Annual Financial Report

RNS Number : 4343U

NetScientific PLC

07 April 2016

 

 7 April 2016

NetScientific plc

("NetScientific" or the "Group")

NetScientific Full Year Results year ended 31 December 2015

London, UK - 7 April 2016 - NetScientific plc (AIM: NSCI), the transatlantic healthcare technology group, announces its audited Full Year results for the year ended 31 December 2015.

Operational highlights:

·      Appointment of new CEO, François R. Martelet, M.D., who brings more than 20 years of biopharma experience and a proven track record of shaping and developing businesses to deliver shareholder returns

·      Lead portfolio companies, Vortex (95% ownership) and Wanda (71.3% ownership), advancing well with high calibre CEOs appointed to drive strategy and expedite commercialisation. Good progress made across other priority portfolio companies, ProAxsis (56.5% ownership) and Glycotest (87.5% ownership), where high calibre CEOs have also been appointed.

·      Portfolio rationalisation completed with the divestment  of non-core assets

·      Portfolio now solely healthcare with the focus on accelerating growth in priority companies

Financial highlights:

·      Capital raising of £18.2m (gross) successfully completed to principally fund the acceleration of Vortex and Wanda

·      Loss after tax of £12.7m (2014: loss £7.1m) reflecting close to commercialisation stage expenditure of lead and priority portfolio companies

·      Available cash resources of £23.2m (at 31 December 2014: £16.8m)

Post period end highlights:

·      Wanda entered into two new commercial agreements with:

o  Health Resource Solutions, a leading US high-tech home nursing and therapy services group, for the use of its CHF/COPD product; and

o  Dignity Health, the fifth largest health provider in the US, for its new Oncology platform

·      PDS Biotechnology signed a Cooperative Research and Development Agreement with the US National Cancer Institute to co-develop novel cancer immunotherapies through Phase II clinical trials

·      Professor Stephen Smith joined the Board as Non-Executive Director

·      Appointment of Ian Postlethwaite as Chief Financial Officer

Sir Richard Sykes, Chairman of NetScientific, said: "NetScientific's management team and portfolio focus has been completely transformed.  Under François' leadership and with a focussed, close to commercialisation portfolio asset base, we now have an extremely strong healthcare technology group well positioned, not least through its majority shareholdings, to deliver significant value to shareholders."

- Ends -

For more information, please contact:

NetScientific François R. Martelet, M.D., CEO Mark Nanovich, Interim CFO	Tel: [phone]
Investec (NOMAD and broker) Gary Clarence / Daniel Adams	Tel: [phone]
Consilium Strategic Communications Mary-Jane Elliott / Chris Gardner / Jessica Hodgson / Chris Welsh / Laura Thornton	Tel: [phone] [e-mail]

About NetScientific

NetScientific is a transatlantic healthcare technology group with an investment strategy focused on sourcing, funding and commercialising technologies that significantly improve the health and well-being of people. For more information, please visit the website at www.netscientific.net. 

Joint Statement from the Chairman & CEO

NetScientific is a transatlantic healthcare technology group with an investment strategy focused on sourcing, funding and commercialising technologies that significantly improve the health and well-being of people. In 2015 the Group underwent a successful transformation with the rationalisation of its portfolio and restructure of the management team, resulting in a streamlined group focused on holding majority positions and delivery and maximising shareholder value from its investments in digital health, diagnostics and therapeutics.

François R. Martelet, M.D. was appointed as CEO and Board Director in June 2015. He brings more than 20 years of biopharma experience and a proven track record of shaping and developing businesses to deliver returns. François has a broad experience in both large and small pharma and technology companies, deep knowledge of commercialisation, value creation and proven managerial capability.  In April 2016, the Company announced that Ian Postlethwaite has accepted the role as Chief Financial Officer. Ian joins the Company from Allergy Therapeutics plc where he has held the position of Finance Director since 2002. 

Over the year, the Group made significant progress with its portfolio companies, and specifically with its lead investments, Vortex, which is developing a novel liquid biopsy technology that could revolutionise cancer diagnosis, monitoring and treatment and Wanda, a digital health company with technology that uses machine learning to derive a personalized risk score for congestive heart failure patients. Beyond Vortex and Wanda, other priority portfolio companies have attracted high calibre, experienced CEOs to drive the next phase of growth to commercialisation. In November 2015 the Group successfully completed an £18.2m (gross) capital raising supported by new and existing shareholders to accelerate the development of its lead portfolio companies.

