TIDMNSCI
RNS Number : 1039B
NetScientific PLC
31 May 2023
For release: 07.01, 31 May 2023
NetScientific plc
("NetScientific" or the "Company")
Preliminary Results for the year ended 31 December 2022
2022 delivered strong results and uplifts in the portfolio
value
NetScientific Plc (AIM: NSCI), investment and commercialisation
group with an international portfolio of innovative life science,
sustainability and technology companies, announces its preliminary
results for the year ended 31 December 2022.
Investor Presentation
The Company will hold a live online presentation for investors
at 11:00 BST on Monday, 5 June on the Investor Meet Company
platform. Investors can join the live presentation via:
https://www.investormeetcompany.com/netscientific-plc/register-investor
.
Investors who already follow NetScientific on the Investor Meet
Company platform will automatically be invited. Questions can be
submitted pre-event via the Investor Meet Company dashboard up
until 09:00 BST on the day before the meeting, or at any time
during the live presentation.
Financial and Operational Highlights:
This was a year of good progress for the Company as shown in the
results. The implementation of its planned growth strategy has
delivered both strategically and tactically:
-- Directors' valuation of the Company's portfolio increased by
c.35% to GBP41.8 million (2021: 31.0 million).
-- Portfolio increased to 24 companies, 2 additions.
-- EMV Capital was profitable on increased revenues of GBP1.2 million.
-- Group loss for the year increased to GBP3.7 million (2021: GBP2.9 million).
-- ProAxsis drive towards external fund-raise to fund next stage
of growth, including planned launch of Point of Care diagnostic for
COPD, and driving sales to pharma clients.
-- Glycotest progress towards completing clinical sample
collection, raised $500k from Fosun (in addition to NetScientific
support).
-- Stronger balance sheet, with total assets of GBP29.0 million
(2021: GBP20.7 million, a c. 40% increase).
-- Net assets of GBP25.2 million (2021: GBP18.5 million, a c.36% increase).
-- Cash on the balance sheet was GBP0.9 million (2021: GBP2.7
million), with a further c.GBP8 million held as readily realisable
quoted securities.
-- Direct balance sheet investments of c.GBP3.2 million,
together with GBP5.3 million of third party syndicated investments
- while the portfolio overall raised c.GBP70m in equity and venture
debt.
-- Capital under advisory now stands at GBP23.5 million.
-- Realisations of GBP0.5 million from a growing portfolio
company, locking in a GBP0.3 million profit.
-- Raised GBP1.5 million in June 2022 placing, strengthening the Company's balance sheet.
Post balance sheet events
-- PDS Biotech: On 3 January 2023, PDS Biotechnology Corporation
(Nasdaq: PDSB), announced an exclusive global licence agreement
with Merck KGaA, Darmstadt, Germany for the tumour-targeting IL-12
fusion protein M9241 (formerly known as NHS-IL12), which will join
the pipeline as PDS0301. On 27 February 2023, PDS announced the
successful completion of a Type B meeting with the U.S. Food and
Drug Administration (FDA) for a combination therapy of PDS0101,
PDS0301 and an FDA-approved immune checkpoint inhibitor (ICI) for
the treatment of recurrent/metastatic human papilloma virus
(HPV)-positive, ICI refractory head and neck cancer. On 30 March
2023, announced plan to Initiate Phase 3 study evaluating PDS0101
in Combination with KEYTRUDA(R) in head and neck cancer in 2023. On
26 May 2023, the company announced interim data indicating 12-month
survival rate of 87% with PDS0101 in combination with KEYTRUDA(R)
(pembrolizumab) for head and neck cancer patients.
-- ProAxsis: On 27 February 2023, wholly owned portfolio
company, respiratory diagnostics specialist, ProAxsis, entered into
an unsecured GBP500,000 six-month loan agreement (the "Loan
Agreement") with AB Group Limited ("AB Group"), a related party
transaction under Rule 13 of the AIM Rules for Companies. See
announcement date 28 February 2023 for more details. The loan is
intended to provide ProAxsis with additional time to prepare for an
external fundraising.
-- Glycotest: On 2 May 2023, NetScientific's portfolio company
Glycotest (specialist in liver disease diagnostics), announced the
launch of a third-party fundraising programme to raise up to $1
million, of which $0.25 million has already been received, with
further commitments. In line with the Group's 'capital light'
investment strategy, the Company and Fosun agreed to introduce
third party investors into Glycotest through the fundraising,
without reliance on NetScientific balance sheet. This is intended
to provide Glycotest with further capital to progress development,
reduce reliance on the traditionally slow-moving corporate
co-investments, prepare for market launch in the US, and explore
wider market opportunities.
-- Sofant Technologies: On 24 May 2023, NetScientific's
portfolio company Sofant Technologies announced a joint development
agreement with Inmarsat Government, the leading provider of secure,
global, mission-critical telecommunications to the US Government,
with a focus on aerial use of Sofant's phased array antenna for
aircraft telecoms. In addition, a further c. GBP1 million was
syndicated by EMV Capital and invested in Sofant post-balance
sheet.
-- Board Changes: On 31 January 2023, John Clarkson stepped down
as Non-Executive Director of the Company, and resigned from the
Board with immediate effect. Jonathan Robinson, Non-Executive
Director of the Company became Interim Non-Executive Chair while
the Company completed its recruitment process to appoint a new
Chair.
On 3 April 2023, as part of its business update, the company
announced Prof. Stephen Smith intends not to stand for re-election
at the forthcoming Annual General Meeting. On 31May 2023, the Group
announced that Charles Spicer will be taking the post of
non-Executive Director from 1 June, and non-Executive Chairman from
29 June. Jonathan Robinson will remain with the company as a
Non-Executive Director.
Summary and Outlook
-- The Company now has a robust investment model with ample room
for growth and development, offering the potential for substantial
investment returns from a maturing portfolio. Its early advantage
in the deeptech sector positions it to become a key player in the
next phase of the VC industry.
-- The focus for 2023 will be to progress its sustainable
business model through the generation of more fees from EMV
Capital, selective divestments, external funding for subsidiaries
and by expanding its funds practice. The Company's aim to increase
the net asset value and fair value of the business by progressing
cohort companies through value creation stages, obtaining third
party investment rounds, and proactive portfolio management.
-- Management plans to generate investment returns through
profitable exits of select portfolio companies and targeted growth
of a curated portfolio. By focusing on value creation services and
accelerate routes to exit and by scaling up the 'capital light'
investment model we can move towards a more evergreen investment
model.
Dr. Ilian Iliev, CEO of NetScientific commented: " We are
delighted with the Company's strong performance during 2022,
showing early validation of our model - despite significant market
volatility. Our team is committed to delivering the agreed growth
strategy, developing the portfolio companies and exploiting
opportunities to unlock and realise the requisite shareholder
returns. We have a powerful investment model with the potential for
significant investment returns in the deeptech space, and in line
with an evolving VC industry. We are excited about the future
prospects of the company."
Jonathan Robinson, Interim Non-Executive Chair of NetScientific
commented: "I am very pleased to report that the 2020 turnaround
plan is now bearing fruit. Reflecting progress, we have evolved our
board to align with the company's strategy and growth ambitions,
emphasising transactional and industry experience. We look forward
to the continued execution of our ambitious plans. "
For more information, please contact:
NetScientific
Dr, Ilian Iliev, CEO Via Belvedere Communications
WH Ireland (NOMAD, Financial Adviser and Broker)
Chris Fielding / Darshan Patel / Enzo Aliaj +44 (0)20 7220 1666
Belvedere Communications
John West / Llew Angus +44 (0) 203 008 6867
Email: nsci@belvederepr.com
About NetScientific
NetScientific plc (AIM: NSCI) is an investment and
commercialisation group with an international portfolio of
innovative life science, sustainability and technology
companies.
NetScientific identifies, invests in, and builds high growth
companies in the UK and internationally. The company adds value
through the proactive management of its portfolio, progressing to
key value inflection points, and delivering investment returns
through partial or full liquidity events.
NetScientific differentiates itself by employing a capital-light
investment approach, making judicial use of its balance sheet and
syndicating investments through its wholly owned VC subsidiary, EMV
Capital. The group secures a mixture of direct equity stakes and
carried interest stakes in its portfolio of companies, creating a
lean structure that can support a large portfolio.
NetScientific is headquartered in London, United Kingdom, and is
admitted to trading on AIM, a market operated by the London Stock
Exchange.
www.netscientific.net
The person responsible for arranging the release of this
announcement on behalf of the Company is Ilian Iliev, Chief
Executive Officer of the Company.
THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR THE PURPOSES
OF ARTICLE 7 OF THE UK VERSION OF REGULATION (EU) NO 596/2014 WHICH
IS PART OF UK LAW BY VIRTUE OF THE EUROPEAN UNION (WITHDRAWAL) ACT
2018, AS AMED. UPON THE PUBLICATION OF THIS ANNOUNCEMENT VIA A
REGULATORY INFORMATION SERVICE, THIS INSIDE INFORMATION IS NOW
CONSIDERED TO BE IN THE PUBLIC DOMAIN.#-
CHAIRMAN'S AND CHIEF EXECUTIVE OFFICER'S STATEMENT
1 CHAIR'S STATEMENT
I joined the business in December 2022, as Non-Executive
Director and Chair of the Audit & Risk Committee. I then became
interim Non-Executive Chair in early 2023, during a transitional
phase and in order to lead the Board during our search for a new
Chair.
At the time of my joining, the company had completed significant
parts of its 2020 turnaround plan and was ready to execute its
growth strategy. I am delighted to report that this is well
underway, with NetScientific and EMV Capital now operating together
to provide 'capital light' funding and value creation services to
the portfolio. NetScientific and EMV Capital also engage closely
together in transactions with potential new portfolio companies,
utilising minimal balance sheet commitment. Since late 2022, the
Group has also assisted our subsidiaries ProAxsis and Glycotest to
become financially independent portfolio companies by accessing
external finance, thus reducing overall demand on the Group's
finances.
In 2022, we witnessed high market volatility due to geopolitical
events and decreased liquidity, marking the end of a number of
years of relatively easily available capital. The venture capital
industry experienced noteworthy changes, with declining valuations
and failed companies becoming more common. Despite this challenging
environment, NetScientific and its portfolio performed well,
improving its performance in key areas. The company's turnaround
strategy, which in 2022 included syndicated investments in core
portfolio companies, and the ability to seize good opportunities,
contributed to its resilience. Our diversified portfolio meant that
some companies were positioned to overcome challenges while others
benefited from increased market focus on sustainability and energy
security.
We evolved our Board to align with the company's strategy and
growth ambitions, emphasising transaction and industry experience.
As well as my own appointment, Ed Hooper joined our board as an
Executive Director and has been a significant addition to the team.
