TIDMNSCI

RNS Number : 1028U

NetScientific PLC

31 March 2021

NetScientific plc

("NetScientific", "NSCI", the Group" or the "Company")

Preliminary Results for the year ended 31 December 2020

Company poised for further growth, following turnaround, transformation and portfolio expansion

NetScientific plc (AIM: NSCI), the international life sciences and sustainability, technology investment and commercialisation group, announces its preliminary results for the year ended 31 December 2020.

2020 was a year of turnaround, transformation and significant progress for the Company. The year started with a strategic review, which identified the quality of the science in the portfolio companies and that the underlying asset value was significantly higher than the market capitalisation with significant growth potential. Hence, the company changed its strategy, moving to a proactive management approach to deliver shareholder value.

Trading for the year was in line with management expectations, as the Group stabilised its position and started to reap the benefits of the new growth strategy. This was further enhanced by the all-paper acquisition of EMV Capital Ltd broadening the portfolio and resources, together with the successful GBP2.3m placement in August 2020. This puts the Company on a strong footing for the year ahead.

Highlights

-- The share price has increased from the low point of 12.5p in early 2020 to the year's average of c. 55p

   --    Loss after tax reduced to GBP2.3 million (2019: loss GBP4.9 million) 

-- Increase in Board estimate of "fair value" of direct holdings by c. 80% from GBP11.8m to GBP21.2m, with further growth anticipated

   --    Completed a GBP2.3m placing and a 10-1 share consolidation 
   --    Consolidated cash and cash equivalents of GBP1.6 million (2019: GBP3.5 million) 
   --    Acquisition and integration of EMV Capital, which: 

o increased Capital Under Advisory from nil to GBP14.6m

o enlarged total Group portfolio from 8 to 17 companies

o enhanced deal execution capacity and revenues

-- Acquisition of the minority interest in ProAxsis and now, as a 100% owned subsidiary, the business has been rejuvenated and is set for commercial expansion

-- Maintaining NetScientific's position in NASDAQ-listed PDS Biotech through a c.GBP1.0m investment in two placements, which are already showing healthy returns

-- Restructured Board with Dr Ilian Iliev becoming CEO and John Clarkson becoming Executive Chairman

o Strong complementary skill sets

o Team in place to deliver value

Outlook

With the fundamental change in strategy and management drive, the Group has acted to realise the underlying asset value in the portfolio companies and their potential to deliver shareholder value. This includes exploiting the established transatlantic business and expanding the international presence, to maximise the growth of its subsidiaries and portfolio.

As seen through the recent news flow, the upward trend has been established and there is significant opportunity for the portfolio to generate the requisite added value.

The Company's management team is performance and results driven; and, with its proactive management approach, NSCI is confident in delivering increased value of the Group's investments, identifying the right new investments and supporting portfolio companies through successful commercial development and value inflection points to timely liquidity events.

By focusing on attractive market sectors, with high growth opportunities and adding value through disciplined commercial management, the Company believes that there is significant upside for shareholder returns through judicious exits, liquidity returns and value inflection points.

Dr. Ilian Iliev, CEO of NetScientific commented : "This was a transformational turnaround year for NetScientific. The new team's pro-active management is already showing positive results; a cut in losses, increased fair value and capital under advisory, closed several transactions, and made further judicious investments in the portfolio. The acquisition and integration of EMV Capital has doubled the Group's portfolio size, provided new sources of capital, and added a more comprehensive support infrastructure for the portfolio companies.

"The Group has limited the negative impacts of COVID, while capturing emerging opportunities.

"Looking forward, NetScientific is focused on increasing shareholder value and profitable returns through the considered management of the portfolio, benefiting from increased activity in the Healthcare and Sustainability markets."

John Clarkson, Executive Chairman of NetScientific added : "The strategy review not only identified the Company's underlying strengths and exciting prospects, but also determined and put in place the fundamental changes needed for the planned business success. The Board is confident that the extended portfolio holds great potential, with the right asset-base, in the right space and at the right time.

"The team is committed to delivering the agreed strategy, developing the portfolio companies and exploiting the opportunities to unlock and realise the requisite shareholder returns."

For more information, please contact:

 
 NetScientific                            Via Walbrook PR 
 Ilian Iliev, CEO 
 
 WH Ireland (NOMAD, Financial Adviser 
  and Broker) 
 Chris Fielding / Darshan Patel           +44 (0)20 7220 1666 
 
 Walbrook PR 
 Nick Rome/ Anna Dunphy/ Paul McManus/    07748 325 236 or 07876 741 001 
  Nicholas Johnson                         or 07980 541 893 
                                           or 07884 664 686 
 

About NetScientific

NetScientific plc (AIM: NSCI) is a holding company, that invests in, develops, commercialises and realises shareholder value in life sciences/healthcare, sustainability and technology companies, which offer significant growth potential predominately in the UK and USA, as well as globally.

With the acquisition of EMV Capital in August 2020, the Group doubled its portfolio from 8 to 17 companies, either through direct subsidiary, balance sheet investment or capital under advisory, varying from start-up private companies to publicly listed equities.

NetScientific delivers shareholder returns through a proactive and hands-on management approach to their portfolio companies; identifying, investing in, and helping to build game-changing companies. The Group targets value inflection points and the release of value through partial or full exits from trade sales, public listings, or equity sales. The Company has a strong transatlantic and growing international presence, providing attractive expansion prospects.

NSCI can deploy a capital-light investment structure; utilising the power of the PLC Brand, and the NetScientific balance sheet to anchor future investments and achieve a multiplier effect by attracting 3rd party investment for the portfolio companies.

NetScientific is headquartered in London, United Kingdom, and was admitted to trading on AIM, a market operated by the London Stock Exchange, in 2013 (website: www.netscientific.net ).

CHAIRMAN'S AND CHIEF EXECUTIVE OFFICER'S STATEMENT

NetScientific Plc ("NetScientific", the "Group" or the "Company") is a holding company, that invests in, develops commercialises and realises shareholder value in life sciences/healthcare, sustainability and technology companies, which offer significant growth potential in predominately in the UK, USA as well as globally.

2020 was a year of challenge, turn-round and transformation for NetScientific.

In order to address past challenges, the Board launched a strategy review at the start of 2020, which produced a new strategic framework for the business. The Board accepted the findings and recommendations, noting the following key points:

   --    the business required fundamental change; 
   --    the remaining portfolio companies had good quality "science"; 

-- there is a strong underlying asset value, several times greater than the market capitalisation; and

   --    the companies showed significant potential for growth and added shareholder value. 