Finance

For the year, the Group made a loss of £12.7 million (2014: loss £7.1 million) which is split between continuing and discontinued operations as follows:

-       Continuing operations                       £11.2 million (2014: £6.2 million)

-       Discontinued operations                   £1.5 million (2014: £0.9 million)

The loss principally reflects the business model where the portfolio companies are largely subsidiaries developing their technologies and are therefore currently loss making.

The loss from continuing operations includes £7.3 million (2014: £3.1 million) of research and development costs primarily incurred in Vortex and Wanda and reflects the increased level of investment to drive the underlying technologies/products of these key portfolio companies towards commercialisation.

General and administrative costs included within continuing operations of £3.2 million (2014: £2.5 million) includes central costs incurred in managing the portfolio companies, corporate costs and sales and marketing/administrative costs incurred by the portfolio companies. The increase during the period represented the uplift in sales and marketing costs and administrative costs of the portfolio companies. Other costs of £1.1 million (2014: £0.7 million) incorporated in continuing operations included £0.5 million (2014: £nil) for redundancy costs associated with the restructure of the management team and review of operations. Headcount across the Group at end of year, excluding non-executive directors, was 47 (2014: 28).

The loss from discontinued operations comprises the operating loss incurred by the discontinued subsidiaries during the year of £0.8 million (2014: £0.9 million), share of loss from associates and joint ventures of £0.4 million (2014: £0.1 million) and the net loss of £0.3 million (2014: £nil) recorded on the disposal of these entities. The principal entities disposed of during the year were Frontier Biosciences Limited, MOF Technologies Limited, Morphodyne SA, Qlida Diagnostics Limited and RoboScientific Limited. Group non-current liabilities which existed at 31 December 2014 of £0.7 million and represented loans and borrowing and other creditors of discontinued operations have been transferred with these entities on their disposal.

Cash on the balance sheet as at 31 December 2015 was £23.2 million (31 December 2014: £16.9 million). Cash used in operations, excluding net proceeds of £17.1m from capital raising, was £11.0 million (2014: £8.8 million). The cash balance as at 31 March 2016 was £19.5 million

Strategy

The business strategy is based on funding and building game changing healthcare technology companies towards value inflection points and eventual exit including through a trade sale or public listing. The Group sources opportunities from global institutions, leading technology incubators and its deep healthcare network. In the early stages of the company's development the Group provides extensive management support including technical guidance, administrative support, legal, IP and commercial expertise. As companies mature through key milestones the Group will recruit experienced industry leading CEOs to drive the next phase of growth, attract additional external capital and secure favourable exits.

Portfolio Review

As at 31 December 2015, the Group had five core portfolio companies, including two lead assets, in which it has a controlling interest: Vortex Biosciences, Inc., Wanda, Inc., ProAxsis Ltd, Glycotest, Inc. and Glucosense Diagnostics Limited. It also has a material investment in PDS Biotechnology Corporation., and five seed stage Investments: EpiBone Inc., G-Tech Inc., Longevity Biotech Inc., Neumitra Inc., and CytoVale Inc.

The Group will continue to focus on the five core portfolio companies and actively manage the remaining portfolio, seeking to maximise shareholder return in the form of capital growth. However, there are no fixed targets for the length of time during which an investment may be held, as this will be dependent both on progress and availability of funding, with a view to maximising shareholder value and generating funds for re-investment in the pipeline.

Portfolio companies

Vortex Biosciences

Vortex Biosciences is a US based cancer diagnostic company, developing a novel liquid biopsy automated instrument (VTX-1) and microfluidic cartridge for the isolation of circulating tumour cells from whole blood without the need for any pre-treatment. The label-free technology enables high purity and collection efficiency of intact circulating tumour cells in less than an hour. The technology enables researchers and clinicians to non-invasively capture, identify, analyse and enumerate tumour cells for use in downstream clinical applications, such as cancer diagnosis and monitoring, personalised medicine, drug development, and cancer research in the estimated US$22 billion liquid biopsy market (JP Morgan Liquid Biopsy Report - 27 May, 2015).

