22 November 2017
Syncona
Limited
Interim results
for the six months ended 30 September
2017
Strong returns and NAV increase with
positive performance across the business
- Net assets at 30
September 2017 of £1,032.2 million; 156.4p per share, a
total return of 16.7 per cent[1]
- 50.6 per cent[2] return from life science
portfolio driven by positive financing events in Nightstar and
Autolus
- Funds portfolio generated return of 4.1
per cent[3], benefitting from continued strong equity markets
Significant advancement in evolution;
differentiated strategy driving value creation
- Evolution to concentrate on creating,
investing in and building global leaders in life science gathered
pace
- Life science portfolio valued at £455.2
million and now represents 44.1 per cent of the Company’s Net
Assets, up from 25.3 per cent at March
2017
- Pace of transition driven by strong value
progression in the portfolio and £91.6 million of follow-on
investment into existing life science portfolio
- Funds portfolio valued at £552.0 million
providing a deep pool of capital for investing in life
sciences
- Significant progress made repositioning
the funds portfolio towards more liquid funds in hedged strategies
with a lower volatility profile
Life science portfolio delivers very
strong financial and operational progress
- Blue Earth Diagnostics, our PET imaging
agent company, delivered continued momentum in the launch and
rollout of Axumin. Units sold in the
United States increased significantly in the third and
fourth quarters since launch to 1800 and 2500 units respectively,
with strong reordering rates and
positive organic growth at existing sites
- Nightstar, our gene therapy company
targeting inherited forms of blindness, completed a US$45 million Series C financing and an IPO on
NASDAQ raising US$86 million at
significant valuation uplifts
- Autolus, our CAR-T cell therapy company
focused on the treatment of cancer, completed a US$80 million Series C financing at a material
uplift and commenced its clinical trial programme
- Syncona’s Developing portfolio companies
continue to progress the delivery of key milestones, in particular
with the appointment of CEOs with significant gene therapy
experience in Gyroscope and Freeline
Life Sciences valuation movements in
period (£m):
Company |
31
March 2017 value |
Net
investment in the period |
Valuation change |
30
Sept 2017 value |
%
NAV |
Established |
|
|
|
|
|
Blue Earth
Diagnostics |
£108.4 |
£6.0 |
£2.5 |
£116.9 |
11.3 |
Maturing |
|
|
|
|
|
Nightstar
Therapeutics |
£34.2 |
£25.6 |
£114.8 |
£174.6 |
16.9 |
Autolus |
£31.2 |
£38.1 |
£19.7 |
£89.0 |
8.6 |
Developing |
|
|
|
|
|
Freeline
Therapeutics |
£18.0 |
£13.0 |
- |
£31.0 |
3.0 |
Gyroscope
Therapeutics |
£5.0 |
£2.8 |
- |
£7.8 |
0.8 |
Achilles
Therapeutics |
£2.8 |
£3.8 |
- |
£6.6 |
0.6 |
CEGX |
£5.2 |
- |
- |
£5.2 |
0.5 |
CRT Pioneer Fund |
£21.8 |
£2.3 |
- |
£24.1 |
2.4 |
TOTAL |
£226.6 |
£91.6 |
£137.0 |
£455.2 |
44.1 |
Positive outlook and clear plan
Syncona has had a particularly strong start to the year. Our
life science portfolio companies remain well placed and are working
towards the delivery of important key milestones in their
development plans, with a number commencing or progressing clinical
trials in 2018, which, if successful, will enable the continued
progression of their therapies to market.
Syncona is well funded, with a deep pool of capital in our funds
portfolio underpinning our life science portfolio. We continue to
see a rich pipeline of life science investment opportunities in
areas of high unmet medical need, with multiple projects under
review. We have a highly selective and disciplined investment
strategy and maintain a focus on investing in only the best
opportunities. We continue to expect to invest up to £150.0 million
into new and existing life science investments in the current
financial year, having already made £91.6 million of investments
into our existing life sciences portfolio.
We remain positive on the outlook for the business and believe
the investment portfolio is well positioned to continue to deliver
attractive risk adjusted returns through the cycle.
Martin Murphy, CEO, Syncona
Investment Management Limited, said, “Syncona has made
significant progress in the first half and delivered strong NAV
progression. We have demonstrated the benefit of a differentiated
model that enables us to draw from a deep pool of productively
deployed capital to make investments in our focused life sciences
portfolio. Our objective is to ensure our businesses have the
backing they need to become global leaders in their fields and
deliver transformational treatments to patients in areas of high
unmet need.
“The Syncona team worked closely with our portfolio companies to
achieve significant milestones during a particularly busy first
half. Among our maturing business, Autolus completed an important
financing round and commenced clinical trials for its
differentiated CAR-T programmes. Nightstar completed a highly
successful IPO just four years after Syncona founded the Company.
Our established business, Blue Earth Diagnostics, continued to
prove the efficacy and market appeal of its Axumin product in the
US and commenced its introduction to the European market.
“This progress reinforces the benefits of Syncona’s highly
focused, hands-on and long-term approach. The material valuation
gains in this six months reflect five years of significant efforts
since Syncona was founded in 2012. Looking ahead, 2018 will be an
important year as a number of our portfolio companies enter or
progress clinical trials and seek to deliver other important
milestones. There is much to do as we work to help these businesses
fulfil their potential and deliver value for both patients and
shareholders.”
[ENDS]
Enquiries
Syncona
Limited
Tel: +44 (0) 20 7611 2031
Siobhan Weaver
Tulchan
Communications
Tel: +44 (0) 207 353 4200
Martin Robinson, Lisa Jarrett-Kerr, Sheebani Chothani
THIS ANNOUNCEMENT IS NOT FOR RELEASE,
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JURISDICTION
Copies of this press release, a company results presentation,
and other corporate information can be found on Syncona’s website
at: www.synconaltd.com
Forward-looking statements – this
announcement contains certain forward-looking statements with
respect to the portfolio of investments of Syncona Limited. These
statements and forecasts involve risk and uncertainty because they
relate to events and depend upon circumstances that may or may not
occur in the future. There are a number of factors that could cause
actual results or developments to differ materially from those
expressed or implied by these forward-looking statements
About Syncona:
Syncona is a leading FTSE250 company focused on investing in and
building global leaders in life science. Our vision is to deliver
transformational treatments to patients in truly innovative areas
of healthcare while generating attractive returns for shareholders.
Our current investment portfolio consists of seven high quality
investee companies in life science and a leading range of fund
investments.
We seek to partner with the best, brightest and most ambitious
minds in science to build globally competitive businesses. We are
established leaders in gene therapy, cell therapy and advanced
diagnostics, and focus on delivering dramatic efficacy for patients
in areas of high unmet need.
Our funds portfolio seeks to generate superior returns by
investing in long only and alternative investment funds. This
represents a productively deployed evergreen funding base, which
enables us to take a long-term approach to investing in life
science as we target the best new opportunities and support our
existing portfolio investee companies to grow and succeed.
Syncona is aligned with two of the premium charitable funders in
UK science, the Wellcome Trust, original founder of Syncona, and
Cancer Research UK, both of which are significant shareholders in
our business. We make a donation of 0.3 per cent of Net Asset
Value to a range of charities each year.
Chairman’s statement
I am pleased to report strong performance and continued progress
for the six months to 30 September
2017.
Significant positive momentum
NAV per share increased by 16.7 per cent[4] on a total return
basis and Syncona now has assets of £1,032.2 million, or 156.4p per
share (March 2017: £895.2 million;
136.0p per share).
Within our life science portfolio a number of significant
financial and operational milestones were achieved, resulting in
excellent value progression and a return of 50.6 per cent in the
six months. These returns have been complemented by a 4.1 per cent
gain on our funds portfolio, which continues its focus on
generating attractive risk-adjusted returns as it transitions to
more liquid and less volatile funds and provides a strong capital
base for the life science portfolio.
Excellent progress in the evolution
of Syncona’s investment strategy
Significant value progression and investment in the life science
portfolio during the period saw further evolution of our investment
strategy to focus on investing in and building global leaders in
healthcare. By 30 September, Syncona’s exposure to life science
investments had increased to 44.1 per cent of net assets, up from
25.3 per cent at 31 March 2017.
The funds and life science investment teams have worked well
together to utilise a deep, productively deployed capital pool to
invest in compelling investment opportunities in life science. This
combination is an important strategic differentiator for the
business and one on which we will further capitalise in the coming
years.
Board
With the development of the investment strategy, the composition
of the Board is also evolving.
Earlier this month Rob Hutchinson
joined the Board as a Non-Executive Director. Rob brings many years
of broad financial experience to the role, having spent 28 years at
KPMG and as a Fellow of the Institute of Chartered Accountants in
England and Wales. Rob will be a valuable addition to the
Board and we look forward to working with him. We expect the
Board will continue to evolve.
The future
Our vision remains to deliver transformational treatments to
patients in innovative areas of healthcare while generating
superior returns for shareholders. We are delighted with the
delivery of significant achievements in our life science portfolio
and the excellent value progression delivered this half. We have
made a very a strong start towards the delivery of our strategy and
look forward to reporting back to shareholders at the end of the
year.
Jeremy Tigue, Chairman, Syncona
Limited
22 November 2017
Report from CEO of Syncona Investment
Management Limited
Syncona has delivered a very strong start to our first year as a
combined business. It has been pleasing to see our strategy of
building global leaders in life science gather pace, supported by
our deep, productively deployed pool of long term capital.
A remarkable period for new ‘Third
Wave’ technologies
The past six months have seen remarkable landmarks in the
development of emerging ‘Third Wave’ technologies such as cell and
gene therapy. These therapies have the potential to transform care
in a range of devastating diseases through highly precise
treatments tailored to the individual patient. In many cases they
offer the potential for cure through a single, one off treatment.
With the milestone approval of the first two CAR-T therapies in
the United States, which harness
the power of a patient’s own T-cells to fight cancer, during the
period, it is now clear that these treatments are going to become
commercial and, more importantly, patient realities.
When we formed Syncona in 2012 we took a high conviction view on
emerging clinical data that these therapies were going to drive the
next wave of innovation in healthcare. We developed deep domain
expertise, allowing us to select the best scientific opportunities
and build a portfolio of high quality companies in these areas.
These companies are now making very positive progress and have the
opportunity, should they continue to execute well, to be global
leaders in the cell and gene therapy space. This process is
representative of Syncona’s strategy; to identify promising areas
of cutting edge science and build companies which we can support
over the long term as they seek to take their products to
market.
Portfolio highlights demonstrate the
benefits of our company building approach
In this context we delivered positive progress in our life
science portfolio during the half. We saw Nightstar, a gene therapy
company which Syncona founded four years ago, conduct an
US$86 million listing on NASDAQ
supported by a wide range of leading global investors. At the end
of the period Nightstar was trading at US$19.20 per share, a premium of almost 40 per
cent to its listing price capitalising the business at US$550 million, demonstrating the potential the
market sees in this business. Nightstar is now a step closer to
achieving its ambition of becoming the global leader for the
treatment of inherited retinal disease through gene therapy. The
business is on track to start its pivotal trial, the last before a
potential approval, in its lead indication of choroideremia in
early 2018. Consistent with our strategy of maintaining significant
ownership stakes in our portfolio companies, we look forward to
continuing to take an active role in supporting Nightstar’s success
so that the business might ultimately be able to deliver its
potentially transformative treatments to patients.
We also saw our CAR-T cell therapy company Autolus reach a
significant milestone, becoming a clinical stage company with the
commencement of three clinical trials in its two lead programmes.
While the CAR-T space is now a competitive field, we believe
Autolus is differentiated by its extensive cell programming
capabilities and its efficient, scalable manufacturing platform.
These factors provide it with the opportunity to deliver programmes
which are either first in class or best in class.
Autolus also completed a significant US$80 million Series C funding round at a
substantial valuation uplift, led by Syncona as the founding
shareholder and supported by leading global institutional
investors. With the recent approval of two CAR-T products by the US
Food and Drug Administration and significant corporate activity in
the space, it is now clear that CAR-T will become an important
commercial reality in the haematological cancer field.
These examples demonstrate the strength of our business model,
which combines an expert approach to company building with a deep
pool of capital and a long-term ownership approach. We believe this
enables us to hire highly motivated, expert teams to lead our
businesses. Through our model we hope to deliver transformational
treatments to patients in areas of high unmet medical need and
secure value throughout the cycle for our
shareholders.
Significant progress delivered with
an important period ahead
Our life science companies have delivered a significant amount
of progress this half, benefitting from five years of development
since the foundation of Syncona in 2012. 2018 will be an important
year for the business as we see a number of our portfolio companies
commence or progress clinical trials or approach other key
milestones which will require them to execute well and which, if
successful, will enable the progression of their therapies to
market. We are pleased with the early strong momentum in the
portfolio and look forward to continuing to support our companies
to succeed.
Martin Murphy, CEO, Syncona
Investment Management Limited
22 November 2017
Finance review
Syncona’s core focus is on investing in and building global
leaders in life science, with its investment programme funded and
underpinned by its funds portfolio.
