RNS Number : 2777B
NetScientific PLC
03 April 2017
 

 3 April 2016

 

NetScientific plc

 

("NetScientific" or the "Group")

 

 

NetScientific Full Year Results for the year ended 31 December 2016

 

 

London, UK - 3 April 2017 - NetScientific plc (AIM: NSCI), the transatlantic healthcare IP commercialisation Group, announces its audited full year results for the year ended 31 December 2016.

 

Operational highlights:

 

Portfolio progress:

 

·      Vortex BioSciences

Gained CE Mark and FDA Class 1 Registration for its liquid biopsy VTX-1 system

Studies presented at the American Association for Cancer Research (AACR) support the application of Vortex's VTX-1 product

Leading advisors appointed to the Scientific Advisory Board led by Massimo Cristofanilli, M.D.

Appointment of Deborah Neff, ex Chief Operating Officer of Complete Genomics, as Non-Executive Director

Exclusive license of a series of four patents covering a novel cell electroporation technology from Harvard University

Co-founder and Chief Scientific Advisor, Professor Dino Di Carlo, received the US Presidential Early Career Award for Scientists and Engineers, for devising a first-of-its-kind technique

 

·      Glycotest

Medical Advisory Board formed, including leading experts in liver disease to advise on the development of diagnostic test for liver related diseases

Strengthened its intellectual property portfolio with Japanese Patent grant

HCC Panel clinical validation study plan developed, with investigators and sites identified

 

·      ProAxsis

Successfully registered a CE Mark to enable commercialisation in laboratories of its respiratory test, a novel ProteaseTag® Active Neutrophil Elastase Immunoassay (NE), for chronic respiratory diseases including COPD and Cystic Fibrosis

Established a leading Scientific Advisory Board to support the development of its ProteaseTag® activity-based immunoassays and point-of-care tests

NE immunoassay highlighted as highly predictive for future respiratory exacerbations in University of Dundee publication (American Journal of Respiratory and Critical Care Medicine, December 2016)

Company awarded research grants from BioMedical Catalyst, Invest Northern Ireland and Innovate UK

 

·      Wanda

Foad Dabiri was appointed Chief Executive Officer, taking over from Steve Curd, to refocus Wanda on its core strategy and progress the Company through its commercialisation phase

Formation of Scientific Advisory Board, including distinguished physicians, health economics scientists, and technologists

Signed contract with Health Resource Solutions, enabling the organisation to use WANDA's chronic condition digital management platform to provide improved at home care to its patients

Wanda selected by Los Angeles-based 24Hr HomeCare to provide its predictive analytics and behavioural guidance technology to improve outcomes for at risk-patients and reduce hospital readmissions

Collaborative deal with one of the US's biggest hospital groups, Dignity Health, to launch OncoVerse, the first ever digital health oncology care platform

 

·      PDS Biotechnology

Positive Phase I study results for its PDS0101 immunotherapy for HPV-related cancers and initiates planning for upcoming Phase II clinical trials in several HPV-related cancers

Signed a Co-operative Research and Development Agreement with the National Cancer Institute, a division of the US National Institutes of Health, to co-develop novel cancer immunotherapies through Phase II clinical trials

Appointed Dr Robert Shepard, M.D., F.A.C.P. as Chief Medical Officer and Dr Panna L. Dutta, Ph.D. as Vice President of Drug Development and Manufacturing

NetScientific converts warrants and loan to increase shareholding from 14.85% to 17.4%

 

Corporate highlights:

 

·      Appointment of Ian Postlethwaite as Chief Financial Officer

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

 

 

 

Financial highlights:

 

·      Loss after tax of £13.1m (2015: loss £12.7m) reflecting the business model, where the portfolio companies are largely subsidiaries developing their technologies and are therefore currently loss making

·      Available cash resources of £9.5m (at 31 December 2015: £23.2m). Cash used in operations, was £12.9 million (2015: £10.7 million)

 

Post year end highlights:

 

·      Vortex BioSciences

Liquid biopsy VTX-1 commercially launched in 2017

 

·      Glycotest

Peer review publication: "Changes in the glycosylation of kininogen and the development of a kininogen based algorithm for the early detection of HCC"

 

 

Commenting on the Group's 2016 full year results, Francois Martelet, CEO of NetScientific, said: "NetScientific is a strong healthcare IP commercialisation group with a world-class portfolio of disruptive technologies, led by experienced management teams.

