Financial Results for the year ended 30 Sept 2021

IXICO plc

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

Financial Results for the year ended 30 September 2021

Notice of AGM

>30% profitability growth despite a challenging business year

Strong cash position and enhanced balance sheet

IXICO plc (AIM: IXI), the AI data analytics company delivering insights in neuroscience, announces its results for the year ended 30 September 2021, delivering a year of significant growth in profitability despite notable headwinds to trading.

Highlights

Financial

· EBITDA* of £1.7 million; 34% increase on prior year (2020: £1.3 million) reflecting solid revenue performance in a challenging trading environment, careful management of discretionary costs and positive one-time impacts;

· £9.2 million of revenues (2020: £9.5 million); despite full year of COVID-19 and revenue being adversely impacted by largest client's decision to descope its Huntington's disease (HD) Phase III trials;

· Gross margin of 65.6% (2020: 66.6%) reflects sustained strong margin achievement.

· Operating profit of £1.2 million (2020: £0.9 million);

· Profit per share of 3.30 pence (2020: 2.02 pence);

· Closing cash of £6.7 million (2020: £7.9 million), incorporating long-term technology investments of £2.2 million (2020: £1.1 million);

· Contracted order book of £18.8 million (2020: £21.7 million) net of £7.1 million descope of Phase III HD trials in the year; and

· Net assets increase to £11.2 million (2020: £9.1 million) reflecting strengthened working capital and capitalised investments.

*Earnings before interest, tax, depreciation, and amortisation

Commercial and Operational

· 16 new projects won across 14 clients, 9 of whom are new to IXICO;

· Equates to £13.8 million of additional multi-year contracts across all phases of clinical development thereby substantially replenishing the contracted order book;

· Further strengthened our partnership with the Global Alzheimer's Platform ('GAP') in their Bio-Hermes program. Sponsors of the study include, Lilly, AbbVie, Merck, Biogen, Gates Ventures and the Alzheimer's Drug Discovery Foundation;

· Partnership with Microsoft to support significant investment in our Azure cloud-based next generation TrialTracker platform to provide scalable cutting-edge technology underpinning IXICO's proprietary analytics offering; and

· Appointment of Romina Oxborough as SVP Operations in September 2021, bringing over 20 years of senior clinical trials experience to the Group, further strengthening our focus on client satisfaction and operational scale up.

Giulio Cerroni, CEO of IXICO, said: "2021 has been another significant year in IXICO's development as a premium imaging technology services partner to the global biopharmaceutical industry. I look back with immense pride on how we have continued to progress our societal purpose of supporting our clients' efforts to develop new therapies across a widening range of neurodegenerative conditions. In delivering strong revenues at continued high gross profit margins and a record level of EBITDA profitability, we have once again demonstrated the resilience and value generating potential of our business model.

The FDA's approval of Aducanumab highlights the importance, and potential commercial value, of being able to objectively measure small changes in brain regions when developing drugs to address complex neurological conditions. IXICO is perfectly placed to support this requirement with our well established, proprietary imaging data analytics capabilities. This, alongside our strategy to diversify and build our client base and continue to invest in our market-leading platform and analysis technologies, provides us with significant opportunities for long-term growth."

Notice of AGM

IXICO also announces that its 2022 Annual General Meeting ("AGM") will be held at CCT Venues Smithfield, Two East Poultry Avenue, Smithfield, London EC1A 9PT on 20 January 2022 at 10.30am.

The full Annual Report and Accounts, along with Notice of AGM, will be posted to shareholders on 17 December 2021 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:

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 

Chief Executive's Statement

Investing for growth in an attractive healthcare market-supported by long-term macro growth trends

2021 has been another significant year in IXICO's development as a premium imaging technology services partner to the global biopharmaceutical industry and has seen the Group diversify into a broader range of neurological disorders identified as having a high unmet clinical need. With medical imaging in clinical trials growing in use, we continue to progress our societal purpose to advance human health in support of the development of new therapies by the global pharmaceutical industry.