As the investment portfolio evolves, the weighting to life
science investments will increase as our companies develop and new
and follow-on investments are made. The liquidity provided by our
funds portfolio is a strategic differentiator. Whilst we expect the
overall weighting to this part of our portfolio to reduce as a
percentage of the portfolio over time, we anticipate that it will
remain a bedrock of our funding model, providing us with the
confidence to take a long-term view in the financing of our life
sciences investments.
Performance
The portfolio as a whole generated a return of 19.8 per cent in
the six months. Performance was driven by the 50.6 per cent return
from our life sciences portfolio, following strong value
progression in Nightstar and Autolus during the period. These
strong returns were underpinned by a 4.1 per cent return from the
funds portfolio. Through the cycle, we are targeting a 15 per cent
net IRR on our portfolio and we are encouraged by this early strong
performance.
Valuations
Syncona continues to maintain a conservative valuation approach
for all investments, with the funds portfolio valued on a
third-party basis and the life science portfolio valued in
accordance with the International Private Equity and Venture
Capital Valuation Guidelines.
Life sciences
portfolio valuation basis |
30
September 17 |
31 March
17 |
Quoted |
38% |
- |
Discounted cash
flow |
26% |
48% |
Price of recent
investment |
21% |
31% |
Cost |
10% |
11% |
Adjusted
third-party |
5% |
10% |
In September, Nightstar listed on NASDAQ, and the valuation for
the business moved from a price of recent investment to a quoted
basis. At 30 September 2017,
Nightstar was valued at £174.6 million and the valuation will
fluctuate with both the movement in Nightstar’s share price and the
foreign currency exchange rate.
Cash flows and liquidity
Syncona continues to have a strong capital base with cash
balances of £36.1 million (March
2017: £86.3 million) and £552.0 million (March 2017: £582.4 million) of liquidity in the
funds portfolio.
During the six months, the funds portfolio continued to
transition to more liquid and less volatile investments. A total of
£113.4 million of redemptions were made, of which £66.6 million was
redeployed into the funds portfolio. The remainder was used,
alongside existing cash balances, to support the £91.6 million[5]
of follow-on investments into our existing life science
portfolio.
Looking ahead, we would anticipate holding a prudent level of
cash resources on hand. We anticipate cash balances to typically be
above those held at 30 September 2017.
The absolute level of drawdowns from our cash and liquidity
resources will be dependent on our life science investment
pipeline. Our expectation remains that Syncona will invest up to
£150 million in new and existing life science investments this
financial year.
Liquidity profile |
30 September
17 |
31 March 17 |
Cash |
£36.1m |
£86.3,m |
< 1 month |
£220.7m |
£161.7m |
1-3 months |
£85.3m |
£137.5m |
3-12 months |
£198.7m |
£237.3m |
> 12 months |
£47.3m |
£45.9m |
Expenses
Our ongoing charges ratio for the six months was 1.44 per cent
(March 2017: 0.72 per cent). The
ongoing charges ratio includes charges paid to the Investment
Manager (BACIT UK) and the Investment Advisor (Syncona Investment
Management Limited).
Charitable donations
Total charitable donations of £2.4 million (March 2017: £4.8 million) were accrued during the
half, to be split equally between The Institute of Cancer Research
and The BACIT Foundation (for onward distribution to the nominated
charities). Including these donations, since launch the
Company has now made charitable donations of more than £20.5
million.
Uncalled commitments
Uncalled commitments stood at £86.2 million at 30 September 2017, of which £38.8 million relate
to milestone payments associated with the life science
portfolio. These payments are linked to the relevant company
achieving key strategic and development goals over the next 24
months.
|
Uncalled Commitment |
Life Science
Portfolio: |
|
Milestone payments to
portfolio companies |
£38.8m |
CRT Pioneer Fund |
£26.1m |
|
|
Fund
Portfolio |
£21.3m |
TOTAL |
£86.2m |
Foreign exchange
During the period, Autolus and Nightstar conducted funding
rounds in US dollars, resulting in £263.6 million of the life
science portfolio now being denominated in US dollars, none of
which was hedged. Within the funds portfolio, £270.7 million was
denominated in US Dollars, of which 69.4 per cent was hedged and
£69.3 million was denominated in Euros, all of which was hedged. At
30 September 2017, the unrealised
gain on the associated forward contracts was £4.0 million
(March 2017: £0.4 million).
Appointment of Alternative Investment
Fund Manager (AIFM)
We expect Syncona Investment Management Limited to be appointed
as the Company’s AIFM before the end of 2017.
John Bradshaw, Chief Financial
Officer, Syncona Investment Management Limited
22 November 2017
Life science portfolio review
Syncona’s life science portfolio made excellent strategic and
financial progress during the first half of the 2018 financial
year. We remain at the forefront of the revolution in ‘Third Wave’
technologies such as cell and gene therapy, with five of our seven
portfolio companies operating in these areas.
Life science portfolio as at 30 September
2017
Company |
£m value |
Syncona
ownership[6] |
% of life science
portfolio |
% of NAV |
Valuation
basis |
Established |
|
|
|
|
|
Blue Earth Diagnostics |
£116.9 |
90% |
25.7% |
11.3% |
DCF |
Maturing |
|
|
|
|
|
Nightstar |
£174.6 |
42% |
38.4% |
16.9% |
Quoted |
Autolus |
£89.0 |
38% |
19.6% |
8.6% |
PRI |
Developing |
|
|
|
|
|
Freeline Therapeutics |
£31.0 |
74% |
6.8% |
3.0% |
Cost |
Gyroscope Therapeutics |
£7.8 |
78% |
1.7% |
0.8% |
Cost |
Achilles Therapeutics |
£6.6 |
66% |
1.4% |
0.6% |
Cost |
CEGX |
£5.2 |
12% |
1.1% |
0.6% |
PRI |
CRT Pioneer Fund |
£24.1 |
64% |
5.3% |
2.3% |
Adj. Third-Party |
DCF – Discounted Cash Flow; PRI – Price of Recent Investment
Portfolio performance
The portfolio generated a 50.6 per cent return in the period
since 31 March 2017. The increase was
driven in particular by significant financing events in Nightstar
and Autolus, both of which were delivered at substantial valuation
uplifts for Syncona in the six month period.
Established companies
Blue Earth Diagnostics (Blue Earth)
Blue Earth is a molecular imaging diagnostics company focused on
the development and commercialisation of novel PET imaging agents
to inform clinical management and guide care for cancer
patients.
During the period the business continued its positive trajectory
in the launch of Axumin, its product for the diagnosis of recurrent
prostate cancer. Units sold increased to 1800 and 2500 in the
second and third quarters of 2017 respectively, a significant
increase from 200 units and 800 units in the first launch quarters
(4Q16 and 1Q17[7]). We are encouraged by strong reordering rates
and robust organic growth at launched sites, providing confidence
in the rollout to new areas as the business seeks to increase its
coverage across the US in a measured way. Expansion of Axumin
supply is ongoing through the addition of new manufacturing sites
and increased utilisation of existing sites, with 17 sites active
at period end, up from 14 in March
2017.
In Europe, Blue Earth received
approval from the European Commission to market Axumin in May. The
European market is more fragmented and represents a more
challenging reimbursement environment than the US, that will
require country specific rollout plans. Blue Earth made excellent
progress on this front, signing four manufacturing and distribution
agreements covering 14 countries. Commercial sales commenced in two
initial countries in September and October and will be rolled out
across other markets in due course.
During the period Blue Earth also presented the UK Axumin Change
in Management FALCON study at the 2017 ASTRO Annual Meeting. The
study measured the extent to which physicians opted to change the
treatment provided to their patients after Axumin was used to
identify the location of their recurrent prostate cancer.
Recruitment to the trial was halted early based on a successful
interim analysis, with initial results demonstrating that 61.2 per
cent of patients had their clinical management changed following an
Axumin scan, representing overwhelming efficiency as defined by the
protocol.
While it remains early days for a complex product launch of this
nature, we are very pleased with the results so far and remain
positive about the prospects for Blue Earth.
Maturing companies
Nightstar
Nightstar utilises gene therapy to develop products for
inherited forms of blindness which have no available therapies.
During the period Nightstar conducted two major financing events, a
US$45 million Series C financing
round in June and an oversubscribed US$86
million NASDAQ IPO in September. Both rounds were conducted
at significant valuation uplifts and Syncona invested in both
financings consistent with its strategy of maintaining significant
ownership stakes in its businesses. As a result of these
activities, the value of Syncona’s stake in the business increased
from £34.2 million to £174.6 million during the period.
Both financings were supported by leading institutional
investors, testament to the quality and potential of the business.
The IPO places Nightstar amongst the leading global biotech
companies operating at the forefront of the gene therapy field, a
remarkable achievement just four years after being founded by
Syncona on the basis of early academic data.
The business also continued to progress its high-quality
pipeline of seven programmes in mono-genetic retinal disorders,
having licensed a further programme from Oxford in Stargadt disease
following the period end. The business is on track to commence its
Phase III pivotal clinical trial in its lead programme of
choroideremia in the first half of next year, and expects initial
data from its second programme in X-linked Retinitis Pigmentosa
during 2018. Its third programme in Best Vitelliform Macular
Dystrophy is targeting initiating a clinical trial in 2019.
Autolus
Autolus is a clinical-stage biopharmaceutical company focused on
the development and commercialisation of next generation CAR-T cell
therapies for the treatment of cancer. Autolus continued to make
progress establishing a leading position in the CAR-T field during
the period, commencing three clinical trials for Multiple Myeloma,
paediatric ALL and adult DLBCL, with products it believes have the
potential to be first or best in class. Autolus is focused on
progressing these programmes through the clinic rapidly, with
initial data expected to begin reading out from 2018.
In September, Autolus conducted an US$80
million Series C investment round at a significant valuation
uplift for Syncona. Syncona led the round, which was supported by
leading global institutional investors. The funds will be used to
advance Autolus’ clinical-stage pipeline while building an
efficient, scalable manufacturing platform to bring its CAR T-cell
therapies rapidly and successfully to market
Autolus anticipates commencing clinical trials of its T-cell
Lymphoma program in the first half of 2018 as well as advancing
several programmes targeting solid tumours through preclinical
development during the year. We believe Autolus is well positioned
to compete with global competitors in the CAR-T field and look
forward to continuing to support the business.
Developing companies
Our Developing companies have continued to work towards
executing their plans and delivering key milestones during the
period.
Gyroscope, our second retinal gene therapy company, appointed Dr
Soraya Bekkali as Chief Executive
Officer. Soraya brings over 20 years’ industry experience with a
specific focus in the fields of gene therapy and ophthalmology, and
will also serve as Chief Medical Officer of the business. Gyroscope
also publicly launched its business, revealing that it is
developing genetically defined therapies for retinal diseases
linked to an unbalanced complement system, a part of the immune
system and that Age-related Macular Degeneration (AMD) is the first
disease being targeted. AMD is the most common cause of blindness
in the industrialised world. This is an emerging new application of
gene therapy conceived by Syncona due to its deep experience in the
field. Gyroscope is expected to commence clinical trials during
2018.
Freeline, a third gene therapy company which is focused on the
development of curative therapies for haemophilia and other
debilitating disorders, appointed Anne
Prener as Chief Executive Officer. Anne has extensive
experience in drug development and commercialisation with a
specific focus on gene therapy and rare diseases. From 2014 to 2016
she served as Vice President, Clinical Research Haematology and
Global Therapeutic Area Head of Haematology at Baxalta. During her
tenure, three new major product approvals in both the US and EU
were secured along with a significant advancement in Baxalta’s
haematology portfolio including gene therapy for haemophilia. The
business is seeking to validate its clinical and manufacturing
platform during 2018.
Achilles, our preclinical immunotherapy company, also made
strong progress during the period making important breakthroughs
which have provided further confidence in the key scientific
premise of the business. We remain positive on the opportunities
for the business which is meeting key milestones as planned.
Finally, CEGX, a pioneer in the field of epigenetics, generated new
data during the period which is now under analysis by the business
and further plans are underway.
CRT Pioneer Fund
The CRT Pioneer Fund is managed by Sixth Element Capital and
invests in oncology focused assets. The fund has a pipeline
agreement with Cancer Research UK under which it has a right of
first review of certain CRUK drug discovery projects. At
30 September 2017, Syncona’s
ownership stake in the fund equalled 64.1 per cent and was valued
at £24.1 million, comprising a portfolio of 11 investments in early
stage drug discovery opportunities.
Outlook
Looking ahead, we continue to believe our portfolio companies
are well positioned to execute on their clear and ambitious plans,
and we look forward to continuing to support them to do so. We are
leaders in ‘Third Wave’ technologies which are enjoying positive
sentiment because of the ever-increasing amount of positive
clinical data in the field. This will be a critical year for a
number of our businesses as they enter clinical trials which we
hope will generate the positive data required for them to move
forward with their therapies. We continue to see opportunities to
add to our portfolio and will make new investments where the
quality of the opportunity meets the high bar set by the remainder
of our portfolio companies.