 

"2016 was a year of execution, where we focused on delivering the individual development milestones within each of our portfolio companies, paving the way in 2017 for continued progress and maturation of our investments.

 

"We continue to believe that we have a world-class portfolio of companies, experienced and relevant management teams and the business and financing strategies to support their development and attract the necessary third-party validation capital."  

 

 

Meeting and conference call for analysts

 

Francois Martelet, Chief Executive Officer, and Ian Postlethwaite, Chief Financial Officer, will hold a presentation and simultaneous conference call with Q&A for analysts today at 09:30 at Stifel's offices, 150 Cheapside, London, EC2V 6ET. Gene Walther, Chief Executive Officer of Vortex BioSciences, and Foad Dabiri, Chief Executive Officer of WANDA, will join via the conference call to give updates on the progress of their respective businesses. The presentation will be available on NetScientific's website shortly before the call at http://netscientific.net/investors/presentations.

 

Participant dial-in: 08006940257

International dial-in: +44 (0) 1452 555566

Participant code: 67358107

 

 

For more information, please contact:

 

NetScientific

François R. Martelet, M.D., CEO

Ian Postlethwaite, CFO

 

Tel: +44 (0)20 3514 1800

Stifel Nicolaus Europe Limited (NOMAD and broker)

Jonathan Senior/ David Arch/ Ben Maddison

Tel: +44 (0)20 7710 7600

 

Consilium Strategic Communications

Mary-Jane Elliott / Jessica Hodgson / Chris Welsh / Laura Thornton

 

 

Tel: +44 (0)20 3709 5700

netscientific@consilium-comms.com

 

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 with chronic diseases. For more information, please visit the website at www.netscientific.net

 

 

 

 



CHAIRMAN'S AND CHIEF EXECUTIVE OFFICER'S STATEMENT

 

NetScientific is a transatlantic healthcare IP commercialisation Group focused on sourcing, funding and commercialising technologies and companies that have the potential to treat chronic diseases and significantly improve the health and well-being of people.

 

The UK is the global hub for IP commercialisation with transatlantic businesses selecting the UK as listing destination due to the strength of the peer group and understanding of the sector.  NetScientific is well placed amongst its peer group to benefit from the appreciation and understanding of this sector.  The Group is highly international in its approach and differentiated by its global network and majority shareholding positions in its portfolio assets.

 

During 2016, the Group has continued to significantly progress its breakthrough technologies towards commercialisation, with portfolio assets across the Diagnostics, Therapeutics and Digital Health sectors. 

 

Great progress has been achieved with the lead portfolio companies, which are either beginning, or poised for, commercialisation. Notably, Vortex Biosciences, which is developing a novel liquid biopsy technology that aims to revolutionise cancer diagnosis, monitoring and treatment by isolating and collecting intact circulating tumour cells, launched its first product, the VTX-1 instrument, at Tri-Conference on Molecular Medicine on 21 February 2017.  NetScientific also made a further investment in PDS Biotechnology to help support the development of its novel and highly promising broad-based cancer immunotherapy, the Versamune® platform, which is about to commence multiple Phase II clinical programmes.  ProAxsis, an early warning diagnostic test for infection in cystic fibrosis and COPD patients, gained a CE Mark for its ProteaseTag immunoassay, and is preparing to launch its point-of-care (POC) test, NEATstik®, this year. Glycotest, a liver diagnostics company, completed a head-to-head clinical evaluation of its liver cancer panel which demonstrated significantly better results versus the current industry standard, with further development of commercial grade kits for CLIA laboratory use underway. Another important milestone in 2016 was Wanda's collaboration with Dignity Health, Inc. on Oncoverse, a virtual care and treatment plan for cancer patients. Dignity Health manages one of the largest healthcare systems in the US.