In January 2023, I assumed the role of Interim Non-Executive Chair
until we recruited a new Chair. We are therefore very pleased to
announce Charles Spicer as our new Non-Executive Chair. We eagerly
anticipate working with Charles for many reasons, including his
substantial board and specialist experience in the life sciences
and deeptech sectors. As planned, I will soon transition from
Interim Chair to Non-Executive Director, maintaining my close
involvement with the company.
On behalf of the Board, I extend gratitude to the hard-working
employees of NetScientific and EMV Capital, as well as our
portfolio companies and shareholders, for their valued support.
Dr. Jonathan Robinson,
Interim Non-Executive Chair, NetScientific PLC
31 May 2023
2 CHIEF EXECUTIVE OFFICER'S STATEMENT
Overview
Our goal is to become a leading deeptech venture capital (VC)
investor in the life sciences, sustainability, and industrials
sectors in the UK and internationally. We believe the global VC
industry is at the end of a cycle and is now shifting away from
traditional investment models focused on software, internet, and
digital-only ventures [1] . We anticipate that the next stage of
the VC industry's focus will revolve around deeptech opportunities
in our target sectors, driven by advancements in artificial
intelligence, robotics, semiconductors, materials science, 'in
silico' design and breakthroughs in life sciences.
These developments present a compelling investment theme that
requires a different VC approach, encompassing skillsets,
engagement models, expertise, and capital deployment strategies
tailored to deeptech investments. After 10 years of operational VC
experience in this field, we continue to refine our investment and
portfolio development strategy, which has been designed around the
challenges of investing in deeptech - often involving hardware or
hardware/software models. Our core multi-disciplinary team
possesses an appropriate skillset mix, and has built the right
processes, 'playbooks' and portfolio support structures apt for the
unique challenges of investing and scaling businesses in
deeptech.
Early success and validation of our strategy are evident in our
2022 performance. Despite market volatility, we achieved a
remarkable 35% increase in Fair Value to GBP41.8m, representing a
4x growth since implementing the new strategy nearly three years
ago. This increase in valuations is not a passive or accidental
outcome. It was in large measure driven by our team's hard work,
and implementation of our model including: hands-on management;
value creation efforts with select portfolio companies; capturing
synergies between companies; and taking new or deeper stakes on
advantageous terms, avoiding overvaluation. While exits through
Initial Public Offerings or trade sales to corporations may remain
challenging and at lower valuations, we have demonstrated modest
profitable divestments through secondaries.
It is worth noting, as other market commentators have also done,
that our current market cap is at a substantial discount to our
Fair Value. Though operational challenges persist, we are confident
in our position for the next phase of developments as we build our
business.
Financial and Operational Highlights:
-- Directors' valuation of the Company's portfolio has increased
by c.35% to GBP41.8 million (2021: 31.0 million), driven by
valuation increases across several companies. [2]
-- Portfolio increased to 24 companies, through 2 additions during the year.
-- EMV Capital was profitable on increased revenues of GBP1.2
million, providing valuable infrastructure and services to the
Group and its portfolio companies.
-- Group Loss for the year increased to GBP3.7 million (2021:
GBP2.9 million), of which GBP1.5m was attributable to the 'core' of
NetScientific PLC and EMV Capital, with the balance of GBP2.2
million consolidated from the subsidiary portfolio companies
ProAxsis and Glycotest due to further commercialisation and
development expenditure.
-- ProAxsis drive towards external fund-raise to fund next stage
of growth, including planned launch of Point of Care diagnostic for
COPD, and driving sales to pharma clients. Post-balance sheet
GBP500k funding package from family office.
-- Glycotest progress towards completing clinical sample
collection, raised $500k from Fosun (in addition to NetScientific
support). Post-balance sheet announcement of a $2m investment
package, combining private investment of $1m and funding of $1m by
Fosun.
-- The company ends the year with a stronger balance sheet, with
total assets of GBP28.9 million (2021: GBP20.7 million, a c. 40%
increase), and net assets of GBP25.2 million (2021: GBP18.5
million, a c.36% increase).
-- Cash on the balance sheet was GBP0.9 million (2021: GBP2.7
million), with a further c.GBP9.3 million held as readily
realisable quoted securities as at 26 May 2023.
-- The Group's 'capital light' investment model enabled
NetScientific to continue to support its portfolio companies with a
very selective use of its balance sheet: direct balance sheet
investments of c.GBP3.2 million, together with GBP5.3 million of
third party syndicated investments led by EMV Capital - while the
portfolio overall raised c.GBP70m in equity and venture debt
-- Capital under advisory now stands at GBP23.5 million (2021: 22.1 million) [3] .
-- Realisations of GBP0.5 million from a growing portfolio
company, locking in a GBP0.3 million profit on that stake.
-- Raised GBP1.5 million in June 2022 PLC placing, strengthening
the Company's balance sheet and with strong participation from the
investor network of EMV Capital.
Portfolio highlights
In 2022, our portfolio experienced a successful year of value
growth and fundraisings despite challenging markets. A total of
GBP70 million was raised through equity and venture debt by 18
companies at various stages of investment. We selectively
participated in 10 of these investments through both direct and
syndicated means, aligning with our 'capital light' model. With two
new additions, our portfolio now consists of 24 companies,
including EMV Capital. More details on the individual companies'
developments are given in the Portfolio Update section later in the
statement.
In terms of new investments, we introduced two companies to our
portfolio:
-- Ventive Limited, in which we hold a 16% direct stake,
received a GBP2.5 million financing package that included equity
and debt matched funding. This unlocked a c.GBP1.5m BEIS grant, and
the company's business lines include passive air ventilation
systems and modular heat pumps.
-- Deeptech Recycling Technologies Limited, in which we hold a
30% direct stake, acquired the majority of assets from Recycling
Technologies, a well known developer of plastic waste recycling
technologies. Our Value Creation team is working on relaunching
this business in the rapidly growing plastics waste management
sector.
In addition, we restructured our participation in Vortex from
capital under advisory into a direct 30% stake.
EMV Capital Ltd ("EMVC")
EMVC is a wholly-owned subsidiary and the corporate finance and
venture capital arm of NetScientific. It was acquired in August
2020, and was founded and owned by our CEO Dr. Ilian Iliev. It
follows an investment model where it syndicates investments from
its extensive network of private, institutional VC, and corporate
investors in pre-Series A and Series A stages. It actively engages
with portfolio companies to focus on venture capital returns.
EMVC plays a vital role in the Group's strategy by generating
revenues, enabling a 'capital light' investment model, and
providing specialised support and value creation services to
portfolio companies. Additionally, it offers potential additional
investment returns to the Group through its the Capital Under
Advisory.
Key developments in 2022 for EMVC included syndicating GBP5.3
million, reaching now a total advisory capital of GBP23.5m (only
slightly higher than 2021 due to the subtraction of GBP3.9m Vortex
Biosciences restructuring). Revenues increased by 15% to GBP1.2m
from corporate finance and value creation activities, resulting in
a net profit of GBP85 thousand. EMVC successfully integrated its
portfolio into NetScientific's Group strategy, facilitating
advantageous acquisitions of stakes in Vortex, Ventive, and
Deeptech Recycling. Furthermore, EMVC raised significant capital
for portfolio companies including Q-Bot, SageTech, Sofant,
DName-iT, Vortex, Wanda, Deeptech Recycling, Ventive, and FOx
Biosystems.
To support growth at its portfolio companies, EMVC offers value
creation services through its in-house operational team, venture
partners, and suppliers, encompassing investment readiness, IP
strategy, corporate collaborations, financial functions, and senior
executive placements. It has retained contracts with several of its
portfolio companies, helping them accelerate development, and
execute strategy pivots.
The fair value of NetScientific's stake in EMVC remains
unchanged at GBP3.5m since its acquisition in 2020. While its value
is believed to be higher, as it is not seeking external finance,
revaluation is not possible due to BVCA rules. However, growth
projections indicate significant potential for upside, driven by
expanding capital under advisory, proprietary deal flow, and
recurring income from management and board fees.
Strategy update
As highlighted above, NetScientific's acquisition of EMV Capital
in August 2020 has transformed our company from a standstill into a
scalable VC business. In just over two years, many of the
objectives of this turnaround have been successfully achieved:
-- Directors' Valuation of the Company's portfolio has increased
almost fourfold, from GBP11.8 million at the end of 2019 to over
GBP41.8 million by the end of 2022.
-- Capital under advisory more than doubled, from GBP9.6 million
in early 2020 to GBP23.5 million in 2022.
-- Integrated portfolios of EMV Capital and NetScientific,
growing from eight companies in early 2020 to 24 in 2022, with
increased direct stakes and influence.
-- Shifted from solely relying on the balance sheet for funding
portfolio companies to incorporating third-party funding through
the 'capital light' investment approach.
-- Proactive investment approach with investor director
representation in 13 companies and value creation or fundraising
programs with 10 companies.
-- Expanded team and infrastructure offering corporate finance
and value creation services, primarily covered through fees charged
to portfolio companies.
-- Notable success stories include NASDAQ-listed PDS Biotech,
rapidly growing companies Q-Bot (robotics) and Sofant
(semi-conductors), and regenerative medicine company EpiBone.
-- Several additional companies in the portfolio show potential
for value appreciation and growth as they are currently held at
relatively low (or nil) valuations, and their valuation is expected
to crystallise as they access external finance (e.g. Vortex,
ProAxsis, Deeptech Recycling, Ventive, DName-iT).
-- Co-led the restructuring and acquired a valuable position in
Cambridge-based early-stage VC Martlet Capital (itself with
positions in 49 deeptech companies), now providing high-quality
deal flow access from the Cambridge high-tech cluster.
-- Diversified portfolio across deeptech sectors to mitigate
risk and increase return opportunities.
-- Assisting portfolio companies in collaborating with leading
corporations globally for joint development agreements, corporate
VC investments, licensing opportunities, and pre-purchase
commitments.
-- Leveraging portfolio synergies and internationalisation
efforts through collaborations and partnerships.
-- Identifying key value inflection points for profitable
liquidity events and exits for many companies.
To continue to drive shareholder value and investment returns,
we will employ and scale our differentiated investment and
portfolio growth model, focusing on:
-- 'Capital light' investment strategy.
-- Proactive investment approach.
-- Value creation services.
Our portfolio strategy entails:
-- Concentrating on a cohort of eight to ten companies at a time
for growth and investment realisations through fundraising support
and value creation services.
-- Making selective new investments that align with our model,
offer good value, and can benefit from value creation services to
drive growth.
-- Growing a funds practice to expand capital deployment capabilities and portfolio coverage.
Summary and Outlook
We now possess a robust investment model with ample room for
growth and development, offering the potential for substantial
investment returns from a maturing portfolio. Our early advantage
in the deeptech sector positions us to become a key player in the
next phase of the VC industry.