Following the review and action programme, and in accordance with the new strategic framework, the Board concluded that:

-- the Group would benefit from a larger portfolio with varying time horizons and stages of development and a wider focus;

-- after its earlier focus on minimising costs and overheads, the Company needed to strengthen the executive team with further expertise and resources below Board/ CFO level, to fully implement the strategy;

-- it was in the best interests of shareholders to acquire EMV Capital, taking advantage of the strong synergies and enabling an enhanced commercial and investment strategy, with increased revenues and capital gain; and

   --    the company should raise additional equity of circa GBP2 million. 

Accordingly, the Company thereafter commenced an implementation action programme, with:

   --    a changed Board and new Executive Team; 
   --    pro-active, commercial management of the portfolio and individual companies; 
   --    investment to protect/enhance NetScientific's position in existing companies; 

-- clear identification of the business plans, timelines/ milestones, associated funding needs, value inflection points and potential for each portfolio company; and

-- leveraging the Company's balance sheet and enhancing the Plc standing to attract 3rd party investment.

Comprehensive information further detailing the above was set out in a circular to shareholders, with the acquisition structured as a share for share exchange, which was approved at an extraordinary general meeting on 24th August 2020. The acquisition of EMVC was duly completed along with a successful and oversubscribed placement of GBP2.3m.

Today NetScientific can be summarised as:

-- a life sciences/healthcare, sustainability and technology investment, and commercialisation group;

   --   an investment company with a balanced portfolio of investments; 

-- pro-active managers, generating returns through growth in the value of its direct balance sheet holdings, and a carry fee on capital under advisory;

-- producing investment realisations through judicious partial or full exits and liquidity events;

-- providing venture capital investment and corporate finance services, adding value through management, incubation and fund-raising support;

-- a trans-Atlantic business, with presence in the UK and North America and growing internationally; and

   --   focused on high growth opportunities, adding value, and delivering shareholder returns. 

The Company's strategy is geared to maximising shareholder value from its portfolio companies by:

   --   completing the business turnaround at NetScientific and its subsidiary companies; 
   --   realigning the market capitalisation with strong underlying asset value; 

-- establishing the necessary resources and infrastructure, and implementing plans to deliver the growth potential of the subsidiaries and portfolio;

-- delivering shareholder returns by driving the business and growth plans through appropriate key value inflection points to create profitable liquidity events and exits; and

   --   building the NetScientific platform in readiness for development and expansion. 

Highlights and KPIs of the year

The Board presented its strategy and operational plans to investors, as a staged process to deliver both immediate results and longer term added shareholder value. During 2020, the company has continued to perform successfully against the stated objectives and milestones as follows:

-- The share price has increased from the low point of 12.5p in early 2020 to a year average of c. 55p,

-- More than halving the previous year's losses of GBP4.9 million, down to GBP2.3 million in 2020,

-- Increase in "fair value" (unaudited Directors' estimated value) of direct owned stakes by c. 80% from GBP11.8m to GBP21.2m, with further growth anticipated,

-- Successful acquisition and integration of EMV Capital Ltd as the corporate finance and venture capital arm of NetScientific leading to:

o increased in Capital Under Advisory from nil to GBP14.6m;

o increased total portfolio from 8 to 17 companies;

o increased deal execution capacity and revenues

-- ProAxsis : NetScientific previously owned 60%, but had provided 100% of the funding. This was an untenable situation. Accordingly, in October 2020, NetScientific successfully bought out the founders and Queens University and secured licensed IP on attractive terms . ProAxsis, now a fully-owned subsidiary, has more effective financial and project management, and a drive for commercialisation and business growth, with the winning of five grants worth over GBP1.0m in value during 2020.

-- Glycotest : Moving from a passive cash demanding approach to a "hands-on owner" approach, with effective controls, project management discipline and performance drive, we implemented cost savings of some $1 million. Despite the impact Covid, excellent progress on the HCC Panel clinical validation study and algorithm training set, with an associated significant value inflection point expected in 2021.

-- EMV Capital: Completing several portfolio company transactions, leading to an increase of 27.1% in Capital Under Advisory from GBP9.6m at the end of 2019 to GBP12.2m by the end of 2020; driving change through the turnaround projects at Vortex and Wanda; keeping overall revenues stable despite the COVID disruptions.

-- PDS Biotechnology : Protecting and significantly enhancing our holding with a GBP500K investment in February 2020 at $1.30 per share and a further investment of GBP500K in August 2020 at $2.75 per share, with both investments now showing healthy returns against the current share price of $5.30 (18 March 2021). PDS has since progressed into multiple clinical trials, and post-year end obtained up to $60m funding support from the Brazilian government for its COVID vaccine initiative. Dr Iliev joined the Board of PDS in April 2020.

Portfolio Summary

In addition to the existing NetScientific portfolio at the start of the year, the Group's base has been broadened and strengthened, through the successful acquisition of EMVC. This enhanced portfolio is well balanced, facilitates risk management and provides synergistic benefits, through consolidated pro-active management across the Group, as summarised below.

As is common in the venture capital industry, EMV Capital has a carried interest arrangement with investors it has introduced into its portfolio companies. Under these arrangements, EMV Capital is entitled, on realisation of the investments, to a share of profits (or carried interest) for capital amounts under advisory. The carried interests range between 10 per cent. and 20 per cent. of profits above a minimum return hurdle rate of up to 10 per cent.

 
                        Sector and                          Consolidated        Fair Value             Capital Under 
                        description                          Statement            of stake              Advisory (At 
                         (further                           of Financial                               Cost to Third 
                        detail set                            Position                                    Parties) 
                        out below)                             Value 
                                            Fully diluted 
                                                Group                        31 Dec      31 Dec      31 Dec      31 Dec 
   Portfolio                                  Interest                        2020        2019        2020        2019 
   companies                                      % 
                                                                          ----------  ----------  ----------  ---------- 
 Subsidiaries 
                -------------------------  --------------  -------------  ----------  ----------  ----------  ---------- 
 EMV Capital     Venture Capital 
  Ltd             Investment                    100.0%         GBP2.2m       GBP3.5m        -           -           - 
                  Company                       Equity 
                -------------------------  --------------  -------------  ----------  ----------  ----------  ---------- 
 ProAxsis Ltd    Medical diagnostics 
                  - Early stage 
                  commercialisation          95.0% Equity      GBP0.5m       GBP3.5m     GBP2.0m        -           - 
                -------------------------  --------------  -------------  ----------  ----------  ----------  ---------- 
 Glycotest,      Liver cancer 
  Inc.            diagnostics 
                  - Late stage               51.5% Equity      GBP0.5m      GBP11.0m     GBP8.0m        -           - 
                  clinical 
                -------------------------  --------------  -------------  ----------  ----------  ----------  ---------- 
 