 

Vortex Biosciences

 

Vortex Biosciences gained a CE Mark approval for its VTX-1 instrument during the period, and VTX-1 was registered as a Class I medical Device with the FDA. Vortex published key results in the November 2016's edition of the journal, Oncotarget, showing that its next-generation circulating tumour cells (CTC) capture system helped enhance the clinical assessment of a cancer's mutation profile and metastatic status. Combining CTC capture and analysis, with separate and complementary evaluation of cfDNA (circulating free DNA), offers a better understanding of dynamic tumour profiles and a patient's disease. Both of these were significant milestones on the path towards making the VTX-1 instrument commercially available in early 2017 and generating sales into the clinical market in the US.

 

Wanda

 

Wanda, our lead digital health company, has developed an artificial intelligence (AI) platform for remote patient monitoring that enables care teams to help patients live longer, with more efficient and lower cost care. In 2016, significant efforts were made to establish contracts and patient user plans in the home care, nursing, direct-to-consumer and B2B segments. Initial client base results have demonstrated the power of Wanda's in-line predictive analytic capabilities in managing patients with chronic disease conditions. 

 

Wanda has been able to agree a number of deals with clients across a broad cross-section of home healthcare providers, but has faced a number of commercial headwinds in determining the best route forward for optimal revenue and profit generation. During the previous 12 months, despite an upgraded product suite, the company has achieved only limited business traction and revenues in the market have been below expectations. This, in combination with the competitive, complex and fast-changing digital health commercial environment has made gaining momentum difficult.  Based on a strategic review, we took the decision to restructure the Company to focus on its core capabilities. Foad Dabiri, Wanda's Chief Technology Officer, was recently promoted to Chief Executive Officer to lead Wanda based on his strong expertise in the digital health sector.

 

Also as a result of an in-house impairment review, we have taken a provision in these results on the debt provided to Wanda, reducing the outstanding debt from £8.8 million to £3.8 million.  This has no impact at Group level, but is nevertheless significant at Company level.

 

OncoVerse is a digital health platform designed to enable cancer patients' care teams to collaborate in real-time to allow clinicians across all disciplines to work together to determine the most effective treatment plan for cancer patients. OncoVerse was initially conceived by a Dignity Health physician who wanted a tool to improve team collaboration, especially when evaluating a complex cancer case and determining the appropriate patient treatment plan. Dignity Health engaged Wanda to develop the software due to the Company's proven track record supporting informed treatment decisions and reducing administrative costs. The collaboration with Dignity Health is now well advanced and the concept attracts interest from major corporations.

 

PDS Biotechnology

 

PDS Biotechnology continued to see strong progress with its T-cell activating technology platform, Versamune®, 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'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® T-cell Activating platform, and presented results at a number of conferences (most recently PDS0101 Phase I/IIa data from a number of HPV-induced cancers at the Society for Immunotherapy of Cancer meeting in November 2016). A key event for the company was the meeting with the FDA in August 2016 regarding the design of the Phase II clinical studies in several HPV related cancers. 

 

Glucosense

 

Glucosense, our smallest portfolio company and the focus of minimal investment in the period was dissolved after it had reached a go/no-go point and failed to replicate its initial in vitro results. The investment in Glucosense totalled only £0.7m in equity and loans.

 

Seed Portfolio

 

During the year, the company reviewed its portfolio of five seed stage investments (the 'Seed Portfolio'). The review concluded that there were no plans to invest additional funds in the Seed Portfolio because it was unlikely that NetScientific's investment criteria of gaining initial majority control would be achieved. Limited investment has been made to date, mostly in the form of convertible loans. Nevertheless, these investments are reviewed periodically in tandem with the companies' business plans and progress.