Chris Hollowood, Chief Investment
Officer, Syncona Investment Management Limited
22 November 2017
Funds portfolio review
The funds portfolio has continued to deliver attractive
risk-adjusted returns, generating a return of 4.1 per cent[8] over
the six months. Unsurprisingly, given continued rising asset prices
in the period, performance was driven by the long-biased elements
of the portfolio, with the portfolio’s exposure to both long-only
and hedge funds contributing to overall growth.
At 30 September 2017, the funds
portfolio was valued at £552.0 million[9] (March 2017: £582.8 million) and was invested in
30 underlying funds across 21 managers.
Funds portfolio |
|
Opening portfolio |
£582.8m |
Redemptions |
(£113.4m) |
Reinvestment |
£66.6m |
Movement in unrealised gain on
hedge |
£3.5m |
Gain on portfolio |
£12.5m |
Closing portfolio |
£552.0m |
Portfolio transition to more liquid
funds in strategies with a lower volatility profile
Following the expansion of Syncona’s investment policy in
December 2016, we have continued to
transition the portfolio’s investments to ones that are typically
more liquid and are less correlated to equity markets, redeeming
some allocations to more directional or long-only strategies in
favour of long/short hedge funds, which may at any time proactively
adjust exposure to equity markets, depending on their outlook and
market sentiment.
During the six months, £113.4 million of redemptions were made,
of which £66.6 million was reinvested into funds with the remainder
deployed into the life science portfolio or held in cash. In
particular, the portfolio’s allocation to commodities was redeemed
in total and its exposure to a number of funds that have
historically proved to be more volatile was reduced. We expect to
have substantially completed the repositioning of the portfolio by
the end of 2018.
Portfolio construction – focus on
containing correlation to a market correction
We are focused on investing with proven managers who have
demonstrated an ability to contain downside volatility through
portfolio construction or nimble repositioning and active
management of underlying holdings, or both. At 30 September 2017, 58 per cent of the portfolio
was allocated to hedge funds and the portfolio’s construction is
driven by the degree to which the managers’ skill sets deliver
performance that has a low correlation to equity markets and can
limit the portfolio exposure to market dislocations.
Rising markets increases portfolio’s
exposure to equities
Looking across the portfolio at both our long-only and hedged
strategies, our underlying managers’ outlook and relative
confidence in equity markets continued to improve, and we estimate
the portfolio ended the period 65 per cent net long in equity
equivalents. This reflects the expansion of our underlying
managers’ long books with rising markets, rather than re-allocation
of capital to long-only strategies at the portfolio level, and is
at the top of the 37 per cent to 65 per cent range since inception
and compares to 57 per cent at the end of March 2017.
Foreign exchange – reduction in
unhedged US$ exposure
The funds portfolio continues to hedge out substantially all
exposure to Euro denominated share classes, and around
three-quarters of its exposure to US Dollar denominated share
classes. Overall, 15.1 per cent of the portfolio’s value at
the period end was in unhedged US Dollar share classes. As we
report in Sterling, and the US Dollar weakened from US$1.25 to US$1.34 over the six months, while the
realised and unrealised gain on the portfolio’s foreign exchange
hedges made a £9.1 million[10] contribution to performance in the
period, the unhedged element detracted approximately £2.6 million
or 0.5 per cent from the portfolio performance during the
period.
Portfolio strategies
Strategy |
£m value |
% of NAV |
% of the funds
portfolio |
% change in
weighting in six months |
Equity hedge funds |
£233.1 |
22.6 |
42.2 |
+4.1 |
Equity funds |
£153.8 |
14.9 |
27.9 |
+3.8 |
Fixed income and credit funds |
£68.9 |
6.7 |
12.5 |
-2.6 |
Global macro funds |
£57.3 |
5.6 |
10.4 |
-2.8 |
Other strategies |
£34.9 |
3.4 |
6.3 |
+0.4 |
Commodities |
- |
- |
- |
-3.5 |
Unrealised FX hedge |
£4.0 |
0.4 |
0.7 |
+0.6 |
TOTAL |
£552.0 |
53.6 |
100.0 |
- |
Equity hedge funds
The portfolio’s weighting to equity hedge funds increased to
42.2 per cent in the six months, reflecting an increase in our
allocation to this strategy and strong performance, with the
long-bias elements of these strategies continuing to drive value.
The managers within this strategy have track records of modest
correlation to equity markets. In aggregate, funds in this strategy
produced a constant currency return of 4.7 per cent in the six
months.
Equity funds
Rising equity markets have continued to provide a tail-wind for
our investments in long-only equity funds, with the UK, Japanese
and Russian funds outperforming their respective benchmarks in the
six months. In aggregate, funds in this strategy produced a return
of 10.5 per cent in constant currencies, with the small increase in
the portfolio’s weighting to long-only funds reflecting performance
rather than a meaningful increase in our allocation.
Fixed income and credit funds
Inflation expectations declined as did the US Dollar against
Sterling, both of which negatively impacted the value of the
portfolio’s TIPs holding. This partially detracted from the
positive progress made by the remaining investments within our
credit strategies. In aggregate fixed income and credit funds made
a 2.5 per cent contribution on a constant currency basis.
Global macro funds
The portfolio has a 10.4 per cent weighting to global macro
funds, primarily invested in two long/short funds, one global and
one focused on Asia Pacific. The
portfolio’s allocation to macro funds is intended to serve as a
hedge for its long-only equity book and in aggregate these funds
made a small positive contribution to performance in the six
months.
Other strategies
Other Strategies accounted for 6.3 per cent of the portfolio and
include infrastructure, private equity and credit.
Realisations activity and valuation uplifts continued to drive
strong performance across these funds, generating an aggregate
return of 9.2 per cent in constant currencies in the period.
Commentary on the portfolio after
period end
Since the period end, asset prices have continued to rise on the
back of a growing market consensus of an economic scenario of
sustainable growth and moderate inflation. Against this, the scale
of global debt burdens constrains central bankers’ abilities to
raise interest rates without the risk of triggering a recession
and, in this context, we remain cautious about the ability of
markets to absorb the risks which are building within the
system.
Whilst the portfolio’s current long bias means that it should
continue to benefit from rising asset prices, we believe its
significant allocation to a number of hedge fund managers, who have
in the past weathered market volatility well, position the
portfolio to react to any changes in market sentiment. We remain
confident in our managers’ ability to generate attractive
risk-adjusted returns through the cycle.
BACIT (UK) Limited Investment Team
22 November 2017
Principal Risks and Uncertainties
The principal risks and uncertainties facing the Company for the
second half of the financial year are substantially the same as
those disclosed in the Report and Accounts for the year ended
31 March 2017. These include:
- Investment
risk
- General,
commercial, technological and clinical risks
- Dominance of
portfolio by a few larger investments and/or sector focus
- Market risk –
realising investment portfolio companies
- Market risk –
political and economic uncertainty
- Investment risk
- Failure to attract or
retain key personnel
- Financing risk
- Systems and controls
- Changes in law and
regulations may adversely affect the Company
Statement of Directors’
Responsibilities
Going Concern
The factors likely to affect the Company’s ability to continue
as a going concern were set out in the Report and Accounts for the
year ended 31 March 2017. As at
30 September 2017, there have been no
significant changes to these factors. Having reviewed the Company’s
forecasts and other relevant evidence, the Directors have a
reasonable expectation that the Company has adequate resources to
continue in operational existence for the foreseeable future.
Accordingly, they continue to adopt the going concern basis in
preparing the half-yearly financial statements.
Statement of Directors’
Responsibilities
The directors confirm that the interim financial statements have
been prepared in accordance with IAS 34 as adopted by the European
Union and that the business review includes a fair review of the
information required by DTR 4.2.7 and DTR 4.2.8, namely:
- an indication of important events that
have occurred during the first six months of the financial year and
their impact on the interim financial statements, and a description
of the principal risks and uncertainties for the remaining six
months of the financial year; and
- material related-party transactions in the
first six months of the financial year and any material changes in
the related-party transactions described in the last annual
report.
The Directors of Syncona Limited are listed in the Syncona
Limited Report & Accounts for the year ended 31 March 2017, with the exception of Peter Hames who stepped down at the AGM on
8 September 2017. Rob Hutchinson was appointed as a non-executive
Director on 1 November 2017. A list
of current directors is maintained on the Syncona Limited
website: http://www.synconaltd.com/people/board.
Jeremy Tigue, Chairman, Syncona
Limited
22 November 2017
Independent Review Report to Syncona Limited
We have been engaged by the Company to review the condensed set
of financial statements in the half-yearly financial report for the
six months ended 30 September 2017
which comprises the Consolidated Statement of Comprehensive Income,
Consolidated Statement of Financial Position, Consolidated
Statement of Changes in Net Assets Attributable to Holders of
Ordinary Shares, Consolidated Statement of Cash Flows and related
notes 1 to 15. We have read the other information contained in the
half-yearly financial report and considered whether it contains any
apparent misstatements or material inconsistencies with the
information in the condensed set of financial statements.
This report is made solely to the Company in accordance with
International Standard on Review Engagements (UK and Ireland) 2410 “Review of Interim Financial
Information Performed by the Independent Auditor of the Entity”
issued by the Auditing Practices Board. Our work has been
undertaken so that we might state to the Company those matters we
are required to state to it in an independent review 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,
for our review work, for this report, or for the conclusions we
have formed.
Directors’ responsibilities
The half-yearly financial report is the responsibility of, and
has been approved by, the directors. The directors are
responsible for preparing the half-yearly financial report in
accordance with the Disclosure and Transparency Rules of the United
Kingdom’s Financial Conduct Authority.
As disclosed in note 2, the annual financial statements of the
Group are prepared in accordance with IFRSs as adopted by the
European Union. The condensed set of financial statements
included in this half-yearly financial report has been prepared in
accordance with International Accounting Standard 34 “Interim
Financial Reporting” as adopted by the European Union.
Our responsibility
Our responsibility is to express to the Company a conclusion on
the condensed set of financial statements in the half-yearly
financial report based on our review.
Scope of review
We conducted our review in accordance with International
Standard on Review Engagements (UK and Ireland) 2410 “Review of Interim Financial
Information Performed by the Independent Auditor of the Entity”
issued by the Auditing Practices Board for use in the United Kingdom. A review of interim financial
information consists of making inquiries, primarily of persons
responsible for financial and accounting matters, and applying
analytical and other review procedures. A review is substantially
less in scope than an audit conducted in accordance with
International Standards on Auditing (UK) and consequently does not
enable us to obtain assurance that we would become aware of all
significant matters that might be identified in an audit.
Accordingly, we do not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that
causes us to believe that the condensed set of financial statements
in the half-yearly financial report for the six months ended
30 September 2017 is not prepared, in
all material respects, in accordance with International Accounting
Standard 34 as adopted by the European Union and the Disclosure and
Transparency Rules of the United Kingdom’s Financial Conduct
Authority.
Deloitte LLP
Statutory Auditor
St Peter Port, Guernsey
22 November 2017
GROUP PORTFOLIO STATEMENT
As at 30
September 2017
|
|
|
|
|
|
|
|
%
of |
|
|
|
|
|
|
|
|
Group |
|
|
|
|
|
|
Fair Value |
|
NAV |
|
|
|
|
|
|
£'000 |
|
2017 |
Life
Science Portfolio |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Life Science
Companies |
|
|
|
|
|
|
|
|
Nightstar
Therapeutics plc |
|
|
|
|
174,647 |
|
16.9 |
Blue Earth
Diagnostics Limited |
|
|
|
|
116,899 |
|
11.3 |
Autolus
Limited |
|
|
|
|
88,997 |
|
8.6 |
Freeline
Therapeutics Limited |
|
|
|
|
31,000 |
|
3.0 |
Companies
of less than 1% of NAV |
|
|
|
|
19,582 |
|
1.9 |
Total Life
Science Companies(1) |
|
|
|
|
431,125 |
|
41.7 |
CRT Pioneer Fund(2) |
|
|
|
24,052 |
|
2.4 |
Total
Life Science Portfolio(3) |
|
|
|
|
455,177 |
|
44.1 |
|
|
|
|
|
|
|
|
|
Funds
Portfolio |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
Hedge Funds |
|
|
|
|
|
|
|
Polygon
European Equity Opportunity
European event-driven equities (long/short) |
|
|
|
|
39,448 |
|
3.8 |
Polar UK
Absolute Equity
UK equities |
|
|
|
|
33,002 |
|
3.2 |
Maga
Smaller Companies UCITS
European equities (long/short) |
|
|
|
|
30,616 |
|
3.0 |
AKO Global
UCITS
Fundamental equities (long/short) |
|
|
|
|
27,449 |
|
2.7 |
Portland
Hill
Event-driven equity investments (long/short) |
|
|
|
23,915 |
|
2.3 |
Sagil
Latin American Opportunities
Latin American equities (long/short) |
|
|
|
|
15,650 |
|
1.5 |
Doric Asia
Pacific
Asia ex-Japan small caps (China, India, SE Asia, Korea)
(long/short) |
|
14,066 |
|
1.4 |
The S.W.
