

23.  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 (2019: 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 3.6 years (2019: 4.6 years). The total charge for each period relating to employee share-based payment plans for continuing operations is disclosed in note 10 of the consolidated financial statements.

Details of the share options under the scheme outstanding during the period are as follows:

	2020		2019
	Number	Weighted average exercise price	Number	Weighted average exercise price
Outstanding at start of the period	3,690,572	£0.18	5,279,745	£0.18
Granted	1,990,000	£0.17	-	-
Exercised	(188,998)	£0.34	(125,294)	£0.38
Lapsed	(1,053,062)	£0.17	(1,463,879)	£0.17
Outstanding at end of the period	4,438,512	£0.17	3,690,572	£0.18
Exercisable at end of the period	1,118,581	£0.36	1,068,110	£0.36

During the year to 30 September 2020, there were two issues of share options awarded (2019: no options were awarded). Details of these awards are provided below.

5 December 2019
On 5 December 2019, the Company issued a total of 1,540,000 options to the two executive directors and two senior management personnel with an exercise price of £0.01. These options are subject to both revenue and share price performance over a 3-year period, with the share price performance measured against the volume-weighted average price of the Company's ordinary shares in the 20 days immediately prior to the third anniversary of the date of the grant. The options eligible to vest are then split, with 50% eligible to vest on the third anniversary of the date of the grant and 50% eligible to vest on the fourth anniversary of the date of the grant. These options must also achieve a compound annual growth rate of 10% on annual revenues over the three financial years to 30 September 2022. The performance conditions of this option award are measured against a share price of £0.32 and are as follows:

-  0% of the LTIP will vest if the share price increases by less than a compound annual growth rate of 12.5%;

-  25% of the LTIP will vest if the share price increases on a compound annual growth rate of 12.5%;

-  25% - 100% of the LTIP will vest on a straight-line basis if the share price increases up by up to a compound annual growth rate of 25.0%.

6 July 2020
Share options were granted on 6 July 2020 to employees of the Group. In this grant there were two tranches issued.

The first tranche totalling 300,000 options was issued to three senior management personnel with an exercise price of £0.70.  These options are subject to both revenue and share price performance over a 3-year period, with the share price performance measured against the volume-weighted average price of the Company's ordinary shares in the 20 days immediately prior to the third anniversary of the date of the grant. The options eligible to vest are then split, with 50% eligible to vest on the third anniversary of the date of the grant and 50% eligible to vest on the fourth anniversary of the date of the grant. These options must also achieve a compound annual growth rate of 10% on annual revenues over the three financial years to 30 September 2023.  The performance conditions of this option award are measured against a share price of £0.70 and are as follows:

-  0% of the LTIP will vest if the share price increases by less than a compound annual growth rate of 12.5%;

-  25% of the LTIP will vest if the share price increases on a compound annual growth rate of 12.5%;

-  25% - 100% of the LTIP will vest on a straight-line basis if the share price increases up by up to a compound annual growth rate of 25.0%.

The second tranche totalling 150,000 options was issued to 6 management personnel in the Group with an exercise price of £0.70 and was linked to profitability and service, with a performance period of 3 years and vesting on achievement of the performance criteria by the end of this period.

The model used to value the grants was the Monte Carlo method followed by 'Hull White' trinomial lattice and the inputs used were as follows:

	5 December 2019	6 July 2020
Weighted average share price	£0.70	£0.70
Weighted average exercise price	£0.01	£0.70
Expected volatility	66.7%	64.4%
Expected life	5 years	10 years
Expected dividend yield	0%	0%
Risk-free interest rate	0.55%	-0.05%

4 June 2018 - modification
On 4 June 2018, the Company issued options with an exercise price of £0.01. The original share options granted are subject to share price performance, measured against the 3-month volume-weighted average price of the Company's ordinary shares. The measurement date will be made in the 3 months prior to the third anniversary from the date of the grant. The performance conditions of this award are as follows:

-  0% of the LTIP will vest if the share price increases by less than 50%;

-  25% of the LTIP will vest if the share price increases by 50% from the date of issue of the grant;

-  25% - 100% of the LTIP will vest on a straight-line basis if the share price increases by up to 100% from the date of issue of the grant.