A breakthrough treatment for the Alzheimer's community

The growing need by the global pharmaceutical industry for new imaging biomarkers and endpoints to inform and support clinical trial data for regulatory approval of new treatments, means we are confident about the long-term growth opportunity for IXICO. For example, we anticipate increased investments in Alzheimer's disease ('AD') drug development due to the FDA granting approval on 7 June 2021 for Biogen's ADUHELM™ the first-ever therapy to address a defining pathology of AD-amyloid beta plaque. In addition to this milestone announcement by Biogen, several other major pharmaceutical companies also received FDA Breakthrough Therapy Designation ('BTD') in AD during 2021 including Eli Lilly for donanemab, EISAI for lecanemab and Roche for gantenerumab. We anticipate that this will result in an additional impetus for new AD trials in the coming years and so further expand the market opportunity for IXICO's specialist neuroimaging services.

A strong financial performance despite challenging conditions

In last year's statement, I indicated that despite the anticipated ongoing COVID-19 business environment, we looked to 2021 with cautious optimism; however, we had not foreseen the decision of the Group's largest client to cease dosing in Phase III and pause dosing in the open label extension trials in Huntington's disease ('HD') (as announced in March 2021). I am pleased however to note that the resultant descope to our order book (£7.1 million) has been more than replaced by the new and expanded contracts signed through 2021 (£13.8 million), consisting of 14 biopharmaceutical companies, of which 9 are new clients to IXICO.

In addition to diversifying the Group's revenue base, most of these new contracts are at the early-stage of the development programme; setting the foundation for IXICO to progress with the clinical assets into larger and more profitable late-stage trials should the trial Investigational New Drug ('IND') advance along the development cycle in future years.

Across the year the Group delivered £9.2 million of revenues (2020: £9.5 million), a 25% five-year revenue compound annual growth rate ('CAGR'), and continued its high gross margin performance of 66%. The Group also reported a fifth consecutive year of improved earnings before interest, tax, depreciation, and amortisation ('EBITDA') of £1.7 million.

Continued our development of AI algorithms and partnerships

We continue to make significant progress in expanding our portfolio of proprietary Artificial Intelligence ('AI') algorithms, exemplified by our scientific collaboration with Takeda, which evidenced how IXICO's AI approach can increase the number of usable datasets as well as the sensitivity to measure treatment effects. The Group has established an enviable book of alliances and collaborative agreements, including the Global Alzheimer's Platform Foundation® ('GAP') partnership, in which IXICO is applying its expertise to collect and analyse PET brain scans in GAP's 1,000 subject Bio-Hermes trial. Our strategic partnership with Microsoft to develop our next generation Microsoft Azure cloud-based imaging data platform and AI data analytics platform is also a collaboration of note in support of our investments to build further scale and efficiencies in our business.

Investing for our future in technology and people

Our consistent strong financial performance in recent years has provided profits that are being reinvested to support future growth. In addition to expanding our employee numbers to meet current and future anticipated demand, we have also made technology asset investments in 2021 in excess of £2.0 million. Most notable are those in our next generation TrialTracker data management platform, AI algorithm development platform and IT infrastructure. With £6.7 million of cash at year end, and continuing to be debt free, we have further strengthened the balance sheet to support continued investment to build further scale and resilience.

Our delivery performance in 2021 is even more commendable when one considers that our services have continued to be delivered with all functions operating remotely and grown staff numbers by 22% to an average of 95 across the year. In addition, I am also delighted to have strengthened the management team with the appointment of Romina Oxborough in September 2021 as our SVP, Operations. Romina has over twenty years of experience in the life sciences and pharmaceutical sector and has held senior leadership positions focused on supporting clinical trials and patients' access to medicines. In her role, she will lead and build on current initiatives to continuously enhance quality and operational efficiencies in the delivery of our client projects.

In summary, we recognise that in the clinical trials market there is an intrinsic potential for clients to prematurely terminate clinical trials due to safety or efficacy issues associated with the IND. However, with an ageing population and the growing burden on the global healthcare system of diseases such as AD, the need for new treatments in a wide range of neurological diseases has never been more pressing. Our robust and strengthened balance sheet allows us to continue to invest in our technology and people to enable us to become the partner of choice for current and prospective clients to realise the medium and long-term opportunity for the scale up of our business.

1 https://investors.biogen.com/news-releases/news-release-details/letter-biogens-ceo-aduhelm

Chairman's Statement

Resilience whilst investing in a platform for growth

Overview

IXICO is an Artificial Intelligence data analytics company delivering intelligent insights in neuroscience.