   Sub Total                                                   GBP3.2m      GBP18.0m    GBP10.0m 
                -------------------------  --------------  -------------  ----------  ----------  ----------  ---------- 
 Owned 
 Portfolio 
                -------------------------  --------------  -------------  ----------  ----------  ----------  ---------- 
 PDS             Immuuno-oncology 
 Biotechnology    (NASDAQ quoted) 
 Corporation      - Early stage               5.7% Equity      GBP2.0m       GBP2.0m     GBP1.1m        -           - 
                  clinical 
                -------------------------  --------------  -------------  ----------  ----------  ----------  ---------- 
 CytoVale,       Medical biomarker 
  Inc             diagnostics 
                  - Late stage                1.0% Equity      GBP0.4m       GBP0.4m     GBP0.4m        -           - 
                  clinical 
                -------------------------  --------------  -------------  ----------  ----------  ----------  ---------- 
 Epibone, Inc    Regenerative 
                  medicine 
                  - Late stage                0.8% Equity      GBP0.3m       GBP0.3m     GBP0.3m        -           - 
                  clinical 
                -------------------------  --------------  -------------  ----------  ----------  ----------  ---------- 
 G - Tech        Waerable 
 Medical,         medical diagnostics 
 Inc              - Early stage               3.8% Equity      GBP0.3m       GBP0.4m        -           -           - 
                  clinical 
                -------------------------  --------------  -------------  ----------  ----------  ----------  ---------- 
 Longevity                                      $250k 
  Biotech, Inc     Therapeutics              Convertible 
                   - Early stage              loan note           -             -           -           -           - 
                   clinical 
                -------------------------  --------------  -------------  ----------  ----------  ----------  ---------- 
 QuantalX        Medical diagnostics 
 Neuroscience     of the brain 
                  - Late stage                0.4% Equity         -          GBP0.1m        -           -           - 
                  clinical 
                -------------------------  --------------  -------------  ----------  ----------  ----------  ---------- 
 
   Sub Total                                                   GBP3.0m       GBP3.2m     GBP1.8m 
                -------------------------  --------------  -------------  ----------  ----------  ----------  ---------- 
 Advised 
 Portfolio 
                -------------------------  --------------  -------------  ----------  ----------  ----------  ---------- 
 Sofant          Semiconductors-Satellite 
 Technologies     and 5G wireless 
 Ltd              communications 
                                                   -              -             -           -        GBP2.3m     GBP0.7m 
                -------------------------  --------------  -------------  ----------  ----------  ----------  ---------- 
 Q-Bot Limited   Building 
                  automation-Robotics 
                  & artificial                     -              -             -           -        GBP2.3m     GBP2.0m 
                  intelligence 
                  ("AI") 
                -------------------------  --------------  -------------  ----------  ----------  ----------  ---------- 
 SageTech        Chemistry 
 Medical          & medical 
 Equipment        technology-Halocarbon            -              -             -           -        GBP1.1m     GBP0.1m 
 Limited          capture 
                -------------------------  --------------  -------------  ----------  ----------  ----------  ---------- 
 PointGrab,      Building 
  Inc             automation-Robotics              -              -             -           -        GBP3.6m     GBP3.2m 
                  & AI 
                -------------------------  --------------  -------------  ----------  ----------  ----------  ---------- 
 Vortex          Medical 
 Biosciences,    technology-Oncology               -              -             -           -        GBP2.4m     GBP1.2m 
 Inc             diagnostics 
                -------------------------  --------------  -------------  ----------  ----------  ----------  ---------- 
 Wanda Health,   AI & medical 
  Inc             technology-Digital 
                  health platform                  -              -             -           -        GBP1.3m     GBP0.6m 
                -------------------------  --------------  -------------  ----------  ----------  ----------  ---------- 
 Nanotech        Material 
 Industrial       science and                      -              -             -           -        GBP0.7m     GBP0.8m 
 Solutions,       chemistry 
 Inc 
                -------------------------  --------------  -------------  ----------  ----------  ----------  ---------- 
 Insight         Semiconductors-Akinetic 
 Photonic         Swept Source                                                                      Warrants    Warrants 
 Solutions,       Laser                            -              -             -           -         for         for 
 Inc                                                                                                GBP0.9m     GBP1.0m 
                -------------------------  --------------  -------------  ----------  ----------  ----------  ---------- 
 
   Sub Total                                                      -             -           -       GBP14.6m     GBP9.6m 
                -------------------------  --------------  -------------  ----------  ----------  ----------  ---------- 
 
   TOTAL                                                       GBP6.2m      GBP21.2m    GBP11.8m    GBP14.6m     GBP9.6m 
                -------------------------  --------------  -------------  ----------  ----------  ----------  ---------- 
 

On the Consolidated Statement of Financial Position the owned portfolio is shown as Equity investments classified as FVTOCI and Financial assets classified as FVTPL.

Finance

For the year, the Group made a loss of GBP2.3 million (2019: GBP4.9 million), split between continuing and discontinued operations as follows:

 
 -   Continuing operations     GBP2.3 million (2019: 
                                GBP3.6 million) 
 -   Discontinued operations   GBPNil (2019: GBP1.3 
                                million) 
 

The loss reflects the loss-making of the subsidiaries, primarily due to continued investment in R&D at Glycotest and ProAxsis and on lower sales in ProAxsis due to COVID.

Cash

Cash on the balance sheet as at 31 December 2020 was GBP1.6 million (2019: GBP3.5 million), of which GBP0.9 million is held in the parent company. Cash used in operations in 2020, was GBP2.8 million (2019: GBP4.1 million). The cash held within the subsidiary Glycotest, of GBP0.6m (2019: GBP2.2m) is not freely available for use within the wider group as it would need the consent of a minority shareholder.

Going Concern

The Directors have prepared and reviewed the budget and cashflows, which were approved by the Board of Directors in the Board meeting of 20 January 2021. The review included the major budgeted assumptions, sensitivities and impact of Covid-19, and the company has drawn up contingency plans to cover eventualities and extend the cash runway, if required. Also, there may be additional opportunities to utilise the financial support measures and generate new revenue streams, further ensuring the Group has options and cash for at least the next twelve months. The financial statements have therefore been prepared on a going concern basis.

COVID

The Group is following the latest health authority and government advice in light of the pandemic. T he primary focus is the health, wellbeing and safety of all its employees and local communities.