Our focus for 2023 will be to progress our sustainable business
model through the generation of more fees from EMV Capital,
selective divestments, external funding for subsidiaries and by
expanding our funds practice. We aim to increase the net asset
value and fair value of your business by progressing cohort
companies through value creation stages, obtaining third party
investment rounds, and proactive portfolio management.
We plan to generate investment returns through profitable exits
of select portfolio companies and targeted growth of a curated
portfolio, by focusing on value creation services and accelerate
routes to exit and by scaling up our 'capital light' investment
model we can move towards a more evergreen investment model. We
have a powerful investment model with potential for significant
investment returns in the deeptech space and we are excited about
the future prospects of our company.
Finally, I would like to express my gratitude to Jonathan
Robinson for his interim leadership as Chair, supporting the final
stages of our turnaround project. His measured and practical
approach has greatly contributed to the execution of our strategy,
and we eagerly anticipate his ongoing support. We are also excited
to welcome Charles Spicer as our new Non-Executive Chair and look
forward to working with him.
Dr. Ilian Iliev
CEO, NetScientific PLC
31 May 2023
Portfolio Performance
NetScientific's Directors' valuation of its direct owned
portfolio is GBP41.8m (GBP31.0m in 2021). An additional GBP23.5m of
capital under advisory (GBP22.1m in 2021) offers potential future
returns through carried interest.
NetScientific's portfolio consists of 24 companies in the
Healthcare, Sustainability, and Technology sectors across the UK,
US, EU, and Israel. These companies vary in their development
stages, with a significant portion generating commercial revenues
or engaging in joint development agreements and corporate
collaborations. Some are in earlier stages (pre-Series A) or
turnaround projects, balancing higher risks with potential
investment returns. Note in the table below that EMV Capital is a
core operational unit of the Group, rather than a portfolio company
held for sale or further investment.
NetScientific invests directly from its balance sheet, while its
subsidiary EMV Capital syndicates investments as capital under
advisory with a carried interest arrangement with investors. The
Group's interest can combine both direct and carried interest
holdings, providing increased returns and influence in the
companies. The Group holds board seats and advisory roles in many
portfolio companies, particularly those where its direct or advised
holdings are larger. Its fee-based advisory roles encompass value
creation services and corporate finance arrangements, generating
fees for the Group and aiding businesses in reaching value
inflection points.
Carried interest or profit share agreements are associated with
the model, typically entailing 15% to 20% of profits earned for
investors above a minimum return hurdle rate of 10%. Capital under
advisory is expected to grow through further syndicated investments
in existing and new portfolio companies. There is ongoing work for
the potential launch of a new VC fund practice under EMV Capital,
which (if successful) would further scale the capital under
advisory. The Consolidated Statement of Financial Position reflects
the owned portfolio as equity investments classified as fair value
through other comprehensive income (FVTOCI) and financial assets
classified as fair value through profit and loss (FVTPL), adhering
to the British Venture Capital Association guidelines widely
accepted in the VC community.
Portfolio Country Sector Stage Group CAU Fair Value CAU (m)
Company Stake (%) (m)
(%)
2022 2021 2022 2021
--------- --------- --------- ---------
EMV Capital UK Venture Sales 100% - GBP3.5 GBP3.5 - -
capital
---------- ------------------ ------------- ------- ------- --------- --------- --------- ---------
PDS US Immuno-oncology Phase II 4.4% - GBP14.7 GBP8.0 - -
Biotechnology clinical
-Nasdaq Listed
---------- ------------------ ------------- ------- ------- --------- --------- --------- ---------
Glycotest US Liver cancer Late 62.5% - GBP11.0 GBP11.0 - -
diagnostics clinical
---------- ------------------ ------------- ------- ------- --------- --------- --------- ---------
Q-Bot UK Robotics Sales 17.6% 30.9% GBP3.8 GBP1.3 GBP4.4 GBP2.3
---------- ------------------ ------------- ------- ------- --------- --------- --------- ---------
ProAxsis UK Respiratory Sales 100% - GBP3.5 GBP3.5 - -
diagnostics
---------- ------------------ ------------- ------- ------- --------- --------- --------- ---------
Regenerative Early
EpiBone US medicine clinical 1.3% 0.3% GBP1.2 GBP0.8 GBP0.2 GBP0.2
---------- ------------------ ------------- ------- ------- --------- --------- --------- ---------
SageTech
Medical Waste
Equipment UK anaesthetic Commercial 5.5% 25.5% GBP0.9 GBP0.9 GBP3.8 GBP3.5
---------- ------------------ ------------- ------- ------- --------- --------- --------- ---------
Vortex Biotech UK/US Liquid Sales 30% - GBP0.7 - GBP0.7 GBP3.9
Holdings Ltd biopsy
oncology
---------- ------------------ ------------- ------- ------- --------- --------- --------- ---------
FOx Biosystems BEL Research Sales 3.9% - GBP0.6 GBP0.3 - -
equipment
---------- ------------------ ------------- ------- ------- --------- --------- --------- ---------
Semiconductors
Sofant satellite
Technologies UK coms Early sales 1.5% 22.9% GBP0.4 GBP0.3 GBP4.3 GBP3.0
---------- ------------------ ------------- ------- ------- --------- --------- --------- ---------
CytoVale US Medical Late 1.0% - GBP0.4 GBP0.4 - -
biomarker clinical
---------- ------------------ ------------- ------- ------- --------- --------- --------- ---------
G - Tech US Wearable Early 3.8% - GBP0.4 GBP0.4 - -
Medical gut monitor clinical
---------- ------------------ ------------- ------- ------- --------- --------- --------- ---------
Martlet Venture
Capital UK capital Sales 1% 5.9% GBP0.3 GBP0.3 GBP1.3 GBP1.3
---------- ------------------ ------------- ------- ------- --------- --------- --------- ---------
DName-iT BEL Lab technology Pre sales 61.5% 0% GBP0.1 GBP0.1 GBP0.1 -
---------- ------------------ ------------- ------- ------- --------- --------- --------- ---------
Smart building
PointGrab IL automation Sales 0.5% 20.8% GBP0.1 GBP0.1 GBP4.1 GBP4.1
---------- ------------------ ------------- ------- ------- --------- --------- --------- ---------
QuantalX IL Medical Late 0.4% - GBP0.1 GBP0.1 - -
Neuroscience diagnostics clinical
---------- ------------------ ------------- ------- ------- --------- --------- --------- ---------
Heat pumps
and passive
Ventive UK ventilation Sales 15.9% 35.3% GBP0.1 - GBP0.1 -
---------- ------------------ ------------- ------- ------- --------- --------- --------- ---------
Deeptech UK Recycling Industrial 30% - - - GBP0.5 -
Recycling
Limited
---------- ------------------ ------------- ------- ------- --------- --------- --------- ---------
CetroMed UK Holding Holding 75% - - - - -
company company
---------- ------------------ ------------- ------- ------- --------- --------- --------- ---------
Oncocidia BEL Cancer Early 41.3% - - - - -
therapeutics clinical
---------- ------------------ ------------- ------- ------- --------- --------- --------- ---------
Longevity US Neurology Early - - - - - -
Biotech therapeutics clinical
---------- ------------------ ------------- ------- ------- --------- --------- --------- ---------
Wanda Health UK/US Digital Sales - 74.7% - - GBP3.2 GBP2.2
health
monitoring
---------- ------------------ ------------- ------- ------- --------- --------- --------- ---------
Nanotech US Material Sales - - - - GBP0.8 GBP0.7
Industrial science
Solutions
---------- ------------------ ------------- ------- ------- --------- --------- --------- ---------
Insight US Semiconductors Sales - - - - - GBP0.9
Photonic akinetic
Solutions laser
---------- ------------------ ------------- ------- ------- --------- --------- --------- ---------
TOTAL - - - - - GBP41.8 GBP31.0 GBP23.5 GBP22.1
---------- ------------------ ------------- ------- ------- --------- --------- --------- ---------
CORE PORTFOLIO COMPANIES[4]
PDS Biotechnology Corporation ("PDS") (
https://www.pdsbiotech.com/ ) (Stock symbol PDSB: NASDAQ) - 4.4%
stake
PDS Biotech is a clinical-stage immunotherapy company focusing
on cancer and infectious diseases. Using their Versamune(R)
technology, they develop therapies and vaccines that activate
T-cells and enhance immune responses. Their primary focus is on
HPV-related head and neck cancers. PDS Biotech has four Phase 2
trials with partners such as Merck, the National Cancer Institute,
MD Anderson, and Mayo Clinic, and an infectious disease vaccine
program. The company also plans to launch a Phase 3 clinical trial
for one of its programmes.
Key developments 2022: The company made significant clinical
progress in its Phase 2 trials and secured a $35 million venture
debt facility from Horizon amidst market turbulence. Its IP
portfolio was strengthened through a licensing agreement with the
NCI and a US patent for its Novel HPV 16 immunotherapy. Recent
achievements include a licensing deal with Merck KgaA, plans for a
Phase 3 trial, and promising data presented at the 2022 ASCO Annual
Meeting. The combination of PDS0101 and KEYTRUDA(R) showed a 41%
response rate and an 87% survival rate at nine months for
HPV16-positive HNSCC patients. The combination was well-tolerated
with no severe adverse events reported. The FDA granted Fast Track
designation for this combination, on the back of which the company
is preparing for a Phase 3 clinical trial.
NSCI Interest: NetScientific backed PDS as the first
institutional investor in 2014, and has continued its support over
the years, including by anchoring a NASDAQ placement in 2020, and
supporting a subsequent placement in 2021. NetScientific currently
owns 4.44% of the undiluted share capital (2021: 4.72%). The
current value of NetScientific's stake as of 26 May 2023 at a share
price of $8.56 per share is worth GBP9.3m, with a company market
capitalization of $264m.
Dr. Ilian Iliev is on the Board of PDS Biotech Inc.
Glycotest, Inc. ("Glycotest") ( https://www.glycotest.com/ ) -
62.5% Subsidiary
Glycotest is a liver disease diagnostics company commercialising
new and unique blood tests for life threatening liver cancers and
fibrosis-cirrhosis. The company has exclusive, world-wide rights to
over 50 patent-protected serum protein biomarkers, assay
technology, and biomarker panels and algorithms that exploit novel
sugar-based disease signals. Fosun Pharma, a leading global
pharmaceutical company, is a co-investor in the business, and has a
license for the distribution of the product in China.
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. Glycotest is close to completing its HCC Panel
clinical trial with 20 leading medical sites (hospitals and liver
treatment centres) across the US and Israel. The clinical trial
blood sample collection is now determined to be substantively
complete, enabling progress toward HCC Panel test validation. The
early Glycotest clinical studies gave encouraging results, despite
a particular problem identified in the assays' calibration at a
subcontractor laboratory, requiring some remedial fine-tuning
action and consideration of alternative approaches. A leading
contract research organisation was engaged to provide an
independent perspective of the problem encountered. Potential
solutions were identified, and further work will now be conducted
to revise assays, carry out the test validation, and evaluate next
development options.
