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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Ixico Plc | LSE:IXI | London | Ordinary Share | GB00BFXR4C20 | ORD 1P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 8.625 | 8.50 | 8.75 | 8.625 | 8.625 | 8.625 | 0.00 | 08:00:01 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
From Apr 2019 to Apr 2024
TIDMIXI
RNS Number : 7534Z
IXICO plc
22 May 2019
22(nd) May 2019
IXICO plc
("IXICO", the "Company" or the "Group")
Half Yearly Report to 31 March 2019
GBP3.4M H1 2019 Revenue
22% revenue growth on H1 2018
GBP21.2M order book
Breakeven
Strong closing cash balance of GBP7.5M
IXICO plc (AIM: IXI), the data analytics company delivering insights in neuroscience, today announces its unaudited interim results for the six months ended 31 March 2019.
Highlights
Commercial and Operational
-- GBP5.2M new and expanded contracts won across H1 2019. -- Strong contracted order book of GBP21.2M* as at 31 March 2019.
-- Broadened expertise in neurological disease areas and diversification of biopharmaceutical clients.
-- Chosen as partner for King's College London's UK Government-funded Medical Imaging & Artificial Intelligence Centre.
Financial
-- Revenue of GBP3.4M; 22% increase on prior period (H1 2018: GBP2.8M**).
-- Revenue excluding foreign exchange of GBP3.3M*; 21% increase on prior period (H1 2018: GBP2.7M**).
-- Gross margin expanded by +610 bps** over H1 2018 to 66.3%.
-- EBITDA of GBP0.1M driven by strong operational leverage at gross margin level (H1 2018: negative GBP0.4M**).
-- Operating profit of GBP0.1M (H1 2018: loss of GBP0.5M**). -- Profit per share of 0.5p (H1 2018: negative 1.5p**). -- Closing cash of GBP7.5M.
*Calculated using the fixed foreign exchange at the time of contract signing for each individual multi-year contract.
**Adjusted to reflect the adoption of IFRS 15 'Revenue from Contracts with Customers'.
Giulio Cerroni, CEO of IXICO, said: "The first half of 2019 has been another period of significant progress. We have delivered on our first half financial targets, whilst developing our investment plans to ensure a strong full-year 2019 and beyond. You can clearly see the impact of our strategy in our revenue growth of 22% and continued strong gross margin performance. This points to the strength of the underlying business fundamentals and our growing position in an attractive market environment, delivering high value data analytics to our pharmaceutical and biotechnology clients. In the second half of 2019 we expect to accelerate the pace of our investment to enable further scale up in support of our long-term growth plans.
We entered the 2019 financial year with a contracted order book of GBP19.3M following a number of significant contract wins. This momentum in building our order book, whilst delivering strong revenue performance, has continued and, year to date, we have secured additional contract wins with a value of GBP5.2M. These contracts are a mix of contract extensions and additions with existing clients and new client wins in a broadened range of neurological diseases. The order book, GBP21.2M at H1, supports our expectation to deliver +20% revenue growth across 2019 and provides an extremely strong basis for continued growth and progress towards profitability.
Our proprietary imaging and digital biomarker data analytics offering, with a focus on deploying proprietary AI algorithms in both current and adjacent neurological therapeutic areas, continues to drive market penetration as well as an expanded client-base. We are well-capitalised, enabling further investments in our technology platform and staff resources to build on our strong client relationships. We expect to continue to deliver on our financial targets by providing enhanced value to our clients, whilst delivering strong gross margins associated with a premium technology service business."
For further information please contact:
IXICO plc
Giulio Cerroni, Chief Executive Officer +44 (0) 20 3763 7498
Cenkos Securities PLC (Nominated adviser and sole broker)
Giles Balleny / Max Gould (Corporate Finance) +44 (0) 20 7397 8900
Michael F Johnson / Russell Kerr (Sales)
Optimum Strategic Communications (Investor Relations)
Mary Clark / Anne Marieke Ezendam / Supriya Mathur +44 (0) 203 950 9144
ixico@optimumcomms.com
About IXICO
IXICO is dedicated to delivering insights in neuroscience. Our mission is to transform the progression of our biopharmaceutical clients' neurological therapeutic pipelines through the application of novel imaging and digital biomarkers.
IXICO's data analytics services are used by the global biopharmaceutical industry to interpret data from brain scans and digital biosensors to enable better trial design, site qualification, patient selection and clinical outcomes. We provide technology-enabled services across all phases of clinical evaluation. Our integrated digital platform provides a scalable and secure infrastructure for the capture and analysis of regulatory compliant clinical data to enable clients to make rapid, better informed decisions. IXICO is also collaborating with partners to develop new analytical techniques and companion digital health products targeted at improving patient outcomes.