 

Conclusion

 

In summary, 2016 saw continued progress across most of the portfolio as the companies strengthen their individual positions working toward raising new funds. Additionally, NetScientific continues to evaluate new opportunities for investment, as it moves new technologies towards an eventual valuable exit in line with business strategy.

 

Finance

 

For the year, the Group made a loss of £13.1 million (2015: loss £12.7 million) which is split between continuing and discontinued operations as follows:

 

-               Continuing operations       £12.4 million (2015: £10.4 million)

-               Discontinued operations   £0.7 million (2015: £2.3 million)

 

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

 

Cash

 

Cash on the balance sheet as at 31 December 2016 was £9.5 million (2015: £23.2 million). Cash used in operations, was £12.9 million (2015: £10.7 million).

 

Going concern

 

The Directors have prepared and reviewed budget forecasts which were approved by the board of directors in the board meeting of March 2017. The budget considered amongst other things the timing of the Series A funding rounds of the subsidiary companies and the cash position of the Group at the beginning of 2017.  After due consideration of these forecasts and current cash resources, the Directors consider that the Company and Group have adequate financial resources to continue in operational existence for the foreseeable future (being at least twelve months from the date of this report), and for this reason the financial statements have been prepared on a going concern basis.

 

Board changes

 

Peter Thoms stepped down as NetScientific Chief Financial Officer on 26th January 2016, and we thank him for his contribution to the Group.

 

On 17 February 2016, 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 out two companies from Cambridge University - 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.

 

 On 15 June 2016, Ian Postlethwaite was appointed Chief Financial Officer of the Group. Ian had been the Finance Director of Allergy Therapeutics plc for 14 years and was a significant contributor to the success of the company. During that time, Allergy Therapeutics 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 grew revenues from products on sale in Europe.

 

Summary and Outlook

 

In 2016, the NetScientific Group delivered on a number of development milestones critical to enhance the competitiveness and value of the individual portfolio companies. Whilst new pipeline opportunities will continue to be reviewed, the aim in 2017 is to focus on the growth of the Company on a number of levels, including further maturation of each lead portfolio Company's platform, including striking corporate deals in order to underline a coherent strategy and progression towards translation of technology success into commercial success. We continue to believe that we have a world-class portfolio of companies, experienced and relevant management teams and the business and financing strategies to support their development and attract the necessary third-party validation capital.

 

Sir Richard Sykes

Francois R. Martelet, M.D.

Non-Executive Director and Chairman

Chief Executive Officer

31 March 2017

31 March 2017

 

 


Consolidated Income Statement

For the year ended 31 December 2016


Notes


            2016

        

£000's


2015 restated

£000's

Continuing Operations






 

Revenue



518


 

21

Cost of sales



(255)


(6)

 

Gross profit



263


 

15







Other operating income



68


44

Research and development costs



(7,443)


(6,838)

General and administrative costs



(5,001)


(2,843)

Other costs



(316)


(887)

 

Loss from operations



(12,429)


 

(10,509)

 

Finance income



94


 

77

Finance expense



(8)


-

Share of loss of associates



(49)


-

 

Loss before taxation



(12,392)


 

(10,432)

 

Income tax (charge)/credit



(18)


 

12

 

Loss for the year from continuing operations    



(12,410)


 

(10,420)












Discontinued Operations












Loss for the year from discontinued operations



(666)


(2,326)

 

Total loss for the year                                                       



(13,076)


 

(12,746)











Owners of the parent



(11,195)


(10,842)

Non-controlling interests



(1,881)


(1,904)

 

 



 

(13,076)


 

(12,746)







Basic and diluted loss per share from continuing and discontinued operations attributable to owners of the parent during the year:

