21
May 2024
IXICO plc
("IXICO", the "Company" or
the "Group")
Half yearly report to 31
March 2024
IXICO plc (AIM: IXI), the
precision analytics company delivering intelligent
insights in neuroscience,
announces its unaudited interim results for the
six months ended 31 March 2024 ('H1 2024' or the
'period').
Operational developments
· As
outlined in the Group's trading update issued on 13 March 2024, the
H1 2024 revenue performance has been challenging albeit consistent
with the slow-down in capital markets funding of the biotech
market;
· We are
seeing a turn in market conditions, and subsequent to the half-year
end have signed new contracts and have received notifications of
award of further contracts following competitive tenders, which are
now subject to contracting;
· Order
book of £12.7 million at 31 March 2024 (H1 2023: £13.3m) following
the signing of contracts totalling £6.4m across the last twelve
months;
· Since
the business restructured during H1 2024, we have delivered £1.1m
cost efficiencies over the past twelve months that will be more
visible in H2 2024; and
· Following the CEO's decision to retire, the Group has
substantially progressed a succession process.
Financial developments
· Revenues of £2.5 million for the six months to 31 March 2024
(H1 2023: £3.2m);
· Gross
margin at 40.2% (H1 2023: 46.1%);
· Loss
before interest, taxation, depreciation and amortisation ('EBITDA')
of £1.3 million (H1 2023: £0.6m);
· EBITDA
loss materially impacted by reduced capitalisation of platform
development costs for the six months to 31 March 2024 which
totalled £0.2m (H1 2023: £0.8m). This reduction reflects the
successful completion of platform validation;
· £2.5
million cash as at 31 March 2024 (H1 2023: £5.0m);
· Net
assets of £10.0 million (H1 2023: £11.9m); and
· Loss
per share of 2.92p (H1 2023: 1.50p).
Giulio Cerroni, CEO of IXICO, commented:
"Across H1 2024, we were aware that
revenues were going to be challenged due to market dynamics and
therefore reduced our cost base in preparation for this. In
parallel we have been laser focussed on our sales pipeline
resulting in a much strengthened outlook for contract bookings in
H2 2024. As part of the cost restructure, we have emphasised our
"lead with science" approach and I am delighted to see that this is
bearing fruit.
More broadly, we remain confident of
the market opportunity and our "Precision in Neuroscience" strategy
and expect to see this deliver increased value in the coming
periods."
A recording of the results
presentation will be made available on the Group's website
here: https://ixico.com/investors/company-information/investor-videos/
The information contained within this announcement is deemed
by the Company to constitute inside information pursuant to Article
7 of EU Regulation 596/2014 as it forms part of UK domestic law by
virtue of the European Union (Withdrawal) Act 2018 as amended. Upon
the publication of this announcement via a Regulatory Information
Service, this inside information is now considered to be in the
public domain.
For
further information please contact:
|
IXICO plc
|
+44 (0)20
3763 7499
|
|
Giulio Cerroni, Chief Executive
Officer
Grant Nash, Chief Financial
Officer
|
|
|
|
|
|
Cavendish Capital Markets Limited (Nominated adviser and
sole broker)
|
+44 (0)20
7397 8900
|
|
Giles Balleny / Dan Hodkinson
(Corporate Finance)
Nigel Birks/Harriet Ward (Corporate
Broking)
|
|
|
Michael Johnson / Tamar
Cranford-Smith (Sales)
|
|
|
|
| |
About IXICO
IXICO is dedicated to delivering
insights in neuroscience to help transform the advancement of
investigational therapies for neurological diseases, such as
Huntington's disease, Parkinson's disease and Alzheimer's disease.
The Company's purpose is to advance medicine and human health by
turning data into clinically meaningful information, providing
valuable new insights in neuroscience by supporting pharmaceutical
companies across all phases of CNS clinical research. IXICO's goal
is to be a leading advocate of artificial intelligence in medical
image analysis.
IXICO has developed and deployed
breakthrough data analytics, at scale, through its remote access
technology platform, to improve the return on investment in drug
development and reduce risk and uncertainty in clinical trials for
the Company's pharmaceutical clients.