The Group has reviewed all the major budgeted assumptions and sensitivities and drawn up contingency plans to respond to changing circumstances. Whilst there was a general Initial negative impact on the group, the consequences have varied across the portfolio and the individual companies have been managed accordingly.

Group companies have received some of the Government Covid-19 business support available, but the approach has been to respond proactively to the operating environment, particularly to minimise downside and concentrate on opportunities. For example, as a leading respiratory company, ProAxsis has focused on research and commercial development, winning substantial grants (mainly Covid related), which is expected to result in new products, new revenue sources and further capital gains; Glycotest where, with considered rescheduling and project management, the HCC clinical trials were successfully completed with minimal delay and are due to report Q2 2021.

In light thereof and given the core focus of the Group, the Board believes that in the aftermath of the COVID pandemic there is increased potential and may also be opportunities to make judicious investments on advantageous terms.

Summary and Outlook

Having undertaken a fundamental review of the whole business at the start of 2020 and agreed a new strategy, implementation of the turnaround plan has gone well. The Company is transformed from the inherited situation and ended the year in a strong position, with a clear, planned route and growth strategy to deliver shareholder returns.

The Board believes that the extended portfolio holds great potential; with the right asset-base, in the right space and at the right time, Management is committed to delivering the agreed strategy, which the Board is confident will unlock and realise the requisite returns.

The Company's strategy remains to maximise shareholder value from the portfolio companies by:

   --   Completion of the business turnaround. 
   --   Realigning the market capitalisation with both the underlying asset value and clear potential. 

-- Proactive management, with commercial disciplines and appropriate risk management, focused on delivering results, increased revenue and added value, in the portfolio companies.

-- Continuing to establish the necessary resources and infrastructure to drive the strategic and business plans.

-- Building the NetScientific platform for robust evaluation, quantified decisions and managed expansion to capitalise on the multiple prospects and potential for large returns.

   --   Exploiting the transatlantic and global opportunities and harnessing the Group synergies. 

-- Progressively developing and implementing performance driven plans, with clearly defined milestones and KPIs to scale the business, maximise the profitable growth of the portfolio.

   --   Judicious direct and syndicated investments, to produce enhanced returns. 

-- Structured evaluation and projections of value inflection points, plus exit opportunities and liquidity events to deliver shareholder returns.

 
 John Clarkson        Ilian Iliev 
 Executive Chairman   Chief Executive Officer 
 31 March 2021        31 March 2021 
 

Consolidated Statement OF Comprehensive Income

For the year ended 31 December 2020

 
                                                                                                      2020        2019 
 Continuing Operations                                                                   Notes    GBP000's    GBP000's 
 Total Income                                                                                        1,103         832 
  Revenue                                                                                              394         735 
 Cost of sales                                                                                        (46)       (117) 
--------------------------------------------------------------------------------------  ------  ----------  ---------- 
  Gross profit                                                                                         348         618 
 
 Other operating income                                                                                599          76 
 
 Research and development costs                                                                    (1,227)     (1,979) 
 General and administrative costs                                                                  (1,988)     (2,079) 
 Other costs                                                                                         (195)       (269) 
--------------------------------------------------------------------------------------  ------  ----------  ---------- 
  Loss from operations                                                                             (2,463)     (3,633) 
  Finance income                                                                                       110          21 
 Finance expense                                                                                      (28)        (22) 
  Loss before taxation                                                                             (2,381)     (3,634) 
  Income tax credit                                                                                     43          88 
--------------------------------------------------------------------------------------  ------  ----------  ---------- 
  Loss for the year from continuing operations                                                     (2,338)     (3,546) 
 
 Discontinued Operations 
--------------------------------------------------------------------------------------  ------  ----------  ---------- 
 
 Loss for the year from discontinued operations                                                          -     (1,326) 
--------------------------------------------------------------------------------------  ------  ----------  ---------- 
  Total loss for the year                                                                          (2,338)     (4,872) 
--------------------------------------------------------------------------------------  ------  ----------  ---------- 
 
 
 Owners of the parent                                                                              (1,611)     (4,491) 
 Non-controlling interests                                                                           (727)       (381) 
--------------------------------------------------------------------------------------  ------  ----------  ---------- 
                                                                                                   (2,338)     (4,872) 
 
 Basic and diluted loss per share from continuing and discontinued operations 
  attributable 
  to owners of the parent during the year:                                                  5 
 Continuing operations                                                                              (2.9p)      (4.3p) 
 Discontinued operations                                                                            (0.0p)      (1.4p) 
 From loss for the year                                                                             (2.9p)      (5.7p) 
--------------------------------------------------------------------------------------  ------  ----------  ---------- 
 
 

Consolidated Statement OF Comprehensive Income

For the year ended 31 December 2020

 
                                                                    Notes        2020       2019 
                                                                             GBP000's   GBP000's 
-----------------------------------------------------------------  -------  ---------  --------- 
  Loss for the year                                                           (2,338)    (4,872) 
 Other comprehensive income: 
 Exchange differences on translation of foreign operations                        (3)       (56) 
 Change in fair value of equity investments classified as FVTOCI                 (97)    (1,340) 
--------------------------------------------------------------------------  ---------  --------- 
  Total comprehensive loss for the year                                       (2,438)    (6,268) 
--------------------------------------------------------------------------  ---------  --------- 
 
 Attributable to: 
 Owners of the parent                                                         (1,724)    (5,891) 
 Non-controlling interests                                                      (714)      (377) 
--------------------------------------------------------------------------  ---------  --------- 
                                                                              (2,438)    (6,268) 
 -------------------------------------------------------------------------  ---------  --------- 
 

Consolidated Statement of Financial Position

As at 31 December 2020

 
                                                    Notes        2020        2019 
                                                             GBP000's    GBP000's 
-------------------------------------------------  ------  ----------  ---------- 
 Assets 
 Non-current assets 
 Property, plant and equipment                        8           128         128 
 Right-of-use assets                                  9           189         221 
 Intangible assets                                   10         2,623           - 
 Equity investments classified as FVTOCI*            11         2,970       1,468 
 Financial assets classified as FVTPL**              12            78         262 
 Total non-current assets                                       5,988       2,079 
-------------------------------------------------  ------  ----------  ---------- 
 