More information is available on www.IXICO.com
CHIEF EXECUTIVE OFFICER'S STATEMENT
Delivering our commercially led growth strategy
Across the past six months, we have won GBP5.2M of new contracts and reported revenue of GBP3.4M (including foreign exchange impact). This continues the Company's strong progress in growing revenue now and for the future. At the 31 March 2019, our contracted order book totalled GBP21.2M (YE 2018: GBP19.3M).
Underlining this achievement is our ability to report breakeven EBITDA for the half-year period, driven by double-digit year-on-year revenue growth for the fifth successive half year and operational leverage being realised within the business.
This is a direct consequence of our ability to combine our deep therapeutic expertise with proven AI technology for measuring brain disease imaging and digital biomarkers. Our track record of successfully partnering with large pharmaceutical and emerging biotech companies in delivering global clinical trials is providing the traction required for continuous growth in an expanding market.
Investing to grow
We are now preparing for the next phase of our strategy, which we believe will underpin our projected continuation of significant revenue growth for the years ahead. We will accelerate investment in the company to strengthen our ability to maximise the commercial opportunities available. This investment includes the appointment of personnel (including a new CFO and a strengthened business development team) whilst also developing new markets and new channel partnerships. We expect the R&D and Sales and Marketing spend to increase in the second half of 2019.
In addition, we are planning to make capital investments in our data and imaging technology infrastructure within 2019 and into 2020 to ensure we are able to deliver the further anticipated growth in our order book. The investment programme is aimed at ensuring that we execute on our commercially led growth strategy, whilst ensuring we establish a leading market position for the long term.
Financial Review
Hot Features
Premium
KPIs H1-19 H1-18 Movement FY2018 FY2017
----------------------------- -------- ----------- --------- ---------- ----------
Revenue excluding foreign GBP3.3M GBP2.7M* +21% GBP5.2M GBP3.7M
exchange
Foreign exchange GBP0.1M GBP0.1M - GBP0.2M GBP0.4M
----------------------------- -------- ----------- --------- ---------- ----------
Revenue GBP3.4M GBP2.8M* +22% GBP5.4M GBP4.1M
Gross margin 66.3% 60.2%* +610 bps 58.8% 56.4%
EBITDA profit/(loss) GBP0.1M GBP(0.4)M* +GBP0.5M GBP(0.6)M GBP(1.4)M
Operating profit/(loss) GBP0.1M GBP(0.5)M* +GBP0.6M GBP(0.8)M GBP(1.9)M
Income per head GBP113K GBP104K* +9% GBP95K GBP78K
Profit/(loss) per share 0.5p (1.5)p* +2.0p (2.0)p (5.7)p
Cash GBP7.5M GBP2.7M +GBP4.8M GBP7.9M GBP2.4M
----------------------------- -------- ----------- --------- ---------- ----------
*Adjusted to reflect the adoption of IFRS 15 'Revenue from Contracts with Customers'
Revenue KPIs are reported at actual exchange rates ('Revenue') and at the foreign exchange rate fixed at the time of contract signing for each individual multi-year contract ('Revenue excluding foreign exchange'). Doing so demonstrates the performance of the Company, excluding the impact of subsequent foreign exchange movements.
Revenue
-- Revenue of GBP3.4 million, 22% increase on prior period (H1 2018: GBP2.8 million*).
-- Revenue excluding foreign exchange of GBP3.3 million, 21% increase on prior period (H1 2018:
GBP2.7 million*).
-- Robust order book; enabling continued delivery of year-on-year revenue growth:
o FY2017: +34%
o FY2018: +32%
o H1-19: +22%
-- Revenue generated from data analytics combined with clinical trials support services over
multi-year contracts across all phases of clinical development with leading biopharmaceutical
companies.
Gross margin
-- Gross margin of 66.3%, +610 bps* and +750 bps improvement on H1 2018 and FY2018 respectively,
due to increased revenue, operational efficiencies and service mix.
Operating expenses
-- Unchanged at GBP2.5 million. H1 2018 included non-recurring expense of GBP0.3 million in respect
of May 2018 capital placing costs which were subsequently capitalised.
-- Adjusting for these costs, operating expenses increased by GBP0.3 million on H1 2018, from
investment in building scale and capabilities to drive growth by strengthening leadership,
functional teams and systems.
EBITDA
-- EBITDA of GBP0.1 million improved upon H1 2018 EBITDA loss of GBP0.4 million* reflecting increased
revenue and gross margins.
