TIDMNSCI
RNS Number : 7708Z
NetScientific PLC
22 May 2019
NetScientific plc
("NetScientific" or the "Group")
NetScientific Full Year Results for the year ended 31 December
2018
London, UK - 22 May 2019 - NetScientific plc (AIM: NSCI), the
transatlantic healthcare IP commercialisation Group, announces its
full year audited results for the year ended 31 December
2018[1].
Financial highlights (including post-period end highlights)
-- Loss for the year from continuing operations of GBP4.0
million (2017: loss GBP4.2 million) reflects ongoing investment in
portfolio companies;
-- Loss from discontinued operations for the year, due to the
sale of Vortex and Wanda in March 2019, of GBP5.4m (2017:
GBP5.2m);
-- Cash used in operations reduced to GBP8.4 million (2017:
GBP10.7 million) due to continued development and operating
expenses in the subsidiaries mitigated by lower head office
costs;
-- The Group raised net funds of GBP4.6 million in April 2018
from a placing of 9,523,809 shares;
-- Cash from continuing operations of GBP2.9 million (2017: GBP6.9 million);
-- Group cash at 30 April 2019 stands at GBP3.0m of which
GBP1.7m held in the Company, giving cash to operate until the end
of 2020.
Operational highlights (including post-period end
highlights)
Portfolio progress:
ProAxsis Ltd ("ProAxsis")
o NEATstik(R)
-- Registered CE Mark and launch of NEATstik(R) for measuring
active neutrophil elastase
-- New data presented at the annual American Thoracic Society
(ATS) conference
o ProteaseTag(R) Active Plasmin Immunoassay
-- Registered CE Mark and launched for application across a
broad range of diseases including lung disorders such as idiopathic
pulmonary fibrosis (IPF) and acute respiratory distress syndrome
(ARDS)
-- Invest Northern Ireland grant to identify and quantify active
protease biomarkers in GBP0.2 million project
o Both products selected for inclusion in the major BRIDGE
clinical study funded by the European Respiratory Society (ERS)
Glycotest, Inc. ("Glycotest")
o Positive clinical results from clinical evaluation of HCC
Panel in patients with Hepatocellular Carcinoma (HCC), the most
common form of liver cancer
o Completed a $10.0 million series A funding round with Shanghai
Fosun Pharmaceutical Co. Ltd, a leading healthcare group based in
China and the first tranche of $3.0 million was received on 14
February 2019
PDS Biotechnology Corporation ("PDS")
o Completed merger with Edge Therapeutics in March 2019 creating
a NASDAQ listed immune-oncology biotechnology company developing
novel products treating early-and late-stage cancer
Vortex Biosciences, Inc. ("Vortex")
o Sold NetScientific interest to Deeptech Disruptive Growth
Investments Ltd "Deeptech" in March 2019, a special purpose vehicle
"SPV" of EMV Capital Ltd for total consideration of GBP112,999
Wanda, Inc. ("Wanda")
o Sold NetScientific interest to Deeptech in March 2019 for
total consideration of GBP37,001
Commenting on the Group's 2018 full year results, Ian
Postlethwaite, CEO/CFO of NetScientific, said:
"Our strategy remains to maximise shareholder value from our
portfolio companies. With the disposal of our Vortex and Wanda
interests, we can focus using the remaining cash resources on
extending the anticipated lifespan of the Company. Glycotest and
PDS require no further funding at this stage and, whilst ProAxsis
does need a small additional injection of GBP0.1 million to meet
operational requirements as it nears cashflow breakeven, this will
be repayable within 2019. All three companies have continued to
make good progress during the year and we remain confident in their
prospects. In addition, we have taken measures to reduce our
central function costs to extend the Company's cash runway and it
is therefore expected that the Company has sufficient cash to
operate until the end of 2020."
For more information, please contact:
NetScientific Tel: +44 (0)20 3514 1800
Ian Postlethwaite, CEO / CFO
Tel: +44 (0)20 7220 1666
WHIreland (NOMAD, Financial Adviser and
Broker)
Chris Fielding / Jessica Cave
The information contained within this announcement is deemed by
the Company to constitute inside information under the Market Abuse
Regulation (EU) No. 596/2014.
About NetScientific
NetScientific PLC is a transatlantic healthcare IP
commercialisation Group focused on technologies and companies that
have the potential to treat chronic disease and significantly
improve the health and well-being of people.
For more information, please visit the website at
www.NetScientific.net.
This announcement contains certain forward-looking statements
that are based on current expectations or beliefs, as well as
assumptions about future events. By their nature, these statements
involve risk and uncertainty because they relate to future events
and circumstances. Actual outcomes and results may differ
materially from any outcomes or results expressed or implied by
such forward looking statements. Any forward-looking statements
made by or on behalf of the Group are made in good faith based on
the information available at the time the statement is made. No
representation or warranty is given in relation to these
forward-looking statements, including as to their completeness or
accuracy or the basis on which they were prepared, and undue
reliance should not be placed on them. The Group does not undertake
to revise or update any forward-looking statement contained in this
announcement to reflect any changes in its expectations with regard
thereto or any new information or changes in events, conditions or
circumstances, save as required by law and regulations. Nothing in
this announcement should be construed as a profit forecast.
