TIDMIXI
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 GBP1.3 million; more than double prior year (2019:
GBP0.5 million) reflecting revenue growth and sales mix arising
from multi-year phase III clinical trials contracts;
-- A further year of record revenues, at GBP9.5 million (2019:
GBP7.6 million) representing 26% growth over prior year;
-- Gross margin accretion to 66.6% (2019: 65.4%) reflects sustained strong margin achievement;
-- Operating profit of GBP0.9 million (2019: GBP0.4 million);
-- Profit per share of 2.02 pence (2019: 0.92 pence);
-- Closing cash of GBP7.9 million (2019: GBP7.3 million), with
operating cash inflows of GBP1.5 million (2019: outflow of GBP0.1
million);
-- 36% increase in contracted order book of GBP21.7 million (2019: GBP15.9 million); and
-- Net assets increase to GBP9.1 million (2019: GBP7.9 million)
reflecting cash generation and investments made for future
growth.
*Earnings before interest, tax, depreciation and
amortisation
Commercial and Operational
-- Secured net GBP15.4 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 GBP10.5 million;
-- Record contracted order book of GBP21.7 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 GBP1.3 million, generated significant operational
cashflows, strengthened the balance sheet and increased its
contracted order book by 36% to GBP21.7 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 +44 20 3763 7499
Giulio Cerroni, Chief Executive Officer
Grant Nash, Chief Financial Officer
Cenkos Securities plc (Nominated
adviser and sole broker) +44 20 7397 8900
Giles Balleny / Max Gould (Corporate
Finance)
Michael F Johnson (Sales)
Walbrook PR Ltd +44 (0)20 7933 8780
Paul McManus / Lianne Cawthorne / IXICO@walbrookpr.com
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 GBP21.7 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 GBP1.3 million EBITDA in 2020 (2019:
GBP0.5 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 GBP21.7 million (2019: GBP15.9
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 GBP9.5m GBP7.6m GBP1.9m
Gross profit GBP6.3m GBP4.9m GBP1.4m
Gross margin 66.6% 65.4% 120 bps
EBITDA profit GBP1.3m GBP0.5m GBP0.8m
Operating profit GBP0.9m GBP0.4m GBP0.5m
Profit per share 2.02p 0.92p 1.10p
Order book GBP21.7m GBP15.9m GBP5.8m
Cash GBP7.9m GBP7.3m GBP0.6m
------------------ ------------ ------------ ---------
Revenue
Revenue for the year of GBP9.5 million (2019: GBP7.6 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 GBP6.3 million in the year.
This is an increase of GBP1.4 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 GBP1.3 million (2019: GBP0.5 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 GBP0.2 million in the
year (2019: GBPnil).
Operating profit
Operating expenditure in the year reflected investment in people
and product development:
-- research and development expenses of GBP1.3 million (2019:
GBP1.0 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 GBP0.2 million of internal development
expenditure in the year (2019: GBP0.2 million);
-- sales and marketing expenses were GBP1.6 million (2019:
GBP1.2 million) reflecting increased investment to support
continued future growth; and
-- general and administrative expenses were controlled at GBP3.2
million (2019: GBP3.0 million).
The reported operating profit of GBP0.9 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 GBP21.7 million (2019:
GBP15.9 million), which takes account of GBP9.5 million of business
executed during the year and net GBP15.3 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 GBP1.5 million
before tax receipts in the year (2019: GBP0.1 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
GBP7.9 million (2019: GBP7.3 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 GBP1.2 million to
GBP9.1 million (2019: GBP7.9 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 The Board
to exploit anticipates * Annual review by the Board of Group strategy and Likelihood
the commercial that its budget priorities with progress against strategy. reduced
opportunities strategic following
available to initiatives will further improved
it and does lead * Monthly leadership review of delivery of specific strategic review
not deliver to increased strategic initiatives. process
the full market
potential penetration and
for shareholder development * Board appraisal of significant investments before
(and other of new market funds are committed and subsequent review of each
stakeholder) opportunities investment's delivery and performance.
returns for the Group.