Cash
-- Closing cash of GBP7.5 million, the increase on H1 2018 is including the GBP5.5 million gross
placing in May 2018.
-- Operating cash outflows of GBP0.3 million compared with inflows of GBP0.3 million across H1
2018 due to phasing of project advance payments.
Consolidated Statement of Comprehensive Income
for the six months ended 31 March 2019 - unaudited
Six months Six months Year ended
ended ended 30 September
31 March 31 March 2018
2019 2018
GBP'000 GBP'000 GBP'000
Note unaudited unaudited audited
Adjusted*
----------------------------------- ----- ----------- ----------- --------------
Revenue 3,426 2,817 5,394
Cost of sales (1,155) (1,120) (2,221)
----------------------------------- ----- ----------- ----------- --------------
Gross profit 2,271 1,697 3,173
Other income 303 300 562
Operating expenses
Research and development expenses (458) (582) (1,033)
Sales and marketing expenses (406) (322) (754)
General and administrative
expenses (1,605) (1,274) (2,745)
Non-recurring administrative
expenses 3 - (332) -
----------------------------------- ----- ----------- ----------- --------------
Total operating expenses (2,469) (2,510) (4,532)
Operating profit / (loss) 105 (513) (797)
Finance income 1 - 4
Finance expense - (1) -
Profit / (loss) on ordinary
activities before taxation 106 (514) (793)
Taxation 109 95 125
----------------------------------- ----- ----------- ----------- --------------
Profit / (loss) attributable
to equity holders for the
period 215 (419) (668)
----------------------------------- ----- ----------- ----------- --------------
Other comprehensive expense:
Foreign exchange translation
differences - 1 (1)
----------------------------------- ----- ----------- ----------- --------------
Total other comprehensive
expense - 1 (1)
Total comprehensive income
/ (expense) attributable to
equity holders for the period 215 (418) (669)
----------------------------------- ----- ----------- ----------- --------------
Profit / (loss) earnings per
share (pence) 4
----------------------------------- ----- ----------- ----------- --------------
Basic profit / (loss) per
share 0.5 (1.5) (2.0)
Diluted profit / (loss) per
share 0.5 (1.5) (2.0)
----------------------------------- ----- ----------- ----------- --------------
* Revenue reflects adoption of IFRS 15 'Revenue from Contracts with Customers' which is set out in note 2 of the condensed consolidated interim financial statement.
Consolidated Statement of Financial Position
as at 31 March 2019 - unaudited
As at As at As at 30
31 March 31 March September
2019 2018 2018
GBP'000 GBP'000 GBP'000
unaudited unaudited audited
Adjusted*
------------------------------- ---------- ---------- -----------
ASSETS
Non-current assets
Property, plant and equipment 129 80 77
Intangible assets 51 80 32
--------------------------------- ---------- ---------- -----------
Total non-current assets 180 160 109
Current assets
Trade and other receivables 2,077 1,472 2,140
Current tax receivable 415 575 229
Cash and cash equivalents 7,453 2,699 7,861
--------------------------------- ---------- ---------- -----------
Total current assets 9,945 4,746 10,230
Total assets 10,125 4,906 10,339
--------------------------------- ---------- ---------- -----------
LIABILITIES AND EQUITY
Current liabilities
Trade and other payables 2,550 2,550 3,013
Total current liabilities 2,550 2,550 3,013
Non-current liabilities
Deferred tax liabilities - 10 -
------------------------------- ---------- ---------- -----------
Total non-current liabilities - 10 -
Equity
Ordinary shares 7,923 7,727 7,923
Share premium 84,389 79,421 84,389
Merger relief reserve 1,480 1,480 1,480
Reverse acquisition reserve (75,308) (75,308) (75,308)
Translation reserve (80) (78) (80)
Accumulated losses (10,829) (10,896) (11,078)
--------------------------------- ---------- ---------- -----------
Total equity 7,575 2,346 7,326
Total liabilities and equity 10,125 4,906 10,339
--------------------------------- ---------- ---------- -----------
*Trade and other payables and accumulated losses reflect adoption of IFRS 15 'Revenue from Contracts with Customers' which is set out in note 2 of the condensed consolidated interim financial statements.