More information is available on www.IXICO.com
CHIEF EXECUTIVE OFFICER'S STATEMENT
Statement from Giulio Cerroni
Across the past six months, we have
delivered revenues of £2.5 million (H1 2023: £3.2m) and, as at 31
March 2024, our order book totalled £12.7 million (H1 2023:
£13.3m). These figures reflect the markets of the past twelve
months, where the biopharmaceutical industry (and in particular
biotechs) have seen tight capital markets and soaring inflation
impact their clinical development plans.
The continuation of these challenges
as we entered 2024, meant that we adjusted our forecasts for the
year (as announced on 13 March 2024) reflecting that we are seeing
positive signs of market recovery, however the associated timelines
of certain contracts mean we anticipate revenues across the second
half of the year to reflect only marginal growth on the past six
months. A marked uptick in receipt of client requests for proposals
(RFPs) and information (RFIs) over the last couple of months
provides confidence that the market is turning
favourably.
During the period we undertook a
cost reduction exercise within the business and, importantly,
realigned the way that the organisational structure reflects our
strategy. As a niche neuroscience specialist, the importance
of effectively communicating our scientific credentials and the
differential value of our analytics is critical.
Consequently, we have developed a "Leading with Science" focus to
our "Precision in Neuroscience" strategy. This reflects that
our scientists, all of whom are experts in their respective
neurological fields, and our scientific assets are assets not
easily replicated by our competitors. Ensuring this value is
communicated effectively is what delivers new business
opportunities. Consequent to this, we have realigned our
sales and marketing team alongside our science team under the
leadership of our CSO, Robin Wolz. This has generated an
increase in productivity and effectiveness in our sales process,
with scientific engagement being brought to clients at an earlier
stage. The signs of the traction this will bring are
positive.
In addition, we have moved the
operational, technology and business support functions under the
leadership of our CFO, Grant Nash. This reflects the
continued focus of the business in delivering the very best service
in the most efficient manner. Closely aligning these teams
ensures effective and consistent management which, through the
close working relationship between CFO and CSO, provides a seamless
and fully aligned approach to delivering quality services,
efficiently.
This period has also seen the full
validation of our next generation TrialTracker platform. This
major investment for the Group which was a key objective of the
Company's capital raise in 2018, that puts IXICO's technology
platform at the forefront of global image management
capabilities. Partnered with Microsoft, and adopting
Microsoft Azure based technologies, this platform provides a
regulatory compliant, end-to-end, image capture, management, and
analysis platform to support global clinical development
programs. The value built within this extends well beyond
IXICO's current capability to utilise and provides intellectual
property likely to be highly attractive to both clients and other
industry players.
Strategically, we continue to see
traction in our "Precision in Neuroscience" strategy. Recent
partnerships with Imeka Solutions Inc. (as announced on 3 April
2024) and Life Molecular Imaging (as announced on 15 April 2024)
reflect a further broadening of our scientific and operational
offerings. Further, the successful award of grant funding to
develop screening capabilities to automate patient eligibility for
Alzheimer's disease ('AD') trials (and potentially within the
clinical diagnostic market) provide further validation of the value
being built within the Group. Whilst our recent financial
performance has been challenging, the Group represents a
longer-term value opportunity with visibility in short and
medium-term trial revenues contributing towards a wider value
opportunity that will be delivered via the Group's differentiated
technology and scientific capabilities in a broadening and rapidly
growing market.