The nature of the * External expertise and advice sought to inform
neurological strategic initiatives.
drug development
market
means that * Orientation and alignment of the Senior Leadership
strategic Team to focus on delivery and an increased pace of
initiatives will improvement implementation.
inevitably
include a degree
of * 5-year strategic plan currently being refreshed to
judgement risk. reflect the Group has now achieved sustainable
profitable growth.
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.
------------------ ------------------------------------------------------------ -----------------
Changes to New impediments
international to * Board review of likely risks associated with Brexit No significant
trading international and other potential changes to the trading impact is
environment trade environment. anticipated
due to political resulting from at the current
events political time
actions such as * Continued focus on non-EU markets helps reduce risk
Brexit for the Group in the event of unexpected difficulties
or US trade arising to trade between UK and EU.
tariffs
may disadvantage
the * Consultation with legal experts to assess specific
Group's position areas of Brexit risk and develop mitigation plans
in accordingly.
its marketplace.
------------------ ------------------------------------------------------------ -----------------
COVID-19 COVID-19 has
pandemic created * The Group has worked closely with clients to support The Group's
creates a significant adjustments required to their trials due to COVID-19. 2021 revenue
strategic, downturn growth levels
financial and/or in the initiation are expected
operational of * The Group has been able to leverage its strong order to be more
uncertainty new clinical book and balance sheet position to continue its muted than
trials investment plans. in the current
(and interruption year because
and of COVID-19.
delays to * The Group has successfully migrated and equipped all
existing staff to working remotely effectively. The actions
clinical trials). of the Group
This mean it is
is expected to * Detailed and regular forecasting and close management confident to
create of expenditure have given the Group confidence in its invest to
short-term growth ability to manage the COVID-19 impact. support
headwinds the expected
and create a rapid initiation
temporary in new trials
reduction in once the
demand pandemic
for the Group's abates.
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.
------------------ ------------------------------------------------------------ -----------------
Operational risks
Principal Risks Risk Context Mitigation Change in the
Year
Failure of A significant
IT infrastructure failure * Investment in IT infrastructure, including use of Likelihood
of IT cloud services, implementation of new and upgraded reduced due
infrastructure, systems and equipment has mitigated the risk of to improved
or a physical prolonged down time as a result of hardware failure. infrastructure
disaster and controls
(such as fire or implemented
flood) * The implementation of a full disaster recovery throughout
at the Group's infrastructure is underway and will be complete in 2020 and planned
IT hosting early 2021. for 2021.
centre, might
disrupt
the Group's
operations.
----------------- ------------------------------------------------------------ -----------------
The Group is As the Group
reliant on scales, * The Group has increased its headcount by more than The risk of
key individuals servicing an 30% during the year. This gives the Group access to overreliance
to support increased both new skills and augmented existing skill sets. on several
its operational number of key individuals
and service clients and has been
delivery their projects, * The Group is investing in a new image capture and reduced.
so analysis platform which will reduce the reliance on
the Group risks key individuals and will launch during 2021. This principal
overreliance risk remains
on key whilst the
individuals. new image
capture
and analysis
platform is
being developed.
----------------- ------------------------------------------------------------ -----------------
A cyber-attack Any successful
results in cyber-attack * Strengthened levels of control exist over the Group's Likelihood
a breach of may create IT infrastructure, including ongoing investments in reduced as
the Group's operational improved security, 'TrialTracker' platform improved
IT systems (and potentially enhancements, upgraded firewalls and training for all controls
financial) staff provided on data security and standard controls and
risks and may such as password protection and policies. infrastructure
have implemented.
a significant
reputational * The Group is investing in a full upgrade to its image Roll out of
impact for the data capture and analysis platform. This will be new a cloud
Group. completed in 2021 and will further enhance the based imaging
security of the Group's systems. capture and
analysis
platform
* The Group has submitted its IT infrastructure to in 2021 will
independent penetration tests as part of prospective further reduce
client audits and received strong security scores. this risk area.
----------------- ------------------------------------------------------------ -----------------
Financial risks
Principal Risk Context Mitigation Change in
Risks the
Year
Early The Group's client
termination contracts bear a risk * Commercial contracts can include up-front payment, No material
of a of early termination close-out cost recovery and termination notice change in
client's in the event of: clauses. risk
clinical * an interim data review demonstrating no material compared to
trial benefit; or prior year.