Consolidated Statement of Changes in Equity
for the six months ended 31 March 2019 - unaudited
Foreign
Six months Merger Reverse exchange
ended Ordinary Share relief acquisition translation Accumulated
31 March 2019 shares premium reserve reserve reserve losses Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
unaudited unaudited unaudited unaudited unaudited unaudited unaudited
--------------------- ---------- ---------- ---------- ------------- ------------- ------------ ----------
Balance at
1 October 2018 7,923 84,389 1,480 (75,308) (80) (11,078) 7,326
--------------------- ---------- ---------- ---------- ------------- ------------- ------------ ----------
Total comprehensive
income
Profit for
the period - - - - - 215 215
Total comprehensive
income - - - - - 215 215
Transactions
with owners
Charge in respect
of share options - - - - - 34 34
------------ ----------
Total transactions
with owners - - - - - 34 34
Balance at
31 March 2019 7,923 84,389 1,480 (75,308) (80) (10,829) 7,575
--------------------- ---------- ---------- ---------- ------------- ------------- ------------ ----------
Consolidated Statement of Changes in Equity
for the six months ended 31 March 2019 - unaudited (continued)
Six months Foreign
ended Merger Reverse exchange
31 March 2018 Ordinary Share relief acquisition translation Accumulated
shares premium reserve reserve reserve losses Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
unaudited unaudited unaudited unaudited unaudited unaudited unaudited
--------------------- ---------- ---------- ---------- ------------- ------------- ------------ ----------
Balance at
1 October 2017
- previously
reported 7,727 79,421 1,480 (75,308) (79) (10,326) 2,915
Adjustment
from the adoption
of IFRS 15 - - - - - (226) (226)
--------------------- ---------- ---------- ---------- ------------- ------------- ------------ ----------
Adjusted Balance
at 1 October
2017 7,727 79,421 1,480 (75,308) (79) (10,552) 2,689
--------------------- ---------- ---------- ---------- ------------- ------------- ------------ ----------
Total comprehensive
expense
Loss for the
period - - - - - (419) (419)
Other comprehensive
expense:
Foreign exchange
translation
differences - - - - 1 - 1
--------------------- ---------- ---------- ---------- ------------- ------------- ------------ ----------
Total comprehensive
expense - - - - 1 (419) (418)
Transactions
with owners
Charge in respect
of share options - - - - - 75 75
---------- ---------- ---------- ------------- ------------- ------------ ----------
Total transactions
with owners - - - - - 75 75
Balance at
31 March 2018 7,727 79,421 1,480 (75,308) (78) (10,896) 2,346
--------------------- ---------- ---------- ---------- ------------- ------------- ------------ ----------
Consolidated Statement of Changes in Equity
for the six months ended 31 March 2019 - unaudited (continued)
Year ended Foreign
30 September Merger Reverse exchange
2018 Ordinary Share relief acquisition translation Accumulated
shares premium reserve reserve reserve losses Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
--------------------- --------- --------- --------- ------------- ------------- ------------ --------
Balance at
1 October 2017 7,727 79,421 1,480 (75,308) (79) (10,326) 2,915
Adjustment
from the adoption
of IFRS 15 - - - - - (226) (226)
------------ --------
Adjusted Balance
at 1 October
2017 7,727 79,421 1,480 (75,308) (79) (10,552) 2,689
------------ --------
Total comprehensive
expense
Loss for the
period - - - - - (668) (668)
Other comprehensive
expense:
Foreign exchange
translation
differences - - - - (1) - (1)
--------------------- --------- --------- --------- ------------- ------------- ------------ --------
Total comprehensive
expense - - - - (1) (668) (669)
Transactions
with owners
Charge in respect
of share options - - - - - 142 142
Exercise of
share options - 4 - - - - 4
Proceeds from
shares issued 196 5,304 - - - - 5,500
Transaction
costs for issue
of shares - (340) - - - - (340)
--------
Total transactions
with owners 196 4,968 - - - 142 5,306
Balance at
30 September
2018 7,923 84,389 1,480 (75,308) (80) (11,078) 7,326
--------------------- --------- --------- --------- ------------- ------------- ------------ --------
Consolidated Statement of Cash Flows
for the six months ended 31 March 2018 - unaudited
Six months Six months Year ended
ended ended 30 September
31 March 31 March 2018
2019 2018
GBP'000 GBP'000 GBP'000
unaudited unaudited audited
Cash flows from operating activities
Profit / (loss) for the period 215 (419) (668)
Finance income 1 - 4
Taxation (109) (95) (125)
Depreciation 19 21 38
Amortisation of acquired intangibles 12 55 114
Research and development expenditure
credit (76) (68) (126)
Share option charge 34 75 142
----------------------------------------- ----------- ----------- --------------
96 (431) (621)
Changes in working capital
Decrease / (increase) in trade
and other receivables 63 19 (653)
(Decrease) / increase in trade
and other payables (464) 743 1,214
----------------------------------------- ----------- ----------- --------------
Cash (used in) / generated operations (305) 331 (60)
Taxation received - - 423
----------------------------------------- ----------- ----------- --------------
Net cash (used in) / generated
operating activities (305) 331 363
----------------------------------------- ----------- ----------- --------------
Cash flows from investing activities
Purchase of property, plant and
equipment (70) (49) (75)
Purchase of intangible assets (32) - -
Sale of property, plant and equipment - 2 -
Finance income (1) - (4)
----------------------------------------- ----------- ----------- --------------