Our purpose is to advance medicine and human health in neuroscience by converting raw imaging data, captured as part of the clinical trial process, into clinically meaningful information. Specifically, this is the ability to measure accurately changes (which can be very small) in biomarkers relevant to diseases of the brain. By doing so, our data analytics services provide objective insights into the efficacy and safety of the drugs being trialled and so deliver greater efficiency and accuracy to the clinical development process.

These services are underpinned by our Trial Tracker end-to-end technology platform. This supports data capture, data management, data analysis and data reporting on behalf of the clinical trial in a seamless, centralised, regulatory compliant system.

A year of consolidation

Following four years of significant growth, and a rapid move from annual losses to double digit profitability margins, the past year has been one of consolidation for IXICO. The Group has weathered dual headwinds of COVID-19, which continues to disrupt and delay the initiation of neurological clinical trials, and the impact of the descoping in March 2021 of our largest client contract, a Phase III and an open-label extension trial in Huntington's disease.

Despite these challenges, led by our excellent senior executive team, IXICO has delivered revenues of £9.2 million, just 4% less than the prior year while achieving EBITDA profitability at £1.7 million, a 34% increase equating to an EBITDA margin increase of 4%. Whilst this particularly strong EBITDA is flattered by several one-time items, it does reflect the resilience the leadership team has built into the Group as it grows. With the market opportunity continuing to develop, this ability to weather the challenges of COVID-19 and such a significant client trial descope, bodes extremely well for the Group's prospects.

As we move towards the commencement of those neurological trials delayed by the pandemic, the importance of addressing long-discussed challenges of diminishing returns and escalating costs within drug development are an acute topic of focus for the industry. All opportunities to increase clinical trial efficiency, operate services remotely, increase the objectivity of measures and improve stratification of patients (particularly in neurological disease areas) are being pursued. Sitting at the apex of this requirement within imaging, IXICO offers objective measures, using a remote-based technology driven model, increasing insights into both the trial patient population and the efficacy and safety of the drug candidates in a growing area of unmet clinical need.

Governance and people

During the year, the Group has leveraged the benefits of our ability to work remotely alongside the cohesion of a single office. We have renegotiated and extended our lease and reconfigured our office space to support a hybrid, activity-based-working model. This, alongside regularly communicated investments in technology, means the Group is positioned to work even more efficiently on behalf of our clients, while improving the work-life balance of our employees. 

As in most successful, high-growth businesses, IXICO's future depends on our people and the Board thanks all our employees for their hard work, dedication and flexibility during unavoidably challenging times. In the past 12 months we have continued to invest in our team, focussing on our medium and long-term growth opportunities and on the conviction that investments made now will lead to greater returns for our shareholders and other stakeholders. We have made these investments in our workforce while continuing to promote our values - Aspiration, Ability, Agility and Accountability - to augment our positive, motivated, and effective culture which aligns our team with our purpose.

Overseeing these decisions and considering the appropriate balance of investment in a challenging period, the Board has been closely involved, meeting formally eight times during the year with several additional ad-hoc meetings to discuss specific topics. As the Group continues to scale, the Board believes it is most important to develop the technology and infrastructure to drive long-term sustained growth, rather than focus on shorter-term growth targets. As such, we recognise there will be periods of rapid revenue growth and periods of revenue consolidation as the Group scales, each reflecting the particular successes or failures of neurological clinical trial programmes within the Group's orderbook, a characteristic inherent to the clinical trials market.

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 our culture.

At the 2022 Annual General Meeting ('AGM'), in accordance with the Company's Articles of Association, Grant Nash and I will stand for re-election, supported by the Board of Directors' recommendation. As part of a planned Board succession process, John Bradshaw has announced his intention to retire from the Board during 2022, having served nearly 9 years as a Director of the Company. A recruitment process is well progressed in identifying a suitable successor to John, and I would like to take this opportunity to thank John for the expertise and wisdom he has invested in IXICO, and, in particular, his robust and diligent chairmanship of the Audit Committee.