 

 

4





Continuing operations



(20.8p)


(24.4p)

Discontinued operations



(1.1p)


(4.0p)

From loss for the year



(21.9p)


(28.4p)







 

Consolidated Income Statement and Other Comprehensive Income

For the year ended 31 December 2016

 




             2016

          £000's


           2015

          £000's







 

Loss for the year



(13,076)


 

(12,746)

Items that may be subsequently reclassified to profit or loss:






Exchange differences on translation of foreign operations



634


134

 

Total comprehensive loss for the year



 

(12,442)


 

(12,612)

 

 

Attributable to:






Owners of the parent



(10,084)


(10,596)

Non-controlling interests



(2,358)


(2,016)




(12,442)


 

(12,612)

 

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 2016

 

 


Notes


2016

£000's


2015

£000's

Assets






Non-current assets






Property, plant and equipment



779


285

Investments in equity accounted associates



357


-

Available for sale investments

6


2,863


1,807

Derivative financial assets



18


100

Other receivables



37


754

Total non-current assets



4,054


2,946







Current assets






Trade and other receivables



1,578


560

Cash and cash equivalents



9,456


23,239

Total current assets



11,034


23,799

 

Total assets



 

15,088


 

26,745

 

Liabilities

Current liabilities






Trade and other payables



(2,044)


(2,156)

Loans and borrowings



(128)


(50)

Total current liabilities



(2,172)


(2,206)

 

Non-current liabilities






Loans and borrowings      



(80)


-

Total non-current liabilities



(80)


-

 

Total liabilities



 

(2,252)


 

(2,206)

 

Net assets



 

12,836


 

24,539







Issued capital and reserves

Attributable to the parent






Called up share capital



2,554


2,554

Share premium account



47,233


47,233

Capital reserve account



237


237

Foreign exchange reserve



1,802


691

Retained earnings



(35,115)


(24,371)

 

Equity attributable to the owners of the parent



 

16,711


 

26,344

 

Non-controlling interests



 

(3,875)


 

(1,805)

 

Total equity



 

12,836


 

24,539



 

Consolidated Statement of Changes in Equity

As at 31 December 2016

 






Shareholders' equity


 

 

 

 

 

Share capital

£000's

 

Share premium

£000's

 

Capital

reserve

£000's

 

Retained earnings

£000's

Foreign exchange reserve

£000's

 

 

Total

£000's

Non-

controlling

interests

£000's

 

Total

equity

£000's

1 January 2015

1,795

30,845

237

(13,529)

446

19,794

(1,098)

18,696

Loss for the year

-

-

-

(10,842)

-

(10,842)

(1,904)

(12,746)

Other comprehensive income









Foreign exchange differences

-

-

-

-

245

245

(111)

134










Total comprehensive income

-

-

-

(10,842)

245

(10,597)

(2,015)

(12,612)










Increase in subsidiary shareholding

-

-

-

(171)

-

(171)

220

49

Disposal of subsidiaries

-

-

-

-

-

-

1,088

1,088

Issue of share capital

759

17,450

-

-

-

18,209

-

18,209

Costs of share issue

-

(1,062)

-

-

-

(1,062)

-

(1,062)

Share-based payments

-

-

-

171

-

171

-

171

 

31 December 2015

2,554

47,233

237

(24,371)

691

26,344

(1,805)

24,539

 

Loss for the year

-

-

-

(11,195)

-

(11,195)

(1,881)

(13,076)

Other comprehensive income









Foreign exchange differences

-

-

-

-

1,111

1,111

(477)

634










Total comprehensive income

-

-

-

(11,195)

1,111

(10,084)

(2,358)

(12,442)










Decrease in subsidiary shareholding

-

-

-

39

-

39

(20)

19

Disposal of subsidiaries

-

-

-

171

-

171

308

479

Share-based payments

-

-

-

241

-

241

-

241

 