* Material contracts are late-phase or open label
studies meaning they are less likely to have an early
* a serious adverse event. termination event than earlier phase studies.
------------------------------------------------------- ------------------------------------------------------------ ------------
Loss of a The Group has material
key contracts with a single * Leadership monitors service levels across projects New client
commercial client. There is therefore and has dedicated additional resources to supporting contracts
relationship a risk that, if that its largest client. The strengthening of the Group's were
with a client terminated its relationship with this client will reduce the won during
client relationship with the likelihood of relationship damage or loss. the year.
Group, there would In
be a significant impact addition to
on the Group's short * Further development of the sales pipeline, via the this
and/or medium-term appointment of additional business development however,
revenue expectations. resources, is targeted at new client acquisition; further
accelerating the broadening of the client portfolio contracts
and reducing the impact of losing a major client. 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 The Group is exposed
risks to financial risks * Standard controls are applied around all of these Reduced
are set out typical of all commercial risks. foreign
in further companies. These include exchange
detail under the risks of a cash exposure
note 24 to shortfall, experiencing * The Group has a strong and strengthening cash due to a
the a significant client position and a client portfolio which includes large, greater
financial payment delay, exposure well-funded organisations. proportion
statements to a foreign currency of client
and include: rate fluctuation which contracts
Liquidity is against the interests * Most contracts are denominated in GBP and currency being
risks of the Group and/or levels are forecast and reviewed monthly. denominated
Credit risks the Group fails to in GBP.
Currency plan for tax and therefore
risks is exposed to tax liabilities * Tax planning initiatives implemented with support of Well
Tax planning beyond the level necessary. external tax advisers. controlled
risks 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 If the Group
damage due provided * Operational checks are used to control data error, Improved controls
to error or incorrect duplication or transfer issues and to highlight when have reduced
system failure results in an analysis fails. risk, with
in delivery the course of further system
of analysis delivering developments
services its services to * Continued investment in training and automation to due to be
a clinical scale controls used to identify potential errors. implemented
trial this may in 2021
impact
on the trial * Significant upgrade to existing data platform is in
and/or progress which will further strengthen system
patient outcomes controls in place.
and
result in
reputational
damage for the
Group.
----------------- ----------------------------------------------------------- ------------------
Breach of data The Group
protection captures * Data captured from client sites is pseudonymised on Likelihood
regulations personal data receipt into the Group's 'TrialTracker' software. reduced as
from the Group has
clinical trial implemented
subjects. * Controls over the protection of personal data have further IT
As such, it is been implemented. Data outputs to clients and key infrastructure
exposed stakeholders are issued following the application of enhancements
to data security controls designed to reduce, as far as possible, the and augmented
risks. likelihood of unintended release. data management
policies and
training.
* Data protection legislation requirements (such as
GDPR) are integrated within the Group's processing
activities and practices.
----------------- ----------------------------------------------------------- ------------------
Failure to It was a
comply with requirement * The Board and Senior Leadership Team regularly Risk mitigated
the requirements of the VCT/EIS reviewed the deployment of funds. with funds
of its VCT/EIS funding employed as
funding raised by the at May 2020.
Group * Detailed plans, budgets and forecasts were used to
in May 2018 that guide the employment of funds.
it
be employed
within * The Group engaged external expertise to review
a period of 2 investments made during the course of the 2-year
years. investment period to ensure compliance with VCT/EIS
Failure to do so funding obligations .
would
result in the
VCT/EIS
investors losing
some
of the tax
benefits
associated with
their
investment.
----------------- ----------------------------------------------------------- ------------------
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 Group Approach Further
Principle Reading
Deliver 1: Establish The Group delivers insights to biopharmaceutical Our 5-point
value in a strategy companies developing drugs to address growth plan
a manner and business neurological disease. To achieve our is detailed
aligned model which business goals, the Group is accelerating in the full
to promotes growth and has grown profitability in annual report.
shareholder long-term the financial year to 30 September 2020 Our approach
and wider value for by: to innovation
stakeholder shareholders * building scale and market presence for our technology and recent
aspirations solutions; and product
launches
are described
* developing and commercialising new products and in the full
services. annual report.