Shareholders

The Group has an impressive list of leading institutions who have joined our shareholder register over the last few years, and we would like to thank all our shareholders for their continued support and enthusiasm. During the year, this list was augmented by CIP Merchant Capital and City Asset Management, both of which now hold significant shareholdings in the Group.

Outlook

The Board remains focussed on the Group's opportunity to grow and is delighted with the progress of our various investment initiatives which position us to capitalise on this opportunity. IXICO's analytical offering has been strengthened in the year and will be enhanced further during the next 12 months as our new algorithm platform is launched. Alongside this, the launch of our next generation, Microsoft Azure cloud-based data capture and analysis platform remains on track for the second half of financial year 2022.

As the Board has communicated over the past few months, companies servicing the clinical trials market are inherently exposed to the risk of early trial termination. The trial halt announced in October 2021 does create short-term challenges that need careful management as we enhance our ability to generate long-term growth. In the current year, we continue to carefully manage these challenges while pursuing our focussed investment programme to deliver scale, efficiency and service offering in a marketplace that continues to expand. We expect these investments, alongside a better mix of revenues from a more balanced order book of early phase trials, will lead to a contraction in the Group's EBITDA in the coming year, but should provide the basis for accelerated, sustained and profitable growth in the medium and longer terms.

Financial review

Preserving profitable growth in a challenging year for neurological clinical trial delivery.

In 2021, the Group consolidated the strong financial performance achieved across recent years despite notable short-term challenges. It did so whilst significantly progressing its investments for delivering medium and long-term growth.

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

Revenue

Revenue for the year of £9.2 million (2020: £9.5 million) represents a small year-on-year contraction of 4%. This contraction was driven by significant client trial descopes impacting the Group's order book and service delivery demands and by the continued drag on start-up times of new clinical trials created by COVID-19. These impacts, plus the early termination of a clinical trial shortly after the financial year end (as announced on 20 October 2021) are expected to continue to dampen revenue performance over the next 12 months.

Gross profit

The Group reports gross profit of £6.0 million for the year (2020: £6.3 million). This equates to a gross margin of 66% (2020: 67%). This strong gross profit margin reflects a favourable revenue mix, linked to the proportion of image analysis associated with Phase III trial service revenues. Looking forward, the Phase III descopes reported in the year, and the increasing proportion of early phase trials won during the year (see Order book section below) mean that gross margins will contract in the short term. Looking to the medium and longer terms, as the Group secures additional trials, the operational leverage opportunity within the Group's cost structure means the potential for sustained mid-to-high 60% gross margins remains strong.

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

The Group materially increased its EBITDA profit in the year to £1.7 million (2020: £1.3 million). This was achieved despite the small year-on-year revenue contraction and reflects:

· careful management of costs following the Phase III descopes earlier in the year;

· the impact of capitalising costs in the Group's next generation Trial Tracker platform (thereby reflecting an element of cost that would have been reported in the Consolidated Statement of Comprehensive Income onto the Consolidated Statement of Financial Position); and

· a small number of one-time benefits that have supported profitability in the year.

Looking forward, we expect to see a reduction in EBITDA performance in the next financial year to reflect the reorientation of the order book to earlier phase trials, the loss of the one-time beneficial impacts seen in 2021 and the continued operational investment program pursued by the Group to deliver on medium and longer-term growth opportunities.

Operating profit

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

· research and development expenses of £1.2 million (2020: £1.3 million) included the development of new algorithms to support image analysis in new and existing therapeutic indications. In addition, the Group capitalised £1.0 million of internal development expenditure primarily in respect of its next generation Trial Tracker platform (2020: £0.2 million); 

· sales and marketing expenses of £1.1 million (2020: £1.6 million) reflecting reduced travel and conference expenditure due to COVID-19 as well as a temporary contraction in the size of the sales team; and 

· general and administrative expenses of £2.9 million (2020: £3.2 million) reflecting careful cost management within the business.

The reported operating profit of £1.2 million (2020: £0.9 million) equated to an operating profit margin of 13% (2020: 9%).

Order book

The Group continues to benefit from a healthy contracted order book. At 30 September 2021 this totalled £18.8 million (2020: £21.7 million), which takes account of £9.2 million of revenues delivered during the financial year, £13.8 million of new and expanded multi-year contracts secured during the year, £7.4 million of trial descopes due to client trial failures, and £0.1 million negative foreign exchange movement in the year.