Gene Walther was appointed as CEO on 4 January 2016. Gene brings over 20 years' impressive experience as a leading diagnostics executive. Gene was the Deputy Director, Diagnostics, for the Bill & Melinda Gates Foundation, Executive Chairman of the Board of GenturaDx where he led this start-up diagnostics firm through product development leading to its acquisition by Luminex. He spent 11 years at Novartis as President and Global Head of Diagnostics and several roles at Chiron including President and Vice President across the diagnostics and global commercial development teams. In addition, several key hires were made during the first quarter of 2016 including a Chief Commercial Officer, Vice President of Manufacturing and Director of Quality.   

During 2015, Vortex made significant progress on both the development of VTX-1 instrument and the integrated microfluidic cartridge. In addition, Vortex was granted a critical US patent which covers its core technology of inertial microfluidics and its application to the separation and collection of cells of interest including circulating tumour cells. The patent also covers collection of circulating tumour cells from the chip for downstream analysis such as counting, cytology and DNA sequencing. Alongside three previously issued patents, this grant strengthens Vortex's global market position as the company prepares to commercialise VTX-1. ISO certified contract manufacturing partners for both the instrument and the microfluidic cartridge have been selected and will be transitioning to scale manufacturing to support placements.

The new management team has reviewed previous commercialisation plans and now intends to ship the VTX-1 instrument to selected leading US researchers for Beta testing in the second quarter of 2016. Additionally, the VTX-1 will be introduced to the broader cancer research market at the American Association for Cancer Research in New Orleans on 17-20 April, 2016. Vortex continues to drive towards its key milestone of commercial launch into the clinical research market in 2017.

NetScientific shareholding in Vortex is 95% and as at 31 December 2015, it has invested £5.6 million. Grant funding received to develop Vortex's underlying technology was £1.6 million.

Wanda

Wanda is a San Francisco based digital health company commercialising advanced clinical decision support software. Wanda aims to significantly reduce hospitalisation risk, and improve the quality of life, for people with chronic conditions, initially focused on congestive heart failure (CHF). In the US chronic disease accounts for 80% of the total health care bill and represents a US$1.4 trillion expenditure, a significant proportion of which is avoidable through better management and appropriate clinical interventions.

Steve Curd joined as CEO in September 2015. He has more than 20 years' experience in driving growth for digital health companies, commercialising products and delivering exits. Steve has helped secure 15 M&A transactions and numerous successful exits for digital health companies. Most recently, Steve was the COO of NantHealth, a healthcare company converging biomolecular medicine and bioinformatics with technology services, where he was responsible for advancing its product portfolio, driving improvements in efficiency and improving client satisfaction. Other notable positions include CEO at CareInSync, CIO at UnitedHealth Group, COO at WebMD and CEO at VantageMed. The existing team was strengthened during the year as headcount grew from 8 to 17, including the appointment of a Chief Collaboration Officer to drive commercialisation.

During 2015, Wanda completed development of its Congestive Heart Failure (CHF) algorithms, and added analytics for Chronic Obstructive Pulmonary Disease (COPD), as well as a combined CHF/COPD predictive capability. As oncology diagnostic and therapeutic techniques have continued to advance, Wanda added the capability to coordinate decision support for oncology care teams in an effort to help relegate most cancers to the category of chronic conditions. Subsequent to a complete business review by the new management team it was decided to restructure the Triventis collaboration with iMPak Health and it is likely that Triventis will be dissolved with there being no financial obligation to NetScientific with regards to dissolution. The Triventis collaboration has provided valuable insight and learning about the market's expectations for the provision of a digital health solution for managing chronic diseases. This has enabled the team to clearly define the optimum solution for target end-users.

In early 2016 Wanda signed a contract with a leading US hi-tech home nursing and therapy services group, Health Resource Solutions ('HRS'), for the use of its CHF/COPD product. In addition, Wanda signed a collaborative agreement with the fifth largest health provider organization in the United States (Dignity Health) to launch   its new oncology platform (Oncoverse). With a new experienced CEO in place, a world-class Silicon Valley team formed and commercial products on the market, Wanda now plans to seek external funding in 2016 to capitalise on the significant opportunities in the digital healthcare space.

NetScientific shareholding in Wanda is 71.3% and as at 31 December 2015, it has invested £5.1 million. Grant funding received to develop Wanda's underlying technology was £7.7 million.