There is a large and growing global need for liver disease
diagnostics. Liver cancer is a growing global problem, with
estimates of over 90million US patients and over 2 billion patients
worldwide who could benefit from regular testing for liver cancers
and fibrosis-cirrhosis. Future potential market growth will come
from the fatty liver disease and NASH pandemic. The US and China
represent major initial market entry points with existing
go-to-market channels for Glycotest. The initial target markets are
the USA (market estimated to be over $800 million) and China
(through a licensing arrangement with Fosun Pharma).
NetScientific setup Glycotest in 2012, based on technology that
originated at the Blumberg Institute and Drexel University College
of Medicine in Philadelphia. In 2019, NetScientific negotiated a
$10m milestone-based investment and licensing deal with Shanghai
Fosun Pharmaceutical Co., Ltd. ("Fosun Pharma"), whereby Fosun
Pharma received a minority stake in Glycotest and the rights to
develop and commercialise the HCC Panel and pipeline liver disease
tests in China, for which Glycotest Inc. will receive a royalty,
with Glycotest Inc. retaining rights to ex-China markets. Fosun has
already invested $7m, with a further $3m remaining against
milestones. Supporting its investment, Glycotest also closed a
$1.46m convertible loan funding round with $500k from Fosun
alongside NetScientific investment in December 2022. Post-balance
sheet, on 2(nd) May 2023 EMV Capital setup a $1m Convertible Loan
syndicated from private investors to provide additional working
capital to the company, as it prepares for a larger external round
later in 2023 to support commercialisation.
NSCI Interest: Company shareholding in Glycotest is 62.5% (2021:
62.5%). As of 31 December 2022, the Group has invested GBP3.9
million (2021: GBP3.9 million). Based on the equity investment
price by Fosun 's milestone-based investments, fair value of
NetScientific's stake is GBP11.0m.
Dr Ilian Iliev is Chair, John Clarkson and Ed Hooper are Board
members. Charles Swindell is COO.
Q-Bot Ltd ("Q-Bot) ( https://q-bot.co/ ) - Direct Equity Holding
17.6%, Capital Under Advisory 30.9%
Q-Bot is an award-winning robotics developer for construction
retrofit. Their AI-powered robotic tools are used to inspect,
monitor, and retrofit insulation for residential buildings.
Specifically, Q-Bot is focused on the unmet market need for
underfloor insulation, helping to reduce fuel poverty in social
housing, improve energy efficiency, and align with new regulations
around decarbonisation. As a market leader, Q-Bot is now scaling
and seeking to capture a significant share of this market in the UK
and internationally.
Key developments 2022: After a successful strategy review in
2021, Q-Bot has seen impressive growth. The energy market's
volatility has fuelled demand for their retrofit offering,
resulting in record-breaking monthly installations by major
partners. Commercial sales nearly doubled to over GBP2m in FY2022,
with an expected 80% revenue increase in FY2023. So far, over 3,500
homes have been insulated, with continued growth in the
installation rate through partners and direct installs. The company
is actively working on expanding internationally in the EU and US
through partnerships, including operations now in France and the
Netherlands. EMV Capital's value creation services team has
supported the Board of Q-Bot since late 2021 in various growth
acceleration and fund-raising projects. It has also led a GBP2.5m
in EIS equity investment and debt facility raised in the company
throughout 2022.
NSCI Interest: Direct equity holding of 17.6% (2021: 18.3%), and
capital under advisory from syndicated investors representing 30.9%
(2021: 12.3%). After a May 2022 conversion of loan note of
c.GBP500k into equity, NetScientific total cost is GBP1.5m.
Following a Q4 22 investment round, our stake has a fair value of
GBP3,728k (2021: GBP1,025k), indicating a c.2.5x valuation uplift
within an 18-month period. During 2022, a GBP140k working capital
loan was extended to Q-Bot, carrying interest at 10% p.a.
On 30 December 2022, GBP48k was repaid, including interest and
an arrangement fee.
Dr. Ilian Iliev is on the Board of Q-Bot Ltd.
ProAxsis Ltd ("ProAxsis") ( https://proaxsis.com/ ) - 100%
Subsidiary
ProAxsis is a commercial medtech company, with a focus on
respiratory diagnostics, a growing global burden exacerbated in the
aftermath of Covid. ProAxsis uses its proprietary ProteaseTag(R)
technology to develop laboratory-based assays and rapid
point-of-care tests for the measurement of active protease
biomarkers associated with chronic respiratory diseases such as
Chronic Obstructive Pulmonary Disease (COPD), cystic fibrosis and
bronchiectasis. The company is a spin-out of Queens University
Belfast.
The company has refined its product portfolio alongside a
quality laboratory, enabling commercialisation of its technology
through clinical services to pharma industry clients, and via
direct kit sales to both Pharma and University researchers.
Development projects include a unique combination of its CE Marked
Lateral Flow Test (NEATstik) in respiratory disease patients with a
robust market-ready Virtual Care Platform, as well as enhancing its
offering for ongoing patient monitoring at point-of-care.
Key developments 2022: The company won further pharma services
contracts and entered into key R&D collaborations. A number of
companies have published data detailing their utility of the
ProAxsis technology, including Insmed (US), Chiesi (EU) and Mereo
(UK). ProAxsis was announced as the NI Small Business of the Year
at the Belfast Telegraph Awards. The company has secured further
grant awards of some GBP420K, to support the ongoing development
programme.
In February 2023, the company secured a GBP500,000 funding
facility from AB Group, to facilitate growth and prepare the
company for a fund-raise in 2023. ProAxsis has also started a
collaboration with Wanda Health (another NetScientific portfolio
company) to deliver a digitally enabled COPD diagnostic
platform.
NSCI Interest: 100% owned subsidiary (95% fully diluted). The
fair value of NetScientific's stake in ProAxsis is GBP3.5m on basis
of last investment round. As of 31 December 2022, the Group has
invested GBP3.7 million (2021: GBP2.8 million).
John Clarkson is Chair and Dr. Ilian Iliev is a Board member of
ProAxsis.
EpiBone, Inc. ("EpiBone") ( https://www.epibone.com/ ) - Direct
Equity Holding 1.3%, Capital Under Advisory 0.3%
EpiBone's bone reconstruction technology allows patients to
"grow their own bone" by utilizing a scan of the patient's bone
defect and their own stem cells to construct a defect-specific
autologous-like bone graft. The company focuses on the $32bn bone
and joint reconstruction market and offers bone reconstruction,
cartilage replacement, and liquid cartilage joint treatment.
EpiBone's proprietary bioreactor technology is a result of 20 years
of research and experience with orthopaedic tissue engineering. It
follows a three-step process to regenerate human bone.
Key developments 2022: All six Phase I/Iia patients successfully
implanted in the clinical trial. Significant progress in biphasic
bone and cartilage graft development. Positive feedback on the
injectable cartilage product from preclinical work. First close on
$22m Series A fundraise.
NSCI Interest: NetScientific's direct investment in EpiBone is
valued at GBP1.2 million based on the Series A round closed in
December 2022.
SageTech Medical Equipment Ltd ("SageTech") (
http://www.sagetechmedical.com/ ) - Direct Equity Holding 5.5%,
Capital Under Advisory 25.5%
SageTech developed a flexible, affordable modular system to
capture waste anaesthetic gas in hospital operating theatres. It
uses reusable canisters to collect and recycle the gas, addressing
the significant problem of unaddressed air pollution caused by
these gases. The solution reduces the carbon footprint of a
midsized hospital, equivalent to 1,200 cars per year. This
innovative technology contributes to a circular economy and offers
substantial environmental benefits.
The system enables hospitals without fixed Anaesthetic Gas
Scavenging Systems to utilize anaesthetic gas in various areas.
SageTech recently launched the SID-Dock waste volatile anaesthetic
gas capture machine, which seamlessly integrates into hospital
operating theatres without requiring modifications to existing
equipment. It has obtained the UK Conformity Assessed (UKCA)
marking and ISO 13485:2016 certification, ensuring compliance with
UK medical sector requirements.
The solution is currently being evaluated at renowned UK NHS
hospitals, including Guy & St. Thomas' and Cromwell Hospital,
with initial sales anticipated. SageTech aims to commercialize the
technology, starting with the NHS and expanding to private
hospitals in the UK, international markets, and the veterinary
industry.
NSCI Interest: NetScientific has a direct equity investment of
5.5% (2021: 5.1%) with a fair value of GBP887k (2021: GBP887k), and
an advised stake of 25.5% (2021: 21.0%).
John Clarkson serves as a Non-Executive Board member of
SageTech.
Vortex Biotech Holdings Ltd ("Vortex") San Francisco/London (
https://vortexbiosciences.com/ ) - Direct Equity Holding 30.0%
Vortex's core technology allows for the capture and isolation of
high-quality Circulating Tumour Cells ("CTCs") from blood samples.
Its mission is to be the innovation leader in Circulating Tumour
Cell (CTC) capture technology that improves therapeutic decisions
and saves lives. This exciting area is providing critical
information from research to the clinic, contributing to a major
shift in how cancer can be treated and monitored. Vortex was formed
on the back of research at UCLA.
Vortex is focused on developing its position in the
multi-billion dollar oncology liquid biopsy market. The combination
of targeted therapies and precise diagnostics is allowing for the
era of personalized medicine to emerge. The capture and enrichment
of circulating tumour cells is expected to be a critical element of
targeted companion diagnostics. Vortex' growth strategy aims to
develop it into an industry leading platform that will help
accelerate the translation of research insights into the clinic and
help deliver to an affordable population health agenda. This will
be done through the development of laboratories that will act as
centres of excellences for the use of CTCs, combining its
proprietary "no touch" microfluidic chip technology, with various
assays and workflow integrations.
Vortex' VTX-1 platform has been placed and used for KOL
published research in leading University and Research centres in
the US, UK and EU, including UCLA, UC Berkeley, Stanford
University, Ghent University (Belgium), University of Maryland, and
Ecole Polytechnique Federale de Lausanne. In addition, Vortex is
now seeing growing interest from pharma and biotech clients in the
service model it is launching. The company has developed several
workflow integrations of the VTX-1 instrument with third party
instruments, opening further commercialisation opportunities.
Key Developments 2022: In August 2022, NetScientific announced
the completion of the acquisition of a 30% equity stake in Vortex
Biotech Holdings Limited ("Vortex") for a non-cash consideration,
in line with NetScientific's 'capital light' investment model. In
support of its next phase of growth as a service provider, Vortex
has recently opened a lab at The London Cancer Hub's Innovation
Gateway, which is already home to The Institute of Cancer Research,
London, and The Royal Marsden NHS Foundation Trust. This is in
addition to their lab in San Francisco, providing the company with
a trans-Atlantic coverage for its target Pharma customer base.