The new trials won were across 14 different clients, 9 of whom are new to IXICO. This broadening and diversifying of the Group's order book is a key plank in the Group's strategy as the Group seeks to secure additional scale and resilience. After the year end, the Group was notified of, and announced, an indefinite halt to a client's clinical trial. This accounted for £3.3 million of the order book as at 30 September 2021, meaning that shortly after the year end the order book value was reduced to £15.5 million.

Cash

The Group reported operating cash inflows of £0.3 million before tax receipts in the year (2020: £1.5 million) reflecting the Group's strengthened profitability partially offset by the timing of trade and other receivables (which increased by £1.1 million) and trade and other payables (which decreased by £0.4 million) in the year. Whilst trade receivables increased in the year the Group had no overdue receivables at the year end and experienced no bad debts during the year.

The Group had a closing cash balance at 30 September 2021 of £6.7 million (2020: £7.9 million) with the reduction in cash reflecting £2.2 million of focussed investment in science and technology assets designed to support future scalability and improved IT infrastructure of the Group. These investments were partially offset by £0.6 million of operating cash and taxation inflows and £0.3 million of cash received from the exercising of employee share options in the year. This strong, debt-free, cash balance means the Group is well positioned to continue to invest for growth.

Consideration of the Group as a going concern is discussed in the Directors' Report in the full annual report.

Non-current asset investments

The Group capitalised £2.6 million of non-current assets in the year to 30 September 2021 (2020: £1.6 million). This notable increase in non-current assets was primarily driven by the investment of £1.8 million in its next generation TrialTracker platform (2020: £0.3 million).

The next generation TrialTracker platform provides a completely new iteration of the Group's TrialTracker system. This TrialTracker version will further enhance the Group's capabilities to remotely collect, and centrally analyse, brain scans (or other image types) in support of clinical trials. The platform is being developed on Microsoft Azure's cloud infrastructure supporting further improvements in system resilience, security, scalability, and efficiency.

In addition, the Group extended its office lease, at a materially reduced rental fee, for a period of 5.5 years. This lease, which was due to end in March 2022, will now run until September 2026 and constitutes an addition to right of use assets of £0.4 million.

Net assets

The Group's net asset position increased by £2.1 million to £11.2 million across the year (2020: £9.1 million). This is reflective of the Group's ability to turn profitability into operating cash, as well as the Group's commitment to build its technology assets to meet long-term future growth demands.

Profit per share

The Group reports a profit per share of 3.30p (2020: 2.02p) reflecting the continued 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 continue to invest to secure and strengthen its position in an expanding market.

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 management on a quarterly basis. The Board receives a summary of the risk and control matrix at least every six months. The matrix 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. This is not an exhaustive list of risks, and is intended to provide visibility of those risks the Board considers as potentially the most material based on the information it currently has available to it.

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, Operational, Financial, and Legal/Compliance & Reputational.

Strategic risks

Operational risks

Financial risks

Legal/Compliance & Reputational risks

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/).

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 2021: 

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 a minimum of twice per financial year.

The Group auditor 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 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 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 2021 and 30 September 2020

Consolidated Statement of Financial Position

as at 30 September 2021 and 30 September 2020

Company Statement of Financial Position

as at 30 September 2021 and 30 September 2020

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 £966,000 (2020: £1,040,000).

Consolidated Statement of Changes in Equity

for the years ended 30 September 2021 and 30 September 2020

Company Statement of Changes in Equity

for the years ended 30 September 2021 and 30 September 2020

Consolidated and Company Statements of Cash Flows

for the years ended 30 September 2021 and 30 September 2020

Notes to the financial statements

For the years ended 30 September 2021 and 30 September 2020

The financial information set out in these results does not constitute the Group's consolidated statutory accounts for the years ended 30 September 2021 or 2020. Statutory accounts for the year ended 30 September 2020 have been filed with the Registrar of Companies. The statutory accounts for the year ended 30 September 2021 will be delivered to the Registrar in due course. Those accounts have been reported on by the Independent Auditors; their report for the accounts for both financial years was (i) unqualfied; (ii) did not include a reference of any matters to which the auditor drew attention by way of emphasis without qualifying their report; and (iii) did not contain a statement under 498 (2) or 498 (3) of the Companies act 2006.