 Current assets 
 Inventory                                                         74          30 
 Trade and other receivables                                      376         603 
 Cash and cash equivalents                                      1,628       3,453 
-------------------------------------------------  ------  ----------  ---------- 
 Total current assets                                           2,078       4,086 
-------------------------------------------------  ------  ----------  ---------- 
  Total assets                                                  8,066       6,165 
-------------------------------------------------  ------  ----------  ---------- 
  Liabilities 
   Current liabilities 
 Trade and other payables                                       (661)       (623) 
 Lease liabilities                                               (31)        (30) 
 Loans and borrowings                                            (28)       (163) 
-------------------------------------------------  ------  ----------  ---------- 
 Total current liabilities                                      (720)       (816) 
-------------------------------------------------  ------  ----------  ---------- 
  Non-current liabilities 
 Lease liabilities                                              (163)       (194) 
 Loans and borrowings                                           (287)        (50) 
 Total non-current liabilities                                  (450)       (244) 
-------------------------------------------------  ------  ----------  ---------- 
  Total liabilities                                           (1,170)     (1,060) 
-------------------------------------------------  ------  ----------  ---------- 
  Net assets                                                    6,896       5,105 
-------------------------------------------------  ------  ----------  ---------- 
 
 Issued capital and reserves 
  Attributable to the parent 
 Called up share capital                                          746       3,928 
 Share premium account                                         65,594      58,006 
 Capital reserve account                                          237         237 
 Equity investment reserve                                    (1,505)     (1,408) 
 Foreign exchange reserve                                       1,368       1,384 
 Retained earnings                                           (59,702)    (56,681) 
-------------------------------------------------  ------  ----------  ---------- 
 Equity attributable to the owners of the parent                6,738       5,466 
 
 Non-controlling interests                                        158       (361) 
-------------------------------------------------  ------  ----------  ---------- 
 
   Total equity                                                 6,896       5,105 
-------------------------------------------------  ------  ----------  ---------- 
 

*Fair value through other comprehensive income

**Fair value through profit and loss

Consolidated Statement of Changes in Equity

As at 31 December 2020

 
                                                        Shareholders' equity 
                                                                                Foreign 
                                                                               exchange 
                                                           Equity                   and 
                         Share      Share    Capital   investment   Retained    capital               Non-controlling      Total 
                       capital    premium    reserve      reserve   earnings    reserve       Total         interests     equity 
                      GBP000's   GBP000's   GBP000's     GBP000's   GBP000's   GBP000's    GBP000's          GBP000's   GBP000's 
-------------------  ---------  ---------  ---------  -----------  ---------  ---------  ----------  ----------------  --------- 
 1 January 2019          3,928     58,006        237         (68)   (51,442)      1,444      12,105           (5,935)      6,170 
-------------------  ---------  ---------  ---------  -----------  ---------  ---------  ----------  ----------------  --------- 
 Loss for the 
  period                     -          -          -            -    (4,491)          -     (4,491)             (381)    (4,872) 
-------------------  ---------  ---------  ---------  -----------  ---------  ---------  ----------  ----------------  --------- 
 Other 
 comprehensive 
 loss/income 
 - 
 Foreign exchange 
  differences                -          -          -            -          -       (60)        (60)                 4       (56) 
 Change in fair 
  value during 
  the year                   -          -          -      (1,340)          -          -     (1,340)                 -    (1,340) 
 Total 
  comprehensive 
  loss                       -          -          -      (1,340)    (4,491)       (60)     (5,891)             (377)    (6,268) 
-------------------  ---------  ---------  ---------  -----------  ---------  ---------  ----------  ----------------  --------- 
 Decrease in 
  subsidiary 
  shareholding               -          -          -            -      2,668          -       2,668             1,677      4,345 
 Disposal of 
  subsidiaries               -          -          -            -    (3,469)          -     (3,469)             4,274        805 
 Share-based 
  payments                   -          -          -            -         53          -          53                 -         53 
-------------------  ---------  ---------  ---------  -----------  ---------  ---------  ----------  ----------------  --------- 
 31 December 
  2019                   3,928     58,006        237      (1,408)   (56,681)      1,384       5,466             (361)      5,105 
-------------------  ---------  ---------  ---------  -----------  ---------  ---------  ----------  ----------------  --------- 
 Loss for the 
  period                     -          -          -            -    (1,611)          -     (1,611)             (727)    (2,338) 
-------------------  ---------  ---------  ---------  -----------  ---------  ---------  ----------  ----------------  --------- 
 Other 
 comprehensive 
 loss/income 
 - 
 Foreign exchange 
  differences                -          -          -            -          -       (16)        (16)                13        (3) 
 Change in fair 
  value of equity 
  investments 
  classified 
  as FVTOCI                  -          -          -         (97)          -          -        (97)                 -       (97) 
 Total 
  comprehensive 
  loss                       -          -          -         (97)    (1,611)       (16)     (1,724)             (714)    (2,438) 
-------------------  ---------  ---------  ---------  -----------  ---------  ---------  ----------  ----------------  --------- 
 Share 
  re-organisation      (3,535)      3,535          -            -          -          -           -                 -          - 
 Issue of share 
  capital                  353      4,236          -            -          -          -       4,589                 -      4,589 
 Cost of share 
  issue                      -      (183)          -            -          -          -       (183)                 -      (183) 
 Increase/decrease 
  in subsidiary 
  shareholding               -          -          -            -    (1,463)                (1,463)             1,233      (230) 
 Share-based 
  payments                   -          -          -            -         53          -          53                 -         53 
-------------------  ---------  ---------  ---------  -----------  ---------  ---------  ----------  ----------------  --------- 
 31 December 
  2020                     746     65,594        237      (1,505)   (59,702)      1,368       6,738               158      6,896 
-------------------  ---------  ---------  ---------  -----------  ---------  ---------  ----------  ----------------  --------- 
 