NSCI Interest: 30.0% Direct; GBP0.7m advance assurance
agreement, indirect (advised)
Dr Ilian Iliev is Executive Chair, and Paul Jones is CEO.
FOx Biosystems (3.9% stake, NSCI effective stake 2.9%)
(https://foxbiosystems.com/)
Provides real-time, label-free analysis technology based on an
innovative fibre-optic-based surface plasmon resonance biosensor,
enabling users to generate high quality biomolecular data such as
affinity data, kinetic data and concentration measurements. The
company was formed as a spin-out following a sponsored research
agreement with K.U. Leuven that saw CetroMed invest EUR537k.
Subsequently it saw investments by Belgian high-tech investors LRM,
Heran Partners, K.U. Leuven's Gemma Frisius Fund.
Key developments 2022: FOx Biosystems received a EUR2.5m
European Innovation Council (EIC) grant to accelerate the market
introduction of unique EV analysis and isolation application, as
well as closing a EUR2.5m investment round, providing the company
with the funds to accelerate development.
NSCI Interest: December 2020 GBP150k convertible loan agreement
(part of a GBP2.5m convertible loan agreement led by the current
investors) converted in November 2022. The NetScientific stake is
valued at GBP495k.
Sofant Technologies Ltd ("Sofant") Edinburgh (
http://www.sofant.com/ ) - Direct Equity Holding 1.5%, Capital
Under Advisory 22.9%
An Edinburgh University spin-out, the company is developing
phased array antennas for satellite and terrestrial communications
that has high energy efficiency and a modular scalable design. The
antenna enables access to low-latency, super-fast low Earth orbit
(LEO) satellite broadband networks. The company is executing a
EUR7.3m contract with the UK Space Agency and the European Space
Agency.
Key Developments 2022: Signed with several corporations in the
telecoms industry, including a Fortune Global 500 aerospace
company. Post-balance sheet announcement of Joint Development
Agreement with Inmarsat Government, focused on aircraft
applications. EMV Capital led a GBP4.2m investment round, in which
NetScientific participated led by EMV Capital in 2022. EMV Capital
closed a further GBP1m of EIS funding into the company post-balance
sheet.
NSCI Interest: Direct equity holding of 1.5% and "capital under
advisory" of c.GBP4.3m at cost representing 22.9% of the cap table.
The NSCI Group through its direct and indirect holdings is the
largest shareholder of Sofant.
Dr. Ilian Iliev is on the Board of Sofant Technologies Ltd.
Martlet Capital Ltd ("Martlet") Cambridge (http://
martletcap.com /) - Direct Equity Holding 1.0%, Capital Under
Advisory 5.9%
Cambridge-based early-stage VC specializing in deep tech and
life sciences, with a focus on the Cambridge high-tech cluster.
Formed in September 2021 as a spin-out from Marshall Group. Advised
by EMV Capital and co-led initial funding round of GBP12m. The
company has a portfolio of 49 investments companies in the life
sciences, sustainability, and industrials sectors, primarily in the
Cambridge region, and often with IP and links to Cambridge
University. Key Investments include Paragraf, a producer of novel
graphene-based semiconductors; Echion Technologies, Li-ion battery
technology supplier using proprietary anode materials; and
Dogtooth, a developer of robotic solutions for the agricultural
sector.
Key Developments 2022: Completed second close of additional
GBP9.6m in 2022. The company saw early exit from the portfolio,
including acquisitions and IPOs. The EMV Capital, Martlet Capital
and SARANAC teams are working toward the establishment of a
follow-on investment vehicle, which would be owned 40% by the
Group. Focus on follow-on growth investment opportunities from
Martlet Capital and the Cambridge innovation ecosystem.
NSCI Interest: Fair value of direct investment: GBP250k (2021:
GBP250k). Total syndicated amount as capital under advisory by EMV
Capital: GBP1.48m. Total direct and syndicated amount represents
1.0% (2021: 11.2%) of issued share capital. Convertible Loan Notes:
GBP0.52m (GBP0.075m direct holding and GBP0.445m advised).
Dr. Ilian Iliev is on the Board of Martlet Capital Ltd.
PointGrab ( https://www.pointgrab.com/ ) Israel - Direct Equity
Holding 0.5%, Capital Under Advisory 20.8%
PointGrab provides IoT-based office workspace optimization
solutions. Its AI-powered edge analytics sensing solution is used
by Fortune 500 companies globally, helping them save up to 40% on
real estate and facility management expenses. The solution offers
features like occupancy data, energy saving, air quality
monitoring, and smart facilities management. PointGrab's AI system
prioritizes privacy and data security. The company has deployed
10,000+ sensors in 40 countries, serving 45 Fortune 500 companies.
PointGrab's offering helps transform workplaces for COVID-19
adaptations, including workplace density monitoring and social
distancing.
Key Developments 2022: Increased demand for real estate
restructuring in major markets. Growing adoption of smart space
solutions for flexible working. PointGrab expanded sales and
introduced new digital features for international growth.
NSCI Interest: Direct equity holding: 0.5% (2021: 0.5%),
Indirect capital under advisory: 20.8% (2021: 27.2%). Fair valued
at the most recent investment round: GBP76k (2021: GBP68k).
Dr. Ilian Iliev is on the Board of PointGrab.
CetroMed Group
On 20 December 2021, NetScientific acquired 75% of the issued
share capital of CetroMed Limited ("CetroMed") for a non-cash
consideration. CetroMed is a life sciences holding company with
several portfolio companies spun out of the University of Leuven,
Belgium, a leading European research institution. CetroMed was
previously owned by the Azima Trust (through Zahra Holdings Ltd),
the family trust of Farad Azima, the founder and ex-CEO of
NetScientific. The acquisition of the majority stake in CetroMed
resulted in significant stakes in three new portfolio companies
(FOx Biosystems, DName-iT and Oncocidia) and the establishment of
commercial relationships with K.U. Leuven and other players in this
key European high-tech cluster. Consistent with the Group's
'capital light' strategy, the transaction of GBP192k was funded
through GBP150k of NetScientific PLC new ordinary shares at
GBP1.02, and the issue of GBP42k worth of warrants at a strike
price of GBP1.30 per share. Following the acquisition, EMV Capital
undertook detailed development plans for the various CetroMed
portfolio companies, with early results outlined in the section on
FOx and DName-iT. It was decided to focus investments on the
CetroMed portfolio companies directly, and therefore no further
investment will be made into CetroMed itself.
NSCI Interest: The fair value of the investment in CetroMed is
GBP228k (2021: GBP228k), with significant growth potential.
Wanda Health, US and UK ( https://www.wandahealth.com/ ) - no
direct holdings, capital under advisory 75% stake
Wanda Health is an intelligent platform for remote patient
monitoring and virtual care. Wanda Health is empowering healthcare
providers and payers with early detection of exacerbations in
patients with acute, chronic, and specialty diseases, helping them
speed interventions, prevent adverse events, and improve patient
adherence. The company is a UCLA-spin-out focused on intelligent
remote monitoring of physiological data, patient engagement and
healthcare analytics for post-acute care, chronic disease patients
and population health. Wanda's platform enables the control and
reduction of hospitalisation and readmission rates through a Remote
Patient Monitoring System that collects data from patients' homes
or community settings and provides it to clinicians, highlighting
high risks cohorts. Wanda also uses its comprehensive
multi-modality patient engagement tools to ensure that adherence to
treatment protocols increases, improving patient outcomes. This
patient centric approach to care model delivery, combined with
secure computing and revolutionary data mining and analytics
provides actionable insights to the care provider to improve
patient outcomes, whilst reducing cost of care of chronic
conditions.
Key Developments 2022: Wanda partnered with Smart Meter
Corporation to ensure reliable patient data capture regardless of
access to smart devices and internet connectivity and is in a
position to sign two strategic partnerships with blue chip
companies to deliver RPM in both domestic and international
markets. The company has filed for FDA clearance for software as a
Medical Device status and the implementation of a Quality
Management System, which will form the foundation for UKCA an CE
marking submissions in the first half of 2023. Wanda has also
signed further US-based reimbursement customers, with a growing
international pipeline and platform training delivered to medical
staff. Wanda is exploring pilot projects for the delivery of
Virtual Wards and Population Health Management for Integrated Care
Systems in the NHS and continued to build on its US client base
throughout 2022 with delivery of Remote Patient Monitoring services
against enhanced reimbursement models for Medicare. Wanda also has
a collaboration with ProAxsis (another NetScientific company)
around integrating a digital platform with ProAxsis' COPD test.
NSCI Interest: capital under advisory of a 75% investors' stake,
which is a related party due to common substantial
shareholders.
Dr Ilian Iliev is Executive Chair, with ex-IBM sales executive
Tom Smith as CEO.
NEW INVESTMENTS
During the period, the Group made new investments in two
companies (Ventive and Deeptech Recycling) and restructured two
existing portfolio companies (DName-iT and Vortex). The Group
utilized a 'capital light' investment model, acquiring and
safeguarding stakes without using cash, thereby preserving NS
balance sheet.
Ventive Limited
Ventive (http://ventive.co.uk/) specializes in passive and
energy-efficient ventilation systems for schools and a unique
modular heat pump for newbuild residential applications. Their
innovative heat pumps, which utilize Phase Change Material for heat
transfer, are well-positioned in the growing market for heat pumps.
In September 2022, EMV Capital collaborated with the Ventive team
to facilitate a GBP2.5m financing round, including debt and equity,
enabling the company to secure a GBP1.5m matching funding grant
from the Department for Business, Energy & Industrial Strategy
(BEIS). This funding has propelled Ventive's modular heat pump
production project in partnership with QM Systems (part of Pipehawk
PLC), resulting in cost and carbon dioxide emissions
reductions.
Notable developments post-investment include an accelerated
development program with Clear Blue Energy and QM Systems, a
pre-purchase agreement with a leading non-UK heat pump distributor,
and increased sales in the Natural Ventilation range. NSCI's
interest in Ventive includes a 15.9% direct holding and a 35.3%
indirect holding as "capital under advisory."
Deeptech Recycling Technologies Limited (
https://recyclingtechnologies.co.uk/ ) - Direct stake of 30%
In December 2022, Deeptech Recycling Technologies acquired the
majority of assets from Recycling Technologies Limited, which aimed
to have an AIM IPO in early 2022. Recycling Technologies had
developed advanced and environmentally sound technologies for
recycling mixed plastic waste, generating valuable naptha,
lubricants, and feedstock for the plastics industry. Deeptech
Recycling Technologies, with support from NSCI's Value Creation
team, has focused on consolidating assets and intellectual
property, assessing market opportunities, and adopting a
customer-centric and cost-effective approach. The company aims to
establish a profitable presence in the plastics waste management
industry, capitalizing on the increasing demand for recycling
solutions driven by environmental regulations and fiscal pressures.
