Cientifica PLC

("Cientifica" or the "Company")

Audited Accounts for the year ended 31 March 2014

The Board of Cientifica is pleased to announce the Company's audited report and accounts ("the Accounts") for the year ended 31 March 2014

The Accounts are being posted to shareholders and will shortly be available from the Company's website  www.cientifica.com

For further information please contact:

Chairman's Statement for the year ended 31 March 2014

INTRODUCTION

I am very pleased to be making my first Chairman's statement, having joined the Board of Cientifica in September of this year.

The year ended 31 March 2014 was a period of significant change for the Company.  During this year, the Company concluded the disposal of Plain Healthcare, Avia Informatics and Avia Investments, together with the assignment of a related £350,000 loan. The Company entered into a Company Voluntary Arrangement (the "CVA") with its creditors and concluded a placing of 19,000,000 new Ordinary Shares which raised £380,000 of new money for the Company.

The accounts for the year ended 31 March 2014 show no turnover, administrative expenses of £293,000, other gains relating to the above disposal and CVA of £584,000 and profit before taxation of £291,000.

Following the disposal of the trading subsidiaries the Company became an Investment Company (as defined under Rule 15 of the AIM Rules for Companies). The Company's investing policy is as follows:

"The Company will seek to acquire and build businesses making use of emerging technologies and advanced materials. These are typically businesses at an early revenue stage where the technology has been proven but not scaled up to meet emerging market demand. The Company focus will be on applications of graphene, nanotechnology and industrial biotechnology, with markets ranging from chemicals, aerospace and microelectronics to smart and sustainable buildings". More detail on the Company's investing policy can be found on the Company's website.

As at 31^st March 2014 the Company had completed and commissioned a number of feasibility studies and reviews and concluded exclusivity arrangements that have, or will form the basis of investment agreements with a number of businesses that either own patents or production facilities or will deploy products using emerging technologies and advanced materials to end users. The Company's accounting policy during the year ended 31 March 2014 was to expense the costs incurred in these activities until the costs are able to be recharged to the relevant business as part of a formal investment agreement with the businesses. This process of converting costs incurred by the Company into investments has started and further announcements will be made in due course.

The Company's first major investment agreement was announced on 29^th August 2014 with G Heat Limited who are developing an advanced form of infra-red heating using graphene. The Board is currently in advanced discussions with 7 other prospective investee businesses (for which the Company has undertaken work in the last year) which the Board is confident can, in part, be converted into investments.  If these conversions are undertaken then the Board are hopeful that the Company will have made sufficient investments to have implemented its investing policy before 25 October 2013 (being the 1 year anniversary of the adoption of the investing policy by the Company's shareholders).  In the event that the Company is not able to implement its investing policy before 25 October 2014 then the Company's shares, in accordance with Rule 15 of the AIM Rules for Companies, will be suspended from trading on AIM.  Should the investing policy not be implemented by 25 April 2015 then the listing of the Company's shares on AIM will be cancelled.

Since my appointment in September I have been reviewing all aspects of the Company's activities since it became an investing company.  As part of this review it has become clear that the Company's systems and procedures have, at times, been less than satisfactory and the Board have undertaken a detailed review of the transactions that the Company has undertaken in: i) the period from the Company becoming an investing company to 31 March 2014; and ii) the period since 31 March 2014.   As a consequence the Board is seeking the refund of certain sums which have been advanced to a number of parties.  In addition the Company's on-going overheads have been reduced and a revised set of controls procedures and policies have been implemented.

The Board is grateful to the Company's advisors and to key shareholders who have provided and continue to provide invaluable support to the Company.

Tim Godwin MA ACA

Chairman

30 September 2014

Strategic Report for the year ended 31 March 2014

The Directors present their Strategic Report on the Company for the year ended 31 March 2014.

RESULTS AND DIVIDENDS

The Company made a profit after taxation from continuing operations of £291,000 (2013: loss of £2,058,000). The Directors do not propose a dividend (2013:£nil).