CHAIRMAN'S AND CHIEF EXECUTIVE OFFICER'S STATEMENT
As announced in November 2018, the Group conducted a strategic
review to maximise value for Shareholders which included the
potential sale of the Group or of a portfolio company. In early
2019 the Company had not received any offers for any of its
portfolio companies nor was it in receipt of any approaches
regarding a sale of the Company. The Board continued to assess all
of its strategic options, including a potential delisting from
admission to AIM in order to reduce the Company's costs to prolong
the cash runway allowing for the maximum opportunity to realise
cash from shareholdings in its investee companies. However, the
general meeting to approve the delisting was indefinitely adjourned
by shareholders.
Following this decision by shareholders, in line with the
Circular sent to Shareholders on 15 February 2019, the Company's
strategy remains to seek to maximise shareholder value from its
portfolio companies based upon its remaining cash resources by:
a) reducing the Company's central functions and costs
significantly such that as much of the remaining cash as possible
can be allocated to the portfolio companies;
b) assessing the funding requirements of each portfolio company
against its prospects of generating a shareholder return within the
anticipated lifespan of the Company; and
c) subsequently allocating the remaining cash to manage those
portfolio companies which the Board believes provide the most
realistic prospects of delivering shareholder returns within the
anticipated lifespan of the Company.
Glycotest and PDS do not require further funding from the
Company at this juncture given their available funds. ProAxsis
requires a further short-term loan of GBP0.1 million which is
repayable within 2019 for operational funding requirements as it
nears cashflow breakeven.
In March 2019, the Company completed a GBP0.15 million cash sale
to Deeptech of its interests in Vortex and Wanda, together with any
outstanding loans and convertible loan notes owed to the Company by
Wanda or Vortex. Immediately prior to completion, NetScientific was
interested in approximately 95.0% and 70.8% of the issued shares of
common stock of Vortex and Wanda, respectively, and 100% of the
Preferred Shares of Wanda. The losses before tax of Vortex and
Wanda included within the consolidated accounts of NetScientific
amounted, to GBP4.0 million and GBP1.4 million, respectively and
the net assets of Vortex and Wanda at the same date were GBP0.3
million and GBP0.1 million, respectively net of intercompany
balances.
As part of the cash saving strategy the lease of the Company's
headquarters at 6 Bevis Marks London EC3A 7BA was terminated on 29
March 2019. In addition, the Company will issue the Annual Report
as a black and white pdf document to save costs. Following
significant changes at the shareholder level Francois Martelet
resigned as a Director on 30 April 2019.
Portfolio Review
ProAxsis Ltd ("ProAxsis")
ProAxsis is a medical diagnostics company, based in Northern
Ireland, developing a range of products for the capture, detection
and measurement of active protease biomarkers of diseases.
ProAxsis made good operational progress during 2018 obtaining a
CE Mark for its ProteaseTag(R) Active Plasmin Immunoassay and it
was awarded a European CE Mark for a third respiratory
immunoassay.
NEATstik(R), the first test ever developed to enable measurement
of active neutrophil elastase at point-of-care, was launched in
2018 and registered its first R&D sale to a research laboratory
conducting a respiratory clinical trial for a pharmaceutical
company early in the year. In May, NEATstik's clinical potential
was validated by new data presented at the annual American Thoracic
Society (ATS) conference, where it was shown that the technology
can successfully identify patients with elevated concentrations of
active neutrophil elastase, which may be a causative link to the
development of bacterial infections which exacerbate lung
disease.
As announced on 20 September 2018, ProAxsis had two products
selected for inclusion in the BRIDGE study, a major upcoming
clinical trial funded by the European Respiratory Society (ERS).
The study will employ NEATstik(R) and the ProteaseTag(R) Active NE
Immunoassay over three years in 1,000 patients suffering from
bronchiectasis across Europe, with the purpose of stratifying the
clinical population. Assessments will include microbiome,
proteomics, detailed phenotyping, and imaging, in order to explore
new biomarkers and determine their impact on clinical outcomes.
Furthermore, ProAxsis secured non-dilutive grant funding from
Invest Northern Ireland to support further research and development
of its ProteaseTag(R) technology to identify and quantify active
protease biomarkers as part of a GBP0.2 million project. The
project will have a particular research focus on the detection and
quantification of deubiquitinases (DUBs), which play a pivotal role
in protein degradation pathways through the ubiquitin-proteasome
system, which are thought to be involved in the pathogenesis of
neurodegenerative disorders as well as several types of oncological
malignancies.
NetScientific's shareholding in ProAxsis is 56.5% (fully diluted
being 54.0%) and as at 31 December 2018, the Group had invested
GBP2.1 million (2017: GBP1.9 million). Grant funding received to
develop both the underlying technology and new applications has
exceeded GBP1.2 million (2017: GBP1.1 million).