Mitchell European Fund
European equities (long/short) |
|
|
|
|
13,618 |
|
1.3 |
Man GLG
Pan-European Growth
European high growth equities (mandate permits short) |
|
|
|
12,722 |
|
1.2 |
Portland Hill European
Catalyst-driven, fundamental EU equities (long/short) |
|
|
|
|
10,171 |
|
1.0 |
Funds of
less than 1% of NAV |
|
|
|
|
12,440 |
|
1.2 |
|
|
|
|
|
|
233,097 |
|
22.6 |
|
|
|
|
|
|
|
|
|
Equity
Funds |
|
|
|
|
|
|
|
Polar
Capital Japan Alpha
Japanese large and mid-cap equities |
|
|
|
|
41,057 |
|
3.9 |
The SFP
Value Realisation
Small and mid-cap Japanese equities (mandate permits
short) |
|
|
|
35,680 |
|
3.5 |
Majedie UK
Equity
UK equities |
|
|
|
|
32,838 |
|
3.2 |
Majedie UK
Focus
UK equities |
|
|
|
|
26,112 |
|
2.5 |
Russian
Prosperity
Russian equities |
|
|
|
|
18,123 |
|
1.8 |
|
|
|
|
|
|
153,810 |
|
14.9 |
|
|
|
|
|
|
|
|
|
Fixed
Income and Credit Funds |
|
|
|
|
|
|
|
Polygon
Convertible Opportunity
US and European convertible arbitrage |
|
|
|
|
21,816 |
|
2.1 |
CG
Portfolio Dollar
US TIPs (inflation linked government bonds) |
|
|
|
|
17,201 |
|
1.7 |
WyeTree
RRETRO
US and EU subprime mortgage-backed securities |
|
|
|
16,939 |
|
1.6 |
Funds of
less than 1% of NAV |
|
|
|
|
12,974 |
|
1.2 |
|
|
|
|
|
|
68,930 |
|
6.6 |
|
|
|
|
|
|
|
|
|
Global
Macro Funds |
|
|
|
|
|
|
|
Parity
Value
Discretionary global macro (long/short) |
|
|
|
|
32,091 |
|
3.1 |
Sinfonietta
Equities, rates, FX and commodities, with an Asian focus
(long/short) |
|
25,220 |
|
2.5 |
|
|
|
|
|
|
57,311 |
|
5.6 |
|
|
|
|
|
|
|
|
|
Other
Strategies |
|
|
|
|
|
|
|
Permira
V
Private equity, mid to large cap European buyouts |
|
|
|
23,038 |
|
2.3 |
Funds of
less than 1% of NAV |
|
|
|
|
11,842 |
|
1.1 |
|
|
|
|
|
|
34,880 |
|
3.4 |
|
|
|
|
|
|
|
|
|
Open
forward currency contracts |
|
|
|
|
3,979 |
|
0.4 |
Total
Funds Portfolio(2) |
|
|
|
|
552,007 |
|
53.6 |
|
|
|
|
|
|
|
|
|
Investment in Subsidiaries(1) |
|
|
|
|
403 |
|
- |
Total
Investment in Subsidiaries |
|
|
|
|
403 |
|
- |
|
|
|
|
|
|
|
|
|
Other Net
Assets |
|
|
|
|
|
|
|
|
Cash and cash
equivalents(4) |
|
|
|
|
|
36,119 |
|
3.5 |
Charitable
donations |
|
|
|
|
|
(2,376) |
|
(0.2) |
Other assets and
liabilities |
|
|
|
|
|
(9,157) |
|
(0.9) |
Total Other Net
Assets |
|
|
|
|
|
24,586 |
|
2.4 |
|
|
|
|
|
|
|
|
|
Total Net Asset
Value
of the Group |
|
|
|
|
|
1,032,173 |
|
100.0 |
(1) The fair value of Syncona Holdings Limited
amounting to £433,463,002 is comprised of investments in life
science companies of £431,124,622 and investment in SIML of
£402,849, other net assets of £1,239,032 in Syncona Portfolio
Limited and other net assets of £696,499 in Syncona Holdings
Limited.
(2) The fair value of the investment in Syncona
Investments LP Incorporated amounting to £600,460,237 is comprised
of the investment in the funds portfolio of £552,006,502 (including
the open forward currency contracts of £3,979,499), the investment
in the CRT Pioneer Fund of £24,052,234, cash of £24,470,000 and
other net liabilities of £68,499. The CRT Pioneer Fund is 64.1 per
cent owned by the Group; however the Group has no control over the
fund.
(3) The life science portfolio of £455,176,856
consists of life science investments totalling £431,124,622 held by
Syncona Holdings Limited and the CRT Pioneer Fund of £24,052,234
held by Syncona Investments LP Incorporated.
(4) Total cash held by the Group is £36,119,379. Of
this amount £315,852 is held by Syncona Limited, and £24,470,000
and £11,333,527 is held by Syncona Investments LP Incorporated and
Syncona Portfolio Limited respectively. Cash held by Syncona
Investments LP Incorporated and Syncona Portfolio Limited is not
shown in Syncona Limited’s Consolidated Statement of Financial
Position.
See note 5 for a description of Syncona Holdings Limited and
Syncona Investments LP.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the period ended 30 September
2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unaudited six |
|
Unaudited six |
|
Audited |
|
|
|
|
|
|
|
|
|
months
to 30 |
|
months
to 30 |
|
year
to 31 |
|
|
|
|
|
|
|
|
|
September 2017 |
|
September 2016 |
|
March
2017 |
|
Notes |
|
Revenue |
|
Capital |
|
Total |
|
Total |
|
Total |
|
|
|
£'000 |
|
£'000 |
|
£'000 |
|
£'000 |
|
£'000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment income |
|
|
|
|
|
|
|
|
|
|
|
Other
income |
|
|
21,118 |
|
- |
|
21,118 |
|
10,183 |
|
14,561 |
Total
investment income |
|
|
21,118 |
|
- |
|
21,118 |
|
10,183 |
|
14,561 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net gains
on financial assets at fair value through profit or loss |
6 |
|
- |
|
137,281 |
|
137,281 |
|
13,571 |
|
71,375 |
Total
gains |
|
|
- |
|
137,281 |
|
137,281 |
|
13,571 |
|
71,375 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
Charitable
donation |
|
|
7 |
|
2,376 |
|
- |
|
2,376 |
|
2,381 |
|
4,752 |
Management fees |
|
|
|
|
5,438 |
|
- |
|
5,438 |
|
449 |
|
2,774 |
General expenses |
|
|
|
|
1,269 |
|
- |
|
1,269 |
|
424 |
|
1,119 |
Total expenses |
|
|
|
|
9,083 |
|
- |
|
9,083 |
|
3,254 |
|
8,645 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit
for the period/year |
|
|
12,035 |
|
137,281 |
|
149,316 |
|
20,500 |
|
77,291 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings
per Ordinary Share |
10 |
|
1.83p |
|
20.84p |
|
22.67p |
|
5.32p |
|
16.72p |
Diluted
earnings per Ordinary Share |
10 |
|
1.81p |
|
20.66p |
|
22.47p |
|
5.32p |
|
16.72p |
The total columns of this statement represent the Group’s
Consolidated Statement of Comprehensive Income, prepared in
accordance with International Financial Reporting Standards as
adopted by the European Union and interpretations adopted by the
International Accounting Standards Board. Whilst the Company is not
a member of the Association of Investment Companies (the “AIC”),
the supplementary revenue and capital columns are both prepared
under guidance published by the AIC.
The profit for the period is equivalent to the “total
comprehensive income” as defined by IAS 1 Presentation of
Financial Statements (‘IAS 1’). There is no other comprehensive
income as defined by IFRS.
All the items in the above statement derive from continuing
operations.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 30 September 2017