Noteworthy areas of exploration include TetraPak recycling, as well
as recycling of polystyrene, medical waste, and film extensively
used in food packaging. NSCI holds a 30% direct holding in Deeptech
Recycling Technologies.
DName-iT Ltd ( https://www.dnameit.com/ ) - Direct stake of
61.5%, NSCI effective stake 46.1%
A University of Leuven spin-out, DName-iT has developed a
platform to avoid sample authentication errors and to correct for
sample contamination in genetic sequencing laboratory tests.
DName-iT has created a proprietary molecular barcoding system,
called DName(R) barcodes that allows the detection of sample swaps
and contamination. Prior to EMV Capital's involvement the company
was mothballed. In 2022 EMV Capital's value creation team restarted
development of the business, refreshed business plan, working
alongside the founder and other experts.
EMV Capital advised on the creation of a new UK holding company
that oversees the Belgian subsidiary and facilitated the launch of
a GBP500k EIS investment round. NSCI has an effective ownership of
46.1% through CetroMed's ownership of 61.5% in DName-iT Ltd.
University of Leuven is a co-investor in the project.
MONITORING PORTFOLIO
We have minority investments in several companies that we
monitor, but have no active involvement or board representation.
Some of these may well result in significant returns to
NetScientific upon exit.
1. CytoVale, Inc., USA applies machine learning and high-speed
imaging to detect diseases in real time. Key developments include
published data demonstrating the potential of their IntelliSep
test. https://cytovale.com/
NSCI Interest : Direct investment valued at GBP415,000.
2. G-Tech Medical, Inc., USA is developing a wearable technology
to measure gastrointestinal motility. Key developments include FDA
510k clearance submission and improved second-generation patches.
http://www.gtechmedical.com/
NSCI Interest : Direct investment valued at GBP442,000.
3. QuantalX Neuroscience, Israel is developing DELPHI MD, a
precise and objective brain evaluation tool for early prevention of
brain degeneration. Key developments include FDA breakthrough
designation and upcoming commercialization in 2023.
https://quantalx.com/
NSCI Interest : Direct investment valued at approximately
GBP100,000, no board representation.
4. Longevity Biotech, Inc., USA: focuses on developing
Hybridtides(R), therapeutic candidates for neurological disorders.
Key developments involve DOD grant and Michael J Fox Foundation
support. https://www.longevitybiotech.com/
NSCI Interest : Convertible loan fully impaired
5. Oncocidia Ltd., UK: is developing a targeted
radiopharmaceutical cancer treatment using Iodine-131.
http://www.oncocidia.com/
NSCI Interest : Effective stake of 31%
6. Nanotech Industrial Solutions Inc., USA: develops inorganic
nanomaterials for industrial applications. Key developments include
an ongoing management-led restructuring.
https://nisusacorp.com/
NSCI Interest : "Capital under advisory" of $1 million
convertible loan agreement
7. Insight Photonics, USA: has developed an Akinetic, all
semiconductor laser with improved performance for various
applications. https://www.sweptlaser.com/
NSCI Interest : "Capital under advisory" of $1.25m warrants.
Consolidated INCOME Statement
For the year ended 31 December 2022
2022 2021
Continuing Operations Notes GBP000's GBP000's
Total Income 1,820 1,260
Revenue 1,004 1,107
Cost of sales (222) (118)
------------------------------------- ------- ----------- -----------
Gross profit 782 989
Other operating income 816 153
Research and development costs (1,371) (1,322)
General and administrative costs (3,729) (2,573)
Other costs (248) (207)
------------------------------------- ------- ----------- -----------
Loss from continuing operations (3,750) (2,960)
Finance income 94 23
Finance expense (55) (22)
Gain on purchase - 36
Loss before taxation (3,711) (2,923)
Income tax credit 37 61
------------------------------------- ------- ----------- -----------
Total Loss for the year all from
continuing operations (3,674) (2,862)
Owners of the parent (3,094) (2,385)
Non-controlling interests (580) (477)
------------------------------------- ------- ----------- -----------
(3,674) (2,862)
Basic and diluted loss per share
from continuing and discontinued
operations attributable to owners
of the parent during the year:
Continuing operations 5 (13.9p) (13.2p)
From loss for the year (13.9p) (13.2p)
------------------------------------- ------- ----------- -----------
Consolidated Statement OF Comprehensive Income
For the year ended 31 December 2022
2022 2021 2020
GBP000's GBP000's GBP000's
--------------------------------------------- ----------- ----------- -----------
Loss for the year (3,674) (2,862) (2,338)
Other comprehensive income/(loss):
Exchange differences on translation
of foreign operations 26 (99) (3)
Change in fair value of equity investments
classified as FVTOCI 8,773 6,009 (97)
Total comprehensive profit for the
year 5,125 3,138 (2,438)
---------------------------------------------- ----------- ----------- -----------
Attributable to:
Owners of the parent 5,732 3,624 (1,724)
Non-controlling interests (607) (486) (714)
----------------------------- --------- --------- -----------
5,125 3,138 (2,438)
---------------------------- --------- --------- -----------
Consolidated Statement of Financial Position
As at 31 December 2022
Notes 2022 2021
GBP000's GBP000's
----------------------------------------- ------- ----------- -----------
Assets
Non-current assets
Property, plant and equipment 7 144 136
Right-of-use assets 8 420 158
Intangible assets 9 3,367 3,045
Equity investments classified as
FVTOCI* 10 22,743 11,516
Financial assets classified as FVTPL** 11 693 1,462
Total non-current assets 27,367 16,317
----------------------------------------- ------- ----------- -----------
Current assets
Inventory 76 67
Trade and other receivables 658 1,598
Cash and cash equivalents 852 2,710
----------------------------------------- ------- ----------- -----------
Total current assets 1,586 4,375
----------------------------------------- ------- ----------- -----------
Total assets 28,953 20,692
----------------------------------------- ------- ----------- -----------
Liabilities
Current liabilities
Trade and other payables (2,457) (1,529)
Lease liabilities (168) (32)
Loans and borrowings (99) (59)
----------------------------------------- ------- ----------- -----------
Total current liabilities (2,724) (1,620)
----------------------------------------- ------- ----------- -----------
Non-current liabilities
Lease liabilities (268) (131)
Loans and borrowings (719) (432)
Total non-current liabilities (987) (563)
----------------------------------------- ------- ----------- -----------
Total liabilities (3,711) (2,183)
----------------------------------------- ------- ----------- -----------
Net assets 25,242 18,509
----------------------------------------- ------- ----------- -----------
Issued capital and reserves
Attributable to the parent
Called up share capital 1,174 1,056 746
Warrants 42 42 -
Share premium account 74,175 72,792 65,594
Capital reserve account 237 237 237
Equity investment reserve 13,277 4,504 (1,505)
Foreign exchange reserve 1,421 1,368 1,368
Accumulated losses (64,486) (61,499) (59,702)
--------------------------------------- ---------- ---------- ----------
Equity attributable to the owners
of the parent 25,840 18,500 6,738
Non-controlling interests (598) 9 158
--------------------------------------- ---------- ---------- ----------
Total equity 25,242 18,509 6,896
--------------------------------------- ---------- ---------- ----------
*Fair value through other comprehensive income
**Fair value through profit and loss
Consolidated Statement of Changes in Equity
As at 31 December 2022
Shareholders' equity
-----------------------------
Foreign
exchange
Warrants Equity and
Share GBP000's Share Capital investment Accum-ulated capital Non-controlling Total
capital premium reserve reserve losses reserve Total interests equity
GBP000's GBP000's GBP000's GBP000's GBP000's GBP000's GBP000's GBP000's GBP000's
---------------- ---------- ----------- ---------- ---------- ------------ -------------- ---------- ----------- ----------------- ----------
1 January
2021 746 - 65,594 237 (1,505) (59,702) 1,368 6,738 158 6,896
---------------- ---------- ----------- ---------- ---------- ------------ -------------- ---------- ----------- ----------------- ----------
Loss for the
period - - - - - (2,385) - (2,385) (477) (2,862)
---------------- ---------- ----------- ---------- ---------- ------------ -------------- ---------- ----------- ----------------- ----------
Other
comprehensive
(loss)/income
-
Foreign
exchange
differences - - - - - - - - (9) (9)
Change in
fair value
of equity
investments
classified
as FVTOCI - - - - 6,009 - - 6,009 - 6,009
---------------- ---------- ----------- ---------- ---------- ------------ -------------- ---------- ----------- ----------------- ----------
Total
comprehensive
profit/(loss) - - - - 6,009 (2,385) - (3,624) (486) 3,138
---------------- ---------- ----------- ---------- ---------- ------------ -------------- ---------- ----------- ----------------- ----------
Issue of share
capital 310 - 7,635 - - - - 7,945 - 7,945
Cost of share
issue - - (437) - - - - (437) - (437)
Issue of
warrants - 42 - - - - - 42 - 42
Decrease in
subsidiary
shareholding - - - - - 447 - 447 337 784
Share-based
payments - - - - - 141 - 141 - 141
---------------- ---------- ------------ -------------- ---------- ----------- ----------------- ----------
31 December
2021 1,056 42 72,792 237 4,504 (61,499) 1,368 18,500 9 18,509
---------------- ---------- ----------- ---------- ---------- ------------ -------------- ---------- ----------- ----------------- ----------
Loss for the
period - - - - - (3,094) - (3,094) (580) (3,674)
---------------- ---------- ----------- ---------- ---------- ------------ -------------- ---------- ----------- ----------------- ----------
Other
comprehensive
loss/income
-
Foreign
exchange
differences - - - - - - 53 53 (27) 26
Change in
fair value
of equity
investments
classified
as FVTOCI - - - - 8,773 - - 8,773 - 8,773
Total
comprehensive
profit/(loss) - - - - 8,773 (3,094) 53 5,732 (607) 5,125
---------------- ---------- ----------- ---------- ---------- ------------ -------------- ---------- ----------- ----------------- ----------
Issue of share
capital 118 - 1,439 - - - - 1,557 - 1,557
Cost of share
issue - - (56) - - - - (56) - (56)
Share-based
payments - - - - - 107 - 107 - 107
---------------- ---------- ---------- ---------- ------------ -------------- ---------- ----------- ----------------- ----------
31 December
2022 1,174 42 74,175 237 13,277 (64,486) 1,421 25,840 (598) 25,242
---------------- ---------- ----------- ---------- ---------- ------------ -------------- ---------- ----------- ----------------- ----------
Consolidated Statement of Cash Flows
As at 31 December 2022
Notes 2022 2021
GBP000's GBP000's
---------------------------------------------- -------------- ----------- -----------
Cash flows from operating activities
Loss after income tax including
discontinued operations (3,674) (2,862)
Adjustments for:
Depreciation of property, plant
and equipment 7 45 54
Depreciation of right-of-use assets 8 76 31
Amortisation of intangibles 9 226 163
Estimated credit losses on trade
receivables 18 2
Bad debt expense - 9
Gain on purchase of subsidiary - (36)
Gain on available for sale investments (254) -
Fair value movement during the year
on convertible debt (466) (28)
Capitalisation of development costs 9 (548) (585)
Share-based payments 107 141
R&D tax credit (46) (81)
Loss on disposal of property, plant 1 -
and equipment
Share of associate loss 11 -
Foreign exchange movement (71) 2
Finance income (95) (23)
Finance costs 24 10
Tax credit (37) (61)
(4,683) (3,264)
Changes in working capital
(Increase)/decrease in inventory (9) 7
Decrease/(Increase) in trade and
other receivables 610 (1,148)
Increase in trade and other payables 879 864
---------------------------------------------- -------------- ----------- -----------
Cash used in operations (3,203) (3,541)
---------------------------------------------- -------------- ----------- -----------
Income tax received 96 78
Income tax paid - (12)
---------------------------------------------- -------------- ----------- -----------
Net cash (used) in operating activities (3,107) (3,475)
---------------------------------------------- -------------- ----------- -----------
Cash flows from investing activities
Acquisition of subsidiary, net cash
acquired - 3
Purchase of property, plant and
equipment (53) (62)
Purchase of available for sale investments (267) (2,192)
Purchase of derivative financial
assets (710) (1,207)
Disposal of available for sale investments 451 -
Receipt of derivative financial 48 -
assets
Interest received 1 -
Interest paid - (5)
Net cash (used in) investing activities (530) (3,463)
---------------------------------------------- -------------- ----------- -----------
Cash flows from financing activities
Proceeds received on change in stake
in subsidiary - 700
Lease payments (88) (38)
Repayment of loans and borrowings (89) (502)
Proceeds from loans and borrowings 415 550
Proceeds from share issue 1,558 7,746
Share issue costs (56) (437)
---------------------------------------------- --- --------- ------------------------
Net cash from financing activities 1,740 8,019
---------------------------------------------- --- --------- ------------------------
(Decrease)/Increase in cash and
cash equivalents (1,897) 1,081
Cash and cash equivalents at beginning
of year 2,710 1,628
Exchange differences on cash and
cash equivalents 39 1
---------------------------------------------- --- --------- ------------------------
Cash and cash equivalents at end
of year 852 2,710
---------------------------------------------- --- --------- ------------------------
Notes to the Financial Information for the Year Ended 31
December 2022
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
C/o Azets, Burnham Yard, London End, Beaconsfield, Buckinghamshire
HP9 2JH.