These activities promote and are delivering
long-term value for shareholders.
------------------ ----------------------------------------------------------------- ---------------
2: Seek to The Board is committed to encouraging
understand open communication between itself and
and meet shareholders. The Chief Executive Officer
shareholder and Chief Financial Officer arrange
needs and to meet with major shareholders at least
expectations 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 The Group is highly conscious of the Our
account wider requirements of its wider stakeholders stakeholders
stakeholder in supporting its long-term success. and how
and social It views its wider stakeholders as its we engage
responsibilities clients, suppliers, employees and the with them
and their patients participating in the clinical are described
implications trials it serves. The Board has implemented in in the
for long-term approaches to support the requirements full annual
success of each group and, where it identifies, report.
or is notified of, any risks or concerns
in respect of any of these stakeholder
groups, it puts in place actions to
address these.
------------------ ----------------------------------------------------------------- ---------------
4: Embed The Board has ultimate responsibility The Risk
effective for the Group's system of risk management Management
risk management, and internal control and for reviewing Report is
considering its effectiveness. provided
both The Board instils control to the Group's above.
opportunities operations by overseeing the following:
and threats, * competent and prudent management;
throughout
the organisation
* sound planning;
* adequate systems of control, including regular review
of risk;
* adequate and accurate accounting records; and
* compliance with statutory and regulatory obligations.
------------------ ----------------------------------------------------------------- ---------------
Maintain 5: Maintain The Board comprises the Non-Executive More
a strong the Board Chairman, two Executive Directors and information
and dynamic as a two Non-Executive Directors, one of on Board
management well-functioning, whom acts as Senior Independent Director. membership
framework balanced The Board has an appropriate balance is provided
that places team led between independence and knowledge of in the full
value on by the Chair the Group and its target markets which annual report.
developing allows it to discharge its duties and
the Group responsibilities effectively.
in an ethical The Directors use their independent
manner 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/).
------------------ ----------------------------------------------------------------- ---------------
6: Ensure The Board has an effective and appropriate Further
that between balance of skills and experience and details
them the is mindful of the need to continuously of the Board's
Directors review the needs of the business to skills and
have the ensure that this remains true, so that experience
necessary the Group can drive performance as well can be found
up-to-date as comply with regulations. in the full
experience, The Group's Articles of Association annual report.
skills and require that all Directors must stand
capabilities 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.
------------------ ----------------------------------------------------------------- ---------------
7: Evaluate The Board undertakes self-reviews from
all elements time to time in order to assess its
of Board performance. The Chairman provides leadership
performance to the Board and assesses the individual
based on Directors to ensure that their contribution
clear and is relevant and effective and that they
relevant are committed members of the Board.
objectives,
seeking
continuous
improvement
------------------ ----------------------------------------------------------------- ---------------
8: Promote The Group operates in a highly regulated The Group's
a corporate environment in accordance with an integrated values are
culture that Management System (including ISO 13485:2016) described
is based which is subject to third-party audit. in the full
on ethical The Group is focused on a therapeutic annual report.
values and area which has a high unmet medical
behaviours 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.
------------------ ----------------------------------------------------------------- ---------------
9: Maintain The Board is collectively responsible The Group's
governance for the long-term success of the Group. risk
structures Its principal function is to provide management
and processes the Group with a framework of prudent approach
that are and effective controls, which enables is described
fit for purpose risk to be assessed and managed and above.
and support its strategy executed. Further details
good as to how the governance processes are
decision-making structured to achieve this are outlined
by the Board within this Governance Report.