On 5 December 2019, the share options granted to those still employed at the Group were modified. This modification removed a minimum floor price of £0.50 and aligned the vesting and holding periods to that of the 5 December 2019 award. A revised valuation model was used to determine the incremental fair value of the modified share options. The model used to value the grants was the Monte Carlo method followed by 'Hull White' trinomial lattice and the inputs used were as follows:

	Original	Modified
Weighted average share price	£0.35	£0.70
Weighted average exercise price	£0.01	£0.01
Expected volatility	46.7%	66.9%
Expected life	6 years	4.5 years
Expected dividend yield	0%	0%
Risk-free interest rate	1.05%	0.62%

24.  Financial risk management

In common with all other areas of the business, the Group is exposed to risks that arise from the use of financial instruments. This note describes the Group's objectives, policies and processes for managing those risks and the methods used to measure them.

The main risks arising from the Group's financial instruments are liquidity, interest rate, foreign currency and credit risk. The Group's financial instruments comprise cash and various items such as trade receivables and trade payables, which arise directly from its operations.

Categories of financial instruments

	Group		Company
	2020	2019	2020	2019
	£000	£000	£000	£000
Financial assets held at amortised cost
Trade and other receivables excluding prepayments	1,960	2,082	4,225	4,671
Cash and cash equivalents	7,945	7,264	1,705	2,187
	9,905	9,346	5,930	6,858
Financial liabilities held at amortised cost
Trade and other payables excluding statutory liabilities	2,216	2,197	73	112
	2,216	2,197	73	112

Fair value of financial assets and liabilities

There is no material difference between the fair value and the carrying values of the financial instruments because of the short maturity period of these financial instruments or their intrinsic size and risk.

Liquidity risk management

Liquidity risk is the risk that the Group will not be able to meet its obligations as they fall due through having insufficient resources. The Group monitors its levels of working capital to ensure that it can meet its liabilities as they fall due. Ultimate responsibility for liquidity risk management rests with the Board, which has built an appropriate framework for the management of the Group's short-, medium- and long-term funding and liquidity requirements.

The principal current asset of the business is cash and cash equivalents and is therefore the principal financial instrument employed by the Group to meet its liquidity requirements. The Board ensures that the business maintains surplus cash reserves to minimise any liquidity risk.

The financial liabilities of the Group and Company are all mostly due within 3 months (2019: 3 months) of the Consolidated Statement of Financial Position date. The Group does not have any borrowings or payables on demand which would increase the risk of the Group not holding sufficient reserves for repayment. Those liabilities older than 3 months are all denominated in Great British Pounds and are not expected to materially affect the business' liquidity.

Market risk

Interest rate risk management

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rate. The Group operates an interest rate policy designed to minimise interest costs and reduce volatility in reported earnings.

The Group holds all cash and cash equivalents with institutions with a recognised high credit rating. Interest rates on current accounts are floating. Changes in interest rates may increase or decrease the Group's finance income.

The Group does not have any committed interest-bearing borrowing facilities and consequently there is no material exposure to interest rate risk in respect of financial liabilities.

Foreign currency risk management

Foreign currency risk is the risk that the fair value or future cash flows of a foreign currency exposure will fluctuate because of changes in foreign exchange rates.

The Group's exposure to the risk of changes in foreign exchange rates relates to the Group's overseas operating activities, primarily denominated in US Dollars, Euros and Swiss Francs. There is also an investment by the Company in a foreign subsidiary. The Group's exposure to foreign currency changes for all other currencies is not material.

During the year, the Group has not made use of financial instruments to minimise any foreign exchange gains or losses, and fluctuations in foreign exchange movements are reflected in the results from operating activities. The Group seeks to minimise the exposure to foreign currency risk by matching local currency income with local currency costs where possible. The Group will use financial instruments to minimise foreign exchange fluctuations where it is appropriate to do so. 