Financial Review
|
KPI
|
H1-24
|
H1-23
|
Movement
|
FY23
|
|
Revenue
|
£2.5m
|
£3.2m
|
(£0.7m)
|
|
£6.7m
|
|
|
Gross profit
|
£1.0m
|
£1.5m
|
(£0.5m)
|
|
£3.3m
|
|
|
Gross margin
|
40.2%
|
46.1%
|
(5.9%)
|
|
49.1%
|
|
|
EBITDA loss
|
(£1.3m)
|
(£0.6m)
|
(£0.7m)
|
|
(£1.7m)
|
|
|
Operating loss
|
(£1.6m)
|
(£0.9m)
|
(£0.7m)
|
|
(£1.4m)
|
|
|
Loss per share
|
(2.92p)
|
(1.50p)
|
(1.42p)
|
|
(2.44p)
|
|
|
Net assets
|
£10.0m
|
£11.9m
|
(£1.9m)
|
|
£11.4m
|
|
|
Order book1
|
£12.7m
|
£13.3m
|
(£0.6m)
|
|
£14.8m
|
|
|
Cash
|
£2.5m
|
£5.0m
|
(£2.5m)
|
|
£4.0m
|
|
|
Non-current asset
investments
|
£0.3m
|
£0.9m
|
(£0.6m)
|
|
£1.9m
|
|
1 Order book is contracted but not yet recognised revenue
adjusted down to reflect the Company's best estimate of
delivery.
Revenue
· The
Group reports revenue of £2.5 million (H1 2023: £3.2m) representing
a 21% decrease on the prior period.
· This
revenue reduction was caused by a weakening in new contract
bookings across FY23 and the first six months of FY24. This
reflects challenges being seen across the biopharmaceutical
industry (and biotech in particular) created by tight capital
markets and consequential challenges to raising capital. This
has resulted in delays and cancellations of planned new
trials.
· The
Group anticipates a stronger second half of the financial year with
increased bookings expected and consequent development of the order
book. Due to the lead times of booking new contracts to revenue
generation, this is unlikely to drive a significant improvement in
revenues for H2 2024 but will benefit later periods.
Gross profit and margin
· Gross
profit for H1 2024 is £1.0 million (H1 2023: £1.5m) with a gross
margin of 40.2% (H1 2023: 46.1%).
· The
year-on-year absolute change is reflective of reduced revenue in
the period and the margin reflective of the relatively fixed cost
nature of IXICO's costs of delivery.
· The
Group completed a reduction of headcount at the start of FY24 which
has reduced the impact of lower revenues on the gross margin.
This cost reduction will not be fully visible in IXICO's financials
until the H2 2024.
Operating expenses and capital expenditure
· The
Group's operating expenditure for H1 2024 is £2.9 million (H1 2023:
£2.6m)
· Careful management of operating expenditure, including the
reduction of headcount in Q1-24, has been offset by the associated
one-time costs of this headcount reduction, the impact of lower
levels of cost capitalisation coterminous with the availability of
IXICO's next generation TrialTracker platform (resulting in costs
previously being capitalised to the balance sheet now being
expensed through operating expenses) and an impact of cost
inflation compared to the prior year.
· Capitalised R&D expenditure relating to staff costs in the
period totalled £0.2 million (H1 2023: £0.8m).
EBITDA and operating loss
· The
Group has reported an EBITDA loss of £1.3 million (H1 2023: £0.6m)
and operating loss of £1.6m (H1 2023: £0.9m). Both reflect
the reduced revenues across the period whilst the Group's reduction
in employee numbers has been offset by reduced cost capitalisation
and inflation.
|
|
H1-24
£000
|
H1-23
£000
|
|
Loss attributable to equity
holders
|
(1,412)
|
(725)
|
|
Depreciation of tangible
assets
|
140
|
202
|
|
Amortisation of intangible
assets
|
101
|
103
|
|
Interest on lease
liabilities
|
11
|
15
|
|
Interest on cash held at
bank
|
(55)
|
(44)
|
|
Taxation
|
(131)
|
(159)
|
|
EBITDA
|
(1,346)
|
(608)
|
Order book
· The
Group's order book totalled £12.7 million at 31 March 2024 (H1
2023: £13.3m). Across the last twelve months the order book
has decreased by £0.6 million reflecting £6.4 million of new
contract wins, offset by £6.0 million revenues recognised and £1.0
million of contract value reductions reflecting the cancellation or
descope of contracts and other minor adjustments including foreign
exchange losses.