PRINCIPAL ACTIVITIES AND REVIEW OF THE BUSINESS DURING THE YEAR

As highlighted in the Chairman's statement, during the year the Company decided to dispose of its software operations, changed its name from Avia Health Informatics plc and become an investment company focused on emerging technologies and advanced materials.  As part of this process the Company raised £380,000 (before expenses) in October 2013, to enable it to implement its investing policy and to settle various outstanding creditors, including the amount owed under the CVA (which totalled £5,000, before expenses).

Since the year end, the Company has raised additional equity funds of £100,000 and has commenced the implementation of its investing policy to satisfy the requirements of Rule 15 of the AIM Rules for Companies. 

KEY PERFORMANCE INDICATORS ("KPIs")

The Company's activity has changed to that of an investing company and as such going forward the Directors will focus principally on the development of the Company's net asset value.

The key performance indicators are therefore set out below: 

KEY RISKS AND UNCERTAINTIES

Early stage investments in the advanced materials and emerging technologies sectors carry a high level of risk and uncertainty, although the rewards can be outstanding.  At this stage, there can be no certainty of outcome and, in addition, there is often a lack of liquidity in the Company's investments which can be either unquoted or quoted, such that the Company may have difficulty in realising the full value in a forced sale.  Accordingly, a commitment is only made after thorough research into both the management and the business of the target, both of which are closely monitored thereafter.  Details of other financial risks and their management are given in Note 16 to the financial statements.

GOING CONCERN

As disclosed in Note 3, after making enquiries and with the support of a key shareholder, the Directors have a reasonable expectation that the Company has adequate resources to continue in operational existence for the foreseeable future.  For this reason, they continue to adopt the going concern basis in preparing the financial statements.

ON BEHALF OF THE BOARD

Tim Harper

Director

30 September 2014

Directors' Report for the year ended 31 March 2014

The Directors present their annual report on the affairs of the Company, together with the financial statements for the year ended 31 March 2014.

DIRECTORS

The Directors of the Company who served during the year are listed below.

Subsequent to the year end, on 4^th September, 2014 Tim Godwin was appointed as a director, and Tim Baldwin resigned as a director.

DIRECTORS' INTERESTS

The Directors' beneficial interests in the ordinary share capital of the Company as at 31 March 2014 were as follows:

SUBSTANTIAL SHAREHOLDINGS

The only interests in excess of 3% of the issued share capital of the Company which have been notified to the Company as at 26 September 2014 were as follows:

CORPORATE GOVERNANCE

Although the Company is not required to comply with the principles of corporate governance, this report sets out how the Company does comply with the principles of good corporate governance.

BOARD OF DIRECTORS

The Company supports the concept of an effective Board leading and controlling the Company. The Board is responsible for approving Company policy and strategy.  It meets regularly and has a schedule of matters specifically reserved to it for decision.  Management supply the Board with appropriate and timely information and the Directors are free to seek any further information they consider necessary.  All Directors have access to advice from the Company Secretary and independent professionals at the Company's expense.  Training is available for new Directors and other Directors as necessary.

The Board consists of three directors, the non-executive chairman Tim Godwin, the Chief Executive Officer Tim Harper, and non-executive director Rod Venables.

Given the size of the Board, there is no separate nomination committee.  All Director appointments are approved by the Board as a whole.

COMMUNICATIONS WITH SHAREHOLDERS

Communications with shareholders are given a high priority.  In addition to the publication of an annual report and an interim report, there is regular dialogue with shareholders and analysts.  The Annual General Meeting is viewed as a forum for communicating with shareholders, particularly private investors.  Shareholders may question the Executive Chairman and other members of the Board at the Annual General Meeting.

INTERNAL CONTROL

The Directors acknowledge they are responsible for the Company's system of internal control and for reviewing the effectiveness of these systems. The risk management process and systems of internal control are designed to manage rather than eliminate the risk of the Company failing to achieve its strategic objectives. It should be recognised that such systems can only provide reasonable and not absolute assurance against material misstatement or loss. The Company has well established procedures which are considered adequate given the size of the business.

FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES

Details of the Company's financial risk management objectives and policies are set out in Note 16 to these financial statements.

STATEMENT OF DIRECTORS' RESPONSIBILITIES

The Directors are responsible for preparing the report of the directors and the financial statements in accordance with applicable law and regulations.