Glycotest, Inc. ("Glycotest")
Glycotest is a US-based liver diagnostics start-up company
seeking to commercialise new and unique blood tests for life
threatening liver cancers and fibrosis-cirrhosis.
During the year, Glycotest successfully completed a clinical
evaluation of its diagnostic panel to detect hepatocellular
carcinoma (HCC), the most prevalent form of liver malignancy, in
149 patients in China. In a blind evaluation of 75 HCC positive
patients and 74 control samples, Glycotest's HCC Panel achieved an
AUROC score of 0.97 and exhibited 93% sensitivity at 92%
specificity, which indicates a very high predictability on a
statistical basis as to whether HCC is present in patients or
not.
In the cohort of patients whose tumours had not been detected by
an alpha-fetoprotein (AFP) blood test, the most common blood test
used for initial liver cancer diagnosis, the HCC Panel was able to
identify 86% of patients with liver cancer. In an early-stage
cohort of patients with HCC, the HCC Panel was able to identify 78%
of patients with liver cancer undetected by AFP. HCC testing is a
large and growing worldwide market, estimated at over $2 billion
annually.
In October 2018, Glycotest completed a $10.0 million series A
funding round with Shanghai Fosun Pharmaceutical Co. Ltd, a leading
healthcare group based in China. The transaction has been approved
by the outbound direct investment (ODI) committee and the first
tranche of $3.0 million was received on 14 February 2019. The
proceeds will be used to advance Glycotest Inc.'s diagnostic HCC
Panel towards commercialisation in the US and to advance pipeline
assets in liver fibrosis and cholangiocinoma (bile duct cancer).
Funding of the remaining $7.0 million is due on completion of
certain milestones.
Glycotest holds exclusive world-wide rights to over 50
patent-protected serum protein biomarkers and during the year
successfully expanded its IP portfolio. The Company now has 13
issued or allowed patents protecting multiple aspects of
Glycotest's proprietary liver disease diagnostic platform.
NetScientific's shareholding in Glycotest is 87.5% (fully
diluted being 51.5%) and as at 31 December 2018, the Group had
invested GBP3.9 million (2017: GBP2.9 million). Grant funding
received to develop the underlying technology, prior to Glycotest's
formation, was GBP5.9 million.
PDS Biotechnology Corporation ("PDS")
PDS is a clinical stage immunotherapy company developing a
next-generation of simpler, safer and more effective
immunotherapies for cancer and infectious diseases. It continued to
see strong progress with its T-cell activating technology platform,
Versamune(R), which combines three critical attributes for an
effective immunotherapy: T-cell induction, reduced tumour
suppression and priming of a potent anti-tumour response without
the conventional associated toxicities.
PDS plans to advance its assets through the pipeline and is
maintaining ownership and control of all its partnered trials.
PDS's oncology pipeline includes compounds for prostate, ovarian,
breast and colorectal cancers, in addition to its lead PDS0101
programme for several HPV-related cancers. PDS made some important
advances through the year in progressing its lead Versamune(R)
T-cell Activating platform.
In November 2018 PDS Biotechnology entered into merger agreement
with Edge Therapeutics, which completed on 14 March 2019, to form a
Nasdaq-Listed Clinical-Stage Cancer Immunotherapy company. The
merger creates a publicly-traded immune-oncology biotechnology
company developing novel products treating early-and late-stage
cancer. This follows phase I & 2 clinical data on lead product
candidate PDS0101 which suggested immunotherapeutic anti-cancer
activity and favourable safety profile in early stage cervical
cancer. The new Company plans to initiate multiple phase 2b & 3
clinical trials of PDS0101 in HPV-associated cancers.
The share price of the new company (now re-named PDS
Biotechnology Corporation) has been used to re-value the Group's
equity holding therein. At year end PDS was valued at GBP2.4
million. The Company's ownership of the enlarged PDS Biotechnology
Corporation, trading on Nasdaq under the ticker PDSB, on a
fully-diluted basis is 8.15% and the latest listing price on 1 May
2019 of $5.93 values NetScientific's holding in PDS at GBP2.5
million. It is the Company's intention to hold the shares and to
make a decision on its position in due course.
On 1 January 2018 the fair value of PDS increased by GBP3.5m as
a result of the restatement due to the implementation of IFRS 9 and
at year end decreased by GBP3.8m due to changes in the valuation
methodology and macro-economic factors impacting the larger
Pharmaceutical sector being the worst performing sector of the
market. During the year the valuation methodology changed for the
following reasons. The opening value was based on the last price
that large investors bought shares in the Company. At the year end
the PDS investment was valued on new information available as a
result of the merger with Edge Therapeutics. The newly merged
Company is now listed on Nasdaq and the valuation will be based on
prevailing market prices.
The Group has invested GBP2.7 million in PDS to date. On the
balance sheet the investment in PDS is shown as equity investments
classified as fair value through other comprehensive income
(FVTOCI) as per note 16.