31 December 2016

2,554

47,233

237

(35,115)

1,802

16,711

(3,875)

12,836

 

 

Consolidated Statement of Cash Flows

As at 31 December 2016

 




2016

£000's


2015

£000's

Cash flows from operating activities






Loss after income tax including discontinued operations



(13,076)


(12,746)

Adjustments for:






Depreciation of property, plant and equipment



141


130

Amortisation of intangible assets



-


55

Loss on disposal of property, plant and equipment



(1)


3

Share of loss of associates and joint venture



49


400

Gain on sale of associates and joint venture



-


(214)

Loss on disposal of subsidiaries



483


508

Impairment of intangible assets



-


191

Provision against recoverability of loan



75


177

Share-based payments



241


171

Bad debt written off



-


4

Foreign exchange gains



(121)


(85)

Finance income



(94)


(77)

Finance costs



8


50

Tax charge



18


(108)




(12,277)


(11,541)

Changes in working capital






Increase in trade and other receivables



(237)


(55)

(Decrease)/Increase in trade and other payables



(364)


882

Cash used in operations



(12,878)

(10,714)

Income tax received



94


83

Net cash used in operating activities



(12,784)


(10,631)

Cash flows from investing activities






Investment in joint venture



-


(35)

Investment in associate



(363)


(25)

Proceeds from sale of associate



-


25

Disposal of discontinued subsidiaries, net of cash disposed of



-


(108)

Purchase of property, plant and equipment



(470)


(137)

Proceeds from sale of property, plant and equipment



13


1

Purchase of intangible assets



-


(164)

Interest received



46


38

Purchase of available for sale investments



(898)


-

Net cash used in investing activities



(1,672)


(405)

 

 

Cash flows from financing activities






Proceeds from borrowings



50


50

Proceeds on change in subsidiary shareholding



20


1

Proceeds from share issue



-


18,208

Share issue cost



-


(1,062)

Net cash from financing activities



70


17,197

(Decrease) / increase in cash and cash equivalents



(14,386)


6,161

Cash and cash equivalents at beginning of year



23,239


16,866

Exchange gains on cash and cash equivalents



603


212

 

Cash and cash equivalents at end of year

 

 

 

 

 

9,456


 

23,239

 

 

 

Notes to the Financial Information for the Year Ended 31 December 2016

 

 

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 2016 have been extracted from audited accounts which have not yet been delivered to the Registrar of Companies.

 

The Financial Information set out in this announcement do not constitute statutory accounts for the year ended 31 December 2016.

 

The report of the auditors on the statutory accounts for the year ended 31 December 2016 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 2016 included in this announcement were authorised for issue in accordance with a resolution of the Board of Directors on 31 March 2017.

 

 

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 2016.

 

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 2016 of 3,412,324 (see note 26) are not treated as dilutive as the entity is loss making.

 

               


2016

£000's


2015

£000's

Loss attributable to equity holders of the Company










Continuing operations


10,623


9,310

Discontinued operations


572


1,532

Total


11,195


10,842






Number of shares





Weighted average number of ordinary shares in issue


51,075,695


38,228,552

 

 

 

 

5.             INVESTMENTS IN SUBSIDIARY UNDERTAKINGS

 

                The Group had the following subsidiaries at 31 December 2016:

Name

Primary trading address

Country of

incorporation

or registration

Proportion of

ownership interest

at 31 December 2016

Proportion of

ownership interest

at 31 December 2015

Proportion of ownership interest held by non-controlling

interests

at 31 December 2016

Proportion of ownership interest held by non-controlling

Interests

at 31 December 2015








NetScientific UK Limited

(a)

UK

100%

100%

-

-

ProAxsis Ltd

(b)

UK

56.5%

56.5%

43.5%

43.5%

Glucosense Diagnostics Limited* (iv)

(a)

UK

60.7%

60.7%

39.3%

39.3%

Healthbox Israel LLP (ii)

(a)

UK

50%

50%

50%

50%

IsraelScientific Ltd

(a)

UK

100%

100%

-

-








NetScientific America, Inc.

