Netscientific Regulatory News (NSCI)

NetScientific plc

('NetScientific' or 'the Company' or 'the Group')

Half-Yearly Report

23 September 2014: NetScientific (AIM: NSCI), the global biomedical and healthcare technology group today announces its half yearly report for the six months ended 30 June 2014.

Highlights

§ Significant progress made in advancing the technologies in two core subsidiaries, WandaHealth and Vortex Biosciences.

§ New commercial partnership with Peter Thiel's Breakout Labs which provides

NetScientific with direct access to cutting-edge technologies in Silicon Valley.

§ Post period end investments were made in two new later-stage companies, G-Tech Medical and Longevity Biotech.

§ Strict expenditure controls and rigorous criteria for new investments resulted in higher than budget closing cash balance of £22.5 million.

Farad Azima, CEO of NetScientific, said:

"The Group has made significant progress so far this year in bringing our subsidiaries closer to achieving value inflection points which will allow a series of high performance exits. At NetScientific our view is that, science knows no borders. Therefore, we anticipate securing further additional strategic alliances, which will give us worldwide access to other transformative technologies."

-Ends-

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

Contact Details

Copies of the unaudited interim results for the six months ended 30 June 2014 are available on the Group's website at www.netscientific.net.

Overview

Over the six-month period under review, the Group made significant progress, in particular in two of its core subsidiaries, WandaHealth and Vortex Biosciences. Strict expenditure controls and rigorous criteria for new investments resulted in higher than budget closing cash balance of £22.5 million.

In the same period, the Group evaluated new enabling technologies to underpin its pipeline. Validated opportunities are being secured from both research institutes and new commercial alliances, as per our March announcement relating to Peter Thiel's Breakout Labs. This unique relationship provides NetScientific with direct access to cutting-edge technologies in Silicon Valley.

Post period end, the Group announced an important research programme in DNA sequencing, and investments in two later-stage BioMed companies, G-Tech Medical and Longevity Biotech.

Strategy

NetScientific's goal is to build a group of subsidiaries and portfolio investments based on transformative technologies in i) digital health, ii) advanced medical diagnostics and iii) novel therapeutics in regenerative medicine. For the most part, these technologies have faster development timelines; lower capital requirements and shorter regulatory pathways.

At NetScientific, 'science knows no borders' and the Group will seek to secure further valuable technologies through privileged access to global centres of excellence which have been painstakingly developed over many years.

The Group has assembled experienced management teams, eminent scientific advisors and solid infrastructures in the UK and the United States. In addition, it operates a centralised shared ecosystem of finance, banking, legal, marketing, patenting and licensing - saving huge costs to the subsidiaries. NetScientific also encourages its subsidiaries to leverage potential synergies among themselves. 

NetScientific is an active investor, taking leadership roles and providing extensive management support to drive its investments to value inflection points, to allow a series of high performance exits.

Key Subsidiaries

WandaHealth is cloud-based predictive big-data analytics for the remote monitoring of patients with chronic disease - the first application of which is in congestive heart failure, the leading cause of hospital re-admission. Successful clinical trials were completed ahead of time and regulatory approvals are expected in Q1, 2015. Discussions have commenced with a major US hospital group in preparation for commercial roll-out.

Vortex is developing a simplified, high-speed blood test for a wide range of metastatic cancers - a 'liquid biopsy' with no requirements for sample prep. Important applications include diagnostics, prognosis during treatment, and 'personalised' therapeutics. Early research collaborators include UCLA, Harvard University and Stanford Cancer Institute. Commercial product launch is expected in 2015. 

Financial Results

Research and development expenditure, which was largely in the core subsidiaries, for the period was £1.4m (H1 2013: £0.3m).

The pre-tax loss was £2.6m (H1 2013: £1.0m) reflecting the expenditure in R&D.

Cash and deposit balances as at 30 June 2014 were £22.5m (H1 2013: £0.1m) and the cash outflow for the period was £2.8m (H1 2013: £0.3m).

Outlook

In summary, the Group has made significant progress in the development of its existing subsidiaries and will continue to drive its investments to specific value inflection points. In addition, the Group anticipates adding further strategic alliances to provide access to investment opportunities in our areas of interest.