2. BASIS OF PREPARATION
The preliminary results of the year ended 31 December 2022 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
2022.
The report of the auditors on the statutory accounts for the
year ended 31 December 2022 was qualified and did not contain a
statement under Section 498 of the Companies Act 2006. Investments
are stated at GBP21.7million in the Parent Company Statement of
Financial Position and GBP23.4million in the Consolidated Statement
of Financial Position. The Directors did not perform year end
valuations for some of the hard to value investments worth
c.GBP1million for the year ended 31 December 2022. Therefore, BDO
were unable to obtain sufficient and appropriate evidence for the
valuation of such investments at this date. The financial
statements for the year ended 31 December 2022 included in this
announcement were authorised for issue in accordance with a
resolution of the Board of Directors on 30 May 2023.
3. GOING CONCERN
NetScientific is in a strong position, with net assets of
GBP25.2 million. In addition to cash-in-bank, NetScientific holds
readily realisable quoted assets of c.GBP9.3 million as at 26 May
2023. Services provided by EMV Capital to the Group's portfolio
companies generate a regular Group fee income, including from
corporate finance fees, value creation fees, and profits from
secondary sales of the Group's position in certain portfolio
companies. These fees have contributed significantly to covering
the operating costs of NetScientific itself and EMV Capital. With
ProAxsis and Glycotest now having access to third party finance,
they no longer draw on the Company's balance sheet.
The Board has prepared and reviewed budget cashflows and
stress-tested the assumptions and sensitivities involved in the
context of the broader economic environment. For the period to June
2024, the Group requires a minimum of approximately GBP1.5 million
to continue as a going concern, assuming that its subsidiary
portfolio companies continue to be fully funded by external
financing as expected. This amount can be financed through several
options, either on their own or in combination, including
accelerating revenues at Group level, partial or full exits from
portfolio company stakes, soft and non-dilutive finance, and/or a
placement of NetScientific shares. Whilst a placement of
NetScientific shares remains an available option, the Board has no
current intention to pursue that in light of the Company's current
share price relative to its net assets. These options have not been
executed, and some or all may not be executed, and accordingly,
this indicates that a material uncertainty exists which may cast
significant doubt on the Group's and Company's ability to continue
as a going concern and therefore that it may be unable to realise
its assets and discharge its liabilities in the ordinary course of
business. The Board will continue to tightly manage its cashflow,
closely monitor events, and maintain a flexible approach to new
opportunities.
The Directors are confident that NetScientific remains a going
concern, and it is appropriate to prepare the financial statements
on this basis. Accordingly, the financial statements do not include
any adjustments that would be necessary if the Group and Company
were unable to continue as a going concern.
4. SIGNIFICANT ACCOUNTING POLICIES
The Group financial statements have been prepared in accordance
with UK adopted international accounting standards as they apply to
the financial statements of the Group for the year ended 31
December 2022. 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 by 6 June 2023.
5. 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 2022 of 1,431,050 (2021:
1,064,498) are not treated as dilutive as the entity is loss
making.
2022 2021
GBP000's GBP000's
-------------------------------------- ------------ ------------
Loss attributable to equity holders
of the Company
Continuing operations 3,094 2,385
Total 3,094 2,385
------------ ------------
Number of shares
Weighted average number of ordinary
shares in issue 22,266,560 18,050,724
6. INVESTMENTS IN SUBSIDIARY UNDERTAKINGS
The Group had the following subsidiaries at 31 December
2022:
Proportion Proportion
Proportion Proportion of ownership of ownership
of of interest interest
Country ownership ownership held by held by
of interest interest non-controlling non-controlling
Primary incorporation at 31 at 31 interests Interests
trading or December December at 31 December at 31 December
Name address registration 2022 2021 2022 2021
---------------- ----------- ---------------- -------------- --------------- ----------------- -----------------
NetScientific
UK Limited (a) UK 100% 100% - -
EMV Capital
Limited (b) UK 100% 100% - -
ProAxsis
Limited
* (i) (c) UK 100% 100% - -
Cetromed
Limited (a) UK 75% 75% 25% 25%
Frontier
Biosciences
Limited * (a) UK 75% 75% 25% 25%
Frontier
Oncology
Limited * (a) UK 75% 75% 25% 25%
NetScientific
America, Inc. (d) USA 100% 100% - -
Glycotest,
Inc.
(i), (ii) (e) USA 62.5% 62.5% 37.5% 37.5%
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.
All of the ownerships shown above relate to ordinary
shareholdings.
(i) Options have been issued by ProAxsis Ltd and Glycotest, Inc.
which if exercised would dilute the Company's shareholding by 5%
and 1% respectively.
Registered office address:
(a) Azets, Burnham Yard, London End, Beaconsfield, Buckinghamshire, HP9 2JH
(b) 20 St Andrew Street, Holborn Circus, London, EC4A 3AG
(c) Unit 1B, Concourse Building, 3, Catalyst Inc, Titanic
Quarter, 6 Queens Road, Belfast, BT3 9DT, Northern Ireland
(d) 1650 Market Street, Suite 4900, Philadelphia, Pennsylvania,
19103-7300, United States of America
(e) 613 Schiller Avenue, Merion, Philadelphia, Pennsylvania, PA 19066, United States of America
The addresses listed above are also the registered offices of
the relevant entities.
7. PROPERTY, PLANT AND EQUIPMENT
Furniture,
Leasehold fittings Plant
Improvement and equipment and machinery Totals
GBP000's GBP000's GBP000's GBP000's
----------------------------------------- -------------- ---------------- -------- ---------------- -------------
Cost
At 1 January 2021 100 35 170 305
Additions - 20 42 62
At 31 December 2021 100 55 212 367
Additions 5 16 32 53
Disposals - (3) (1) (4)
Foreign exchange
movement - 1 - 1
At 31 December 2022 105 69 243 417
----------------------------------------- -------------- ---------------- --- --------------------- -----------
Depreciation
At 1 January 2021 42 18 117 177
Charge for the year 10 11 33 54
At 31 December 2021 52 29 150 231
Charge for the year 11 12 22 45
Disposals - (3) - (3)
At 31 December 2022 63 38 172 273
----------------------------------------- -------------- ---------------- --- --------------------- -----------
Net book value
At 31 December 2022 42 31 71 144
----------------------------------------- -------------- ---------------- --- --------------------- -----------
At 31 December 2021 48 26 62 136
----------------------------------------- -------------- ---------------- --- --------------------- -----------
(i) Leasehold improvements of GBP100k are funded by a loan.
8. RIGHT-OF-USE-ASSETS
2022 2021
GBP000's GBP000's
------------------------------------- ----------- -----------
Cost
At 1 January 253 253
Additions 338 -
At 31 December 591 253
---------------------------------------- ----------- -----------
Amortisation
At 1 January (95) (64)
Charge for the year (76) (31)
At 31 December (171) (95)
---------------------------------------- ----------- -----------
Net book value
At 31 December 420 158
---------------------------------------- ----------- -----------
There are now three long term leases with two additions in 2022.
The Group decided it would apply the modified retrospective
approach to IFRS 16, and therefore will only recognise leases on
balance sheet as at 1 January 2019. In addition, it has decided to
measure right-of-use assets by reference to the measurement of the
lease liability on that date. This will ensure there is no
immediate impact to net assets on that date.
The lease liabilities were measured at the present value of the
remaining lease payments, discounted using the Group's incremental
borrowing rate as at 1 January 2019. The Group's incremental
borrowing rate is the rate at which a similar borrowing could be
obtained from an independent creditor under comparable terms and
conditions. The rate applied was 3.5%.
The rate applied to the new leases in 2022 is 5.0%
Right-of-use assets are amortised on a straight-line basis over
the remaining term of the lease or over the remaining economic life
of the asset.
Short term leases still expensed as operating amount to GBP10k
(2021: GBP29k) that are now all expired.