The carrying amounts of the Group's foreign currency denominated monetary assets and monetary liabilities as at 30 September are as follows:

	Group		Company
	2020	2019	2020	2019
US Dollar exposure	USD'000	USD'000	USD'000	USD'000
Balance at end of period
Monetary assets	469	944	-	-
Monetary liabilities	(170)	(89)	-	-
Total exposure	299	855	-	-

	Group		Company
	2020	2019	2020	2019
Euro exposure	EUR'000	EUR'000	EUR'000	EUR'000
Balance at end of period
Monetary assets	304	284	-	-
Monetary liabilities	(32)	(112)	-	-
Total exposure	272	172	-	-

	Group		Company
	2020	2019	2020	2019
Swiss Franc exposure	CHF'000	CHF'000	CHF'000	CHF'000
Balance at end of period
Monetary assets	10	99	-	-
Monetary liabilities	(10)	(123)	-	-
Total exposure	-	(24)	-	-

Foreign currency sensitivity analysis

As at 30 September 2020, the sensitivity analysis assumes a +/-10% change of the USD/GBP, EUR/GBP and CHF/GBP exchange rates, which represents management's assessment of a reasonably possible change in foreign exchange rates (2019: 10%). The sensitivity analysis was applied on the fair value of financial assets and liabilities.

	2020		2019
	10% weaker1	10% stronger	10% weaker	10% stronger
	£000	£000	£000	£000
US Dollar	(23)	23	(70)	70
Euro	(25)	25	(15)	15
Swiss Franc	-	-	2	(2)
	(48)	48	(83)	83

¹ 10% weaker relates to the Great British Pound strengthening against the currency and therefore the Group would be in a weaker monetary position.

Credit risk management

Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the Group. The Group's financial assets are cash and cash equivalents and trade and other receivables. The carrying value of these assets represents the Group's maximum exposure to credit risk in relation to financial assets.

The Group's credit risk is primarily attributable to its trade receivables. The amounts presented in the Consolidated Statement of Financial Position are net of allowances for any expected credit losses, estimated by the Group's management based on prior experience and their assessment of the current economic environment, and any specific criteria identified in respect of individual trade receivables. An allowance for expected credit losses is made where there is an identified loss event, which, based on previous experience, is evidence of a reduction in the recoverability of future cash flows. There are no outstanding expected credit losses identified at 30 September 2020 (2019: nil).

Prior to entering into an agreement to provide services, the Group makes appropriate enquiries of the counterparty and independent third parties to determine creditworthiness. The Group has not identified any significant credit risk exposure to any single counterparty or Group of counterparties as at the period end.

The Group and Company continually reviews client credit limits based on market conditions and historical experience. Any provision for impairment, as well as the ageing analysis of overdue trade receivables, is set out in note 17 .

The Group and Company's policy is to minimise the risks associated with cash and cash equivalents by placing these deposits with institutions with a recognised high credit rating.

Capital risk management

The Group considers capital to be shareholders' equity as shown in the Consolidated Statement of Financial Position, as the Group is primarily funded by equity finance and is not yet in a position to pay a dividend. The Group had no borrowings at 30 September 2020 (2019: £nil).

The objectives when managing capital are to safeguard the Group's ability to continue as a going concern in order to provide returns for shareholders and for other stakeholders. In order to maintain or adjust the capital structure the Group may return capital to shareholders or issue new shares.

25.  Related party transactions

Transactions between the Company and its subsidiaries, which are related parties, have been eliminated on consolidation and are not disclosed in this note.

Remuneration and transactions of Directors and key management personnel

Key management remuneration:

	2020	2019
	£000	£000
Short-term employee benefits	1,905	1,604
Post-employment benefits	27	29
Other long-term benefits	104	-
Termination benefits	74	70
Share-based payments	170	76
Total remuneration	2,280	1,779

Key management includes Executive Directors, Non-Executive Directors and senior management who have the responsibility for managing, directly or indirectly, the activities of the Group.

The aggregate Directors' remuneration, including employers' National Insurance and share-based payments' expense, was £1,256,000 (2019: £1,043,000) and aggregate pension of £12,000 (2019: £8,000). Further detail of Directors' remuneration is disclosed in the Directors' Remuneration Report in the full annual report.

 

END

 

 

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