Consolidated Statement of Cash Flows

As at 31 December 2020

 
                                                                 Notes        2020        2019 
                                                                          GBP000's    GBP000's 
--------------------------------------------------------------  ------  ----------  ---------- 
 Cash flows from operating activities 
 Loss after income tax including discontinued operations                   (2,338)     (4,872) 
 Adjustments for: 
 Depreciation of property, plant and equipment                                  44          42 
 Depreciation of right-of-use assets                                            32          32 
 Amortisation of intangibles                                                    77           - 
 Estimated credit losses on trade receivables                                 (37)          56 
 Loss on disposal of property, plant and equipment                               -           4 
 Loss on disposal of subsidiaries                                                -         703 
 Fair value movement during the year on convertible debt                     (120)           - 
 Release of loan provision                                                   (224)           - 
 Capitalisation of development costs                                         (337)           - 
 Share-based payments                                                           53          53 
 Foreign exchange gains                                                          1          23 
 Finance income                                                              (110)        (21) 
 Finance costs                                                                  14          22 
 Tax credit                                                                   (43)        (88) 
                                                                           (2,988)     (4,046) 
 Changes in working capital 
 (Increase)/decrease in inventory                                             (44)           7 
 Decrease/(increase) in trade and other receivables                            325       (130) 
 (Decrease)/Increase in trade and other payables                             (172)        (26) 
--------------------------------------------------------------  ------  ----------  ---------- 
 Cash used in operations                                                   (2,879)     (4,195) 
--------------------------------------------------------------  ------  ----------  ---------- 
 Income tax received                                                            88          72 
--------------------------------------------------------------  ------  ----------  ---------- 
 Net cash (used) in operating activities                                   (2,791)     (4,123) 
--------------------------------------------------------------  ------  ----------  ---------- 
 Cash flows from investing activities 
 Acquisition of subsidiary, net cash acquired                                  128           - 
 Disposal of discontinued operations, net of cash disposed of                    -          34 
 Purchase of property, plant and equipment                         8          (39)         (6) 
 Purchase of available for sale investments                       10         (999)           - 
 Purchase of intangibles                                                      (50)           - 
 Interest received                                                               1           7 
 Net cash (used in)/from investing activities                                (959)          35 
--------------------------------------------------------------  ------  ----------  ---------- 
 
 Cash flows from financing activities 
 Proceeds paid on change in stake in subsidiary                              (230)           - 
 Proceeds received on change in stake in subsidiary                              -       4,345 
 Lease payments                                                               (38)        (38) 
 Repayment from borrowings                                                   (200)           - 
 Proceeds from loans                                                           245           - 
 Proceeds from share issue                                                   2,300           - 
 Share issue cost                                                            (183)           - 
--------------------------------------------------------------  ------  ----------  ---------- 
 Net cash from financing activities                                          1,894       4,307 
--------------------------------------------------------------  ------  ----------  ---------- 
 (Decrease)/Increase in cash and cash equivalents                          (1,856)         219 
 Cash and cash equivalents at beginning of year                              3,453       3,316 
 Exchange differences on cash and cash equivalents                              31        (82) 
--------------------------------------------------------------  ------  ----------  ---------- 
  Cash and cash equivalents at end of year                                   1,628       3,453 
--------------------------------------------------------------  ------  ----------  ---------- 
 

Notes to the Financial Information for the Year Ended 31 December 2020

   1.             GENERAL INFORMATION 

The Company is a public limited company incorporated on 12 April 2012 and domiciled in England with registered number 08026888 and its shares are listed on the Alternative Investment Market (AIM) of the London Stock Exchange. The address of the registered office is Anglo House, Bell Lane Office Village, Bell Lane, Amersham, Buckinghamshire HP6 6FA.

   2.            BASIS OF PREPARATION 

The preliminary results of the year ended 31 December 2020 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 2020.

The report of the auditors on the statutory accounts for the year ended 31 December 2019 was unqualified and did not contain a statement under Section 498 of the Companies Act 2006. The financial statements for the year ended 31 December 2020 included in this announcement were authorised for issue in accordance with a resolution of the Board of Directors on 30 March 2021.

   3.            GOING CONCERN 

The group made a loss in the financial year of GBP2,338k (2019: GBP4,872k) and has been reliant on the continued financial support of investors.

The Directors have prepared and reviewed budget cashflows which were approved by the Board of Directors in the Board meeting of 20 January 2021.

The Group has reviewed the major budgeted assumptions and sensitivities in light of Covid-19 and drawn up cash preservation plans in case revenue does not continue as planned, or it faces delays in planned payments from third parties. It has initiated further cost saving plans across the Group and delayed expenditure where possible, until there is more clarity on the financial impact of the pandemic.

In some cases, the crisis restrictions will delay trials and programs, which will defer expenditure and thus extend the cash runway. Also, there may be opportunities to take advantage of the financial support measures and divert resources to support the Covid-19 effort to generate new revenue streams, further ensuring the Group has options and cash for at least the next twelve months.

The Going concern status of the group is dependent on meeting its forecast including generating revenues, receiving planned payments from third parties and achieving planned cost savings. In the event the group is unable to meet its forecasts it will need to raise further finance. These events or conditions indicate that a material uncertainty exists that may cast significant doubt on the group and the company's ability to continue as a going concern.

The financial statements do not include any adjustments that would be necessary if the group or company was unable to continue as a going concern.

   4.            SIGNIFICANT ACCOUNTING POLICIES 

The Group financial statements have been prepared in accordance with International Financial Reporting Standards as adopted by the European Union as they apply to the financial statements of the Group for the year ended 31 December 2020. 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 14 April 2021.

   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 2020 of 656,729 (2019: 3,475,984) (see note 32) are not treated as dilutive as the entity is loss making.

 
                                                        2020         2019 
                                                         GBP000's     GBP000's 
-----------------------------------------------------  -----------  ----------- 
 Loss attributable to equity holders of the Company 
 
 Continuing operations                                  1,611        3,409 
 Discontinued operations                                -            1,082 
                                                       -----------  ----------- 
 Total                                                  1,611        4,491 
                                                       -----------  ----------- 
 
 Number of shares 
 Weighted average number of ordinary shares in issue    56,129,350   78,561,866 
 
 

On 24 August 2020, a share capital re-organisation took place. This had the effect of consolidating each ten existing options into one new option. The effect of the share capital re-organisation was that the exercise price of the options issued in the past was also multiplied by ten to be fair and equitable. The total number of options in the Company post the share capital re-organisation was 385,598.

   6.         BUSINESS COMBINATIONS ACQUIRED DURING THE PERIOD 

On 25 August 2020, the Group acquired 100% of the voting equity of EMV Capital Limited from Futura Messis Group Limited, a company owned and managed by Dr Ilian Iliev. The principal activity is venture capital and corporate finance with interests in the industrials, energy and healthcare sectors. Key reasons for the acquisition were to add scale, operational and investment capabilities, team and additional revenue channels that NetScientific did not have in-house. Taken in combination, the acquisition has the potential to unlock additional value creation opportunities for NetScientific shareholders and reduce the risk of further value erosion. Details of the fair value of identifiable assets and liabilities acquired purchase consideration and goodwill are as follows:

 
                                   Book Value   Adjustments   Fair Value 
                                     GBP000's      GBP000's     GBP000's 
-------------------------------   -----------  ------------  ----------- 
 Assets 
 Property, plant and equipment              6             -            6 
 Intangible assets                         17             -           17 
 Bank                                     139             -          139 
 Trade Receivables                         34             -           34 
 Prepayments                                4             -            4 
 Accrued Income                            76          (11)           65 
 Other Debtors                              1             -            1 
--------------------------------  -----------  ------------  ----------- 
 Total assets                             277          (11)          266 
--------------------------------  -----------  ------------  ----------- 
 
