Final Results

RNS Number : 2126H

Cambridge Cognition Holdings PLC

12 March 2015

 

 

Cambridge Cognition Holdings Plc

("Cambridge Cognition" or the "Company")

Preliminary Results for the year ended 31 December 2014

Cambridge Cognition Holdings plc, (AIM: COG), which specialises in computerised neuropsychological tests including those enabling the early detection of dementia, announces its unaudited preliminary results for the year ended 31 December 2014. The Company achieved significant growth in 2014 and moved into profit in the second half of the year.

Cambridge Cognition's business is split into 3 divisions:

Clinical Trials	Products and services for use in pharmaceutical clinical trials
Academic Research	Cognitive assessment products for non-regulated researchers (i.e. academia)
Healthcare Technology	Cognitive assessment products and services for use in near patient and community settings

 

Financial Highlights

·        Total revenue up by c. 40% to £5.80m (2013: £4.15m)

·        Adjusted* EBITDA reduced to £0.27m loss (2013: £2.19m loss)

·        Maiden pre-tax profit in H2 2014 of £0.18m (H1 2014: £0.47m loss)

·        Loss before tax reduced to £0.29m (2013: £2.99m loss)

·        Loss per share reduced to 1.1p (2013: 21.3p)

·        Cash balances of £1.52m (30 June 2014: £1.59m)

* Adjusted in 2013 for restructuring costs and one-off IPO expenses

Operational Highlights

·        Clinical Trials sales up 57% driven by emphasis on drug characterisation, safety and HAL studies

·        Academic Research sales up 12% due to a more structured commercial focus

·        Additional Cloud based products launched during the year for Clinical Trials

·        New Cloud based product and e-commerce platform for Academic Research launched early in the new year

·        Over 15,000 patients assessed using Cantab Mobile with results affirming efficacy of product

·        New commercial initiatives underway to broaden the use and application of Cantab Mobile

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

"The solid performance seen at the end of 2014 has continued into the new financial year and we remain on track to deliver our first full year of profitability in 2015.

"The growing contribution from our clinical trials and academic businesses provide us with confidence that we will deliver continued growth and profitability. In particular the enlarged US sales team offers an opportunity to enhance North American sales and we already have a healthy pipeline of contracts in the safety and tolerability trial space that we expect to convert over the year. The increasing activity in our early stage Healthcare business bodes well for significant value realisation in the medium term."

Enquiries:

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

CHIEF EXECUTIVE OFFICER'S REVIEW

I am pleased to provide a report on our results for the full year which demonstrates the Company's return to growth after a challenging 2013 and a profitable second half to the year. We have worked hard to establish a commercial infrastructure across Cambridge Cognition which has resulted in growth across all three areas of the business. We had a good end to the year, with a profitable second half, and we are well placed to continue this growth through 2015. We expect 2015 to be our first profitable year as a listed company.

The return to profitability enables us to increase our investment in the Healthcare Technology division which until now has focused solely on supplying its Cantab Mobile product to the NHS. The combination of sales of Cantab Mobile to new geographic markets using channel partners, the launch of an extension of the Mobile product for secondary care and the application of the product in allied, non-clinical markets is a key focus for 2015.

Financial Results 

Revenue in the period increased by 40% to £5.80m (2013: £4.15m), which reflects the successful establishment of a good infrastructure across the three divisions and the adoption of a more structured commercial approach. This was seen particularly in the Clinical Trials division by focusing on drug characterisation, safety and Human Abuse Liability (HAL) following launch of our 'Cloud based' Connect products for these applications. 

A breakdown of revenues by division is provided below:

	2014 £'000	2013 £'000	Growth %
Clinical Trials	3,926	2,497	57%
Academic Research	1,675	1,493	12%
Healthcare Technology	201	158	27%
TOTAL	5,802	4,148	40%

The Clinical Trials division, which provides products and services for use in pharmaceutical clinical trials, performed well, increasing revenues by 57% to £3.93m (2013: £2.50m). The Company has seen the benefit of a new focus on drug characterisation, safety and HAL, both of which have the ability to deliver higher quality and predictable revenues. The impact of this focus and the establishment of a US commercial team was seen throughout the year and will provide a platform for additional growth in 2015.

Revenues from our Academic Research division, also performed well with sales up 12% to £1.68m (2013: £1.49m) driven by a new marketing focus introduced during 2014 whereby we concentrated on the top 200 academic institutions worldwide in a more structured way.

The Healthcare Technology division, recorded Cantab Mobile sales of £0.20m during the year (2013: £0.16m). Cantab Mobile was launched in 2013 and focuses on delivering services to the primary healthcare market. Over 15,000 patients have now been assessed using Cantab Mobile with the results affirming the efficacy of the product. In 2015 the focus will be on extending the commercialisation of this product into other countries and other allied healthcare applications.