9. INTANGIBLE ASSETS
Development Investment
Carry Interest costs Acquisition Licenses
Goodwill Arrangements Costs and Patents Total
GBP000's GBP000's GBP000's GBP000's GBP000's GBP000's
------------------ ---------- ---------------- ------------- -------------- -------------- ----------
Cost
------------------ ---------- ---------------- ------------- -------------- -------------- ----------
At 1 January
2021 669 1,627 337 17 50 2700
Additions - - 585 - - 585
At 31 December
2021 669 1,627 922 17 50 3,285
Additions - - 548 - - 548
At 31 December
2022 669 1,627 1,470 17 50 3,833
------------------ ---------- ---------------- ------------- -------------- -------------- ----------
Accumulated
amortisation
and impairment
------------------ ---------- ---------------- ------------- -------------- -------------- ----------
At 1 January
2021 - 76 - - 1 77
Amortisation
charge - 140 18 - 5 163
------------------ ---------- ---------------- ------------- -------------- -------------- ----------
At 31 December
2021 - 216 18 - 6 240
Amortisation
charge - 163 56 - 7 226
At 31 December
2022 - 379 74 - 13 466
------------------ ---------- ---------------- ------------- -------------- -------------- ----------
Net book value
------------------ ---------- ---------------- ------------- -------------- -------------- ----------
At 31 December
2022 669 1,248 1,396 17 37 3,367
------------------ ---------- ---------------- ------------- -------------- -------------- ----------
At 31 December
2021 669 1,411 904 17 44 3,045
------------------ ---------- ---------------- ------------- -------------- -------------- ----------
Further ProAxsis development costs of GBP548k (2021: GBP585k)
have been capitalised during the year in line with the accounting
policy as certain projects meet all the criteria for development
costs to be recognised as an asset as it is probable that future
economic value will flow to the Group.
The main factors leading to the recognition of this intangible
are:
-- the presence of certain intangible assets, such as the
assembled workforce of the acquired entity, EIS fund practice,
infrastructure, thought leadership, brand, deal flow and investor
network and relationships, which do not qualify for separate
recognition;
-- economies of scale which result in the Group being prepared to pay a premium; and
-- carry interest arrangements and profit share that are a
material identifiable class of asset that has been recognised
separately.
10. EQUITY INVESTMENTS CLASSIFIED AS FVTOCI
Represent equity securities classified
as FVTOCI
2022 2021
GBP000's GBP000's
-------------------------------------------- ----------- -----------
At 1 January 11,516 2,970
Additions 555 2,192
Disposals (451)
Conversion of financial assets classified 2,004 -
as FVTPL
Acquired through business combinations - 342
Change in fair value during the year 9,119 6,012
At 31 December 22,743 11,516
-------------------------------------------- ----------- -----------
Country % of issued 2022 GBP2021
Name of incorporation share capital GBP000's GBP000's
-------------------------------- -------------------- ---------------- ----------- -----------
PDS Biotechnology Corporation USA 4.4% 14,680 8,047
EpiBone, Inc. USA 1.3% 1,179 290
CytoVale, Inc. USA 1.0% 415 371
G-Tech, Inc USA 3.8% 354 317
PointGrab Israel 0.5% 76 68
FOx Biosystems NV Belgium 3.9% 495 336
Q-Bot Limited UK 17.6% 3,728 1,025
SageTech Medical Equipment
Limited UK 5.5% 887 887
Sofant Technologies
Limited UK 1.5% 402 -
Vortex Biotech Holdings
Limited UK 30.0% 300 -
Martlet Capital Limited UK 1.0% 175 175
Ventive Limited UK 15.9% 52 -
DeepTech Recycling Limited UK 30.0% - -
-------------------------------- -------------------- ---------------- ----------- -----------
At 31 December 22,743 11,516
------------------------------------------------------ ---------------- ----------- -----------
Below we provide some additional detail on the composition of
the Fair Value estimates. When reviewing these estimates, we have
taken into consideration both third party investment rounds, and
whether the company continues to progress on their roadmap.
-- NASDAQ-listed PDS Biotechnology Corporation (4.4% stake) year
end fair value was based on the listed share price (Nasdaq under
the ticker PDSB) of $13.20 per share at 31 December 2022 (2021:
$8.10). At 31 December 2022 NetScientific owns 1,338,833 shares of
PDS' common stock, valuing the stake at GBP14,680k (2021:
GBP8,047k). The current share price as of 19 May 2023 was $7.41
giving a fair value of the PDS investment of GBP7,977k. The Company
periodically reviews its investment strategy with respect to this
asset.
-- CytoVale Inc., (1.0% stake) remains privately held, and fair
value has been established using the share price and company
valuation from investments by third parties during December 2019.
CytoVale raised $15.0m all at the same price per share from VC,
private investor and government sources. At the time this was the
only observable valuation on which to value CytoVale. Fair value at
year end was GBP415k (2021: GBP371k). This last observable price
has been used to value the CytoVale equity investment at year
end.
-- EpiBone, Inc ., (1.3% stake) executed a first close on a
Series A fund-raise as part of which on 1 November 2022 the
convertible loan note of GBP650k converted to equity. Fair value at
year end was GBP1,179k (2021: GBP290k) based on the last round
price.
-- G-Tech, Inc., continues to be valued at the Series A funding
round of $6 million as of May 2020. This is the last observable
price which values our 3.8% stake at GBP354k (2021: GBP316k).
-- PointGrab, (0.5% stake) - Valued at the most recent
investment round as of April 2021, valuing our holding at GBP76k
(2021: GBP68k).
-- FOx Biosystems (3.9% stake) - On 23 November 2022 the EUR150k
convertible loan note plus interest converted to equity at the last
investment round share price, valuing the stake at GBP495k (2021:
GBP336k) as part of a c.EUR3.0m round (supported by an additional
EUR2.5m EIC grant.
-- Q-Bot Limited (17.6% stake) - After a May 2022 conversion of
a loan note of GBP549k into equity, NetScientific total cost is
GBP1.5m. Following a November 2022 investment round, our stake has
a fair value of GBP3,728k (2021: GBP1,025k), indicating a c.2.5x
valuation uplift within an 18 month period.
-- SageTech Medical Equipment Limited, (5.5% stake) - Continues
to be valued at the last round price as of 24 December 2021,
valuing the stake at GBP887k (2021: GBP887k).
-- Sofant Technologies Limited, (1.5% stake) - On 6 July 2022
the convertible loan note converted to equity. The stake is valued
at the last round price, resulting in GBP402k (2021: GBPNil), at a
cost of GBP300k.
-- Vortex Biotech Holdings Limited (30.0% stake) - On 16 August
2022, NetScientific announced the acquisition of 300,000 ordinary
shares, translating into a 30% stake in the business for a non-cash
consideration. This last round price of GBP1.00 was used to value
the stake at GBP300k (2021: GBPNil).
-- Ventive Limited, (15.9% stake) - Following a September 2022
rescue financing package led by EMV Capital, which also unlocked a
c.GBP1.5m BEIS grant, the Group received a 15.9% stake in partial
settlement of fees (and no cash investment). The stake is currently
valued at GBP52k (2021: GBPNil), based on the 'rescue round' equity
price.
-- Martlet Capital Limited, (1.0% direct equity stake) - Our
direct investment in the early-stage VC platform in Cambridge is
currently valued at GBP175k (2022: GBP175k) .
11. FINANCIAL ASSETS CLASSIFIED AS FVTPL
Warrants & Convertible Loans classified 2022 2021
as FVTPL GBP000's GBP000's
------------------------------------------ ----------- -----------
Balance at 1 January 1,462 78
Additions 710 1,332
Repayment (48) -
Additional accrued interest 93 24
Conversion to equity investments (2,004) -
classified as FVTOCI
Change in fair value during the year 480 28
------------------------------------------ ----------- -----------
Balance at 31 December 693 1,462
------------------------------------------ ----------- -----------
Below is further detail on the various debt instruments used in
financing portfolio companies during the year. For completeness,
please refer to the above note 10, especially where convertible
loans convert into equity:
-- EpiBone, Inc., a $734k convertible loan note (carrying
interest at 6% p.a., and a conversion discount of 15%) was
converted to equity on 1 November 2022, with accrued interest of
GBP29k (2021: GBP3k). Fair value at year end was GBPNil (2021:
GBP543k).
-- G-Tech Medical, Inc., holds GBP88k of common form
convertibles (2021: GBP78k), which remain as financial assets
classified as FVTPL. No interest accrued.
-- Q-Bot Limited, GBP300k convertible loan note carries interest
at 10% p.a., a discount on conversion of 20% on the next investment
round and is repayable within two years. On 27 January 2022 a
further GBP200k was invested in the convertible loan note, with
accrued interest during the period of GBP16k (2021: GBP5k). On 10
May 2022 the convertible loan note of GBP549k converted to equity.
Fair value at year end was GBPNil (2021: GBP312k). During 2022, a
GBP140k working capital loan was extended to Q-Bot, carrying
interest at 10% p.a. On 30 December 2022, GBP48k was repaid,
including interest and arrangement fee of GBP9k. Fair value at year
end was GBP101k (2021: GBPNil). Warrants of GBP41k in Q-Bot were
also received for services.
-- Vortex Biotech Holdings Limited was advanced loans of GBP370k
during the period. The loan carries interest at 8% p.a. Accrued
interest during the period was GBP15k (2021: GBPNil). Fair value at
year end was GBP385k (2021: GBPNil).
-- Sofant Technologies Limited, a GBP300k convertible loan
alongside BBB's Future Fund with 10% pa coupon convertible loan
note, with a 20% discount on conversion was converted into equity
in July 2022. Accrued interest during the period was GBP14k (2021;
GBP13k). The fair value at year end was GBPNil (2021: GBP324k).
-- Martlet Capital Limited, GBP75k unsecured convertible loan
note. Fair value at year end was GBP80k (2021: GBP76k). The
convertible loan note carries interest at 5% p.a. and is repayable
by the seventh anniversary from the grant date. Accrued interest
during the period is GBP4k (2021: GBP1k).
-- FOx Biosystems, EUR150k loan note with 5% p.a. coupon was
converted to equity on 23 November 2022, with accrued interest
during the period of GBP7k (2021: GBPNil). Fair value at year end
was GBPNil (2021: GBP128k).
-- The Neumitra, Inc., and Longevity Inc., convertible loan
notes do not have a material value individually or collectively and
have been fully impaired.
[1] A 2021 report by Boston Consulting Group "The Deeptech
Investment Paradox" notes " VC funds are structurally unfit
(lifetime, size, incentives) to invest in deep tech, relying on the
traditional blueprints of ICT (high market risk, low technology
risk) and Pharma / biotech (high technology risk, low market risk)
and they often lack the expertise needed to understand advanced
science, engineering risks and to support ventures" p.3
[2] 'Fair Value' is unaudited Directors' estimated value of the
directly owned stakes, based on the BVCA valuation method.
[3] This includes the subtraction of GBP3.9 million in respect
of Vortex Biosciences, where the company restructured its carried
interest and acquired a 30% direct interest. "Capital under
advisory" is associated with carried interest or profit share
agreements, typically between 15% and 20% of the profit on advised
funds above a minimum return hurdle rate of 10 per cent.
[4] The companies are listed in the order of Fair Value size of
NetScientific direct stake.
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END
FR KZGFKGMZGFZG
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May 31, 2023 02:01 ET (06:01 GMT)
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