 Liabilities 
-------------------------------   -----------  ------------  ----------- 
 Trade Payables                          (59)             -         (59) 
 Accruals                                (93)             -         (93) 
 Other Creditors                         (39)             -         (39) 
 Corporation Tax                         (32)             -         (32) 
 Bank loan                               (50)             -         (50) 
--------------------------------  -----------  ------------  ----------- 
 Total liabilities                      (273)             -        (273) 
--------------------------------  -----------  ------------  ----------- 
 
 Net assets/liabilities                     4          (11)          (7) 
--------------------------------  -----------  ------------  ----------- 
 

Fair value of consideration paid is as follows:

 
                                                                     2020 
                                                                 GBP000's 
--------------------------------------------------------       ---------- 
 
 Issue of NetScientific Plc 5p ordinary shares                      2,289 
-------------------------------------------------------------  ---------- 
 Total Consideration Paid                                           2,289 
-------------------------------------------------------------  ---------- 
 
 Separately identifiable intangible assets 
 Carry interest arrangements (Capital Gain Based Value)             1,627 
 Investment acquisition costs                                          17 
 Goodwill (see note 18)                                               669 
 
 Total intangibles acquired                                         2,313 
-------------------------------------------------------------  ---------- 
 

Acquisition costs of GBP179k arose as a result of the transaction. These have been recognised as part of administrative expenses in the statement of comprehensive income.

The consideration settled in shares is subject to a number of warranties over a three-year period following the date of acquisition.

The main factors leading to the recognition of goodwill 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. 

-- Carry interest arrangements and profit share are a material identifiable class of asset that has been recognised separately.

The goodwill recognised will not be deductible for tax purposes.

Since the acquisition date, EMV Capital has contributed GBP200k to Group revenues and GBP20k to Group profit. If the acquisition had occurred on 1 January 2020, the acquisition would have added to Group revenue GBP507k and increased the Group loss by GBP37k.

   7.         INVESTMENTS IN SUBSIDIARY UNDERTAKINGS 

The Group had the following subsidiaries at 31 December 2020:

 
                                                                                        Proportion of    Proportion of 
                                                                                            ownership        ownership 
                                                                                        interest held    interest held 
                                                      Proportion of    Proportion of               by               by 
                                                          ownership        ownership  non-controlling  non-controlling 
                                        Country of         interest         interest        interests        Interests 
                 Primary trading     incorporation   at 31 December   at 31 December   at 31 December   at 31 December 
Name                     address   or registration             2020             2019             2020             2019 
---------------  ---------------  ----------------  ---------------  ---------------  ---------------  --------------- 
 
NetScientific 
 UK Limited            (a)                      UK             100%             100%                -                - 
EMV Capital 
 Limited               (b)                      UK             100%                -                -                - 
ProAxsis 
 Limited * (i)         (c)                      UK             100%            56.5%                -            43.5% 
 
NetScientific 
 America, Inc.         (d)                     USA             100%             100%                -                - 
Glycotest, Inc. 
 (i), (ii)             (e)                     USA            65.6%            65.6%            34.4%            34.4% 
 

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 14% respectively.

(ii) Following issue of further shares during the prior year the Group's interest was reduced to 77.5% on 14 February 2019 and then to 65.6% on the 21 November 2019.

   (a)       Anglo House, Bell Lane Office Village, Bell Lane, Amersham, Buckinghamshire, HP6 6FA 
   (b)       Level 39, One Canada Square, Canary Wharf, London, E14 5AB 

(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.

   8.         PROPERTY, PLANT AND EQUIPMENT 
 
                                                   Furniture, fittings and 
                        Leasehold Improvement                    equipment           Plant and machinery        Totals 
                                     GBP000's                     GBP000's                      GBP000's      GBP000's 
---------------------  ----------------------  ---------------------------  ------  --------------------  ------------ 
 Cost 
 At 1 January 2019                        100                          174                         1,199       1,473 
 Additions                                  -                            5                             1           6 
 Disposals                                  -                        (157)                       (1,061)     (1,218) 
                       ----------------------  ---------------------------      ------------------------  ---------- 
 At 31 December 2019                      100                           22                           139         261 
 Additions                                  -                            8                            31          39 
 Acquired                                   -                            6                             -           6 
 Disposals                                  -                          (1)                             -         (1) 
---------------------  ----------------------  ---------------------------      ------------------------  ---------- 
 At 31 December 2020                      100                           35                           170         305 
---------------------  ----------------------  ---------------------------      ------------------------  ---------- 
 Depreciation 
 At 1 January 2019                         22                          163                         1,119       1,304 
 Charge for the year                       10                            4                            28          42 
 Disposals                                  -                        (152)                       (1,061)     (1,213) 
--------------------- 
 At 31 December 2019                       32                           15                            86         133 
 Acquired                                   -                            1                             -           1 
 Charge for the year                       10                            3                            31          44 
 Disposals                                  -                          (1)                             -         (1) 
 At 31 December 2020                       42                           18                           117         177 
---------------------  ----------------------  ---------------------------      ------------------------  ---------- 
 Net book value 
 At 31 December 2020                       58                           17                            53         128 
---------------------  ----------------------  ---------------------------      ------------------------  ---------- 
 At 31 December 2019                       68                            7                            53         128 
---------------------  ----------------------  ---------------------------      ------------------------  ---------- 
 
 
   (i)        Leasehold improvements of GBP100k are funded by a loan. 
   (ii)        During the prior year the property plant and equipment of Vortex and Wanda was sold. 
   9.         RIGHT-OF-USE-ASSETS 
 
                                                         2020        2019 
                                                     GBP000's    GBP000's 
----------------------------------------------     ----------  ---------- 
 Cost 
 
 At 1 January                                             253           - 
 Recognised on initial application of IFRS 16               -         253 
 At 31 December                                           253         253 
-------------------------------------------------  ----------  ---------- 
 
 Amortisation 
 At 1 January                                            (32)           - 
 Charge for the year                                     (32)        (32) 
 At 31 December                                          (64)        (32) 
-------------------------------------------------  ----------  ---------- 
 
 Net book value 
 At 31 December                                           189         221 
-------------------------------------------------  ----------  ---------- 
 
 

There is one long term lease, the Group has decided it will 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%.

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 GBP28k (2019: GBP16k) with a maturity of three to six months.