Cash
· The
Group had a cash balance of £2.5 million at 31 March 2024 (H1 2023:
£5.0m). Cash outflow in the six months to 31 March 2024
totalled £1.5 million (H1 2023: £0.7m). This period has
included a process to reduce employee numbers and the level of
capital investment.
· The
Group has continued to closely monitor its cash position in light
of the more challenging trading.
Net
Assets
· The
Group reports net assets at 31 March 2024 of £10.0 million (H1
2023: £11.9m). This reflects the increase of the Group's
non-current asset position to £6.8 million (H1 2023: £6.0m) offset
by a reducing working capital to £3.5 million (H1 2023:
£6.3m).
Consolidated Statement of Comprehensive Income
For the six months ended 31 March 2024 -
unaudited
|
|
|
31-Mar-24
|
31-Mar-23
|
30-Sep-23
|
|
|
6 months
|
6
months
|
12
months
|
|
|
|
|
Unaudited
|
Unaudited
|
Audited
|
|
|
|
|
Notes
|
£000
|
£000
|
£000
|
|
|
Revenue
|
|
2,538
|
3,203
|
6,665
|
|
|
Cost of sales
|
|
(1,518)
|
(1,727)
|
(3,395)
|
|
|
Gross profit
|
|
1,020
|
1,476
|
3,270
|
|
|
Other income
|
|
256
|
175
|
393
|
|
|
Operating expenses
|
|
|
|
|
|
|
Research and development
expenses
|
|
(623)
|
(464)
|
(925)
|
|
|
Sales and marketing
expenses
|
|
(787)
|
(617)
|
(1,321)
|
|
|
General and administrative
expenses
|
|
(1,454)
|
(1,483)
|
(2,854)
|
|
|
Total operating expenses
|
|
(2,864)
|
(2,564)
|
(5,100)
|
|
|
Operating loss
|
|
(1,588)
|
(913)
|
(1,437)
|
|
|
Finance income
|
|
55
|
44
|
105
|
|
|
Finance expense
|
|
(11)
|
(15)
|
(29)
|
|
|
Loss
on ordinary activities before taxation
|
|
(1,544)
|
(884)
|
(1,361)
|
|
|
Taxation
|
|
131
|
159
|
183
|
|
|
Loss
attributable to equity holders for the period
|
|
(1,413)
|
(725)
|
(1,178)
|
|
|
|
|
|
|
|
|
|
Other comprehensive income / (expense):
|
|
|
|
|
|
|
Items that will be reclassified subsequently to profit or
loss
|
|
|
|
|
|
|
Foreign exchange translation
differences
|
|
-
|
(21)
|
(21)
|
|
|
Movement in fair value of cash flow
hedges
|
|
27
|
135
|
111
|
|
|
Cash flow hedges recycled to
revenue
|
|
(3)
|
16
|
(27)
|
|
|
Total other comprehensive income
|
|
23
|
130
|
63
|
|
|
|
|
|
|
|
|
|
Total comprehensive expense attributable
|
|
(1,389)
|
(595)
|
(1,115)
|
|
|
to
equity holders for the period
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss
per share (pence)
|
|
|
|
|
|
|
Basic loss per share
|
3
|
(2.92)
|
(1.50)
|
(2.44)
|
|
|
Diluted loss per share
|
3
|
(2.92)
|
(1.50)
|
(2.44)
|
|
Consolidated Statement of Financial Position
As at 31 March 2024 - unaudited
|
|
|
|
31-Mar-24
|
31-Mar-23
|
30-Sep-23
|
|
|
6 months
|
6
months
|
12
months
|
|
|
|
|
|
Unaudited
|
Unaudited
|
Audited
|
|
|
|
|
|
Notes
|
£000
|
£000
|
£000
|
|
|
Assets
|
|
|
|
|
|
|
|
Non-current assets
|
|
|
|
|
|
|
|
Property, plant and
equipment
|
|
|
418
|
707
|
518
|
|
|
Intangible assets
|
|
|
6,305
|
5,309
|
6,147
|
|
|
Commission assets
|
|
|
28
|
-
|
39
|
|
|
Total non-current assets
|
|
|
6,751
|
6,016
|
6,704
|
|
|
|
|
|
|
|
|
|
|
Current assets
|
|
|
|
|
|
|
|
Trade and other
receivables
|
|
|
1,425
|
1,962
|
1,706
|
|
|
Current tax receivables
|
|
|
862
|
789
|
549
|
|
|
Derivative financial asset
|
|
|
-
|
39
|
-
|
|
|
Cash and cash equivalents
|
|
|
2,532
|
5,021
|
4,031
|
|
|
Total current assets
|
|
|
4,819
|
7,811
|
6,286
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
|
11,570
|
13,827
|
12,990
|
|
|
|
|
|
|
|
|
|
|
Liabilities and equity
|
|
|
|
|
|
|
|
Non-current liabilities
|
|
|
|
|
|
|
|
Trade and other payables