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. The rapid and easy-to-use tests ProAxsis has developed incorporate patented ProteaseTags®; smart molecules which trap an active protease within a complex biological sample and enable a visual readout of its presence. The initial applications for the technology are focused on managing the chronic respiratory diseases, Cystic Fibrosis (CF) and Chronic Obstructive Pulmonary Disease (COPD), where exacerbations have a major impact on the long-term prognosis of patients. There are 70,000 patients diagnosed with CF worldwide and 35.7m patients with COPD in the US and EU alone.

Dr. David Ribeiro was recruited as CEO in October 2015. He has extensive experience in commercialising products within chronic diseases, having previously held senior management roles at Solvay Healthcare, Encysive Pharmaceuticals, Pfizer and Pharmaxis Pharmaceuticals Limited.

ProAxsis made excellent progress in 2015 with the commercial launch of its immunoassay kit for research labs, as well as securing its first customers, including a major pharma company. Separately, the company made significant progress with the development of its point-of-care test for neutrophil elastase, which is expected to be ready for commercialisation in early 2017. ProAxsis will seek to raise additional funds in 2016 to principally develop its point-of-care test (NEATstik) and fund a clinical trial for COPD.

NetScientific shareholding in ProAxsis is 56.5% and as at 31 December 2015, it has invested £0.1 million. Grant funding received to develop ProAxsis's underlying technology was £1.0 million.

Glycotest

Glycotest is a US based liver diagnostics company seeking to commercialise new and unique blood tests for life threatening liver cancers and fibrosis-cirrhosis with exclusive world-wide rights to over 50 patent-protected serum protein biomarkers. Glycotest's lead product is its HCC panel, a biomarker panel driven by a proprietary algorithm for curable early-stage hepatocellular carcinoma (HCC), the most common form of primary liver cancer. The market for HCC testing is large and growing with currently three million patients and in excess of US$800m in the US alone. 

In late 2015, Larry Cohen was appointed CEO. Larry is a diagnostic industry leader who has held executive positions at large diagnostic companies such as Ortho-Clinical Diagnostics (J&J), International Technidyne Corporation (ITC), the diagnostic division of Thoratec and Beckman Instruments. He has also been CEO of venture backed start-ups such as HemoSense (acquired by Alere), SenGenix and Exalenz Bioscience (TASE).

In 2015, a 208 patient head-to-head clinical study was performed which demonstrated the excellent performance of the Glycotest HCC panel's ability to detect curable, early-stage liver cancer (HCC) versus currently used blood tests.

In the first quarter of 2016, Glycotest created a Medical Advisory Board consisting of experts in hepatology and molecular diagnostics. The aim for 2016 is to accelerate commercialisation by seeking additional external financing to develop commercial grade kits for use in a CLIA laboratory to be opened in late 2016 or early 2017.

NetScientific shareholding in Glycotest is 87.5% and as at 31 December 2015, it has invested £1.2 million. Grant funding received to develop Glycotest's underlying technology was £5.9 million.

Glucosense

Glucosense is developing a non-invasive glucose sensor, which has a number of potential applications as a replacement for current invasive tests that are inconvenient and uncomfortable for the patient. These include a partial replacement for finger-prick testing, continuous non-invasive glucose monitoring and as a wearable hypoglycaemia-alert device. According to the International Diabetes Federation, in 2015 there were an estimated 415 million adults worldwide with diabetes, including 193 million who are undiagnosed, and a further 318 million adults are estimated to have impaired glucose tolerance.

In 2015 the company continued the development of a second generation prototype to support the next phase of clinical testing. A full time Programme Director was appointed in July 2015 to oversee this work and a number of technical expert advisors have subsequently been engaged. 

NetScientific shareholding in Glucosense is 60.7% and as at 31 December 2015, it has invested £0.7 million.

PDS

PDS is a clinical stage immunotherapy company developing a next-generation of simpler, safer and more effective immunotherapies for cancer and infectious diseases. Versamune®, its novel synthetic nanoparticle platform technology, activates multiple immunological mechanisms which direct the targeting of cancer and infectious disease by the immune system.