   10.       INTANGIBLE ASSETS 
 
                                        Carry Interest   Development costs            Investment 
                        Goodwill          Arrangements                         Acquisition Costs    Patents      Total 
                        GBP000's              GBP000's            GBP000's              GBP000's   GBP000's   GBP000's 
---------------------  ---------  --------------------  ------------------  --------------------  ---------  --------- 
 Cost 
---------------------  ---------  --------------------  ------------------  --------------------  ---------  --------- 
 At 1 January 2020             -                     -                   -                     -          -          - 
 Additions                     -                     -                 337                     -         50        387 
 Acquired through 
  business 
  combinations               669                 1,627                   -                    17          -      2,313 
---------------------  ---------  --------------------  ------------------  --------------------  ---------  --------- 
 At 31 December 2020         669                 1,627                 337                    17         50      2,700 
---------------------  ---------  --------------------  ------------------  --------------------  ---------  --------- 
 
 Accumulated 
 amortisation and 
 impairment 
---------------------  ---------  --------------------  ------------------  --------------------  ---------  --------- 
 At 1 January 2020             -                     -                   -                     -          -          - 
 Amortisation charge           -                    76                   -                     -          1         77 
---------------------  ---------  --------------------  ------------------  --------------------  ---------  --------- 
 At 31 December 2020           -                    76                   -                     -          1         77 
---------------------  ---------  --------------------  ------------------  --------------------  ---------  --------- 
 
 Net book value 
---------------------  ---------  --------------------  ------------------  --------------------  ---------  --------- 
 
 At 31 December 2020         669                 1,551                 337                    17         49      2,623 
---------------------  ---------  --------------------  ------------------  --------------------  ---------  --------- 
 
 

On 25 August 2020, the Group acquired 100% of the voting equity of EMV Capital Limited from Futura Messis Group Limited, a company owned and managed by Dr Ilian Iliev. The acquisition has the potential to unlock additional value creation opportunities for NetScientific shareholders and reduce the risk of further value erosion. The consideration settled in shares is subject to a number of warranties over a three-year period following the date of acquisition. The Group acquired through business combinations total intangibles of GBP2,313k. 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.

ProAxsis acquired a key patent as part of the buyout of the founders and Queens University for GBP50k which will be amortised over the economic life of the patent.

ProAxsis development costs of GBP337k has been capitalised during the year in line with the accounting policy as certain projects now 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.

   11.       EQUITY INVESTMENTS CLASSIFIED AS FVTOCI 
 
 Represent equity securities classified as FVTOCI 
                                                            2020        2019 
                                                        GBP000's    GBP000's 
----------------------------------------------------  ----------  ---------- 
 
 At 1 January                                              1,468       2,768 
 Additions                                                   999           - 
 Conversion of financial assets classified as FVTPL          645           - 
 Change in fair value during the year                      (142)     (1,300) 
  At 31 December                                           2,970       1,468 
----------------------------------------------------  ----------  ---------- 
 
 
Name                             Country of incorporation  % of issued share capital  Currency denomination  GBP000's 
------------------------------  -------------------------  -------------------------  ---------------------  -------- 
 
PDS Biotechnology Corporation                         USA                      5.75%                    US$     2,005 
CytoVale, Inc.                                        USA                      1.00%                    US$       367 
Epibone, Inc.                                         USA                      0.84%                    US$       286 
G-Tech, Inc                                           USA                      3.80%                    US$       312 
                                                                                                                2,970 
 --------------------------------------------------------  -------------------------  ---------------------  -------- 
 

The Company's ownership of the enlarged PDS Biotechnology Corporation, now trading on Nasdaq under the ticker PDSB, on a fully diluted basis is 5.75% (2019: 8.15%), which at the year-end listing price of $2.14 values NetScientific's holding in PDS at GBP2,005k (2019: GBP1,097k). On 12 February 2020, Netscientific subscribed for GBP503k for 500,000 shares of PDS common stock at a price of $1.30 per share. On 12 August 2020, NetScientific subscribed for GBP496k for 236,000 shares of PDS common stock at a price of $2.75 per share as the Board did not wish to be unduly diluted if it did not participate. On 31 December 2020 Netscientific owns 1,278,833 shares of PDS' common stock (2019: 542,833 shares), representing approximately 5.75% of the undiluted share capital (2019: 8.15%). The current share price as of 19 March 2021 was $5.37 giving a fair value of the PDS investment of GBP4,926k. It is the Company's intention to hold the shares and to make a decision on its position in due course. The Group's interest in PDS Biotechnology is non-controlling.

On 23 January 2020, Epibone, Inc., an early-stage investment announced a Series A funding round raising $8 million. NetScientific's convertible loan note and accrued interest of GBP299k converted into Series A preferred shares. This last observable price has been used to value the Epibone, Inc., equity investment at year end.

On 21 May 2020, G-Tech, Inc., an early-stage investment announced a Series A funding round raising $6 million. NetScientific's fully impaired convertible loan note and accrued interest of GBP346k converted into Series A preferred shares. This last observable price has been used to value the G-Tech, Inc., equity investment at year end.

CytoVale Inc. 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 a Venture Capital, private investor and government sources. At the time this was the only observable valuation on which to value CytoVale.

   12.       FINANCIAL ASSETS CLASSIFIED AS FVTPL 
 
 Warrants & Convertible Loans classified as FVTPL               2020    Restated 
                                                            GBP000's        2019 
                                                                        GBP000's 
-------------------------------------------------------  -----------  ---------- 
 
 Balance at 1 January                                            262         297 
 Additional accrued interest                                     109           - 
 Release of provision                                            224           - 
 Conversion to equity investments classified as FVTOCI         (645)           - 
 Change in fair value during the year                            128        (35) 
-------------------------------------------------------  -----------  ---------- 
  Balance at 31 December                                          78         262 
-------------------------------------------------------  -----------  ---------- 
 

The warrant has been valued using the Black-Scholes Model and a level 3 fair value hierarchy, given the unobservable data for volatility and its fair value. These warrants may be exercised at any time prior to May 2021.

On 23 January 2020, Epibone, Inc., an early-stage investment announced a Series A funding round raising $8 million. NetScientific's convertible loan note and accrued interest of GBP299k converted into Series A preferred shares.

On 21 May 2020, G-Tech Medical, Inc., an early-stage investment announced a Series A funding round raising $6 million. NetScientific's fully impaired convertible loan note and accrued interest of GBP424k converted into Series A preferred shares of GBP346k and common form convertibles of GBP78k which remain as financial assets classified as FVTPL.

The Neumitra, Inc., and Longevity Inc., convertible loan notes do not have a material value individually or collectively and have been fully impaired.

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March 31, 2021 04:02 ET (08:02 GMT)