Vortex Biosciences, Inc. ("Vortex")
After the balance sheet date, Vortex Biosciences, Inc. was sold
to Deeptech for a total consideration of GBP112,999, being GBP1 for
the shares and GBP112,998 for the transfer of the debt.
Vortex Biosciences is a liquid biopsy company with a mission to
revolutionize cancer diagnosis, monitoring and treatment by
replacing tissue biopsies with simple blood tests. Vortex's VTX-1
instrument harvests intact circulating tumour cells (CTCs) from
whole blood samples for use in downstream research and clinical
applications such as patient stratification, monitoring of disease
progression and drug treatment effectiveness.
In November 2018, Vortex announced a Global partnership with
Stratec Consumables GmbH to scale-up manufacturing production of a
customised chip, a crucial component of the liquid biopsy platform
(VTX-1). This will assist with scale-up to commercialisation with a
view to increasing the product's prominence in the clinical space
as a diagnostic and monitoring tool.
During the year its operations were reviewed and streamlined,
reducing costs significantly.
NetScientific shareholding in Vortex was 95.0%, fully diluted
being 66.1% and as of 31 December 2018, the Group had invested
GBP21.4 million (2017: GBP16.4 million).
Wanda, Inc. ("Wanda")
After the balance sheet date, Wanda, Inc. was sold to Deeptech
for total consideration of GBP37,001, being GBP1 for the shares and
GBP37,000 for the preferred stock and debt.
Wanda is a San Francisco-based digital health company
commercialising advanced clinical decision support software. Wanda
aims to significantly reduce hospitalisation risk and
re-hospitalisation risk post-discharge and improve the quality of
life for people with chronic conditions, initially focused on
congestive heart failure (CHF). During the year its operations were
reviewed and streamlined, reducing costs significantly.
NetScientific's shareholding in Wanda was 70.8%, fully diluted
being 61.8% and as at 31 December 2018, the Group had invested
GBP11.6 million (2017: GBP9.5 million).
Early stage Investments Portfolio
Limited investment has been made to date in the Early Stage
Portfolio, mostly in the form of convertible loans. Of the five
early stage investments made only one loan is unprovided for. There
are no plans to invest additional funds in the Early Stage
Portfolio. On the balance sheet the investment in early stage
investment portfolios is shown within trade and other receivables
as convertible loans at a fair value of GBP0.3m which now relates
to a single convertible loan following the fair value loss of
GBP0.2m recognised in the year for the other loans in the portfolio
per note 19.
Finance
For the year, the Group made a loss of GBP9.4 million (2017:
GBP9.4 million), split between continuing and discontinued
operations as follows:
- Continuing operations GBP4.0 million (2017: GBP4.2 million)
- Discontinued operations GBP5.4 million (2017: GBP5.2 million)
The loss reflects the business model, where the core portfolio
companies are mainly subsidiaries. The core portfolio companies are
commercialising their products, with the other two still developing
their technologies; therefore, the portfolio companies are all
currently loss making.
Currently, Glycotest and PDS are not expected to require further
funding from the Company. ProAxsis requires further funding by way
of a short-term loan of GBP0.1 million which is repayable within
2019 to meet operational requirements as ProAxsis nears cashflow
breakeven.
Cash
The Group placed a further 9,523,809 shares in April 2018
raising net funds of GBP4.6 million (2017: 17,962,362 shares issued
raising net funds of GBP7.5 million). Cash on the balance sheet as
at 31 December 2018 was GBP2.9 million (2017: GBP6.9 million). Cash
used in operations, was GBP8.4 million (2017: GBP10.7 million).
Group cash at 30 April 2019 stood at GBP3.0m of which GBP1.7m was
held in the Company, giving cash
to operate until the end of 2020.
Going concern
The Directors have prepared and reviewed budget cashflows which
were approved by the Board of Directors in the Board meeting of 11
December 2018 and further reviewed at the Board meetings on 10
January 2019 and 15 March 2019. These budgeted cash flows included
a number of implemented cash saving initiatives, including:
a) Significantly reducing the Company's central cost base by
reductions in headcount, closing the office at 6 Bevis Marks London
at the end of March 2019, producing the Annual Report as a simple
black and white pdf document and reviewing all expenditure
commitments;
b) Sold Vortex and Wanda for net proceeds of GBP0.15 million on
22 March 2019 and consequently reducing the operational funding
requirement of the Group; and
c) allocating the remaining cash to manage those portfolio
companies which the board believes provide the most realistic
prospects of delivering shareholder returns within the anticipated
lifespan of the Company. Glycotest and PDS do not require any
further funding form the Company. ProAxsis requires a short-term
loan of GBP0.1 million repayable in 2019, to meet specific
operational funding requirements as it nears cashflow break even by
the end of 2019.
After due consideration of these forecasts and current cash
resources, the Directors consider that the Company and Group do
have adequate financial resources to continue in operational
existence for the foreseeable future (being at least 12 months from
the date of this report), and for this reason the financial
statements have been prepared on a going concern basis.