Copies of the Annual Report 2021 will be posted to shareholders on or about 17 December 2021.

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 15, 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 participants 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 international accounting standards in conformity with the requirement of the Companies Act 2006.

The consolidated financial statements comprise a Statement of Comprehensive Income, a Statement of Financial Position, a Statement of Changes in Equity, a Statement of Cash Flows, and accompanying notes. These financial statements have been prepared under the historical cost convention modified by the revaluation of certain financial instruments.

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

c. Basis of consolidation

The consolidated financial statements incorporate the accounts of the Company and its subsidiary companies adjusted to eliminate intra-Group balances and any unrealised gains and losses or income and expenses arising from intra-Group transactions. The Company's subsidiaries are detailed in note 15. 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

The ongoing COVID-19 pandemic continues to cause uncertainty across global markets for the short and medium term. During the year, the Group continued to react quickly to the changing operational landscape caused by the pandemic, including a continuous assessment of any financial implications through the preparation of revised forecasts. The Group also continued to successfully operate a fully remote model for employees through the year. Whilst there was a notable contract loss in the year, and a further contract loss shortly after the period end, there was a significant increase in new trials and contract wins during the year. These new contract wins significantly diversify the client base of the Group and reduce the reliance it has on its largest client.

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 participants to attend imaging centres (due to the ongoing COVID-19 pandemic) 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 2021

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. The standards and amendments that are now effective and have been adopted 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)

There was no impact on the Group's financial statements as a result of adopting these standards.

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:

• Onerous Contracts - Cost of Fulfilling a Contract (Amendments to IAS 37)

• Classification of liabilities as current or non-current (Amendments to IAS 1)

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 has not been assessed.

3. Significant accounting policies

3.1 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.

All services provided to clients are agreed at the inception of a project through contracts. A critical part of the contract is a detailed schedule of work that provides the list of services to be provided by the Group. Under the requirements of IFRS 15 - Revenue from Contracts with Customers, the Group is required to identify individual and distinct performance obligations within each contract. This represents a judgement, and the Group has considered whether each individual service provided meets these requirements in its own right and in the context of the contract, by assessing in particular the level of interrelationship between each type of service and the nature of the contract entered in to with clients. The Group has identified performance obligations within each of the revenue streams as set out below. The transaction price associated to each performance obligation is allocated based on their relative stand-alone selling price. Revenue is recognised once the performance obligation is met for each distinct service.

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. Most of the Group's revenue is recognised at a point in time; the Group recognises this revenue once control is passed to the client, or once the service has been delivered on behalf of the client.

The Group's most significant streams of service revenue are outlined below and have the respective recognition criteria:

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.

3.2 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. 

3.3 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 14.

3.4 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 22 of the consolidated financial statements.

3.5 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.

3.6 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 are shown separately.

3.7 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:

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.

3.8 Intangible assets

Acquired intangibles

Intangible assets that are acquired through business combinations are recognised as intangible assets if they are 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 their 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:

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 3.3.

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:

3.9 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. 

3.10 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 15.

3.11 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 any expected credit losses. The Group makes use of a simplified approach in accounting for trade and other receivables as well as contract assets and records the loss allowance as lifetime expected credit losses. These are the expected shortfalls in contractual cash flows, considering the potential for default at any point during the life of the financial instrument. In calculating, the Group uses its historical experience, external indicators and forward-looking information to calculate the expected credit losses.

The Group assess impairment of trade receivables on an individual basis as they possess individual credit risk characteristics based on each client. Refer to note 16 for further information on aging of trade receivables and an analysis of any expected credit losses.

3.12 Taxation

Current taxCurrent 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 creditsThe 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 3.3.

Deferred taxationDeferred 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.

3.13 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.

3.14 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.

3.15 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.

3.16 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. 

3.17 Equity instruments

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

3.18 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 23.

4. 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.