Net cash used in investing activities (103) (47) (79)
----------------------------------------- ----------- ----------- --------------
Cash flows from financing activities
Issue of shares - - 5,504
Transaction costs associated with
issue of shares - - (340)
----------------------------------------- ----------- ----------- --------------
Net cash generated from financing
activities - - 5,164
Movements in cash and cash equivalents
in the period (408) 284 5,448
----------------------------------------- ----------- ----------- --------------
Cash and cash equivalents at start
of period 7,861 2,414 2,414
Effect of exchange rate fluctuations
on cash held - 1 (1)
----------------------------------------- ----------- ----------- --------------
Cash and cash equivalents at end
of period 7,453 2,699 7,861
----------------------------------------- ----------- ----------- --------------
*Loss for the period and trade and other payables reflect adoption of IFRS 15 'Revenue from Contracts with Customers' which is set out in note 2 of the condensed consolidated interim financial statements.
1. 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 Group is an established provider of technology enabled speciality services to the global biopharmaceutical industry. The Group's services are used to select patients for clinical trials, assess the safety and efficacy of new drugs in development and in post marketing surveillance.
2. BASIS OF PREPARATION AND SIGNIFICANT ACCOUNTING POLICIES
Basis of preparation
The condensed consolidated interim financial statements were approved by the Board of Directors for issue on 17 May 2019. The condensed consolidated interim financial statements do not comprise statutory accounts within the meaning of section 434 of the Companies Act 2006. The condensed consolidated interim financial statements together with the comparative information for the six months ended 31 March 2018 are unaudited.
The condensed consolidated interim financial statements for the six months ended 31 March 2018 have been adjusted to reflect the directors' decision to adopt IFRS 15 'Revenue from Contracts with Customers' in the year ended 30 September 2018.
The statutory accounts of the Company for the year ended 30 September 2018 were approved by the Board of Directors on 3 December 2018 and delivered to the Registrar of Companies. The report of the auditors on those accounts was unqualified, did not contain an emphasis of matter paragraph and did not contain any statement under section 498 of the Companies Act 2006.
Going concern
At the time of approving the condensed consolidated interim financial statements, and based on a review of the Group's forecasts and business plan, the directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future. Thus, these condensed consolidated interim financial statements are prepared under the going concern basis of accounting.
Accounting policies
The accounting policies used in the condensed consolidated interim financial statements are consistent with those used in the consolidated financial statements for the period ended 30 September 2018 and are in accordance with International Financial Reporting Standards as adopted by the European Union.
Significant management judgement in applying accounting policies and estimation uncertainty
When preparing the condensed consolidated interim financial statements, the Directors make a number of judgements, estimates and assumptions about the recognition and measurement of assets, liabilities, income and expenses.
Significant management judgements
The following are management judgements in applying the accounting policies of the Group that have the most significant effect on the condensed consolidated interim financial statements.
2. BASIS OF PREPARATION AND SIGNIFICANT ACCOUNTING POLICIES (continued)
Revenue recognition
The Group recognises revenue in accordance with amounts charged to customers 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. Change orders represent a contract modification because they represent a distinct performance obligation in addition to the obligations in the contract. This could 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 reflect 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.
There are two principal revenue recognition sensitivities. The first is in respect of the timing of transferring the deliverable to the customer, which is not always directly under the Group's control. The second sensitivity is the volumes of data to be analysed. The price per unit of analysis is fixed in the contract, however if data volumes are lower than expected then revenue recognised would be correspondingly lower. Equally if the data volumes are higher than expected the revenue recognised would be correspondingly higher. Judgement is therefore required to determine that the distinct performance obligations under which revenue is recognised have occurred. There is also judgement involved in determining whether the performance obligations are transferred over time or at a point in time.
Customer 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.
The Group will recognise an intangible asset arising from development only if it can demonstrate its technical feasibility, intent to use or sell the intangible asset and measure reliably the expenditure attributable to the intangible asset during its development.
Intangible assets that do not meet the capitalisation criterial are recognised as an expense as incurred.
Internal development costs are capitalised only after technical and commercial feasibility of the software for sale or use have been established, meeting the criteria for capitalisation in the year.