Board changes
François R. Martelet, M.D has resigned as a Director on 30 April
2019; the Board would like to thank him for his contributions to
the Group. Ian Postlethwaite was appointed Chief Executive Officer
effective from 1 May 2019.
Summary and Outlook
The Company's strategy remains to maximise shareholder value
from the portfolio companies using the remaining cash resources of
the Company by:
a) Reducing the Company's central functions and costs
significantly such that the Company can continue to operate for as
long as is reasonably possible whilst it seeks to generate
shareholder value from the portfolio companies. It is anticipated
that the Company has sufficient cash to operate until the end of
2020.
b) Assessing the funding requirements of each portfolio company
against its prospects of generating a Shareholder return within the
anticipated lifespan of the Company. At this stage, Glycotest and
PDS are not expected to require further funding from the Company.
ProAxsis requires further funding by way of a short-term loan of
GBP0.1 million which is repayable within 2019 to meet operational
requirements as it nears cashflow breakeven.
Sir Richard Sykes Ian Postlethwaite
Non-Executive Director and Chairman Chief Executive Officer/Chief Financial
Officer
22 May 2019 22 May 2019
Consolidated Income Statement
For the year ended 31 December 2018
Restated*
2018 2017
Continuing Operations Notes GBP000's GBP000's
Revenue 245 171
Cost of sales (78) (80)
------------------------------------- ------ ----------- ----------
Gross profit 167 91
Other operating income 101 238
Research and development costs (524) (997)
General and administrative costs (2,821) (3,293)
Other costs (1,029) (472)
Loss from operations (4,106) (4,433)
Finance income 47 43
Finance expense (12) (11)
Loss before taxation (4,071) (4,401)
Income tax credit 73 202
------------------------------------- ------ ----------- ----------
Loss for the year from continuing
operations (3,998) (4,199)
Discontinued Operations
------------------------------------- ------ ----------- ----------
Loss for the year from discontinued
operations (5,405) (5,179)
------------------------------------- ------ ----------- ----------
Total loss for the year (9,403) (9,378)
------------------------------------- ------ ----------- ----------
Owners of the parent (8,328) (8,318)
Non-controlling interests (1,075) (1,060)
------------------------------------- ------ ----------- ----------
(9,403) (9,378)
Basic and diluted loss per share
from continuing and discontinued
operations attributable to owners
of the parent during the year: 4
Continuing operations (4.8p) (6.2p)
Discontinued operations (6.2p) (7.4p)
From loss for the year (11.0p) (13.6p)
------------------------------------- ------ ----------- ----------
* 2017 comparatives have been restated due to discontinued
operations classified as held for sale
Consolidated Income Statement and Other Comprehensive Income
For the year ended 31 December 2018
Notes 2018 2017
GBP000's GBP000's
--------------------------------------------- ------- ----------- ----------
Loss for the year (9,403) (9,378)
Items that may be subsequently reclassified
to profit or loss:
Exchange differences on translation
of foreign operations 94 (374)
Change in fair value IFRS 9 Financial (3,863) -
Instruments
Total comprehensive loss for the year (13,172) (9,752)
------------------------------------------------------ ----------- ----------
Attributable to:
Owners of the parent (11,810) (9,057)
Non-controlling interests (1,362) (695)
---------------------------- ----------- ----------
(13,172) (9,752)
--------------------------- ----------- ----------
All other comprehensive income will be reclassified to retained
earnings on the ultimate sale of any relevant subsidiary or
investment company.
Consolidated Statement of Financial Position
As at 31 December 2018
*Fair value through other comprehensive income
Notes 2018 2017
GBP000's GBP000's
-------------------------------------------- ------ ---------- ----------
Assets
Non-current assets
Property, plant and equipment 169 891
Investments in equity accounted associates 6 - -
Equity investments classified as
FVTOCI* 7 2,768 2,863
Derivative financial assets 44 18
Other receivables - 33
-------------------------------------------- ------ ---------- ----------
Total non-current assets 2,981 3,805
-------------------------------------------- ------ ---------- ----------
Current assets
Inventory 37 86
Trade and other receivables 698 1,014
Cash and cash equivalents 2,911 6,868
-------------------------------------------- ------ ---------- ----------
3,646 7,968
Assets in disposal groups classified 569 -
as held for sale
-------------------------------------------- ------ ---------- ----------
Total current assets 4,215 7,968
-------------------------------------------- ------ ---------- ----------
Total assets 7,196 11,773
-------------------------------------------- ------ ---------- ----------
Liabilities
Current liabilities
Trade and other payables (668) (777)
Loans and borrowings (140) (128)
-------------------------------------------- ------ ---------- ----------
(808) (905)
Liabilities directly associated with
assets in disposal groups classified (158) -
as held for sale
-------------------------------------------- ------ ---------- ----------