NetScientific plc

Unaudited Consolidated Interim Statement of Changes in Equity

As at 30 June 2014

1. Accounting Polices

Basis of preparation

The interim financial statements, which are unaudited, have been prepared on the basis of the accounting policies expected to apply for the financial year to 31 December 2014 and in accordance with recognition and measurement principles of International Financial Reporting Standards (IFRSs) as endorsed by the European Union. The accounting policies applied in the preparation of these interim financial statements are consistent with those used in the financial statements for the year ended 31 December 2013.

The interim financial statements do not include all of the information required for full annual financial statements and do not comply with all the disclosures in IAS 34 'Interim Financial Reporting'. Accordingly, whilst the interim statements have been prepared in accordance with IFRSs, they cannot be construed as being in full compliance with IFRSs.

The financial information for the year ended 31 December 2013 does not constitute the full statutory accounts for that period. The Annual Report and Financial Statements for the year ended 31 December 2013 have been filed with the Registrar of Companies. The Independent Auditor's Report on the Report and Financial Statements for the year ended 31 December 2013 was unqualified, did not draw attention to any matters by way of emphasis, and did not contain a statement under 498(2) or 498(3) of the Companies Act 2006.

Going Concern

The directors have prepared and reviewed financial forecasts. After due consideration of these forecasts and current cash resources, the directors consider that the Company and Group have adequate financial resources to continue in operational existence for the foreseeable future (being at least twelve months from the date of this report), and for this reason the financial statements have been prepared on a going concern basis.

2. Acquisitions

During the period the Group acquired a minority holding of 2.18% in Cytovale, Inc. an early stage life sciences company based in San Francisco, USA commercialising microfluidic technologies that enable high through put single cell analysis.

Subsidiaries

During the period the Group acquired a controlling interest of 57% in Proaxsis Limited, a recently formed company involved in the development of a range of novel medical diagnostic tests to enable routine monitoring of patients with Cystic Fibrosis and other chronic respiratory conditions such as Chronic Obstructive Pulmonary Disease.

3. Tax Credit

The tax credit of £3,616 (six months ended 30 June 2013: £Nil: year ended 31 December 2013: £14,153) is in relation to a research and development tax credit receivable in respect of a subsidiary company for a prior period.

4. Loss per Ordinary Share

The loss attributable to ordinary shareholders and weighted average number of ordinary shares for the purpose of calculating the diluted earnings per ordinary share are identical to those used for basic earnings per share, as whilst the parent company has share options in existence they are not dilutive as their exercise would have the effect of reducing the loss per ordinary share. At 30 June 2014 there were 2,782,405 options outstanding (30 June 2013: Nil options outstanding: 31 December 2013: 2,513,140 options outstanding).

INDEPENDENT REVIEW REPORT TO NETSCIENTIFIC PLC

Introduction

We have been engaged by the Company to review the condensed set of financial statements in the half-yearly financial report for the six months ended 30 June 2014 which comprises the Consolidated Interim Statement of Comprehensive Income, the Consolidated Interim Statement of Financial Position, the Consolidated Interim Statement of Changes in Equity, the Consolidated Interim Statement of Cash Flows and the related notes 1 to 4.

We have read the other information contained in the half-yearly financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.

Directors' responsibilities

The interim report, including the financial information contained therein, is the responsibility of and has been approved by the directors. The directors are responsible for preparing the interim report in accordance with the rules of the London Stock Exchange for companies trading securities on AIM which require that the half-yearly report be presented and prepared in a form consistent with that which will be adopted in the Company's annual accounts having regard to the accounting standards applicable such accounts.

Our responsibility

Our responsibility is to express to the Company a conclusion on the condensed set of financial statements in the half-yearly financial report based on our review.

Our report has been prepared in accordance with the terms of our engagement to assist the company in meeting the requirements of the rules of the London Stock Exchange for companies trading securities on AIM and for no other purpose. No person is entitled to rely on this report unless such a person is a person entitled to rely upon this report by virtue of and for the purpose of our terms of engagement or has been expressly authorised to do so by our prior written consent. Save as above, we do not accept responsibility for this report to any other person or for any other purpose and we hereby expressly disclaim any and all such liability.

Scope of review

We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410, ''Review of Interim Financial Information Performed by the Independent Auditor of the Entity'', issued by the Auditing Practices Board for use in the United Kingdom. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the six months ended 30 June 2014 is not prepared, in all material respects, in accordance with the rules of the London Stock Exchange for companies trading securities on AIM.

BDO LLP

Chartered Accountants and Registered Auditors

Southampton

United Kingdom

22 September 2014

BDO LLP is a limited liability partnership registered in England and Wales (with registered number OC305127).