|
|
|
|
Unaudited |
|
Unaudited |
|
Audited |
|
|
|
|
30 September |
|
30 September |
|
31 March |
|
|
|
|
2017 |
|
2016 |
|
2017 |
|
Notes |
|
£'000 |
£'000 |
£'000 |
|
|
|
|
|
|
|
|
|
ASSETS |
|
|
|
|
|
|
|
|
Non-current
assets |
|
|
|
|
|
|
|
|
Financial assets at
fair value through profit or loss |
|
8 |
|
1,033,923 |
|
485,865 |
|
896,469 |
|
|
|
|
|
|
|
|
|
Current
assets |
|
|
|
|
|
|
|
|
Bank and cash
deposits |
|
|
|
316 |
|
320 |
|
105 |
Trade and other
receivables |
|
|
|
3,025 |
|
2,485 |
|
4,772 |
Total assets |
|
|
|
1,037,264 |
|
488,670 |
|
901,346 |
|
|
|
|
|
|
|
|
|
LIABILITIES AND
EQUITY |
|
|
|
|
|
|
|
|
Non-current
liabilities |
|
|
|
|
|
|
|
|
Share based
payment |
|
9 |
|
1,083 |
|
- |
|
46 |
|
|
|
|
|
|
|
|
|
Current
liabilities |
|
|
|
|
|
|
|
|
Share based
payment |
|
9 |
|
710 |
|
- |
|
- |
Payables |
|
|
|
3,298 |
|
2,587 |
|
6,062 |
Total liabilities |
|
|
|
5,091 |
|
2,587 |
|
6,108 |
|
|
|
|
|
|
|
|
|
EQUITY |
|
|
|
|
|
|
|
|
Share capital
account |
|
10 |
|
763,016 |
|
408,009 |
|
760,327 |
Distributable capital
reserves |
|
|
|
269,157 |
|
78,074 |
|
134,911 |
Total equity |
|
|
|
1,032,173 |
|
486,083 |
|
895,238 |
|
|
|
|
|
|
|
|
|
Total liabilities and
equity |
|
|
|
1,037,264 |
|
488,670 |
|
901,346 |
|
|
|
|
|
|
|
|
|
Total
net assets attributable to holders of Ordinary Shares |
|
|
|
|
|
|
|
|
|
|
|
1,032,173 |
|
486,083 |
|
895,238 |
|
|
|
|
|
|
|
|
|
Number of Ordinary
Shares in Issue |
|
10 |
|
659,952,090 |
|
386,138,785 |
|
658,387,407 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net assets
attributable to holders ofOrdinary Shares (per share) |
|
10 |
|
£1.56 |
|
£1.26 |
|
£1.36 |
The unaudited Consolidated Financial Statements were approved on
22 November 2017.
CONSOLIDATED STATEMENT OF CHANGES IN NET ASSETS ATTRIBUTABLE TO
HOLDERS OF ORDINARY SHARES
|
|
Share |
|
|
|
|
|
|
|
|
capital |
|
Capital |
|
Revenue |
|
|
|
|
account |
|
reserves |
|
reserves |
|
Total |
|
Notes |
£'000 |
|
£'000 |
|
£'000 |
|
£'000 |
|
|
|
|
|
|
|
|
|
As at 31 March 2016
(audited) |
|
406,208 |
|
66,037 |
|
- |
|
472,245 |
|
|
|
|
|
|
|
|
|
Total comprehensive
income |
|
|
|
|
|
|
|
|
for the period |
|
- |
|
13,571 |
|
6,929 |
|
20,500 |
Transactions with
shareholders: |
|
|
|
|
|
|
|
|
Distributions |
|
- |
|
(1,534) |
|
(6,929) |
|
(8,463) |
Scrip dividend shares
issued during the period |
|
1,801 |
|
- |
|
- |
|
1,801 |
As at 30 September
2016 (unaudited) |
|
408,009 |
|
78,074 |
|
- |
|
486,083 |
|
|
|
|
|
|
|
|
|
Total comprehensive
income |
|
|
|
|
|
|
|
|
for the period |
|
- |
|
57,804 |
|
(1,013) |
|
56,791 |
Transactions with
shareholders: |
|
|
|
|
|
|
|
|
Distributions |
|
- |
|
(967) |
|
967 |
|
- |
Issuance of
shares |
|
357,054 |
|
- |
|
- |
|
357,054 |
Share issue costs |
|
(4,736) |
|
- |
|
- |
|
(4,736) |
Share based
payment |
9 |
- |
|
- |
|
46 |
|
46 |
As at 31 March 2017
(audited) |
|
760,327 |
|
134,911 |
|
- |
|
895,238 |
|
|
|
|
|
|
|
|
|
Total comprehensive
income |
|
|
|
|
|
|
|
|
for the period |
|
- |
|
137,281 |
|
12,035 |
|
149,316 |
Transactions with
shareholders: |
|
|
|
|
|
|
|
|
Distributions |
11 |
- |
|
(3,035) |
|
(12,108) |
|
(15,143) |
Scrip dividend shares
issued during the period |
10 |
2,689 |
|
- |
|
- |
|
2,689 |
Share based
payment |
9 |
- |
|
- |
|
73 |
|
73 |
As at 30 September
2017 (unaudited) |
|
763,016 |
|
269,157 |
|
- |
|
1,032,173 |
CONSOLIDATED STATEMENT OF CASH FLOWS
For the period ended 30 September
2017
|
|
|
Unaudited six |
|
Unaudited six |
|
Audited |
|
|
|
months to 30 |
|
months to 30 |
|
year
to 31 |
|
|
|
September |
|
September |
|
March |
|
|
|
2017 |
|
2016 |
|
2017 |
|
Notes |
|
£'000 |
|
£'000 |
|
£'000 |
|
|
|
|
|
|
|
|
Cash flows from
operating activities |
|
|
|
|
|
|
|
Profit for the
period/year |
|
|
149,316 |
|
20,500 |
|
77,291 |
Adjusted for: |
|
|
|
|
|
|
|
Gains on financial
assets at fair value through profit or loss |
6 |
|
(137,281) |
|
(13,571) |
|
(71,375) |
Operating cash flows
before movements in working capital |
|
|
12,035 |
|
6,929 |
|
5,916 |
Decrease in other
receivables |
|
|
1,747 |
|
2,310 |
|
23 |
(Decrease)/increase in
other payables |
|
|
(1,017) |
|
(2,298) |
|
1,177 |
Net cash generated
from operating activities |
|
|
12,765 |
|
6,941 |
|
7,116 |
|
|
|
|
|
|
|
|
Cash flows from
investing activities |
|
|
|
|
|
|
|
Purchase of financial
assets at fair value through
profit or loss |
|
|
(90,385) |
|
- |
|
(169,235) |
Return of capital
contribution |
|
|
90,285 |
|
- |
|
4,000 |
Net cash used in
investing activities |
|
|
(100) |
|
- |
|
(165,235) |
|
|
|
|
|
|
|
|
Cash flows from
financing activities |
|
|
|
|
|
|
|
Issuance of
shares |
|
|
- |
|
- |
|
169,581 |
Share issue costs |
|
|
- |
|
- |
|
(4,736) |
Distributions |
11 |
|
(12,454) |
|
(6,662) |
|
(6,662) |
Net cash (used
in)/generated from financing activities |
|
|
(12,454) |
|
(6,662) |
|
158,183 |
|
|
|
|
|
|
|
|
Net increase in
cash and cash equivalents |
|
|
211 |
|
279 |
|
64 |
Cash and cash
equivalents at beginning of period/year |
|
|
105 |
|
41 |
|
41 |
Cash and cash
equivalents at end of period/year |
|
|
316 |
|
320 |
|
105 |
|
|
|
|
|
|
|
|
Supplemental disclosure of non-cash investing and financing
activities: |
|
|
|
|
|
|
|
|
|
|
|
Investments purchased
by issue of shares |
8 |
|
- |
|
- |
|
(187,473) |
Issue of shares |
10 |
|
2,689 |
|
1,801 |
|
189,274 |
Scrip dividend shares
issued during the period/year |
10 |
|
(2,689) |
|
(1,801) |
|
(1,801) |
Net non-cash investing
and financing activities |
|
|
- |
|
- |
|
- |
Cash held by the Company and its wholly owned subsidiaries
(“Syncona Group Companies”) is disclosed in the portfolio
statement.
CONDENSED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the period ended 30 September
2017
1. GENERAL INFORMATION
Syncona Limited (the “Company”) is incorporated in Guernsey as a
registered closed-ended investment company. The Company’s Ordinary
Shares were listed on the premium segment of the London Stock
Exchange (“LSE”) on 26 October 2012 when it commenced its
business.
In December 2016, shareholders
approved the expansion of the Company’s investment policy and the
acquisition from the Wellcome Trust of Syncona Partners LLP, a
portfolio of life science investments, together with its investment
management team (“the December 2016
transaction”). As part of the transaction, the Company also
acquired Cancer Research UK’s partnership interest in the Cancer
Research Technologies Pioneer Fund LP (“CRT Pioneer Fund”).
2. ACCOUNTING POLICIES
The accounting policies applied in these interim results are the
same as those applied by the Group in its Annual Report and
Accounts for the year ended March
2017 and shall form the basis of the 2018 Annual Report and
Accounts. No new standards that have become effective in the period
have had a material effect on the Group’s financial statements.
Basis of preparation
The condensed consolidated financial statements have been
prepared in accordance with IAS 34 ‘Interim Financial Reporting’
and should be read in conjunction with the Annual Report and
Accounts for the year ended March
2017, which have been prepared in accordance with
International Financial Reporting Standards (“IFRS”) as adopted by
the European Union. The financial information in these interim
accounts was approved by the Board and authorised for issue on
22 November 2017. The financial
information is unaudited but has been subject to a review by the
Group’s independent auditor.
The condensed consolidated financial statements have been
prepared under the historical cost basis, except for investments
and derivatives held at fair value through profit or loss, which
have been measured at fair value.
Going concern
The financial statements are prepared on a going concern basis.
The Group’s assets predominantly consist of securities and cash,
amounting to £1,037.3 million (September
2016: £488.7 million; March
2017: £901.3 million) of which 33.0 per cent (September 2016: 53.8 per cent; March 2017: 43.1 per cent) are readily realisable
within three months in normal market conditions. The Group has
liabilities including uncalled commitments to underlying
investments and funds amounting to £91.3 million (September 2016: £47.3 million; March 2017: £114.1 million). Accordingly, the
Group has adequate financial resources to continue in operational
existence for 12 months following the approval of the financial
statements.
Basis of consolidation
All intra-group transactions, balances and expenses are
eliminated on consolidation. Entities that meet the definition of
an Investment Entity under IFRS 10 ‘Consolidated Financial
Statements’ are held at fair value through profit or loss in
accordance with IAS 39 ‘Financial Instruments: Recognition and
Measurement’. Syncona Investments LP Incorporated (the
“Partnership”) and Syncona Holdings Limited (the “Holding Company”)
both meet the definition of Investment Entities. Syncona GP Limited
(the “General Partner”) is consolidated in full.
3. SIGNIFICANT ACCOUNTING JUDGEMENTS, ESTIMATES AND
ASSUMPTIONS
The preparation of the interim results requires management to
make judgements, estimates and assumptions that affect the
application of accounting policies and the reported amounts of
assets, liabilities, income and expenses. Estimates and judgements
are continually evaluated and are based on historical experience
and other factors, such as expectations of future events, and are
believed to be reasonable under the circumstances. Actual results
may differ from these estimates.
In preparing these interim results, the significant judgements
made by management in applying the Group’s accounting policies and
the key sources of estimation uncertainty were the same as those
applied to the Annual Report and Accounts for the year ended
March 2017.
4. OPERATING SEGMENTS
The Group is made up of two main components, the ‘life science
portfolio’ and the ‘funds portfolio’. The Board has considered the
requirements of IFRS 8 ‘Operating Segments’, and is of the view
that the Group’s activities form two segments under the standard,
the ‘life science portfolio’ and the ‘funds portfolio’. The life
science portfolio and the funds portfolio are managed on a global
basis and, accordingly, no geographical disclosures are
provided.
The Board, as a whole, has been determined as constituting the
chief decision maker of the Group. The key measure of performance
used by the Board to assess the Group’s performance and to allocate
resources is the total return based on the Net Asset Value (“NAV”)
per share, as calculated under IFRS.
Life science portfolio
The underlying investments in this segment are those whose
activities focus on developing products to deliver transformational
treatments to patients.
Details of the underlying assets are shown in the Portfolio
Statement.
Funds portfolio
The underlying assets in this segment are investments in a
diversified portfolio of hedge, equity and long-term alternative
investment funds across multiple asset classes.
Details of the underlying assets are shown in the Portfolio
Statement.
Information about Reporting
Segments
The following provides detailed information for the Group’s two
reportable segments for the six months to 30
September 2017, the six months to 30
September 2016 and the year to 31
March 2017:
As at 30
September |
Life
Science Portfolio |
|
Funds
Portfolio |
|
Unallocated1 |
|
Total |
2017
(unaudited) |
£'000 |
|
£'000 |
|
£'000 |
|
£'000 |
Revenue |
- |
|
- |
|
21,118 |
|
21,118 |
Capital growth |
137,220 |
|
61 |
|
- |
|
137,281 |
Expenses |
- |
|
- |
|
(9,083) |
|
(9,083) |
Net Assets |
455,177 |
|
552,007 |
|
24,989 |
|
1,032,173 |
|
|
|
|
|
|
|
|
As at 30
September |
Life
Science Portfolio |
|
Funds
Portfolio |
|
Unallocated1 |
|
Total |
2016
(unaudited) |
£'000 |
|
£'000 |
|
£'000 |
|
£'000 |
Revenue |
- |
|
- |
|
10,183 |
|
10,183 |
Capital growth |
- |
|
13,571 |
|
- |
|
13,571 |
Expenses |
- |
|
- |
|
(3,254) |
|
(3,254) |
Net Assets |
10,631 |
|
460,800 |
|
14,652 |
|
486,083 |
|
|
|
|
|
|
|
|
As at 31 March
2017 |
Life
Science Portfolio |
|
Funds
Portfolio |
|
Unallocated1 |
|
Total |
(audited) |
£'000 |
|
£'000 |
|
£'000 |
|
£'000 |
Revenue |
- |
|
- |
|
14,561 |
|
14,561 |
Capital growth |
24,801 |
|
46,574 |
|
- |
|
71,375 |
Expenses |
- |
|
- |
|
(8,645) |
|
(8,645) |
Net Assets |
226,554 |
|
582,808 |
|
85,876 |
|
895,238 |
1 Unallocated’ includes the dividends, donations and
expenses for the period, which are not relevant to allocate by
segment. The revenue is unrelated to either segment’s
performance.
The net assets of each segment can be agreed to the Portfolio
Statement. The capital growth can be agreed to the Statement of
Comprehensive Income.
Prior to the December 2016
transaction, the Group’s activities formed a single segment, namely
the funds portfolio. Following the December
2016 transaction, the reporting segments have changed so the
2016 segments have been restated. The restatement relates to the
CRT Pioneer Fund which was previously treated as a Fund Investment
and deemed immaterial for disclosure. The CRT Pioneer Fund is
included in the life science portfolio as the underlying assets of
this fund are also developing products to deliver transformational
treatments to patients.
5. INVESTMENT IN SUBSIDIARIES AND
ASSOCIATES
The Company meets the definition of an Investment Entity in
accordance with IFRS10. Therefore, with the exception of the
General Partner, the Company does not consolidate its subsidiaries
and indirect associates, but rather recognises them as financial
assets at fair value through profit or loss.
Directly owned subsidiaries
Subsidiary |
Country of incorporation |
Principal activity |
%
interest |
Syncona
GP Limited |
Guernsey |
General
Partner |
100% |
Syncona
Investments LP Incorporated |
Guernsey |
Portfolio management |
100% |
Syncona
Holdings Limited |
Guernsey |
Portfolio management |
100% |
There are no significant restrictions on the ability of
subsidiaries to transfer funds to the Company.
Indirect interests in subsidiaries
Indirect
subsidiaries |
Country of incorporation |
Immediate parent |
Principal activity |
%
interest1 |
Syncona Discovery
Limited |
UK |
Syncona
Investments LP Inc |
Portfolio management |
100% |
Syncona Portfolio
Limited |
Guernsey |
Syncona
Holdings Limited |
Portfolio management |
100% |
Syncona IP Holdco
Limited |
UK |
Syncona
Portfolio Limited |
Portfolio management |
100% |
Syncona Investment
Management Limited |
UK |
Syncona
Holdings Limited |
Portfolio management |
100% |
Syncona Partners LLP
² |
UK |
Syncona
Holdings Limited |
Portfolio management |
100% |
Syncona Management
LLP² |
UK |
Syncona
Holdings Limited |
Portfolio management |
100% |
Syncona LLP² |
UK |
Syncona
Holdings Limited |
Portfolio management |
100% |
Syncona Management
Services Limited² |
UK |
Syncona
Management LLP |
Portfolio management |
100% |
Blue Earth Diagnostics
Limited |
UK |
Syncona
Portfolio Limited |
Medical
imaging |
90% |
Freeline Therapeutics
Limited |
UK |
Syncona
Portfolio Limited |
Gene
therapy |
83% |
Gyroscope Therapeutics
Limited |
UK |
Syncona
Portfolio Limited |
Gene
therapy |
74% |
Achilles Therapeutics
Limited |
UK |
Syncona
Portfolio Limited |
Immunotherapy |
65% |
|
|
|
|
|
Indirect
associates |
Country of incorporation |
Immediate parent |
Principal activity |
%
interest1 |
Nightstar Therapeutics
plc |
UK |
Syncona
Portfolio Limited |
Gene
therapy |
42% |
Autolus Limited |
UK |
Syncona
Portfolio Limited |
T-Cell
Therapies |
41% |
Cambridge Epigenetix
Limited |
UK |
Syncona
Portfolio Limited |
Research
tools |
14% |
1 Based on undiluted issued share capital.
² Entities in members voluntary liquidation.