|
|
|
-
|
17
|
2
|
|
|
Lease liabilities
|
|
|
208
|
321
|
275
|
|
|
Total non-current liabilities
|
|
|
208
|
338
|
277
|
|
|
|
|
|
|
|
|
|
|
Current liabilities
|
|
|
|
|
|
|
|
Trade and other payables
|
|
|
1,206
|
1,373
|
1,142
|
|
|
Derivative financial
liability
|
|
|
3
|
-
|
27
|
|
|
Lease liabilities
|
|
|
115
|
186
|
112
|
|
|
Total current liabilities
|
|
|
1,324
|
1,559
|
1,281
|
|
|
Total liabilities
|
|
|
1,532
|
1,897
|
1,558
|
|
|
|
|
|
|
|
|
|
|
Equity
|
|
|
|
|
|
|
|
Ordinary shares
|
|
4
|
484
|
484
|
484
|
|
|
Share premium
|
|
4
|
84,802
|
84,802
|
84,802
|
|
|
Merger relief reserve
|
|
|
1,480
|
1,480
|
1,480
|
|
|
Reverse acquisition
reserve
|
|
|
(75,308)
|
(75,308)
|
(75,308)
|
|
|
Cash flow hedge reserve
|
|
|
(3)
|
40
|
(27)
|
|
|
Foreign exchange translation
reserve
|
|
|
(95)
|
(95)
|
(95)
|
|
|
Capital redemption reserve
|
|
|
7,456
|
7,456
|
7,456
|
|
|
Accumulated losses
|
|
|
(8,778)
|
(6,929)
|
(7,360)
|
|
|
Total equity
|
|
|
10,038
|
11,930
|
11,432
|
|
|
|
|
|
|
|
|
|
|
Total liabilities and equity
|
|
|
11,570
|
13,827
|
12,990
|
|
Consolidated Statement of Cashflows
For the six months ended 31 March 2024 -
unaudited
|
|
|
31-Mar-24
|
31-Mar-23
|
30-Sep-23
|
|
|
6 months
|
6
months
|
12
months
|
|
|
|
|
Unaudited
|
Unaudited
|
Audited
|
|
|
|
|
|
£000
|
£000
|
£000
|
|
|
Cash
flows from operating activities
|
|
|
|
|
|
|
Loss for the period
|
|
(1,413)
|
(725)
|
(1,178)
|
|
|
Finance income
|
|
(55)
|
(44)
|
(105)
|
|
|
Finance expense
|
|
11
|
15
|
29
|
|
|
Taxation
|
|
(131)
|
(159)
|
(183)
|
|
|
Depreciation of fixed
assets
|
|
124
|
202
|
400
|
|
|
Amortisation of
intangibles
|
|
117
|
103
|
225
|
|
|
Research and development expenditure
credit
|
|
(163)
|
(136)
|
(355)
|
|
|
Impairment of intangible
assets
|
|
-
|
-
|
14
|
|
|
Share option charge
|
|
(5)
|
30
|
52
|
|
|
|
|
(1,515)
|
(714)
|
(1,101)
|
|
|
Decrease in trade and other
receivables
|
|
129
|
1,047
|
1,290
|
|
|
Increase/(decrease) in trade and
other payables
|
|
216
|
(145)
|
(327)
|
|
|
Cash
(used in)/generated from operations
|
|
(1,170)
|
188
|
(138)
|
|
|
Taxation received
|
|
-
|
-
|
456
|
|
|
Taxation paid
|
|
(1)
|
(15)
|
(16)
|
|
|
Net
cash (used in)/generated from operating
activities
|
|
(1,171)
|
173
|
302
|
|
|
Purchase of property, plant and
equipment
|
|
(24)
|
(89)
|
(100)
|
|
|
Purchase of intangible assets
including staff costs capitalised
|
|
(291)
|
(828)
|
(1,863)
|
|
|
Finance income
|
|
63
|
39
|
99
|
|
|
Net
cash used in investing activities
|
|
(252)
|
(878)
|
(1,864)
|
|
|
Issue of shares
|
|
-
|
2
|
2
|
|
|
Repayment of lease
liabilities
|
|
(76)
|
(25)
|
(158)
|
|
|
Net
cash used in financing activities
|
|
(76)
|
(23)
|
(156)
|
|
|
Movements in cash and cash equivalents in the
period
|
|
(1,499)
|
(728)
|
(1,718)
|
|
|
Cash and cash equivalents at start of
period
|
|
4,031
|
5,769
|
5,769
|
|
|
Effect of exchange rate fluctuations
on cash held
|
|
-
|
(20)
|
(20)
|
|
|
Cash
and cash equivalents at end of period
|
|
2,532
|
5,021
|
4,031
|
|
Notes to the financial
statements
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, together referred to throughout as 'the Group'.
The Group is an established provider of technology-enabled imaging
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 condensed consolidated interim
financial statements were approved by the Board of Directors for
issue on 20 May 2024. 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 for the six months ended 31 March