Company law requires the Directors to prepare Company financial statements for each financial year.  The Directors are required by the AIM Rules of the London Stock Exchange to prepare financial statements in accordance with International Financial Reporting Standards ("IFRS") as adopted by the European Union ("EU") and have also elected to prepare the Company financial statements in accordance with IFRS as adopted by the EU.  Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs and profit or loss of the Company for that period. In preparing these financial statements, the directors are required to:

·      select suitable accounting policies and then apply them consistently

·      make judgments and accounting estimates that are reasonable and prudent

·      state whether applicable IFRSs have been followed, subject to any material departures disclosed and explained in the financial statements

·      prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company will continue in business.

The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the company's transactions and disclose with reasonable accuracy at any time the financial position of the company and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

In the case of each person who was a director at the time this report was approved:

·      so far as that director is aware there is no relevant audit information of which the Company's auditor is unaware: and

·      that director has taken all steps that the director ought to have taken as a director to make himself aware of any relevant audit information and to establish that the Company's auditor is aware of that information.

The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the Company's website.  Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

POST YEAR END EVENTS

Details of events after the reporting period have been disclosed in Note 21.

AUDITORS

Welbeck Associates, having expressed their willingness to continue in office, will be deemed reappointed for the next financial year in accordance with section 487(2) of the Companies Act 2006 unless the Company receives notice under section 488(1) of the Companies Act 2006.

ON BEHALF OF THE BOARD

Tim Harper

Director

30 September 2014

Report on Directors' Remuneration for the year ended 31 March 2014

REMUNERATION

The remuneration of the directors has been fixed by the Board as a whole. The Board seeks to provide appropriate reward for the skill and time commitment required so as to retain the right calibre of director at a cost to the Company, which reflects current market rates.

The Board is responsible for the overall remuneration package for the Executive and Non-Executive Directors.

DIRECTORS' EMOLUMENTS

Full details of all elements in the remuneration package of each Director for the year are set out below:

PENSIONS

No pension contributions were paid in respect of the directors for the year ended 31 March 2014 (2013 £nil).

OPTIONS

Detail of options granted to the directors are shown in note 15.

BENEFITS IN KIND

The directors did not receive any benefits in kind for the year ended 31 March 2014 (2013: £nil).

DIRECTORS LOAN

A director's loan totaling £7,069 was owed by Tim Harper to the Company at 31 March 2014 (2013 £nil).

ON BEHALF OF THE BOARD

Tim Harper

Director

30 September 2014

Report of the Independent Auditor for the year ended 31 March 2014

INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF CIENTIFICA PLC

We have audited the financial statements of Cientifica plc for the year ended 31 March 2014 which comprise the income statement, the statement of comprehensive income, the statement of changes in equity, the statement of financial position, the statement of cash flows, and the related notes. The financial reporting framework that has been applied in the preparation of the financial statements is applicable law and International Financial Reporting Standards (IFRSs) as adopted by the European Union.

This report is made solely to the company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company's members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company's members as a body, for our audit work, for this report, or for the opinions we have formed.

RESPECTIVE RESPONSIBILITIES OF DIRECTORS AND AUDITORS

As explained more fully in the statement of Directors' responsibilities set out on page 7, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view. Our responsibility is to audit and express an opinion on the financial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the Auditing Practices Board's (APB's) Ethical Standards for Auditors.

SCOPE OF THE AUDIT OF THE FINANCIAL STATEMENTS

An audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or error. This includes an assessment of: whether the accounting policies are appropriate to the company's circumstances and have been consistently applied and adequately disclosed; the reasonableness of significant accounting estimates made by the directors; and the overall presentation of the financial statements.  In addition, we read all the financial and non-financial information in the annual report to identify material inconsistencies with the audited financial statements. If we become aware of any apparent material misstatements or inconsistencies we consider the implications for our report.

OPINION ON FINANCIAL STATEMENTS

In our opinion:

·      the financial statements give a true and fair view of the state of the Company's affairs as at 31 March 2014 and of the Company's profit for the year then ended;

·      the financial statements have been properly prepared in accordance with IFRS as adopted by the European Union; and

·      the financial statements have been prepared in accordance with the requirements of the Companies Act 2006.