6. NET GAINS ON FINANCIAL ASSETS AT
FAIR VALUE THROUGH PROFIT OR LOSS
The net gains on financial assets at fair value through profit
or loss arise from the Group’s holdings in the Partnership and
Holding Company.
|
|
|
|
|
Unaudited six |
|
Unaudited six |
|
Audited |
|
|
|
|
|
months to 30 |
|
months to 30 |
|
year
to 31 |
|
|
|
|
|
September 2017 |
|
September 2016 |
|
March
2017 |
|
|
|
|
|
£'000 |
|
£'000 |
|
£'000 |
Net gains
from:
Syncona Investments LP Incorporated |
6.a |
61 |
|
13,571 |
|
46,574 |
Syncona Holdings
Limited |
|
|
|
6.b |
137,220 |
|
- |
|
24,801 |
|
|
|
|
|
137,281 |
|
13,571 |
|
71,375 |
6.a Movements in Syncona Investments LP Incorporated:
|
|
|
|
|
|
Unaudited six |
|
Unaudited six |
|
Audited |
|
|
|
|
|
|
months to 30 |
|
months to 30 |
|
year
to 31 |
|
|
|
|
|
|
September 2017 |
|
September 2016 |
|
March
2017 |
|
|
|
|
|
|
£'000 |
|
£'000 |
|
£'000 |
Investment
income |
|
877 |
|
498 |
|
1,333 |
Rebates
and donations |
|
901 |
|
914 |
|
2,035 |
Expenses |
|
|
|
|
|
(118) |
|
(165) |
|
(303) |
Distributions |
|
|
|
|
|
(21,118) |
|
(10,183) |
|
(14,561) |
Realised
gains on financial assets at fair value
through profit or loss |
|
18,734 |
|
995 |
|
7,324 |
Movement
in unrealised (losses)/gains on financial assets at fair value
through profit or loss |
|
(7,361) |
|
39,539 |
|
72,143 |
Gains/(losses) on forward currency contracts |
|
9,103 |
|
(18,477) |
|
(23,368) |
(Losses)/gains on foreign currency |
|
(957) |
|
450 |
|
1,971 |
Net gains
on financial assets at fair value
through profit or loss |
|
61 |
|
13,571 |
|
46,574 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6.b Movements in Syncona Holdings Limited:
|
|
|
|
|
|
|
|
Audited period |
|
|
|
|
|
|
Unaudited six |
|
from
24 |
|
|
|
|
|
|
months to 30 |
|
November 2016 |
|
|
|
|
|
|
September |
|
to 31
March |
|
|
|
|
|
|
2017 |
|
2017 |
|
|
|
|
|
|
£'000 |
|
£'000 |
|
|
|
|
|
|
|
|
|
Residual
income from liquidated subsidiaries |
|
726 |
|
- |
Expenses |
|
|
|
|
|
(17) |
|
(36) |
Movement
in unrealised gains on life science investments at fair value
through profit or loss |
|
136,844 |
|
24,940 |
Movement
in unrealised losses on wholly owned Group
companies at fair value through profit or loss |
|
(333) |
|
(103) |
Net gains
on financial assets at fair value through profit or
loss |
|
137,220 |
|
24,801 |
7. CHARITABLE DONATIONS
As part of the December 2016
transaction, the Company has an obligation to make a donation to
charity, paid in arrears, of 0.3 per cent of the total NAV of the
Company during the financial year calculated on a monthly basis.
For the years ending March 2017 and
March 2018 the Company has agreed
that the charitable donations will not be less than £4,751,608. Any
amount paid in excess of 0.3 per cent of the total NAV of the
Company in those years will be recovered by reducing the charitable
donations in subsequent years if the NAV of the Company rises above
£1,583,869,333. Half of the donation is donated to The Institute of
Cancer Research (“ICR”) and the other half to The BACIT Foundation.
The BACIT Foundation grants those funds to charities proposed
annually by The BACIT Foundation, in proportions determined each
year by shareholders of the Company.
During the period, accrued charitable donations amounted to
£2,375,804 (September 2016:
£2,381,232, March 2017: £4,751,608).
As at September 2017, £2,375,804
(September 2016: £2,381,232,
March 2017: £4,751,608) remained
payable.
8. FINANCIAL ASSETS AT FAIR VALUE
THROUGH PROFIT OR LOSS
|
|
|
|
|
|
Unaudited |
|
Unaudited |
|
|
|
|
|
|
|
|
30
September |
|
30
September |
|
Audited |
|
|
|
|
|
|
2017 |
|
2016 |
|
31
March 2017 |
|
|
|
|
|
|
£'000 |
|
£'000 |
|
£'000 |
Syncona
Investments LP Incorporated |
8.a |
600,460 |
|
485,865 |
|
690,682 |
Syncona
Holdings Limited |
8.b |
433,463 |
|
- |
|
205,787 |
|
|
|
|
|
|
1,033,923 |
|
485,865 |
|
896,469 |
The financial assets at fair value through profit or loss
represent the movement in the Group’s underlying investments during
the period.
8.a The net assets of Syncona Investments LP
Incorporated.
|
|
|
|
|
|
Unaudited |
|
Unaudited |
|
|
|
|
|
|
|
|
30
September |
|
30
September |
|
Audited |
|
|
|
|
|
|
2017 |
|
2016 |
|
31
March 2017 |
|
|
|
|
|
|
£'000 |
|
£'000 |
|
£'000 |
Cost of
the Partnership's investments at the start of the period/year |
460,046 |
|
388,412 |
|
388,412 |
Purchases
during the period/year |
|
|
|
67,049 |
|
11,020 |
|
136,197 |
Sales
during the period/year |
|
|
|
|
(101,462) |
|
(27,077) |
|
(60,804) |
Return of capital |
|
|
|
|
|
(9,076) |
|
(2,168) |
|
(11,083) |
Net
realised gains on disposals during the period/year |
|
18,734 |
|
995 |
|
7,324 |
Cost of
the Partnership's investments at the end of the period/year |
435,291 |
|
371,182 |
|
460,046 |
Net
unrealised gains on investments at the end of the period/year |
136,788 |
|
111,545 |
|
144,149 |
Fair value
of the Partnership's investments at the end of the period/year |
572,079 |
|
482,727 |
|
604,195 |
Open
forward currency contracts |
3,979 |
|
(11,296) |
|
437 |
Cash and
cash equivalents |
|
|
|
|
24,470 |
|
16,567 |
|
86,204 |
Other net
current liabilities |
|
|
|
(68) |
|
(2,133) |
|
(154) |
Financial
assets at fair value through profit or loss at the end of the
period/year |
|
|
|
600,460 |
|
485,865 |
|
690,682 |
8.b The net assets of Syncona Holdings Limited.
|
|
|
|
|
|
|
|
Unaudited |
|
|
|
|
|
|
|
|
|
|
30
September |
|
Audited |
|
|
|
|
|
|
|
|
2017 |
|
31
March 2017 |
|
|
|
|
|
|
|
|
£'000 |
|
£'000 |
Cost of
the Holding Company's investments at the start of the
period/year |
|
180,479 |
|
- |
Purchases
during the period/year |
|
|
|
|
|
90,940 |
|
180,479 |
Cost of
the Holding Company's investments at the end of the
period/year |
|
271,419 |
|
180,479 |
Net
unrealised gains on investments at the end of the period/year |
|
|
161,348 |
|
24,837 |
Fair value
of the Holding Company's investments at the end of the
period/year |
|
432,767 |
|
205,316 |
Other net current
assets |
|
|
|
|
|
|
|
696 |
|
471 |
Financial
assets at fair value through profit or loss
at the end of the period/year |
|
|
433,463 |
|
205,787 |
9. LONG TERM INCENTIVE PLAN
|
|
|
|
|
Unaudited six months to 30 September 2017 |
|
Unaudited six months to 30 September 2016 |
|
Audited year to 31 March 2017 |
|
|
|
|
|
£'000 |
|
£'000 |
|
£'000 |
Current
share-based payments |
|
710 |
|
- |
|
- |
Non-current share-based payments |
|
1,083 |
|
- |
|
46 |
Total
share-based payments |
|
1,793 |
|
- |
|
46 |
Share-based payments represent a liability associated with
awards of Management Equity Shares (“MES”) in the Holding Company,
relevant details of which are set out in note 2 of the Annual
Report and Accounts for the year ended March
2017. There were no MES in September
2016 therefore there is no comparative information for that
date. There were no share-based payments for the Company’s shares
during the period ended 30 September
2017 (March 2017: nil and
September 2016: nil).
When a participant elects to realise vested MES by sale of the
MES to the Company, half of the proceeds (net of anticipated taxes)
will be settled in shares of the Company, with the balance settled
in cash. During the period ended 30
September 2017 the charge to the Consolidated Statement of
Comprehensive Income was £146,500 (March
2017: £92,000) of which £73,250 (March 2017: £46,000) is expected to be settled in
shares and £73,250 (March 2017:
£46,000) is expected to be settled in cash. In addition, the cash
liability was revalued incurring a charge of £1,673,486.
The fair value of the MES is established via external valuation
as set out in note 2 of the Annual Report and Accounts for the year
ended March 2017. For the awards of
MES made in the period ended 30 September
2017, the applicable hurdle value was 15 per cent
(March 2017: 15 per cent) growth in
the value of the Holding Company above the value at the date of
award. No further performance targets apply to the MES awards. Each
MES is entitled to share equally in value attributable to the
Holding Company above the applicable hurdle value.
The fair value of awards made in the period ended 30 September 2017 was £13,000 (March 2017: £648,000).
The following MES were held by participants:
Date of
award |
|
MES
awarded |
|
MES
vested at 30 September 2017 |
|
Holding Company hurdle |
|
Vesting period |
December 2016 |
|
26,304,603 |
|
- |
|
£203.4
million |
|
December
2016 - December 2020 |
March 2017 |
|
1,480,721 |
|
- |
|
£203.4
million |
|
March
2017 - March 2021 |
July 2017 |
|
489,854 |
|
- |
|
£208.0
million |
|
July
2017 - July 2021 |
Number of ordinary shares in the Holding Company in issue at
30 September 2017: 255,721,814
(March 2017: 176,986,208).
Value of the Holding Company at 30
September 2017 adjusted for MES purposes: £429.0 million
(March 2017: £200.1 million).
At 30 September 2017, if all MES
were realised the number of shares issued in the Company would be
5,095,588 (March 2017: 1,087,495).
The cash liability is revalued at the end of each accounting
period. At 30 September 2017 the fair
value of the cash liability was £1,792,736 (March 2017: nil). The revaluation of the cash
liability is a charge to the Statement of Comprehensive Income.
10. SHARE CAPITAL ACCOUNT
A. Authorised Share Capital
The Company is authorised to issue an unlimited number of
shares, which may have a par value or no par value. The shares can
be issued as Ordinary Shares, C Shares or other such classes and in
any currency at the discretion of the Board.
The Company is a closed-ended investment company with an
unlimited life. The Ordinary Shares are not puttable instruments
because redemption is conditional upon certain market conditions
and/or Board approval. As such they are not required to be
classified as debt under IAS 32 – ‘Financial Instruments:
Disclosure and Presentation’.
As the Company’s Shares have no par value, the share price
consists solely of share premium and the amounts received for
issued shares are recorded in the Share Capital Account in
accordance with The Companies (Guernsey) Law, 2008.
The Company also has the authority, subject to various terms as
set out in its Articles and in accordance with The Companies
(Guernsey) Law, 2008, to acquire up to 14.99 per cent of the Shares
in issue. The Company intends to renew this authority annually.
Ordinary Shares carry the right to receive all income of the
Company attributable to the Ordinary Shares of such class and to
participate in any distribution of such income made by the
Company,
pro-rata to the relative calculated NAV of each of the classes of
Ordinary Shares and within each such class income shall be divided
pari passu among the holders of Ordinary Shares of that class in
proportion to the number of Ordinary Shares of such class held by
them.