2024, together with the comparative information for the six months
ended 31 March 2023 are unaudited.
The statutory accounts of the
Company for the year ended 30 September 2023 were approved by the
Board of Directors on 4 December 2023 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.
The condensed consolidated interim
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 condensed consolidated interim
financial statements are presented in Great British Pounds ('£' or
'GBP') and are rounded to the nearest thousand unless otherwise
stated. This is the functional currency of the Group, and is the
currency of the primary economic environment in which it operates.
Foreign currency transactions are accounted for in accordance with
the policies set out below.
c. Basis of
consolidation
The condensed consolidated interim
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. 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 condensed consolidated interim 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
condensed consolidated interim 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.
In assessing going concern,
management prepare forecasts which are updated monthly that
consider different scenarios throughout the course of the financial
year, as well as ad-hoc forecasts that extend into future years.
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. Significant accounting
policies, judgements, and estimation uncertainty
The unaudited condensed consolidated
interim financial statements have been prepared using the
accounting policies as described in the 30 September 2023 audited
year end Annual Report and have been consistently
applied.
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 significant
management judgements in applying the accounting policies of the
Group that have the most significant effect on the consolidated
financial statements.
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 assesses 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 period ended 31 March
2024, research and development expenses totalled £898,000 (H1 2023:
£1,289,000). Of this amount, £275,000 (H1 2023: £825,000) was
capitalised as an intangible asset, £230,000 (H1 2023: £571,000)
relating to employee costs and £45,000 (H1 2023: £254,000) relating
to external costs. The balance of expenditure being £623,000 (H1
2023: £464,000) 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.
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 period.
Determination of transaction prices
in revenue recognition
Client contracts include an agreed
work order so the transaction price for a contract is allocated
against each distinct performance obligations for each service,
based on their relative stand-alone selling prices. For legacy
contracts prior to the adoption of IFRS 15, management were
required to estimate the standalone price allocated to each
distinct service that were previously grouped in a single price.
For new contracts, the fair value of individual components is based
on actual amounts charged by the Group on a stand-alone basis.
Management have determined that for items recognised on a
straight-line basis, including project, site and data management,
the demands of this on the company are spread evenly over the life
of the revenue stream. This was determined through an understanding
of the work required to deliver the various revenue streams and the
obligations within the contract needing to be met.