In May 2015 PDS announced positive preliminary data showing that its lead cancer immunotherapy treatment, PDS0101, has generated strong T-cell responses in pre-cervical cancer. In February 2016 PDS signed a Cooperative Research and Development Agreement with the National Cancer Institute, a division of the US National Institutes of Health. The goal is to co-develop novel cancer immunotherapies through Phase II clinical trials that will start in 2016 and 2017. PDS has recently strengthened its senior management team with the recruitment of a Chief Medical Officer and VP of Drug Development and Manufacturing.

NetScientific has invested £1.76m for a 14.85% shareholding in PDS.

Board changes

Post year end, the Group was pleased to announce the appointment of Professor Stephen Smith as Non-Executive Director. Stephen has held senior leadership roles in the NHS and academia. He has had a long and distinguished career as a clinician scientist, Head of Department, Dean and CEO with the Medical Research Council, University of Cambridge, Imperial College, London and Imperial College Healthcare NHS Trust. During his career, Stephen has also spun two companies out of Cambridge - Metris Therapeutics Ltd and GNI Group Ltd. GNI was established as a start up in Japan in 2001 and successfully achieved an Initial Public Offering (IPO) on the Tokyo Stock Exchange six years later. 

In addition, Ian Postlethwaite has accepted the role of Chief Financial Officer of the Group. Ian has been the Finance Director of Allergy Therapeutics plc for 14 years and has been a significant contributor to the success of the company. During this time Allergy Therapeutics became listed on AIM, achieved a number of financial goals, including two fund raisings in 2015 to support the company's clinical and other development plans, and has growing revenues from products on sale in Europe.

We wish to thank past Directors for their valuable contributions to Netscientific.

Outlook

In 2015 the Group underwent a significant transformation with key management changes, including the appointment of a new blue-chip Group CEO and CFO and streamlining of assets resulting in a tightly run, highly focused healthcare portfolio. Following the successful capital raising in November 2015 we are able to accelerate key portfolio companies towards major milestones and commercialisation. The prime focus in 2016 across the Group is on execution and delivery. 

We remain very encouraged by the quality of our priority portfolio companies where we have been able to recruit outstanding CEOs in their respective fields to complete the process of bringing the cutting-edge technologies to commercialisation. We believe these leaders have the track record and experience needed to drive the next phase of commercial growth and attract additional third party validation capital, which will lead to significant shareholder value creation. We will continue to focus heavily in these companies throughout 2016.

Sir Richard Sykes	François R. Martelet, M.D
Non-Executive Director and Chairman	Chief Executive Officer
6 April 2016	6 April 2016

CONSOLIDATED INCOME STATEMENT

FOR THE YEAR ENDED 31 DECEMBER 2015

	Notes	2015 £		2014 £
Continuing Operations
Revenue		78,577		-
Cost of sales		(6,447)		-
Gross profit		72,130		-
Other operating income		43,864		24,338
Research and development costs		(7,256,285)		(3,098,067)
General and administrative costs		(3,182,454)		(2,495,450)
Other costs		(1,077,110)		(717,001)
Loss from operations		(11,399,855)		(6,286,180)
Finance income		77,692		77,435
Finance expense		(137)		-
Loss before taxation		(11,322,300)		(6,208,745)
Income tax credit		93,550		29,821
Loss for the year from continuing operations		(11,288,750)		(6,178,924)
Discontinued Operations
Loss for the year from discontinued operations	5	(1,517,696)		(947,874)
Loss for the year		(12,746,446)		(7,126,798)
Loss attributable to:
Owners of the parent	4	(10,841,924)		(6,425,011)
Non-controlling interests		(1,904,522)		(701,787)
		(12,746,446)		(7,126,798)
Basic and diluted loss per share from continuing and discontinued operations attributable to owners of the parent during the year:
Continuing operations		(25.4p)		(15.7p)
Discontinued operations		(3.0p)		(2.2p)
From loss for the year		(28.4p)		(17.9p)

CONSOLIDATED INCOME STATEMENT AND OTHER COMPREHENSIVE INCOME

FOR THE YEAR ENDED 31 DECEMBER 2015

		2015 £		2014 £
Loss for the year		(12,746,446)		(7,126,798)
Items that may be subsequently reclassified to profit or loss:
Exchange differences on translation of foreign operations		245,443		295,989
Total comprehensive loss for the year		(12,501,003)		(6,830,809)

Attributable to:
Owners of the parent		(10,596,481)		(6,129,022)
Non-controlling interests		(1,904,522)		(701,787)
		(12,501,003)		(6,830,809)

All other comprehensive income will be reclassified to retained earnings on the ultimate sale of any relevant subsidiary company.