Total current liabilities (966) (905)
-------------------------------------------- ------ ---------- ----------
Non-current liabilities
Loans and borrowings (60) (70)
Total non-current liabilities (60) (70)
-------------------------------------------- ------ ---------- ----------
Total liabilities (1,026) (975)
-------------------------------------------- ------ ---------- ----------
Net assets 6,170 10,798
-------------------------------------------- ------ ---------- ----------
Issued capital and reserves
Attributable to the parent
Called up share capital 3,928 3,452
Share premium account 58,006 53,839
Capital reserve account 237 237
Equity investment reserve (68) -
Foreign exchange reserve 1,444 1,063
Retained earnings (51,442) (43,220)
-------------------------------------------- ------ ---------- ----------
Equity attributable to the owners
of the parent 12,105 15,371
Non-controlling interests (5,935) (4,573)
-------------------------------------------- ------ ---------- ----------
Total equity 6,170 10,798
-------------------------------------------- ------ ---------- ----------
Consolidated Statement of Changes in Equity
As at 31 December 2018
Shareholders' equity
Foreign
exchange
Equity and
Share Share Capital investment Retained capital Non-controlling Total
capital premium reserve reserve earnings reserve Total interests equity
GBP000's GBP000's GBP000's GBP000's GBP000's GBP000's GBP000's GBP000's GBP000's
----------------- --------- --------- --------- ----------- --------- --------- ---------- ---------------- ---------
1 January
2017 2,554 47,233 237 - (35,115) 1,802 16,711 (3,875) 12,836
----------------- --------- --------- --------- ----------- --------- --------- ---------- ---------------- ---------
Loss for
the period - - - - (8,318) - (8,318) (1,060) (9,378)
----------------- --------- --------- --------- ----------- --------- --------- ---------- ---------------- ---------
Other
comprehensive
income -
foreign
exchange
differences - - - - - (739) (739) 365 (374)
Total
comprehensive
income - - - - (8,318) (739) (9,057) (695) (9,752)
----------------- --------- --------- --------- ----------- --------- --------- ---------- ---------------- ---------
Share capital
issued 898 7,185 - - - - 8,083 - 8,083
Cost of share
capital issue - (579) - - - - (579) - (579)
Issue of
shares to
a
non-controlling
interest - - - - 5 - 5 (3) 2
Share-based
payments - - - - 208 - 208 - 208
----------------- --------- --------- --------- ----------- --------- --------- ---------- ---------------- ---------
31 December
2017 3,452 53,839 237 - (43,220) 1,063 15,371 (4,573) 10,798
----------------- --------- --------- --------- ----------- --------- --------- ---------- ---------------- ---------
Change on
initial
application
of IFRS 9
Financial
Instruments - - - 3,795 - - 3,795 - 3,795
----------------- --------- --------- --------- ----------- --------- --------- ---------- ---------------- ---------
Balance at
1 January
2018 (as
restated) 3,452 53,839 237 3,795 (43,220) 1,063 19,166 (4,573) 14,593
----------------- --------- --------- --------- ----------- --------- --------- ---------- ---------------- ---------
Loss for
the period - - - (8,328) - (8,328) (1,075) (9,403)
----------------- --------- --------- --------- ----------- --------- --------- ---------- ---------------- ---------
Other
comprehensive
income -
Foreign exchange
differences - - - - - 381 381 (287) 94
Change in
fair value
during the
year - - - (3,863) - - (3,863) - (3,863)
Total
comprehensive
income - - - (3,863) (8,328) 381 (11,810) (1,362) (13,172)
----------------- --------- --------- --------- ----------- --------- --------- ---------- ---------------- ---------
Share capital
issued 476 4,524 - - - - 5,000 - 5,000
Cost of share
capital issue - (357) - - - - (357) - (357)
Share-based
payments - - - - 106 - 106 - 106
----------------- --------- --------- --------- ----------- --------- --------- ---------- ---------------- ---------
31 December
2018 3,928 58,006 237 (68) (51,442) 1,444 12,105 (5,935) 6,170
----------------- --------- --------- --------- ----------- --------- --------- ---------- ---------------- ---------
Consolidated Statement of Cash Flows
As at 31 December 2018
Notes 2018 2017
GBP000's GBP000's
---------------------------------------------- -------- ---------- ----------
Cash flows from operating activities
Loss after income tax including discontinued
operations (9,403) (9,378)
Adjustments for:
Depreciation of property, plant and
equipment 262 221
Impairment of Property, Plant & Equipment 977 -
and Inventories
Share of loss of associate - 45
Gain on sale of associate - (1,026)
Loss on disposal of subsidiaries - -
Fair value movement during the year 230 -
on convertible debt
Impairment charge on convertible
debt - 306
Release of loan provision (40) -
Share-based payments 132 166
Foreign exchange gains (65) 145
Finance income (47) (43)
Finance costs 12 11
Tax credit (73) (202)
(8,015) (9,755)
Changes in working capital
(Increase) in inventory (296) (87)
(Increase)/decrease in trade and
other receivables (136) 308
Increase/(decrease) in trade and
other payables 24 (1,158)
-------------------------------------------------------- ---------- ----------
Cash used in operations (8,423) (10,692)
-------------------------------------------------------- ---------- ----------