(c)

USA

100%

100%

-

-

Vortex BioSciences, Inc. (i)

(d)

USA

95%

95%

5%

5%

Wanda, Inc. (i)(iii)

(e)

USA

70.9%

71.3%

29.1%

28.7%

Glycotest, Inc. (i)

(f)

USA

87.5%

87.5%

12.5%

12.5%








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

 

All of the ownerships shown above relate to ordinary shareholdings.

 

 

(i)         Options have been issued by Vortex BioSciences, Inc., Wanda, Inc. and Glycotest, Inc. which if exercised would dilute the Company's shareholding by 30%, 11% and 21% respectively.

(ii)        The Group holds 50% of the voting shares and has the casting vote. The Group is entitled to 80% of profits subsequent to repayments of capital and member operational expenses.

(iii)       Following issue of further shares during the year the Group's interest was reduced to 70.9% on 31 July 2016.

(iv)       An application to strike-off Glucosense Diagnostics Limited was filed shortly after the year end.

 

 

6.             AVAILABLE FOR SALE INVESTMENTS

 

Represent unquoted equity securities







2016

£000's


2015

£000's






At 1 January


1,807


1,807

Warrant exercised


100


-

Additions


956


-

 

At 31 December


 

2,863


 

1,807

 

 

Name

Country of incorporation

% of issued share capital

Currency denomination

£000's






PDS Biotechnology Corporation

USA

17.4%

US$

2,713

CytoVale, Inc.

USA

2.15%

US$

150

Other




-





 

2,863

               

Valuation of unquoted equity investments

The fair value of unlisted securities is established using International Private Equity and Venture Capital Valuation Guidelines (IPEVCVG). Given the nature of the Group's investments in seed, start-up and early-stage companies, where there are often no current and no short-term future earnings or positive cash flows, it can be difficult to gauge the probability and financial impact of the success or failure of development or research activities and to make reliable cash flow forecasts.

 

The Group considers that fair value estimates that are based entirely on observable market data will be of greater reliability than those based on assumptions and accordingly where there has been any recent investment by third parties, the price of that investment will generally provide a basis of the valuation. Consequently, the most appropriate approach to determine fair value is a methodology that is based on market data, that being the price of a recent investment.

 

The length of period for which it remains appropriate to use the price of recent investment depends on the specific circumstances of the investment and the stability of the external environment. Where the Group considers that the price of recent investment, unadjusted, is no longer relevant and there are limited or no comparable companies or transactions from which to infer value, the Group carries out an enhanced assessment based on milestone analysis and/or industry and sector analysis. In applying the milestone analysis approach to investments in companies in early or development stages the Group seeks to determine whether there is an indication of change in fair value based on a consideration of performance against any milestones that were set at the time of the original investment decision, as well as taking into consideration the key market drivers of the investee company and the overall economic environment.

 

If there is no readily ascertainable value from following the 'price of recent investment' methodology, the Group considers alternative methodologies in the IPEVCVG guidelines, being principally discounted cash flows and price-earnings multiples requiring management to make assumptions over the timing and nature of future earnings and cash flows when calculating fair value. Factors which the Group considers include, inter alia, technical measures such as product development phases and patent approvals, financial measures such as cash burn rate and profitability expectations, and market and sales measures such as testing phases, product launches and market introduction.

 

Where a fair value cannot be estimated reliably, the investment is reported at the carrying value at the previous reporting date unless there is evidence that the investment has since been impaired.

 

At present, there is a significant range of possible fair value estimates and the probabilities of the various estimates cannot be reliably measured.

 

The investment includes a warrant with an identified fair value of £18k. This has been separately recognised.

 

 

 


This information is provided by RNS
The company news service from the London Stock Exchange
 
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