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

AS AT 31 DECEMBER 2015

	Notes	2015 £		2014 £
ASSETS
NON-CURRENT ASSETS
Intangible assets		513		10,244
Property, plant and equipment		285,015		348,245
Investments in equity accounted associates		-		228,883
Investments in equity accounted joint ventures		-		-
Available for sale investments	7	1,806,608		1,806,608
Derivative financial assets	8	100,159		100,159
Other receivables		753,583		545,606
		2,945,878		3,039,745
CURRENT ASSETS
Trade and other receivables		559,775		853,022
Cash and cash equivalents		23,239,047		16,867,198
		23,798,822		17,720,220
TOTAL ASSETS		26,744,700		20,759,965
LIABILITIES CURRENT LIABILITIES
Trade and other payables		(2,156,180)		(1,281,242)
Loans and borrowings		(50,137)		(43,250)
		(2,206,317)		(1,324,492)
NON CURRENT LIABILITIES
Trade and other payables		-		(52,537)
Loans and borrowings		-		(687,369)
		-		(739,906)
TOTAL LIABILITIES		(2,206,317)		(2,064,398)
NET ASSETS		24,538,383		18,695,567
ISSUED CAPITAL AND RESERVES ATTRIBUTABLE TO THE PARENT
Called up share capital		2,553,785		1,795,101
Share premium account		47,232,755		30,844,552
Capital reserve account		236,745		236,745
Foreign exchange reserve		691,563		446,120
Retained earnings		(24,371,018)		(13,529,442)
Equity attributable to the owners of the parent		26,343,830		19,793,076
Non-controlling interests		(1,805,447)		(1,097,509)
TOTAL EQUITY		24,538,383		18,695,567

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

FOR THE YEAR ENDED 31 DECEMBER 2015

	Shareholders' equity
	Share capital £	Share premium £	Capital reserve £	Retained earnings £	Foreign exchange reserve £	Total £	Non- controlling interests £		Total equity £
1 January 2014	1,795,101	30,844,552	236,745	(7,459,726)	150,131	25,566,803	(667,271)		24,899,532
Comprehensive Income
Loss for the year	-	-	-	(6,425,011)	-	(6,425,011)	(701,787)		(7,126,798)
Other comprehensive income	-	-	-	-	295,989	295,989	-		295,989
Acquisition of subsidiary	-	-	-	-	-	-	78,580		78,580
Increase in subsidiary shareholding	-	-	-	(489,893)	-	(489,893)	489,893		-
Dilution in subsidiary shareholdings	-	-	-	128,187	-	128,187	(128,187)		-
Disposal of subsidiaries	-	-	-	-	-	-	2,785		2,785
Foreign exchange differences	-	-	-	-	-	-	(171,552)		(171,552)
Share-based payments	-	-	-	717,001	-	717,001	-		717,001
Total comprehensive income	-	-	-	(6,069,716)	295,989	(5,773,727)	(430,238)		(6,203,965)
31 December 2014	1,795,101	30,844,552	236,745	(13,529,442)	446,120	19,793,076	(1,097,509)		18,695,567
Comprehensive Income
Loss for the year	-	-	-	(10,841,924)	-	(10,841,924)	(1,904,522)		(12,746,446)
Other comprehensive income	-	-	-	-	245,443	245,443	-		245,443
Increase in subsidiary shareholding	-	-	-	(170,520)	-	(170,520)	220,240		49,720
Disposal of subsidiaries	-	-	-	-	-	-	1,087,447		1,087,447
Foreign exchange differences	-	-	-	-	-	-	(111,103)		(111,103)
Issue of share capital	758,684	17,449,727	-	-	-	18,208,411	-		18,208,411
Costs of share issue	-	(1,061,524)	-	-	-	(1,061,524)	-		(1,061,524)
Share-based payments	-	-	-	170,868	-	170,868	-		170,868
Total comprehensive income	758,684	16,388,203	-	(10,841,576)	245,443	6,550,754	(707,938)		5,842,816
31 December 2015	2,553,785	47,232,755	236,745	(24,371,018)	691,563	26,343,830	(1,805,447)		24,538,383