Income tax received 142 71
-------------------------------------------------------- ---------- ----------
Net cash used in operating activities (8,281) (10,621)
-------------------------------------------------------- ---------- ----------
Cash flows from investing activities
Proceeds from sale of associate - 1,477
Costs on sale of associate - (167)
Purchase of property, plant and equipment (112) (399)
Proceeds from sale of property, plant
and equipment 1 2
Interest received 23 21
-------------------------------------------------------- ---------- ----------
Net cash (used in)/from investing
activities (88) 934
Cash flows from financing activities
Repayment from borrowings (10) (20)
Proceeds from loans 39 -
Proceeds on change in subsidiary
shareholding - 2
Proceeds from share issue 5,000 8,083
Share issue cost (357) (579)
----------------------------------------------- ------- ---------- ----------
Net cash from financing activities 4,672 7,486
----------------------------------------------- ------- ---------- ----------
Decrease in cash and cash equivalents (3,697) (2,201)
Cash and cash equivalents at beginning
of year 6,868 9,456
Cash in disposal groups classified (405) -
as held for sale
Exchange differences on cash and
cash equivalents 145 (387)
----------------------------------------------- ------- ---------- ----------
Cash and cash equivalents at end
of year 2,911 6,868
----------------------------------------------- ------- ---------- ----------
Notes to the Financial Information for the Year Ended 31
December 2018
1. GENERAL INFORMATION
The Company is a public limited company incorporated on 12 April
2012 and domiciled in England with registered number 08026888 and
its shares are listed on the Alternative Investment Market (AIM) of
the London Stock Exchange. The address of the registered office is
Anglo House, Bell Lane Office Village, Bell Lane, Amersham,
Buckinghamshire HP6 6FA.
2. BASIS OF PREPARATION
The preliminary results of the year ended 31 December 2018 have
been extracted from audited accounts which have not yet been
delivered to Companies House.
The financial information set out in this announcement does not
constitute statutory accounts for the year ended 31 December
2018.
The report of the auditors on the statutory accounts for the
year ended 31 December 2018 was unqualified and did not contain a
statement under Section 498 of the Companies Act 2006. The
financial statements for the year ended 31 December 2018 included
in this announcement were authorised for issue in accordance with a
resolution of the Board of Directors on 22 May 2019.
3. SIGNIFICANT ACCOUNTING POLICIES
The Group financial statements have been prepared in accordance
with International Financial Reporting Standards as adopted by the
European Union as they apply to the financial statements of the
Group for the year ended 31 December 2018. The principal accounting
policies adopted in the preparation of the financial information
are set out below. The policies have been consistently applied to
all the years presented.
While the financial information included in this preliminary
announcement has been prepared in accordance with IFRS, this
announcement does not in itself contain sufficient information to
comply with IFRS. The Group expects to publish full financial
statements that comply with IFRS by 28 May 2019.
4. LOSS PER SHARE
The basic and diluted loss per share is calculated by dividing
the loss for the financial year by the weighted average number of
ordinary shares in issue during the year. Potential ordinary shares
from outstanding options at 31 December 2018 of 2,287,550 (2017:
1,812,257) are not treated as dilutive as the entity is loss
making.
2018 2017
GBP000's GBP000's
-------------------------------------------- ----------- -----------
Loss attributable to equity holders of
the Company
Continuing operations 3,648 3,832
Discontinued operations 4,680 4,486
----------- -----------
Total 8,328 8,318
----------- -----------
Number of shares
Weighted average number of ordinary shares
in issue 75,796,048 61,016,509
5. INVESTMENTS IN SUBSIDIARY UNDERTAKINGS
The Group had the following subsidiaries at 31 December
2018:
Proportion Proportion
of ownership of ownership
Proportion Proportion interest interest
of of held by held by
ownership ownership non-controlling non-controlling
Primary Country of interest interest interests Interests
trading incorporation at 31 December at 31 December at 31 December at 31 December
Name address or registration 2018 2017 2018 2017
------------------- --------- ----------------- --------------- --------------- --------------- ----------------
NetScientific UK
Limited (a) UK 100% 100% - -
ProAxsis Ltd * (b) UK 56.5% 56.5% 43.5% 43.5%
Healthbox Israel
LLP * (ii) (g) UK - 50% - 50%
IsraelScientific
Ltd * (iii) (a) UK - 100% - -
NetScientific
America,
Inc. I USA 100% 100% - -
Vortex
BioSciences,
Inc. **(i) (d) USA 95% 95% 5% 5%
Wanda, Inc. **
(i),
(iv) (e) USA 70.8% 70.8% 29.2% 29.2%
Glycotest, Inc.
(i) (f) USA 87.5% 87.5% 12.5% 12.5%
Notes to the Financial Information for the Year Ended 31
December 2018
5. INVESTMENTS IN SUBSIDIARY UNDERTAKINGS (continued)
For all undertakings listed above, the country of operation is
the same as its country of incorporation or registration.