Gross profit grew by 35% to £4.94m (2013: £3.66m), reflecting an increase in turnover offset by a modest reduction in margin. The gross margin during 2014 reduced to 85% as budgeted (2013: 88%), and this reflects the change in sales mix. Adjusted EBITDA (adjusted for depreciation, and with the 2013 comparison also adjusted for one-off restructuring costs and expenses associated with the Admission to AIM) showed a significant reduction in losses to £0.27m (2013: £2.19m loss). Reported Losses before tax were also reduced to £0.29m (2013: £2.99m loss). As a result, loss per share reduced considerably to 1.1p (2013: 21.3p loss). These results reflect not only the improved trading conditions within the business, but also the significant work undertaken to correctly align our cost base and ensure that the Company is on track to move into profitability during 2015. Good progress has been made towards that goal already and we were pleased to record a profit before tax of £0.18m for the second half of the year compared to a loss of £0.47m in the first half.

There was a significant improvement in the net cash outflow from operations during the period, with net cash outflow from operating activities reduced to £0.69m (2013: £2.47m outflow). The reduction would have been greater but for an increase in working capital due largely to an increase in credit terms negotiated with certain customers taking total debtor days to 67 (2013: 42 days). Cash balances at 31 December 2014 were £1.52m (as at 30 June 2014: £1.59m; as at 31 December 2013: £2.26m).

Operating Review

2014 has been a year of commercial focus based on the structural changes we implemented in the business during 2013. Our three business units are now delivering to a more commercial strategy and we have established robust infrastructures to drive future growth in each division. The performance during the year has shown that these changes are already bearing fruit and that we have been able to capitalise on our unique position within the process of understanding and treating mental health - from initial research, through to drug discovery and into the diagnosis and treatment of patients in the community.

Clinical Trials

I can report that we have been successful in returning our Clinical Trials business to growth and producing high margin predictable revenue streams. Our strategy of focussing on drug characterisation, safety and HAL has proven to be the correct one with the considerable potential that this business has going forward.

As we've already reported larger pharmaceutical companies are now taking a more cautious view to their implementation of trials relating to the Central Nervous System (CNS) and so a shift to drug characterisation, safety and HAL studies was an important step for the Company.

In the first half of 2014 we were able to announce a number of drug characterisation, safety and HAL studies which provides an indication of the demand for Cambridge Cognition's technology in this area. Most importantly we were able to announce in June our participation in a non-CNS global multi-year study focussed on drug characterisation. The award of the contract for this phase III trial is typical of the need drug development companies have for an objective and scientifically rigorous measurement of the impact that a new drug may have on cognitive function in a consistent and cost-efficient manner. The contract is worth £1.6m to Cambridge Cognition, half of which has been recognised in these numbers.  

During the year we developed three partnerships with companies who are selling our HAL product. Towards the end of June we announced eight new contracts for HAL studies totalling around £710,000, of which we have recognised £680,000 during 2014. We also had a number of additional trials that converted in the second half of the year making a total of 23 new trials in 2014 with revenue in the year of £1.17m and we continue to have a strong pipeline of additional trials which will impact the 2015 results and beyond.

In October, we launched the Clinical Trials Information System -Profile 2+ ('CTIS-Profile 2+') enabling us to provide pharmaceutical and biotechnology companies with cognitive safety and tolerability testing across all phases of the clinical development of new therapeutic compounds; an addressable market estimated to be in excess of £105m.

Academic Research

With sales up 12% during the year, this business division has benefitted from a far more proactive and structured approach to marketing our products to academic institutions. We have employed a new Business Manager who introduced a strategy to concentrate on the top 200 academic institutions. During the year we trained a new customer services team for digital marketing activities and in early 2015 we launched an e-commerce platform and new Academic Cloud-based Connect product that allows us to more effectively exploit the changing trends in research from single centre, small scale studies to large, multi-centre collaborative programmes.

As a result of this focused sales approach we have seen a healthy uplift in the order book with an increase in the number of orders converting during the year, including three substantial multi-site orders worth c. £70,000 each, demonstrating our ability to target higher value opportunities when average invoice values have been historically around £5,000. In addition we established an enlarged US sales team to target the lucrative North American Academic market.

Healthcare Technology

To date we have now completed 15,000 patient assessments using Cantab Mobile, our iPad based CE-marked Class II medical device which detects the earliest signs of memory loss associated with dementia. During the year over 260 GP surgeries and over 40 Clinical Commissioning Groups (CCGs) in the UK used Cantab Mobile.

The results from the 15,000 patient assessments completed to date show that on average one in four patients were identified with mild cognitive impairment with the remaining 75% reassured that their cognitive function remained within normal parameters and that referral to secondary care units for dementia, which would cost the NHS time, resources and money, was unnecessary.