The Founder Share issued at the date of incorporation was
redesignated, by special resolution dated 28
September 2012, as a Deferred Share and transferred to The
BACIT Foundation. This
non-participating non-redeemable Deferred Share has no other rights
to assets or dividends, except to payment of £1 on the liquidation
of the Company and carries a right to vote only if there are no
other classes of voting share of the Company in issue.
|
|
|
Unaudited |
|
Unaudited |
|
Unaudited |
|
|
|
Ordinary Shares at |
|
Ordinary Shares at |
|
Ordinary Shares at |
|
|
|
30
September |
|
30
September |
|
31
March |
|
|
|
2017 |
|
2016 |
|
2017 |
|
|
|
£'000 |
|
£'000 |
|
£'000 |
Ordinary Share
Capital |
|
|
|
|
|
|
|
Balance at
the start of the period/year |
760,327 |
|
406,208 |
|
406,208 |
Issued
during the period/year |
- |
|
- |
|
357,054 |
Scrip
dividend shares issued during the period/year |
2,689 |
|
1,801 |
|
1,801 |
Share issue costs |
|
|
- |
|
- |
|
(4,736) |
Balance at
the end of the period/year |
763,016 |
|
408,009 |
|
760,327 |
|
|
|
|
|
|
|
|
|
|
|
Unaudited |
|
Unaudited |
|
Unaudited |
|
|
|
Ordinary Shares at |
|
Ordinary Shares at |
|
Ordinary Shares at |
|
|
|
30
September |
|
30
September |
|
31
March |
|
|
|
2017 |
|
2016 |
|
2017 |
Ordinary Share
Capital |
|
|
Shares |
|
Shares |
|
Shares |
Balance at
the start of the period/year |
658,387,407 |
|
384,665,158 |
|
384,665,158 |
Issued
during the period/year |
- |
|
- |
|
272,248,622 |
Scrip
dividend shares issued during the period/year |
1,564,683 |
|
1,473,627 |
|
1,473,627 |
Balance at
the end of the period/year |
659,952,090 |
|
386,138,785 |
|
658,387,407 |
A further £2,688,751 (1,564,683 Ordinary Shares) in new Ordinary
Shares were issued at a price of 171.84p as a result of the 2017
scrip dividend.
B. Capital reserves
Gains and losses recorded on the realisation of investments,
realised exchange differences, unrealised gains and losses recorded
on the revaluation of investments held at the period end and
unrealised exchange differences of a capital nature are transferred
to capital reserves.
C. Earnings per Share
The calculations for the earnings per share attributable to the
Ordinary Shares of the Company are based on the following data:
|
Unaudited six
months to 30 September 2017 |
Unaudited six
months to 30 September
2016 |
Audited year to 31
March 2017 |
Earnings for the purposes of
earnings per share |
£149,315,501 |
£20,499,938 |
£77,291,393 |
|
|
|
|
Basic weighted average number of
shares |
658,763,615 |
385,011,420 |
462,399,882 |
Basic revenue earnings per
share |
1.83p |
1.80p |
1.28p |
Basic capital earnings per
share |
20.84p |
3.52p |
15.44p |
Basic earnings per share |
22.67p |
5.32p |
16.72p |
|
|
|
|
Diluted weighted average number of
shares |
664,471,801 |
385,011,420 |
462,399,882 |
Diluted revenue earnings per
share |
1.81p |
1.80p |
1.28p |
Diluted capital earnings per
share |
20.66p |
3.52p |
15.44p |
Diluted earnings per share |
22.47p |
5.32p |
16.72p |
Earnings are diluted for the six months to September 2017 due to the MES described in note
9.
D. NAV per Share
|
|
|
|
|
Unaudited |
|
Unaudited |
|
Audited year to |
|
|
|
|
|
30
September 2017 |
|
30
September 2016 |
|
31
March 2017 |
Net assets
for the purposes of NAV per share |
£1,032,172,609 |
|
£486,083,040 |
|
£895,238,499 |
Ordinary Shares in
issue |
|
|
|
|
659,952,090 |
|
386,138,785 |
|
658,387,407 |
NAV per share |
|
|
|
|
156.40p |
|
125.88p |
|
135.97p |
Diluted NAV per
share |
|
|
|
|
155.20p |
|
125.88p |
|
135.97p |
11. DISTRIBUTION TO SHAREHOLDERS
The Company may pay a dividend at the discretion of the Board.
Following the EGM in October 2013, each dividend paid by the
Company will be in the form of scrip as a default, with a cash
dividend alternative, under which shareholders may elect to receive
cash in place of new Shares. Ordinary Shares issued pursuant to a
scrip dividend are issued at a price based on Ordinary Share
price.
During the period ended 30 September
2017, the Company declared and paid a dividend of 2.3p per
share amounting to £15,142,910 (September
2016: £8,462,633) relating to the year ended March 2017 (March
2016). The dividend was comprised of £12,454,159 cash
(September 2016: £6,662,132) and a
scrip dividend of £2,688,751 (September
2016: £1,800,501).
12. RELATED PARTY TRANSACTIONS
Parties are considered to be related if one party has the
ability to control the other party or exercise significant
influence over the other party in making financial or operational
decisions.
The Directors are responsible for the determination of the
investment policy of the Group and have overall responsibility for
the Group’s activities. The Group’s investment portfolio is managed
by the Investment Manager, BACIT (UK) Limited.
The Company has five Directors, all of whom serve in a
Non-Executive capacity. The Directors of the Company, with the
exception of Nigel Keen and
Ellen Strahlman who also serve as
Directors of the General Partner. Thomas
Henderson is also a director of BACIT (UK) Limited.
Peter Hames resigned as a
Director on 8 September 2017.
For the period ended 30 September
2017, each Director is entitled to a fee of £25,000
(March 2017: £25,000) per annum, except for the Chairman who
is entitled to receive a fee of £40,000 (March 2017: £40,000) per annum and the Chairman
of the Audit Committee who is entitled to a fee of £30,000
(March 2017: £30,000) per annum.
Until 31 December 2016, Jeremy Tigue had agreed to waive his right to
receive his fee and since 1 January
2017 has taken a fee of £40,000 per annum. Thomas Henderson has agreed to continue waiving
his fee. Please refer to note 15 for further information.
|
|
|
|
|
|
Unaudited six months to 30 September 2017 |
|
Unaudited six months to 30 September 2016 |
|
Audited year to 31 March |
|
|
|
|
|
|
£'000 |
|
£'000 |
|
|
Directors' fees for the
period/year |
|
|
|
70 |
|
35 |
|
87 |
|
|
|
|
|
|
|
|
|
|
|
Payable at end of
period/year |
|
|
|
- |
|
14 |
|
38 |
Directors’ fees for the six months to 30
September 2017, the six months to 30
September 2016 and the year to 31
March 2017, including outstanding Directors’ fees at the end
of the period/year, are set out below.
As at 30 September 2017, Directors
of the Company held the following Ordinary Shares beneficially:
|
|
Number of |
|
Number of |
|
Number
of |
|
|
shares |
|
shares |
|
shares |
|
|
30
September 2017 |
|
30
September 2016 |
|
31
March 2017 |
Jeremy Tigue
(Chairman) |
|
473,561 |
|
355,153 |
|
467,307 |
Thomas Henderson* |
|
12,042,400 |
|
11,742,400 |
|
12,042,400 |
Nigel Keen (appointed
19 December 2016) |
|
- |
|
- |
|
- |
Nicholas Moss |
|
20,092 |
|
15,270 |
|
20,092 |
Ellen Strahlman
(appointed 19 December 2016) |
|
107,162 |
|
- |
|
- |
*Shares are held by Farla Limited, a company controlled by
Thomas Henderson.
The Group may have underlying investments which, from time to
time, include investments associated with members of the Board. In
no case does the member have any direct ability to influence the
investment policy of the Group’s portfolio investments to make,
hold or dispose of such investments.
In accordance with the Company’s
Articles of Incorporation, 50 per cent of the charitable donations
are made to The BACIT Foundation. The BACIT Foundation was
incorporated in England and
Wales on 17 May 2012 as a
private company limited by guarantee, with exclusively charitable
purposes and holds the Deferred Share in the Company. The amount
paid to The BACIT Foundation during the period ended 30 September 2017 was £2,375,804
(September 2016: £2,375,804, March
2017: £2,375,804). At the period end, £1,187,902 remained
payable (September 2016: £1,187,902,
March 2017: £2,375,804).
BACIT (UK) Limited is the Company’s Investment Manager. The
operating expenses of the Investment Manager are covered by a
Management Expense Contribution, payable by the Company to the
Investment Manager, equal to 0.19 per cent of NAV per annum. Until
June 2017, the Group directly bore
certain expenses (“Sundry Expense Contribution”) of the Investment
Manager. During the period, £2,873 (September 2016: £40,589,
March 2017: £96,333) of Sundry
Expense Contribution was borne by the Company on behalf of BACIT
(UK) Limited and £nil
(September 2016: £1,248,
March 2017: £1,248) remained payable as at
30 September 2017. At the period end, there is a
prepayment of £526,819 relating to advanced payment of fees to
BACIT (UK) Limited (September 2016:
£nil, March 2017: £nil).
Following the EGM held on 14 December 2016 and subject to
receipt of the appropriate regulatory authorisations, Syncona
Investment Management Limited (“SIML”) will become the Investment
Manager of the Company. The Company pays SIML an annual fee of up
to 1 per cent of NAV per annum.
13. FAIR VALUE MEASUREMENT
IFRS 13 requires the Group to establish a fair value hierarchy
that prioritises the inputs to valuation techniques used to measure
fair value. The hierarchy gives the highest priority to unadjusted
quoted prices in active markets for identical assets or liabilities
(Level 1 measurements) and the lowest priority to unobservable
inputs (Level 3 measurements). The three levels of the fair value
hierarchy under IFRS 13 are set as follows:
Level 1 Quoted prices (unadjusted) in active markets for
identical assets or liabilities;
Level 2 Inputs other than quoted prices included within Level 1
that are observable for the asset or liability either directly
(that is, as prices) or indirectly (that is, derived from prices)
or other market corroborated inputs; and
Level 3 Inputs for the asset or liability that are not based on
observable market data (that is, unobservable inputs).
The level in the fair value hierarchy within which the fair
value measurement is categorised in its entirety is determined on
the basis of the lowest level input that is significant to the fair
value measurement. For this purpose, the significance of an input
is assessed against the fair value measurement in its entirety. If
a fair value measurement uses observable inputs that require
significant adjustment based on unobservable inputs, that
measurement is a Level 3 measurement. Assessing the significance of
a particular input to the fair value measurement requires
judgement, considering factors specific to the asset or
liability.
The determination of what constitutes ‘observable’ requires
significant judgement by the Group. The Group considers observable
data to be market data that is readily available, regularly
distributed or updated, reliable and verifiable, and provided by
independent sources that are actively involved in the relevant
market.
The following table presents the Group’s financial assets and
liabilities by level within the valuation hierarchy as at
30 September 2017, 30 September 2016 and
31 March 2017:
|
|
|
|
|
|
|
|
|
|
|
|
|
30 September 2017 |
|
|
|
|
|
|
|
Level 1 |
|
Level 2 |
|
Level 3 |
|
Total |
Assets
(unaudited) |
|
|
|
|
£'000 |
|
£'000 |
|
£'000 |
|
£'000 |
Financial
assets at fair value |
|
|
|
|
|
|
|
|
through
profit or loss: |
|
|
|
|
|
|
|
|
|
|
Syncona
Investments LP Incorporated |
|
- |
|
600,460 |
|
- |
|
600,460 |
Syncona
Holdings Limited |
|
- |
|
- |
|
433,463 |
|
433,463 |
Total
assets |
|
|
|
|
- |
|
600,460 |
|
433,463 |
|
1,033,923 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
30 September 2016 |
|
|
|
|
|
|
|
Level 1 |
|
Level 2 |
|
Level 3 |
|
Total |
Assets
(unaudited) |
|
|
|
|
£'000 |
|
£'000 |
|
£'000 |
|
£'000 |
Financial
assets at fair value |
|
|
|
|
|
|
|
|
through
profit or loss: |
|
|
|
|
|
|
|
|
|
|
Syncona
Investments LP Incorporated |
|
- |
|
485,865 |
|
- |
|
485,865 |
Total
assets |
|
|
|
|
- |
|
485,865 |
|
- |
|
485,865 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
31 March 2017 |
|
|
|
|
|
|
|
Level 1 |
|
Level 2 |
|
Level 3 |
|
Total |
Assets
(audited) |
|
|
|
|
£'000 |
|
£'000 |
|
£'000 |
|
£'000 |
Financial
assets at fair value |
|
|
|
|
|
|
|
|
through
profit or loss: |
|
|
|
|
|
|
|
|
|
|
Syncona
Investments LP Incorporated |
|
- |
|
690,682 |
|
- |
|
690,682 |
Syncona
Holdings Limited |
|
- |
|
- |
|
205,787 |
|
205,787 |
Total
assets |
|
|
|
|
- |
|
690,682 |
|
205,787 |
|
896,469 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As noted below, 11.2 per cent (September
2016: 10.0 per cent, March 2017: 9.9 per cent) of the
Partnership’s fair value measurements consist of positions residing
in Level 3 of the fair value hierarchy (‘the Level 3 investments’).
IFRS 13 requires the fair value measurement of the Partnership to
be classified in the same level of the fair value hierarchy as the
lowest level input that is significant to the overall valuation of
the Partnership. Given their quantum, the Directors do not consider
the Level 3 investments to be significant to the overall fair value
of the investment. As such, and in accordance with IFRS 13, the
Partnership investment has been disclosed within Level 2 in the
fair value hierarchy. The Directors have provided additional
information in respect of the assets and liabilities of the
Partnership below.