Determination of acting as agent or principal

The scope of the project or contract terms are reviewed to determine whether the Group is acting as principal or agent. This determination depends on the facts and circumstances of each individual project or contract and requires judgement, which are made in accordance with the applicable standards. The primary indicator used to determine whether the Group is acting as a principal is whether control of the good or service is gained prior to the good or service transferring to the client. If control is gained, revenue is recognised on a gross basis. If no control is achieved, then revenue is recognised on a net basis. During the year, the Group entered into a contract with a client to arrange the delivery of products from a third party to various client trial sites. The Group determined this was an agency relationship. If this judgement was incorrect and the Group was acting as principal, it would result in a material increase in revenue and cost of sales recognised in the year and a decrease in profit margins achieved.

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. More detail is included in note 3.3 as to the specific considerations given to each project when determining whether to capitalise internally developed software. 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 2021, total research and development expenses totalled £2,270,000 (2020: £1,553,000). Of this amount, £1,030,000 (2020: £244,000) was capitalised as an intangible asset. The balance of expenditure being £1,240,000 (2020: £1,309,000) 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 20 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.

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. Details of the estimations used in determining the fair value of the options in issue are detailed in note 22.

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.

5. Revenue

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

All material revenue streams derived by the Group relate to the delivery of services in support of clinical trials. As such, all revenue is deemed to belong to one stream, being service revenue.

Revenue derived from services provided over time do not constitute a material portion of revenue and therefore disclosure distinguishing between revenue recognised at a point in time versus over time is not made.

For the year ended 30 September 2021, revenue includes £438,000 (2020: £227,000) held in contract liabilities within trade and other payables at the beginning of the period. This amount includes the satisfaction of performance obligations relating to legacy contracts whereby TrialTracker deployments and access are combined in to a single fee, with the access fee being recognised over the duration of the project. This also includes the completion of performance obligations for advance payments held at the end of the prior year. Advance payments are charged to clients to de-risk start-up activities and are recognised at a point in time once an activities performance obligation is met.

6. 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 primarily 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 management 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 2021, the Group had two clients (2020: one client) that exceeded 10% of total revenue. In 2021 the individual percentage revenue associated with these clients was 55% (£5,012,000) and 14% (£1,248,000). In 2020, the individual percentage revenue associated with the largest client was 65% (£6,232,000).

Geographical information

The Group's revenue can be categorised by type of revenue and by country, based on the location of the contracting client. Sometimes clients of the Group, which include global pharmaceutical companies with offices in multiple locations across the world, request the Group to contract directly with their regional offices in the United Kingdom or European locations. In such circumstances the associated revenues are reported as being based in the contracting location even though much of the operational execution of the contract will include entities of the client based elsewhere in the world.

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

7. 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.

8. Auditor's remuneration

9. Employees and Directors

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

The Group uses a different metric in the measurement of key performance indicators, and includes both the number of employees and contractors, adjusted for the number of hours worked during the year (to account for part-time employees). This is known as average full-time equivalents, or FTE's, and for the year ended 30 September 2021, the average number of FTE's was 95 (2020: 78).

The aggregate remuneration of employees in the Group was:

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 2021 in respect of pension costs were £42,000 (2020: £31,000).

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 24 under related party transactions.

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

10. Operating profit

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

There is a further amortisation charge of £118,000 (2020: £56,000) recognised in cost of sales for those items directly related to project activities. The total amortisation charge for the year is £144,000 (2020: £82,000).

11. Taxation

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

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

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:

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:

12. Earnings per share

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

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:

13. Property, plant and equipment

Group

The only right-of-use asset is held within the office building category. At 30 September 2021, the carrying amount of the right-of-use asset was £500,000 (2020: £271,000).

Company

At 30 September 2021 and 30 September 2020, the Company had no property, plant and equipment.

14. Intangible assets

Group

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 3 and 4.

Assets under construction

Assets that are still under construction undergo an annual impairment test which is carried out at the end of the reporting period. This impairment test considers the carrying amount of the asset and compares it with its recoverable amount, with an impairment being recognised if the recoverable amount is lower than the carrying amount. Management have determined the recoverable amount as being the value-in-use, which is calculated using management expectations of future revenues, discounted at an applicable rate. There was no indication of impairment at the year end. Whilst the asset remains under construction, amortisation is not charged.

Company

At 30 September 2021 and 30 September 2020, the Company had no intangible assets.

15. Investments

The consolidated financial statements of the Group as at 30 September 2021 and at 30 September 2020 include:

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:

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.

16. Trade and other receivables