Whilst we still expect sales of Cantab Mobile to continue to grow in the UK, the redistribution of NHS dementia funding away from CCGs to GPs will make the sale process a more challenging one in 2015.  Despite this we plan to roll out Cantab Mobile in other geographical markets during 2015 by forming strategic partnerships with channel partners. We have also begun to extend the use of the product into private and occupational health settings in the UK which is a substantial and largely unexplored market. We are piloting a business model which, if successful, could be rolled out internationally. These healthcare growth strategies will be enhanced by the launch of a new product in the middle of 2015 which will enable us to link the early detection of memory loss in primary care with additional secondary care diagnosis thus supporting the diagnosis and management of patients along their treatment pathways.

Board Changes

We further strengthened the board with the appointment of Eric Dodd as a Non-Executive Director. Eric brings significant corporate and financial experience and knowledge, including within public companies, to the board of Cambridge Cognition and has already contributed greatly to the Group's progress in 2014.

Outlook

The strong performance seen at the end of 2014 has continued into the new financial year and we remain on track to move into profitability in 2015. We started the year with better visibility than last year with the contracted order book at £2.46m at the start of the year compared with £1.81m a year earlier.

The growing contribution from our clinical trials and academic businesses provide us with confidence that we will deliver continued growth and profitability in line with expectations. In particular the enlarged US sales team offers a significant opportunity to drive North American sales and we already have a healthy pipeline of contracts in the safety and tolerability trial space that we expect to convert over the year. In addition our new customer service team in the Academic division is confident of delivering further growth in that business through effective digital marketing of our cloud based Connect product on our new e-commerce platform.

In 2015 we will invest in the Healthcare Technology division to take full advantage of the platform for growth in the broader healthcare environment afforded by the Cantab Mobile product.  We will expand our marketing coverage for Cantab Mobile outside of the UK using distribution partners in addition to expanding the applications for the product and we will update shareholders on our progress as our plans come to fruition.

We also expect to exploit opportunities for the use of the division's key technologies to assess cognition in pharmaceutical and healthcare settings beyond the existing Cantab Mobile applications. The current areas of focus are for customised products for pharmaceutical companies identified through the Clinical Trials business, as well as healthcare applications for private health clinics or home use.  

Overall, I am pleased to be able to present such a positive set of results and a healthy outlook for 2015 which shows we are on track to deliver further growth and profitability. I would like to thank shareholders for their support and my colleagues for their continued hard work in accelerating growth across all parts of the business.

Nick Kerton

Chief Executive Officer

12 March 2015

 

CONSOLIDATED Statement of COMPREHENSIVE INCOME

For the year to 31 December 2014

	Notes	Year to 31 December 2014 £'000			Year to 31 December 2013 £'000
Revenue	3	5,802			4,148
Cost of sales		(866)			(490)
Gross profit		4,936			3,658
Administrative expenses		(5,583)			(6,761)
Other income		343			145
Operating (loss)		(304)			(2,958)
Analysed as:
Adjusted EBITDA		(266)			(2,193)
Depreciation		(38)			(40)
Restructuring costs		-			(352)
AIM listing expenses		-			(373)
Operating (loss)		(304)			(2,958)
Finance income		9			3
Finance costs		-			(35)
(Loss) before tax		(295)			(2,990)
Income tax		122			129
Loss and total comprehensive income for the period attributable to the equity shareholders of the parent		(173)			(2,861)
Earnings per share (pence)	5
Basic earnings per share			(1.1)		(21.3)
Diluted earnings per share			(1.1)		(21.3)

The above results relate to continuing operations.

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

 

Consolidated statement of financial position

For the year ended 31 December 2014

	Notes	At 31  December  2014 £'000	At 31 December 2013 £'000
Assets
Non-current assets
Goodwill		352	352
Property, plant and equipment		64	53
Total non-current assets		416	405
Current assets
Inventories		185	123
Trade and other receivables		1,632	976
Cash and cash equivalents		1,519	2,261
Total Current assets		3,336	3,360
Total assets		3,752	3,765
Liabilities
Current liabilities
Trade and other payables		1,703	1,635
Total liabilities		1,703	1,635
Equity
Share capital	4	169	169
Share premium account		6,335	6,335
Other reserve		5,981	5,981
Own shares		(174)	(204)
Retained earnings		(10,262)	(10,151)
Total equity		2,049	2,130
Total liabilities and equity		3,752	3,765

 