The following table presents the Partnership’s financial assets
and liabilities by level within the valuation hierarchy as at
30 September 2017, 30 September 2016 and 31
March 2017:
Asset type |
Level |
Unaudited 30 September 2017
£'000 |
Unaudited 30 September 2016
£'000 |
Audited
31 March 2017
£'000 |
Valuation technique |
Unobserved inputs |
Key
input |
Reasonable possible shift +/- |
Change
in valuation £'000 |
Relationship of inputs to value |
Listed
investments |
1 |
196,108 |
98,152 |
157,332 |
Publicly
available share price at balance sheet date |
- |
- |
- |
- |
- |
Listed
investments |
2 |
- |
7,104 |
4,258 |
Publicly available share price at balance sheet date |
Inputs
include current publicly available share prices however as the
investments are not regularly traded at this price. |
Different
fair value from date of last trade and the period end |
n/a |
- |
- |
The
greater the value of latest trade, the greater the fair value |
Forward
contracts |
2 |
3,979 |
(11,296) |
437 |
Publicly available exchange rates at balance sheet date |
Inputs
include different exchange rates used at different banking
institutions. IFRS 13 specifically defines forward contracts as
level 2. Valuation is taken using publicly available exchange rates
and calculating the asset value. |
Different
exchange rates at period end |
n/a |
- |
- |
The
greater the GBP exchange rate, the greater the fair value |
Unlisted
fund investments |
2 |
311,192 |
330,326 |
381,745 |
Valuation produced by fund administrator. Inputs into fund
components are from observable inputs |
Inputs
include asset administrator’s assessment of the performance of the
underlying funds. Valuation is taken from the fund administrator
who has based the fund’s fair value on observable inputs of
underlying assets. |
Valuation
model produced by asset administrator |
n/a |
10% |
31,119 |
The
greater the asset administrator's valuation, the greater the fair
value |
Long-term unlisted investments |
3 |
40,727 |
36,514 |
39,036 |
Valuation produced by fund administrator |
Inputs
include asset administrator’s assessment of the performance of the
underlying funds. Valuation is provided by quarterly statements
from each administrator. The administrator’s valuation technique
will use unobservable inputs, the main unobservable input relates
to asset administrator’s inputs into the valuation: |
Valuation
model produced by asset administrator |
n/a |
10% |
4,073 |
The
greater the expectation for future profits, the greater the fair
value |
CRT
Pioneer Fund |
3 |
24,052 |
10,631 |
21,824 |
Valuation produced by fund administrator |
Inputs
include asset manager’s assessment of the performance of the
underlying investee companies. Valuation is provided by quarterly
statements from the manager. The valuation is based on cost of
investments, price of latest round of investments and discounted
future cashflows. The valuation by the manager is updated to comply
with Syncona accounting methodology as seen in note 2 of the Annual
Report and Accounts for the year ended 31 March 2017. The main
unobservable input relates to the asset manager’s assessment of
performance: |
Valuation
model produced by asset administrator |
n/a |
10% |
2,405 |
The
greater the expectation for future profits, the greater the fair
value |
|
|
576,058 |
471,431 |
604,632 |
|
|
|
|
|
|
The Partnership values investments in accordance with the
International Private Equity and Venture Capital (“IPEVC”)
valuation guidelines. In line with the investment methodology
outlined in the IPEVC guidance, new investments are valued
equivalent to the cost of the investments.
Assets classified as Level 2 investments are underlying funds
fair-valued using the latest available NAV of each fund as reported
by each fund’s administrator, which are redeemable by the Group
subject to necessary notice being given. Included within the Level
2 investments above are investments where the redemption notice
period is greater than 90 days. Such investments have been
classified as Level 2 because their value is based on observable
inputs.
Assets classified as Level 3 investments are underlying Limited
Partnerships which are not traded or available for redemption. The
fair value of these assets is derived from quarterly statements
provided by each Limited Partnership’s administrator. The Group
does not have transparency over the inputs of this valuation.
There were no transfers between levels during the period
(September 2016: nil, March 2017: nil).
The following table presents the movements in Level 3
investments of the Partnership for the six months to 30 September 2017, the six months to 30 September 2016 and the year to 31 March 2017:
|
|
|
|
|
|
Unaudited six |
Unaudited six |
Audited |
|
|
|
|
|
|
months to 30 |
months to 30 |
year
to 31 |
|
|
|
|
|
|
September |
September |
March |
|
|
|
|
CRT |
Funds |
2017 |
2016 |
2017 |
|
|
|
|
Pioneer Fund |
portfolio |
Total |
Total |
Total |
|
|
|
|
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
Opening
balance |
|
|
21,824 |
39,036 |
60,860 |
37,249 |
37,249 |
Purchases |
|
|
|
4,218 |
4,973 |
9,191 |
9,829 |
25,014 |
Return of
capital |
|
|
(1,990) |
(7,086) |
(9,076) |
(2,168) |
(11,083) |
Gain on
financial assets |
|
|
|
|
|
|
|
at fair
value through profit or loss |
- |
3,804 |
3,804 |
2,235 |
9,680 |
Closing
balance |
|
|
24,052 |
40,727 |
64,779 |
47,145 |
60,860 |
The net gain for the period included in the Statement of
Comprehensive Income in respect of Level 3 investments of the
Partnership held at the period end amounted to £3,803,501
(September 2016: £2,234,501, March 2017: £9,680,448
gain).
The Holding Company is an addition to the Group as a result of
the December 2016 transaction,
therefore there are no September 2016
comparatives. 38.7 per cent of the Holding Company’s fair value
measurements consist of positions residing in Level 3 of the fair
value hierarchy.
The following table presents the Holding Company’s financial
assets and liabilities by level within the valuation hierarchy as
at 30 September 2017 and 31 March 2017:
Asset type |
Level |
Unaudited 30 September 2017
£'000 |
Audited
31 March 2017
£'000 |
Valuation technique |
Unobserved inputs |
Key
input |
Reasonable possible shift +/- |
Change
in valuation £'000 |
Relationship of inputs to value |
Listed
investments |
1 |
174,647 |
- |
Publicly
available share price at balance sheet date |
- |
- |
- |
- |
- |
Receivables |
2 |
1,239 |
- |
Purchase agreement |
Inputs
include management’s assessment of any impairment. Receivables are
valued at cost with any adjustments made to reflect the fair
value. |
Adjusted
for fair value |
n/a |
- |
- |
The
greater the assessment of the impairment, the lower the fair
value |
Price of
latest funding round (investment made less than twelve months
ago) |
2 |
88,997 |
- |
Price of latest funding round |
Observable
inputs include recent valuation by independent third party
investors. This price is not actively traded. |
Adjusted
for fair value |
n/a |
- |
- |
The
greater the assessment of the impairment, the lower the fair
value |
Wholly
owned Syncona group companies |
3 |
403 |
586 |
Net assets of wholly owned Syncona group companies |
Unobservable inputs include management’s assessment of the wholly
owned Syncona group companies, uplift in fair value and
calculations of any impairment. Wholly owned Syncona group
companies are valued at net assets with any necessary adjustments
for fair value. The main unobservable input relates to the
adjustments in fair value: |
Adjusted
for fair value |
n/a |
- |
- |
The
greater the assessment of the impairment, the lower the fair
value |
Price of
latest funding round (investment made more than twelve months
ago) |
3 |
50,582 |
96,315 |
Price of latest funding round |
Unobservable inputs include management’s assessment of the
performance of the investee company, uplift in fair value and
calculations of any impairment. For further information on
valuation methodology, see note 2 of the Annual Report and Accounts
for the year ended 31 March 2017. The main unobservable input
relates to the adjustments in fair value: |
Adjusted
for fair value |
n/a |
- |
- |
The
greater the assessment of the impairment, the lower the fair
value |
Investments valued on discounted cashflow forecasts |
3 |
116,899 |
108,415 |
Future earnings potential, discount for lack of
marketability and time value of money |
Unobservable inputs include management’s assessment of the
performance of the investee company and calculations of any
impairment. For further information on valuation methodology, see
note 2 of the Annual Report and Accounts for the year ended 31
March 2017. The main unobservable input relates to assessment of
the future performance of the investee: |
Assessment of the future performance of the investee |
Discount
rate |
2% |
11,688 |
The greater the assessment of performance, the higher the
fair value |
USD
exchange rate |
10% |
11,651 |
|
|
432,767 |
205,316 |
|
|
|
|
|
|
The following table presents the movements in Level 3
investments of the Holding Company for the period ended 30
September 2017 and 31 March
2017:
|
|
|
|
|
|
|
Unaudited six |
|
Audited |
|
|
|
|
|
Wholly |
|
months to 30 |
|
year
to 31 |
|
|
|
|
|
owned |
|
September |
|
March |
|
|
|
Life
science |
|
Group |
|
2017 |
|
2017 |
|
|
|
investments |
|
companies |
|
Total |
|
Total |
|
|
|
£'000 |
|
£'000 |
|
£'000 |
|
£'000 |
Opening balance |
|
|
204,730 |
|
586 |
|
205,316 |
|
- |
Transfer
from level 3 |
|
(65,368) |
|
- |
|
(65,368) |
|
- |
Purchases |
|
|
25,635 |
|
147 |
|
25,782 |
|
180,950 |
Gain/(loss) on
financial assets at fair value through profit or loss |
|
|
2,484 |
|
(330) |
|
2,154 |
|
24,837 |
|
|
Closing balance |
|
|
167,481 |
|
403 |
|
167,884 |
|
205,787 |
The net gain for the period included in the Consolidated
Statement of Comprehensive Income in respect of Level 3 investments
in the Holding Company held at the period end amounted to
£2,153,505 (March 2017:
£24,837,281).
During the period ending 30 September
2017, Nightstar Therapeutics plc became a listed investment
and has therefore moved from Level 3 to Level 1. This resulted in
£34,168,416 transferring from Level 3 to Level 1.
During the period ending 30 September
2017, Autolus Limited had a new funding round and has
therefore moved from Level 3 to Level 2. This resulted in
£31,200,000 transferring from Level 3 to Level 2.
14. COMMITMENTS AND CONTINGENCIES
The Group had the following commitments as at 30 September 2017:
2017 |
|
Uncalled |
commitment |
£’000 |
Life science
portfolio |
|
|
Milestone payments to
life science companies |
|
38,782 |
CRT Pioneer Fund |
|
26,093 |
|
|
|
Funds
portfolio |
|
21,343 |
TOTAL |
|
86,218 |
There were no contingent liabilities as at 30 September 2017.
15. SUBSEQUENT EVENTS
These Consolidated Financial Statements
were approved for issuance by the Board on 22 November 2017.
Subsequent events have been evaluated until this date.
Rob
Hutchinson was appointed as Director of the Company, with
effect from 1 November 2017.
On 10 November 2017, the Board
approved an increase in directors’ annual fees effective
1 October 2017 as follows:
Basic Director
fee |
£45,000 |
Committee member –
additional |
£5,000 |
Audit chair |
£60,000 |
Chairman |
£100,000 |
Thomas Henderson agreed to waive
his fee.
GLOSSARY
Company |
Syncona Limited |
|
|
CRT Pioneer Fund |
The Cancer Research Technologies
Pioneer Fund LP |
|
|
December 2016 transaction |
In December 2016, shareholders
approved the expansion of the Company’s investment policy and the
acquisition from The Wellcome Trust of Syncona Partners LLP, a
portfolio of life science investments, together with its investment
management team. |
|
|
Funds portfolio |
The underlying investments in this
segment are investments in a diversified portfolio of hedge, equity
and long-term alternative investments funds across multiple asset
classes. |
|
|
General Partner |
Syncona GP Limited |
|
|
Group |
Syncona Limited and Syncona GP
Limited are collectively referred to as the “Group” |
|
|
Holding Company |
Syncona Holdings Limited |
|
|
ICR |
The Institute of Cancer
Research |
|
|
Investment Manager |
Alternative Fund Investment Manager,
role performed by BACIT (UK) Limited |
|
|
IRR |
Internal Rate of Return |
|
|
Life science portfolio |
The underlying investments in this
segment are those whose activities focus on actively developing
products to deliver transformational treatments to patients. |
|
|
MES |
Management Equity Shares |
|
|
NAV |
Net Asset Value |
|
|
Partnership |
Syncona Investments LP
Incorporated |
|
|
Return |
Time Weighted Rate of Return is the
method used for return calculations |
|
|
SIML |
Syncona Investment Management
Limited |
|
|
Syncona Group Companies |
Subsidiaries that are 100 per cent
owned by Syncona |
|
|
Total return |
Movement in NAV per share plus
dividend per share |
[1] Including 2.3p dividend paid in August 2017
[2] Return for life sciences and funds portfolio calculated on a
time weighted basis
[3] Return for life sciences and funds portfolio calculated on a
time weighted basis
[4] Including 2.3p dividend paid in August 2017
[5] Including £10.5 million investment into Nightstar at its
IPO, which settled on 2 October
2017
[6] Fully diluted ownership
[7] Calendar year
[8] Including realised gain of £5.6 million on foreign exchange
hedges
[9] Including associated hedges
[10] £5.6 million realised gain, £3.5 million unrealised
gain