CONSOLIDATED STATEMENT OF CASH FLOWS

FOR THE YEAR ENDED 31 DECEMBER 2015

				2015 £			2014 £
Cash flows from operating activities
Loss before income tax including discontinued operations				(12,854,407)			(7,313,806)
Adjustments for:
Depreciation of property, plant and equipment				129,831			65,981
Amortisation of intangible assets				55,336			1,614
Loss on disposal of property, plant and equipment				3,432			768
Share of loss of associates and joint venture				399,656			119,991
Gain on sale of associates and joint venture				(214,331)			-
Loss on disposal of subsidiaries				508,046			-
Impairment of intangible assets				190,631			641,767
Provision against recoverability of loan				176,677			-
Share-based payments				170,868			717,001
Bad debt written off				3,557			-
Foreign exchange gains				(84,145)			-
Finance income				(77,695)			(77,465)
Finance costs				51,397			45,671
				(11,541,147)			(5,798,478)
Changes in working capital:
Increase in trade and other receivables			(54,880)				(962,051)
Increase in trade and other payables			881,717				129,757
Cash used in operations			(10,714,310)				(6,630,772)
Income tax received			83,199				19.399
Net cash used in operating activities			(10,631,191)				(6,611,373)
Cash flows from investing activities
Investment in joint venture			(34,981)				(35,119)
Investment in associate			(24,999)				(239,189)
Proceeds from sale of associate			24,999				-
Purchase of derivative financial assets			(426,000)				(100,159)
Proceeds from sale of derivative financial assets			426,000				-
Disposal of discontinued subsidiaries, net of cash disposed of			(109,431)				-
Purchase of property, plant and equipment			(136,460)				(337,469)
Proceeds from sale of property, plant and equipment			650				1,054
Purchase of intangible assets			(163,672)				-
Interest received			37,786				66,661
Proceeds on change in subsidiary shareholding			720				-
Cash acquired on acquisition of subsidiary			-				52,000
Purchase of available for sale investments			-				(1,806,606)
Net cash used in investing activities			(405,388)				(2,398,827)
Cash flows from financing activities
Proceeds from borrowings			50,000				190,000
Proceeds from share issue			18,208,411				-
Share issue cost			(1,061,524)				-
Net cash from financing activities			17,196,887				190,000
Increase / (decrease) in cash and cash equivalents			6,160,308				(8,820,200)
Cash and cash equivalents at beginning of year			16,867,198				25,546,951
Exchange gains on cash and cash equivalents			211,541				140,447
Cash and cash equivalents at end of year			23,239,047				16,867,198

NOTES TO THE FINANCIAL INFORMATION FOR THE YEAR ENDED 31 DECEMBER 2015

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.

2              Basis of preparation

The preliminary results of the year ended 31 December 2015 have been extracted from audited accounts which have not yet been delivered to the Registrar of Companies.

The Financial Statements set out in this announcement do not constitute statutory accounts for the year ended 31 December 2015.

The report of the auditors on the statutory accounts for the year ended 31 December 2015 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 2015 included in this announcement were authorised for issue in accordance with a resolution of the Board of Directors on 6 April 2016.

3.             Significant accounting policies

The Group financial information has been prepared in accordance with International Financial Reporting Standards as adopted by the European Union that are effective for accounting periods beginning on or after 1 January 2015.

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.

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 2015 of 3,081,936 are not treated as dilutive as the entity is loss making

		2015 £		2014 £
Loss attributable to equity holders of the Company
Continuing operations		9,697,459		5,636,685
Discontinued operations		1,144,465		788,326
Total		(10,841,924)		(6,425,011)
Number of shares
Weighted average number of ordinary shares in issue		38,228,552		35,902,020

5.         DISCONTINUED OPERATIONS

Following a review of the Group's strategy and portfolio to focus on core projects, certain subsidiaries, associates and joint ventures were disposed of during the year.

The results of the discontinued operations, which have been included in the consolidated income statement, were as follows.