OPINION ON OTHER MATTER PRESCRIBED BY THE COMPANIES ACT 2006

In our opinion the information given in the report of the directors for the financial year for which the financial statements are prepared is consistent with the financial statements.

OPINION

Emphasis of Matter - Going Concern

In forming our opinion on the financial statements, which is not modified, we draw your attention to the disclosures made in note 3 to the financial statements concerning the Company's ability to continue as a going concern.

These conditions, along with other matters explained in note 3 to the financial statements, indicate the existence of a material uncertainty which may cast significant doubt about the ability of the Company to continue as a going concern. The directors have plans to manage the cash flows of the Company to enable it to continue as a going concern. These plans include the necessary additional fundraising required to provide the working capital requirement for the next 12 months. The financial statements do not include the adjustments that would result if the Company was unable to continue as a going concern.

MATTERS ON WHICH WE ARE REQUIRED TO REPORT BY EXCEPTION

We have nothing to report in respect of the following matters where the Companies Act 2006 requires us

to report to you if, in our opinion:

·              adequate accounting records have not been kept by the company, or returns adequate for our audit have not been received from branches not visited by us; or

·              the financial statements are not in agreement with the accounting records and returns; or

·              certain disclosures of directors' remuneration specified by law are not made; or

·              we have not received all the information and explanations we require for our audit.

The financial statements were approved by the Board and ready for issue on 30 September 2014.

STATEMENT OF CHANGES IN EQUITY

For the year ended 31 March 2014

STATEMENT OF CASH FLOWS

For the year ended 31 March 2014

On 16 October 2013, the Company agreed at the meeting of creditors the proposals under a Company Voluntary Arrangement (the "CVA") for a final settlement of £5,000. This resulted in a gain of £230,000 which has been included in other gains and losses for the period.

On the same date, at the Company's annual general meeting, the resolution to approve the proposals under the CVA as above, as well as the planned disposal of Plain Healthcare Limited for £1 was passed.

On the same date the £350,000 convertible loan notes held by Drury Lane Limited were transferred to Plain Healthcare Limited at the time of the disposal.

The costs of the transfer of the undertakings include a £50,000 novation fee for the £350,000 Convertible loan notes owing to Drury Lane Limited.

As discussed above in Note 5, following passing of the relevant resolution on 16 October 2013, at the Company's annual general meeting the Company disposed of all of its subsidiary undertakings, Plain Healthcare Limited, Avia Health Informatics Inc. and Avia Investments Limited for £1 each. Avia Health Informatics Inc. and Avia Investments Limited were subsequently dissolved.

The table above sets out the fair value measurements using the IFRS 7 fair value hierarchy.  Categorisationwithin the hierarchy has been determined on the basis of the lowest level of input that is significant to the fair value measurement of the relevant asset as follows:

Level 1 - valued using quoted prices in active markets for identical assets.

Level 2 - valued by reference to valuation techniques using observable inputs other than quoted prices included within Level 1.

Level 3 - valued by reference to valuation techniques using inputs that are not based on observable market data.

There were no transfers between Level 1, Level 2 and Level 3 in either 2014 or 2013.

Level 3 valuation techniques used by the Company are explained in more detail in Note 3.

No receivables were past due or provided for at the year-end or at the previous year-end.

The fair value of trade and other receivables is considered by the Directors not to be materially different to carrying amounts.

The other debtors includes a balance owed by the CEO, Tim Harper relating to monies advanced against ordinary business expenses.

The fair value of cash and cash equivalents is considered by the Directors not to be materially different to carrying amounts.

The above short term borrowings relate to £350,000 of convertible loan notes that were issued on 3 September 2012.

On 16 October 2013 the Company and Drury Lane Limited ("Drury Lane") entered into a deed of novation providing for the release of the Company's obligation to repay the sum of £350,000 to Drury which was completed following payment of a novation fee of £50,000 by the Company.

The fair value of trade and other payables is considered by the Directors not to be materially different to carrying amounts.

The 710,000 options granted to Tim Baldwin have since been cancelled following his resignation from the Company on 4 September 2014.

The options outstanding at 31 March 2014 had a weighted average exercise price of 3.68p and a weighted average remaining contractual life of 9.8 years.

The charge in the income statement in respect of options in 2014 was £21,342 (2013: £nil).