------------------ ----------------------------------------------------------------- ---------------
Build trust 10: Communicate The Group communicates with shareholders The full
based on how the Group (and other stakeholders) via its website, Strategic
open is governed its Annual Report and the AGM as well Report,
communication and is performing as via issuing RNS announcements and Directors'
with by maintaining presenting to major shareholders and report and
stakeholders a dialogue analysts. stakeholder
with shareholders This Governance Report, alongside the engagement
and other wider Strategic and Directors' Reports in the year
relevant are designed to provide full and relevant can be found
stakeholders updates on how the Group is governed in the full
and how it is performing. These are annual report.
drafted with both shareholders and the Financial
wider stakeholder community in mind. 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 Share Transaction
Committee Committee
------------------ --------------- ------------
Charles Spicer (Non-Executive Chairman - - -
Chairman)
Giulio Cerroni (Chief Executive Member - - -
Officer)
Grant Nash (Chief Financial Member & Secretary Secretary Secretary Member & Secretary
Officer & Company Secretary)
Mark Warne (Senior Independent Member Member Chairman Chairman
Non-Executive Director)
John Bradshaw (Independent Member Chairman Member -
Non-Executive Director)
------------------------------- ------------------ --------------- ------------ ------------------
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 GBP000 GBP000
----------------------------------------------- ----- -------- --------
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 GBP000 GBP000 GBP000
------------------------------- ----- --------- ----------- -----------
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 GBP000 GBP000 GBP000
----------------------------- ----- --------- ----------- -----------
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
GBP1,040,000 (2019: GBP1,069,000).
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 Restated
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
----------------------- --------- -------- -------- ------------ ------------ ----------- ------------ -------
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 Restated
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
--------------------------------- -------------------------- -------- -------- ----------- ------------ --------
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
GBP000 GBP000 GBP000 GBP000
----------------------------------------- -------- ------- -------- --------
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 ('GBP' 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 Remeasurement Carrying amount
at 30 September at 1 October
2019 2019
GBP000
GBP000 GBP000
------------------------------- ----------------- -------------- ----------------
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:
GBP000
------------------------------------------------ -------
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 GBP0.50 into 15,215,664 ordinary
shares of nominal value GBP0.01 and 15,215,664 deferred shares of
nominal value GBP0.49. 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 GBP1 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 GBP7,455,675, whilst the
capital redemption reserve is understated in the same periods by
GBP7,455,675.
Share capital Capital redemption
reserve
GBP000 GBP000
------------------------------------------- -------------- ---------------------
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 5 years
combinations
Other acquired intangible assets
3 years
* Computer software
5 years
* Data acquisition
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 GBP1,553,000 (2019: GBP1,147,000). Of
this amount, GBP244,000 (2019: GBP161,000) was capitalised as an
intangible asset. The balance of expenditure being GBP1,309,000
(2019: GBP986,000) 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
GBP000 GBP000
----------------- ------- -------
Service revenue 9,532 7,561
--------------------- ------- -------
For the year ended 30 September 2020, revenue includes
GBP227,000 (2019: GBP1,271,000) 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%
(GBP6,232,000). In 2019 the individual percentage revenue
associated with this client was 39% (GBP2,976,000) and 14%
(GBP1,086,000) 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
GBP000 GBP000
---------------- ------- -------
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
GBP000 GBP000
-------------- ------- -------
Grant income 444 433
RDEC 162 155
-------------- ------- -------
Other income 606 588
-------------- ------- -------
9. Auditor's remuneration
2020 2019
GBP000 GBP000
---------------------------------- ------- -------
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
GBP000 GBP000
------------------------------ ------- -------
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
GBP31,000 (2019: GBP27,000).
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
GBP000 GBP000
------------------------------------------------------- ------- -------
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 GBP56,000 (2019:
GBPnil) recognised in cost of sales for those items directly
related to project activities. The total amortisation charge for
the year is GBP82,000 (2019: GBP40,000).
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
GBP000 GBP000
------------------------------------------------------------ -------- ---------
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
GBP000 GBP000
----------------------------------------------------- -------- ---------
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
GBP000 GBP000
------------------------------------------- ------- -------
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
GBP000 GBP000
----------------------------------------- ------- -------
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 (GBP000) 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 GBP000 GBP000 GBP000 GBP000 GBP000
-------------------------- --------- ------------ ---------- ---------- -------
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 GBP271,000 (2019: GBPnil).
Company
At 30 September 2020 and 30 September 2019, the Company had no
property, plant and equipment.