* Held via an intermediate holding company.
** Sold to Deeptech in March 2019, a SPV of EMV Capita Ltd for
total consideration of GBP150k.
All of the ownerships shown above relate to ordinary
shareholdings.
(i) Options have been issued by ProAxsis Ltd, Vortex
BioSciences, Inc., Wanda, Inc. and Glycotest, Inc. which if
exercised would dilute the Company's shareholding by 3%, 29%, 16%
and 21% respectively.
(ii) A Deed of Termination was entered into as of 14 November
2017, with the company dissolved on 13 August 2018.
(iii) A Deed of Termination was entered into as of 7 August
2018, with the company dissolved two months later in 2018.
(iv) Following issue of further shares during the year the
Group's interest was reduced to 70.8% on 1 May 2017.
6. INVESTMENTS IN ASSOCIATE
2018 2017
OncoVerse OncoVerse
LLC LLC
GBP000's GBP000's
----------------------------------------------- ------------ -----------
At 1 January - 357
Exchange movement - (20)
Loss after tax recognised in the consolidated
income statement - (45)
- 292
Consideration on disposal of interest - (1,477)
Cost incurred on disposal of interest - 167
Exchange movement - (8)
Gain on disposal after tax recognised
in the consolidated income statement - 1,026
----------------------------------------------- ------------ -----------
At 31 December - -
----------------------------------------------- ------------ -----------
On 20 April 2017, the Groups subsidiary company Wanda, Inc.
disposed of its entire holding of 35.9% in OncoVerse LLC, a San
Francisco based digital health company.
7. EQUITY INVESTMENTS CLASSIFIED AS FVTOCI
Represent unquoted equity securities
classified as FVTOCI
2018 2017
GBP000's GBP000's
--------------------------------------------- ---------- ----------
At 1 January under IAS 39 2,863 2,863
Change in fair value on initial application 3,744 -
of IFRS 9
Change in fair value during the year (3,839) -
At 31 December 2,768 2,863
--------------------------------------------- ---------- ----------
% of issued
Name Country of incorporation share capital Currency denomination GBP000's
-------------------------------- ------------------------- -------------- --------------------- --------
PDS Biotechnology Corporation USA 9.12% US$ 2,380
CytoVale, Inc. USA 1.41% US$ 388
Other -
-------------------------------- ------------------------- -------------- --------------------- --------
2,768
---------------------------------------------------------- -------------- --------------------- --------
Notes to the Financial Information for the Year Ended 31
December 2018
7. EQUITY INVESTMENTS CLASSIFIED AS FVTOCI (continued)
Valuation of unquoted equity investments
Historically, the equity investments were reported at cost as
they were not quoted in an active market and that there was a
significant range of possible fair value estimates and the
possibilities of the various estimates could not be reliably
measured. Upon transition to IFRS 9, the fair value gain of
GBP3,744k has been attributed to the effective date of transition
and presented in the statement of changes in equity. Of the
GBP3,744k increase in fair value, GBP3,518k is represented by PDS.
Between February and August 2018, PDS raised $1,150k over a number
of separate share issues and at the same valuation per share. The
fundraise was restricted to a small group of sophisticated
investors.
The fair value at year end was derived from the listed entity
Edge Therapeutics, Inc. and using its share price as a proxy to
value PDS. On the 18 March 2019 PDS announced the closing of its
merger with Edge Therapeutics, Inc. following the approval of Edge
stockholders on 14 March 2019.
In November 2018 PDS Biotechnology entered into merger agreement
with Edge Therapeutics, which completed on 14 March 2019, to form a
Nasdaq-Listed Clinical-Stage Cancer Immunotherapy company. The
merger creates a publicly-traded immune-oncology biotechnology
company developing novel products treating early-and late-stage
cancer. This follows phase I & 2 clinical data on lead product
candidate PDS0101 which suggested immunotherapeutic anti-cancer
activity and favourable safety profile in early stage cervical
cancer. The new Company plans to initiate multiple phase 2b & 3
clinical trials of PDS0101 in HPV-associated cancers.
The share price of Edge Therapeutics as at balance sheet date
has been used to re-value the Group's equity holding in PDS
Biotechnology. The Company's ownership of the enlarged PDS
Biotechnology Corporation, trading on Nasdaq under the ticker PDSB,
on a fully-diluted basis is 8.15%, which at the latest listing
price on 1 May 2019 of $5.93 values NetScientific's holding in PDS
at GBP2,460k. At year end PDS the Group's interest on a fully
diluted basis was 9.12% (2017: 17.1%) and was valued at GBP2,380k.
It is the Company's intention to hold the shares and to make a
decision on its position in due course. The Group's interest in PDS
Biotechnology is non-controlling.
If the fair value of the investment and derivative financial
assets were to decrease by 50%, the net assets figure would
decrease by GBP1.2m with a corresponding increase if the inputs
were to increase by 50%.
[1] extracted from audited accounts that have not yet been
delivered to Companies House.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
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