Recovery of deferred tax assets
Deferred tax assets have not been recognised for deductible temporary differences and tax losses as the Directors consider that there is not sufficient certainty that future taxable profits will be available to utilise those temporary differences and tax losses.
2. BASIS OF PREPARATION AND SIGNIFICANT ACCOUNTING POLICIES (continued)
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. Actual results may be substantially different.
Share-based payments
The Group measures the cost of equity-settled transactions with employees by reference to the fair value of the equity instruments at the date at which they are granted. The fair value of the options granted is measured using an option valuation model, taking into account the terms and conditions upon which the options were granted.
Useful lives of depreciable assets
Management reviews its estimate of the useful lives of depreciable assets at each reporting date, based on the expected utility of the assets. Uncertainties in these estimates relate to technological obsolescence that may change the utility of certain software and IT equipment.
Adoption of IFRS 15 'Revenue from Contracts with Customers'
The Group has adopted IFRS 15 'Revenue from Contracts with Customers' from 1 October 2017. As part of transitioning to the new financial standard, management reviewed all contracts with customers and identified distinct performance obligations.
IFRS 15 establishes the principles that the Group applies when reporting information about the nature, amount, timing and uncertainty of revenue and cash flows from a contract with a customer. Applying IFRS 15, the Group recognises revenue to depict the transfer of promised goods or services to the customer in an amount that reflects the consideration to which the Group expects to be entitled in exchange for those goods or services.
It replaced IAS 18 'Revenue', IAS 11 'Construction Contracts' and related interpretations. Under IFRS 15 'Revenue from Contracts with Customers', revenue is recognised when a customer obtains control of the goods or services. Determining the distinct performance obligations within contracts and the timing of the transfer of control, at a point in time or over time, requires management judgement.
The Group's revenue is recognised in 2 main categories: service revenue and licensing revenue.
Service revenue
Service revenue is mainly derived from activities related to technology services provided to biopharmaceutical clients carrying out clinical development. The Group applied the IFRS 15 'Revenue from Contracts with Customers' 5-step model framework on all activities. The technology service contracts include a number of activities which can be allocated to discrete contract phases. The activities within each phase have been examined to determine distinct performance obligations. As a result, the Group has identified 2 activities which have resulted in a change in revenue recognition:
1. Set-up and configuration of the TrialTracker platform: Under IAS 18 'Revenue', revenue for these activities was recognised when the set-up and configuration was completed, provided that all other criteria for revenue recognition was met. Under IFRS 15 'Revenue from Contracts with Customers', revenue is recognised against 2 separate performance obligations. The first performance obligation is the set-up of TrialTracker and revenue is recognised when the configuration and platform set-up is completed. A second performance obligation is a platform access fee recognised over the duration of the project.
2. BASIS OF PREPARATION AND SIGNIFICANT ACCOUNTING POLICIES (continued)
Some historic, long-standing, existing contracts combined the access fee and configuration fee which were agreed on a contract by contract basis. Management could not differentiate between the set-up, configuration and access fee as distinct performance obligations on these contracts, therefore revenue associated with these activities has been treated as an access fee and recognised over the duration of the project term.
Consequently, revenue recognition of the set-up and configuration of TrialTracker is recognised later under IFRS 15 'Revenue from Contracts with Customers' than under IAS 18 'Revenue'.
2. Project set-up activities: Under IAS 18 'Revenue', revenue for these activities was recognised when the set-up was completed, provided that all other criteria for revenue recognition was met. Under IFRS 15 'Revenue from Contracts with Customers', project set-up revenue is recognised as part of a bundle of activities as they do not, on a stand-alone basis, meet the definition of distinct performance. The set-up activities have been recognised when all the activities that together comprise the distinct performance obligation have been delivered.
Consequently, revenue recognition of Project set-up activities is recognised later under IFRS 15 'Revenue from Contracts with Customers' than under IAS 18 'Revenue'.
License revenue
Licensing revenue includes one agreement, which grants the right to use TrialTracker software.
The license is a distinct performance obligation and under IFRS 15 'Revenue from Contracts with Customers' revenue is recognised over the contract term. The license grants a right to use the software and receive associated technical support during the license period.
The revenue recognition under IFRS 15 'Revenue from Contracts with Customers' is consistent with recognition under IAS 18 'Revenue', therefore there is no change to the recognition of licensing revenue.
Transition to IFRS 15 'Revenue from Contracts with Customers'
The Group has adopted IFRS 15 'Revenue from Contracts with Customers' using the retrospective effect method and has applied this standard from 1 October 2017. Accordingly, the information presented for the six months ended 31 March 2018 has been adjusted.