15. Intangible assets
Group
Intangibles
acquired through Other acquired Internally
business combinations intangibles developed technology Total
GBP000 GBP000 GBP000 GBP000
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:
Class of Country of
Name of subsidiary share incorporation Principal activities
------------------- ---------- --------------- -----------------------------------
Directly held:
IXICO Technologies Ordinary United Kingdom Data collection and analysis
Limited of neurological diseases
IXITech Limited Ordinary United Kingdom Dormant - dissolved on 26 November
2019
Indirectly held:
IXICO US LLC Members' United States Dormant
interest
Optimal Medicine Ordinary United Kingdom Dormant - dissolved on 26 November
Limited 2019
IXICO Technologies Ordinary United States Sales and marketing
Inc.
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
GBP000 GBP000
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 GBPnil (2019: GBPnil).
17. Trade and other receivables
Group Company
2020 2019 2020 2019
GBP000 GBP000 GBP000 GBP000
------------------------------------------ ---------- ---------- ------------ ------------
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
GBP000 GBP000 GBP000 GBP000
------------------------- ---------- --------- ---------- ----------
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
GBP000 GBP000 GBP000 GBP000
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
GBP000
----------------------------------- ------------------
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
GBP000 GBP000
------------ ------------ -----------
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:
Carrying
Asset Dilapidations Depreciation amount
GBP000 GBP000 GBP000 GBP000
----------------- ------- -------------- ------------- ---------
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
GBP000 GBP000
--------------------- ------------ -----------
Leases of low value 1 1
-------------------------- ------------ -----------
1 1
------------------------ ------------ -----------
At 30 September 2020, the Group's commitment to short term and
low-value leases was GBPnil (2019: GBP1,000).
21. Deferred tax
Deferred tax asset (unrecognised)
Group Company
2020 2019 2020 2019
GBP000 GBP000 GBP000 GBP000
-------------------------------------- ---------- ---------- ------------- ------------
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 GBP0.01 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 GBP000 GBP000
----------------------------------- ----------- -------- --------
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 Other Exercise
personnel employees Total price Value
Date of exercise Shares Shares Shares Pence GBP000
------------------ --------------- ----------- -------- --------- -------
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 GBP1,890 and an
increase in share premium of GBP61,579.
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 GBP0.01 to GBP0.70 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 Number Weighted average
exercise price exercise price
Outstanding at start of
the period 3,690,572 GBP0.18 5,279,745 GBP0.18
Granted 1,990,000 GBP0.17 - -
Exercised (188,998) GBP0.34 (125,294) GBP0.38
Lapsed (1,053,062) GBP0.17 (1,463,879) GBP0.17
Outstanding at end of
the period 4,438,512 GBP0.17 3,690,572 GBP0.18
Exercisable at end of
the period 1,118,581 GBP0.36 1,068,110 GBP0.36
------------------------- ------------ ----------------- ------------ -----------------
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 GBP0.01. 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 GBP0.32 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 GBP0.70.
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 GBP0.70 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 GBP0.70
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 GBP0.70 GBP0.70
Weighted average exercise price GBP0.01 GBP0.70
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 GBP0.01. 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 GBP0.50 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 GBP0.35 GBP0.70
Weighted average exercise price GBP0.01 GBP0.01
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
GBP000 GBP000 GBP000 GBP000
--------------------------------------- --------- --------- ------------ -----------
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% weaker(1) 10% stronger 10% weaker 10% stronger
GBP000 GBP000 GBP000 GBP000
------------- -------------- ------------- ----------- -------------
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: GBPnil).
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
GBP000 GBP000
------------------------------ ------- -------
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
GBP1,256,000 (2019: GBP1,043,000) and aggregate pension of
GBP12,000 (2019: GBP8,000). Further detail of Directors'
remuneration is disclosed in the Directors' Remuneration Report in
the full annual report.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
RNS may use your IP address to confirm compliance with the terms
and conditions, to analyse how you engage with the information
contained in this communication, and to share such analysis on an
anonymised basis with others as part of our commercial services.
For further information about how RNS and the London Stock Exchange
use the personal data you provide us, please see our Privacy
Policy.
END
FR UPGGWPUPUPUG
(END) Dow Jones Newswires
December 02, 2020 02:00 ET (07:00 GMT)
Ixico (LSE:IXI)
Historical Stock Chart
From Apr 2024 to May 2024
Ixico (LSE:IXI)
Historical Stock Chart
From May 2023 to May 2024