		Year ended 2015 £		Year ended 2014 £
Revenue		50,928		51,921
Cost of sales		(24,244)		(17,732)
Gross profit		26,684		34,189
Other operating income		404,001		266,867
Research and development costs		(1,149,716)		(542,949)
General and administrative costs		(68,448)		(55,769)
Impairment of intangible assets		-		(641,767)
Loss from operations		(787,479)		(939,429)
Finance income		3		29
Finance expenses		(51,260)		(45,671)
Share of loss of associates and joint venture		(399,656)		(119,991)
Loss before taxation		(1,248,392)		(1,105,062)
Attributable tax credit		(14,411)		(157,188)
Loss after tax		(1,223,981)		(947,874)
Gain on sale of associates and joint venture		214,331		-
Loss on divestment of subsidiaries		(508,046)		-
Attributable tax expense		-		-
Loss from sale of discontinued operations after tax		(293,715)		-
Loss for the year		(1,517,696)		(947,874)

Subsidiaries disposed of during the year:

Name	Country of incorporation or registration		Proportion of ownership interest at 31 December 2014*		Proportion of ownership interest held by non-controlling interests at 31 December 2014*
MOF Technologies Limited	UK		51%		49%
RoboScientific Limited	UK		80%		20%
Nearfield Communications Limited	UK		100%		-
Watermass Limited	UK		100%		-
Advanced BioSensors, Inc.	USA		37%		63%%
Advanced Cardiotech, Inc.	USA		87.5%		12.5%
Cardio-Scientific, Inc.	USA		100%		-
Moftek, Inc.	USA		100%		-
Qlida Diagnostics, Inc.	USA		51.2%		48.8%
Morphodyne SA	Swiss		60%		40%

*           Interests were unchanged at time of disposal.

Associates disposed of during the year:

Name
DName-iT NV
Frontier BioSciences Limited

Joint venture disposed of during the year:

Name
Butterfly BioSciences LLC

6.             INVESTMENTS IN SUBSIDIARY UNDERTAKINGS

The Group had the following principal subsidiaries at 31 December 2015:

Name	Country of incorporation or registration	Proportion of ownership interest at 31 December 2015	Proportion of ownership interest at 31 December 2014	Proportion of ownership interest held by non-controlling interests at 31 December 2015	Proportion of ownership interest held by non-controlling Interests at 31 December 2014
NetScientific UK Limited	UK	100%	100%	-	-
ProAxsis Ltd	UK	56.5%	56.5%	43.5%	43.5%
Glucosense Diagnostics Limited	UK	60.7%	100%	39.3%	-
NetScientific America, Inc.	USA	100%	100%	-	-
Vortex BioSciences, Inc. (i)	USA	95%	95%	5%	5%
Wanda, Inc. (i)	USA	71.3%	71.3%	28.7%	28.7%
Glycotest, Inc. (i)	USA	87.5%	87.5%	12.5%	12.5%
Triventis Health LLC (ii)	USA	55%	-	45%	-

             For all undertakings listed above, the country of operation is the same as its country of incorporation or registration.

(i)         Options have been issued by Vortex BioSciences, Inc., Wanda, Inc. and Glycotest, Inc. which if exercised would dilute the Company's shareholding by 19%, 14% and 14% respectively.

(ii)        On 27 April 2015, the Group subscribed for a 55% interest in Triventis Health LLC, a digital health sales and marketing company. The price paid for the interest was US$0.55. Triventis Health LLC was formed on 20th April 2015 and was dormant and did not trade until 27 April 2015.

7.         AVAILABLE FOR SALE INVESTMENTS

Represent unquoted equity securities
		2015 £		2014 £
At 1 January		1,806,608		2
Additions		-		1,806,606
At 31 December		1,806,608		1,806,608

Name	Country of incorporation	% of issued share capital	Currency denomination	£
PDS Biotechnology Corporation	USA	14.85%	US$	1,657,030
CytoVale, Inc.	USA	2.15%	US$	149,576
Other				2
				1,806,608

The shares in the above investments are not quoted in an active market and their fair value cannot be reliably measured. As such the investments have been measured at cost less accumulated impairment.           

8.         DERIVATIVE FINANCIAL ASSETS

					2015 £		2014 £
Warrants					100,159		100,159

The Group have warrants to acquire equity shares in PDS Biotechnology Corporation at an agreed price at any time prior to 15 December 2016. The warrants have been valued using the Black-Scholes Model and a level 3 fair value hierarchy, given the unobservable data for volatility. This valuation has not changed in the year as the market value of the equity shares in PDS Biotechnology Corporation cannot be reliably measured.

 

END

 

 

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