The principal changes arising from the adoption of IFRS 15 'Revenue from Contracts with Customers' refer to changes in revenue recognition in 1. Set-up and configuration of the TrialTracker and 2. Project set-up activities as outlined above.
The following tables summarise the impact of adopting IFRS 15 'Revenue from Contracts with Customers' on the Group's condensed consolidated interim financial statements of comprehensive income for the six months ended 31 March 2018 and its condensed consolidated interim statement of financial position as at 31 March 2018. There is no impact on the Group's consolidated statement of cash flows.
2. BASIS OF PREPARATION AND SIGNIFICANT ACCOUNTING POLICIES (continued)
Impact on consolidated statement of comprehensive income for the six months ended 31 March 2018:
Previously IFRS 15 Adjusted
reported adjustments
2018
GBP'000 GBP'000 GBP'000
Revenue 2,933 (116) 2,817
Cost of sales (1,120) - (1,120)
--------------------------------------------- ----------- ------------- ---------
Gross profit 1,813 (116) 1,697
Other income 300 - 300
Total operating expenses (2,510) - (2,510)
--------------------------------------------- ----------- ------------- ---------
Operating loss (397) (116) (513)
Loss on ordinary activities before taxation (398) (116) (514)
Taxation 95 - 95
--------------------------------------------- ----------- ------------- ---------
Loss to attributable equity holders for
the period (303) (116) (419)
--------------------------------------------- ----------- ------------- ---------
Total other comprehensive expense 1 - 1
Total comprehensive expense attributable
to equity holders for the period (302) (116) (418)
--------------------------------------------- ----------- ------------- ---------
Loss per share (pence)
--------------------------------------------- ----------- ------------- ---------
Basic loss per share (1.1) (0.4) (1.5)
Diluted loss per share (1.1) (0.4) (1.5)
--------------------------------------------- ----------- ------------- ---------
2. BASIS OF PREPARATION AND SIGNIFICANT ACCOUNTING POLICIES (continued)
Impact on the consolidated statement of financial position at 31 March 2018:
Previously IFRS 15 adjustments IFRS 15 adjustments IFRS 15 adjustments Adjusted
reported
Year ended Year ended Six months
ended
30 September 30 September 31 March
2016* 2017* 2018
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Total assets 4,906 - - - 4,906
-------------------------- ----------- -------------------- -------------------- -------------------- ---------
Liabilities and equity
Current liabilities
Trade and other payables 2,208 216 10 116 2,550
Total current liabilities 2,208 216 10 116 2,550
Total non-current
liabilities 10 - - - 10
Equity
Ordinary shares 7,727 - - - 7,727
Share premium 79,421 - - - 79,421
Merger relief reserve 1,480 - - - 1,480
Reverse acquisition
reserve (75,308) - - - (75,308)
Foreign exchange
translation reserve (78) - - - (78)
Accumulated losses (10,554) (216) (10) (116) (10,896)
-------------------------- ----------- -------------------- -------------------- -------------------- ---------
Total equity 2,688 (216) (10) (116) 2,346
Total liabilities
and equity 4,906 - - - 4,906
-------------------------- ----------- -------------------- -------------------- -------------------- ---------
*Impact on consolidated statement of financial position for the year ended 30 September 2016 and 30 September 2017 are disclosed in the statutory accounts of the Group for the year ended 30 September 2018.
3. EXCEPTIONAL EXPENSES
During the six months ended 31 March 2018, non-recurring administrative expenses of GBP332,000 were incurred in respect of costs associated with a planned capital raise. Following the capital raise, announced on 3 May 2018, all the costs associated were capitalised in accordance with IAS 32 and the exceptional expense was therefore reversed in the financial statements for the year ended 30 September 2018.
4. PROFIT / (LOSS) PER SHARE
Basic profit / (loss) per share is calculated by dividing the profit / (loss) for the period attributable to equity holders by the weighted average number of ordinary shares outstanding during the period.
For diluted profit / (loss) per share, the profit / (loss) for the period attributable to equity holders and the weighted average number of ordinary shares outstanding during the period is adjusted to assume conversion of all dilutive potential ordinary shares. As the effect of the share options would be to reduce the profit / (loss) per share, the diluted profit / (loss) per share is the same as the basic profit / (loss) per share.
At 31 March 2019 and 30 September 2018, the Group has no dilutive potential ordinary shares in issue.