Consolidated statement of changes in equity

For the year ended 31 December 2014

	Share capital	Share premium	Own shares	Other reserve	Equity reserves	Retained earnings	Total
	£'000	£'000	£'000	£'000	£'000	£'000	£'000
Balance at 1 January 2013	68	-	(204)	5,981	168	(7,696)	(1,683)
Total comprehensive income for the year	-	-	-	-	-	(2,861)	(2,861)
Reserve transfer	-	-	-	-	(168)	168	-
Issue of new share capital	101	-	-	-	-	-	101
Premium of new share capital	-	6,922	-	-	-	-	6,922
Share issue costs	-	(587)	-	-	-	-	(587)
Credit to equity for equity- settled share based payments	-	-	-	-	-	238	238
Transactions with owners	101	6,335	-	-	(168)	406	6,674
Balance at 31 December 2013	169	6,335	(204)	5,981	-	(10,151)	2,130
Balance at 1 January 2014	169	6,335	(204)	5,981	-	(10,151)	2,130
Total comprehensive income for the period	-	-	-	-	-	(173)	(173)
Issue of new share capital	-	-	-	-	-	-	-
Transfer on allocation of shares held in trust	-	-	30	-	-	(30)	-
Credit to equity for equity-settled share based payments	-	-	-	-	-	92	92
Transactions with owners	-	-	30	-	-	62	92
Balance at 31 December 2014	169	6,335	(174)	5,981	-	(10,262)	2,049

Consolidated statement of cash flows

For the year ended 31 December 2014

	Notes	Year to 31 December 2014 £'000	Year to 31 December 2013 £'000
Net cash flows from operating activities	6	(693)	(2,472)
Investing activities
Payment of deferred consideration		-	(300)
Purchase of property, plant and equipment		(49)	(21)
Net cash flow used in investing activities		(49)	(321)
Financing activities
Proceeds from the issue of share capital net		-	4,413
Net cash flows from financing activities		-	4,413
Net increase in cash and cash equivalents		(742)	1,620
Cash and cash equivalents at start of period		2,261	641
Cash and cash equivalents at end of period		1,519	2,261

 

NOTES TO THE INTERIM FINANCIAL STATEMENT

1. General information

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

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

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

2. Basis of preparation

The financial information of the Group set out above does not constitute "statutory accounts" for the purposes of Section 435 of the Companies Act 2006.

The financial information in this preliminary results announcement does not constitute the Group's statutory accounts for the year ended 31 December 2014 or the year ended 31 December 2013 but is derived from those accounts.

The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards ('IFRS') as adopted by the European Union, IFRIC interpretations and the Companies Act 2006 applicable to companies operating under IFRS.  The accounting policies adopted are consistent with those followed in the preparation of the consolidated financial statements for the year ended 31 December 2013.

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

3. Revenue

An analysis of revenue is as follows:

	2014 £'000	2013 £'000
Continuing operations
Sales analysed by business unit:
Clinical Trials	3,926	2,497
Academic Research	1,675	1,493
Healthcare Technology	201	158
	5,802	4,148
	2014 £'000	2013 £'000
Continuing operations
Sales analysed by product:
Hardware	1,080	494
Software	2,689	1,796
Other services	2,033	1,858
	5,802	4,148

 

4. Share capital

	2014 £'000	2013 £'000
Issued and fully paid
16,930,556 (2013: 16,885,105) Ordinary Shares of £0.01 each	169	169

During the year 45,451 Ordinary shares were issued following the exercise of share options at an exercise price of £0.01 per share.  

No other shares were issued during the year.

5. Earnings per share

From continuing operations

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

Earnings

	2014 £'000	2013 £'000
Earnings for the purposes of basic and diluted earnings per share being net loss attributable to owners of the Company	(173)	(2,861)
Number of shares
	2014 '000	2013 '000
Weighted average number of ordinary shares for the purposes of basic and diluted earnings per share	16,439	13,423

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

 

6. Notes to the cash flow statement

	2014 £'000	2013 £'000
Loss before tax	(295)	(2,990)
Adjustments for:
Finance costs	-	35
Depreciation of property, plant and equipment	38	40
Share-based payment expense	92	238
Operating cash flows before movements in working capital	(165)	(2,677)
(Increase)/Decrease in inventories	(62)	(10)
(Increase)/Decrease in receivables	(663)	372
Increase/(Decrease) in payables	68	(157)
Cash generated by operations	(822)	(2,472)
Tax credit received	129	-
Interest received/(paid)	-	-
Net cash from operating activities	(693)	(2,472)

Cash and cash equivalents

	2014 £'000	2013 £'000
Cash and bank balances	1,519	2,261

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

7. Annual Report & Annual General Meeting

The Annual Report will be available from the Company's website, and posted to shareholders by 1st May 2015. The Annual Report contains notice of the Annual General Meeting of the Company which will be held at 10.00am on 27^th May 2015 at the offices of finnCap, 60 New Broad Street, London, EC2M 1JJ.

 

END

 

 

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