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
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.
3.
Earnings per
share
The calculation of basic and diluted
earnings per share ('EPS') of the Group is based on the following
data:
|
|
31 Mar 24
6 months
|
31 Mar
23
6
months
|
30 Sep
23
12
months
|
|
|
Unaudited
|
Unaudited
|
Audited
|
|
|
|
|
|
|
Earnings
|
|
|
|
|
Earnings for the purposes of basic
and diluted EPS, being net profit attributable to the owners of the
Company (£000)
|
(1,413)
|
(725)
|
(1,178)
|
|
|
|
|
|
Number of shares
|
|
|
|
|
Weighted average number of shares for
the purposes of basic EPS
|
48,351,373
|
48,267,395
|
48,309,181
|
|
Effect of potentially dilutive
ordinary shares:
|
|
|
|
|
- Weighted average number
of share options
|
-
|
-
|
-
|
|
|
|
|
|
|
Weighted average number of shares for
the purposes of diluted EPS
|
48,351,373
|
48,267,395
|
48,309,181
|
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 period. 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 period. For the 6 months to 31 March 2024,
there was no dilutive effect as the share options in issue would
have decreased the loss per share.
The basic and diluted earnings per
share for the Group and Company is:
|
|
31 Mar 24
6 months
|
31 Mar
23
6
months
|
30 Sep
23
12
months
|
|
|
Unaudited
|
Unaudited
|
Audited
|
|
Basic earnings per share
|
(2.92p)
|
(1.50p)
|
(2.44p)
|
|
Diluted earnings per share
|
(2.92p)
|
(1.50p)
|
(2.44p)
|
4. Issued capital and
reserves
Ordinary shares and share premium
The Company has one class of
ordinary shares. The share capital issued has a nominal value of
£0.01 and all carry the right to one vote at shareholders' meetings
and are eligible to receive dividends. Share premium is recognised
when the amount paid for a share is in excess of the nominal
value.
The Group and Company's opening and
closing share capital and share premium reserves are:
|
|
Group and
Company
|
|
|
Ordinary
|
Share
|
Share
|
|
|
shares
|
capital
|
premium
|
|
|
Number
|
£000
|
£000
|
|
Authorised, issued and fully paid
|
|
|
|
|
At 30 September 2023
|
48,351,373
|
484
|
84,802
|
|
Share options exercised
|
-
|
-
|
-
|
|
At
31 March 2024
|
48,351,373
|
484
|
84,802
|
5. 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 (H1 2023: 2). Both structures
relate to a single scheme outlined in the EMI Share Option Plan
2014.
The scheme is open, by invitation,
to both Executive Directors and employees. Participants are granted
share options in the Company which contain vesting conditions.
These are subject to the achievement of individual employee and
Group performance criteria as determined by the Board. The vesting
period varies by award and the conditions approved by the Board.
Options are usually forfeited if the employee leaves the Group
before the options vest.
Total share options outstanding have
a range of exercise prices from £0.01 to £0.70 per option and the
weighted average contractual life is 6.1 years (H1 2023: 7.2
years). The total charge for the period relating to employee
share-based payment plans for continuing operations was a reversal
of £5,000 (H1 2023: £30,000 charge).
Details of the share options under
the scheme outstanding during the period are as follows:
|
|
As at 31 March
2024
|
As at 30
September 2023
|
|
|
Number
|
Weighted
average exercise price
|
Number
|
Weighted
average exercise price
|
|
Outstanding at start of the
period
|
3,529,681
|
£0.15
|
4,490,931
|
£0.18
|
|
Granted
|
-
|
-
|
-
|
-
|
|
Exercised
|
-
|
-
|
(200,000)
|
£0.01
|
|
Lapsed
|
(200,000)
|
£0.17
|
(761,250)
|
£0.29
|
|
Outstanding at end of the period
|
3,329,681
|
£0.15
|
3,529,681
|
£0.15
|
|
Exercisable at end of the period
|
2,313,014
|
£0.07
|
1,949,680
|
£0.08
|