The calculation of the Group's basic and diluted profit / (loss) per share is based on the following data:
Six months Six months
ended ended Year ended
31 March 31 March 30 September
2019 2018 2018
GBP'000 GBP'000 GBP'000
unaudited unaudited audited
Adjusted*
---------------------------------------- ----------- ----------- --------------
Profit / (loss) attributable to equity
holders for the period 215 (419) (668)
---------------------------------------- ----------- ----------- --------------
As at As at As at
31 March 31 March 30 September
2018 2018 2018
Number Number Number
unaudited unaudited audited
---------------------------------------- ----------- ----------- --------------
Weighted average number of ordinary
shares used in basic loss per share 46,777,000 27,119,130 33,761,428
---------------------------------------- ----------- ----------- --------------
*Reflects the adoption of IFRS 15 'Revenue from Contracts with Customers' which is set out in note 2 of the condensed consolidated interim financial statements.
5. ISSUED CAPITAL AND RESERVES
As at 31 March 2019 the Company had 46,777,000 ordinary shares of 1 pence each in issue.
6. SHARE-BASED PAYMENTS
Certain Directors and employees of the Group hold options to subscribe for shares in the Group under share option schemes. The number of shares subject to options, the periods in which they were granted and the period in which they may be exercised are given below.
The Group operates 2 share option schemes, the EMI Share Option Plan 2014 and Long-Term Incentive Plan 2018 (2018: 1), which are equity settled.
The change in the number of share options outstanding at end of period and the number weighted average exercise prices during the year were as follows:
6. SHARE-BASED PAYMENTS (continued)
Outstanding Outstanding
at start at end of
Scheme and Grant date of period Granted Exercised Lapsed period
-------------------------- ------------ -------- ---------- ------------ ------------
EMI Share Option Plan
2014
1 October 2014 128,002 - - (25,100) 102,902
29 March 2016 623,881 - - (325,215) 298,666
7 February 2017 917,012 - - (125,176) 791,836
7 August 2017 713,940 - - (235,000) 478,940
4 June 2018 325,000 - - - 325,000
-------------------------- ------------ -------- ---------- ------------ ------------
2,707,835 - - (710,491) 1,997,344
Long-Term Incentive Plan
2018
4 June 2018 2,571,910 - - (753,388) 1,818,522
TOTAL 5,279,745 - - (1,463,879) 3,815,866
-------------------------- ------------ -------- ---------- ------------ ------------
EMI Share Option Plan 2014
This scheme is open, by invitation, to Executive Directors and key management personnel. Participants are granted share options in the Group which contain standard and enhanced vesting conditions. These are subject to the achievement of individual employee and Group performance criteria as determined by the Board. Vesting periods vary by award and the conditions approved by the Board.
Long-Term Incentive Plan 2018 ('LTIP Award')
Share options granted in accordance with the LTIP Award are subject to share price performance measured against the 3-month volume weighted average price of the Company's ordinary shares in the 3 months prior to the third anniversary from the date of grant. The performance conditions of the LTIP Award are as follows 25% of the LTIP Award will vest if the share price increases by 50% above GBP0.28, which was the price of the placing of new ordinary shares announced in May 2018, increasing on a straight-line basis such that the full LTIP Award will vest if the share price increases by over 100%. The performance conditions are subject to a minimum floor price of GBP0.50 per ordinary share before any part of the LTIP Award can vest. On vesting the LTIP Award is subject to a holding period of up to 2 years. The award is also subject to continued employment, malus and clawback provisions.
As at 31 March 2019 As at 30 September
2018
Weighted Weighted
average average
exercise exercise
Number price Number price
-------------------------------- ------------ --------- ---------- ---------
Outstanding at start of period 5,279,745 GBP0.18 2,836,012 GBP0.35
Granted - - 2,896,910 GBP0.05
Exercised - - (15,000) GBP0.31
Lapsed (1,463,879) GBP0.17 (438,177) GBP0.33
-------------------------------- ------------ --------- ---------- ---------
Outstanding at end of period 3,815,866 GBP0.19 5,279,745 GBP0.18
Exercisable at end of period 466,822 GBP0.35 537,099 GBP0.36
-------------------------------- ------------ --------- ---------- ---------
The number of share options outstanding and share options exercised at the end of the period was 3,815,866 or 65% of the total share option pool. The total share option pool represents 12.5% of the total ordinary shares in issue.
Total share options outstanding have a range of exercise prices from GBP0.01 to GBP0.49 per option and the weighted average contractual life is 5.1 years (2018: 5.6 years).
The total charge for the period relating to employee share-based payment plans were GBP34,000 (2018: GBP75,000).
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.
END
IR LLFFEEEILFIA
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May 22, 2019 02:00 ET (06:00 GMT)
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