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Syncona Limited
13 June 2019
13 June 2019
Syncona Limited
Final Results for the Year Ended 31 March 2019
Strong performance driven by operational and financial progress
in our Life Science companies
Strong returns and NAV increase
-- Net Asset Value ("NAV") of GBP1,455.1 million (2018: GBP1,055.8 million), 216.8 p per share
(2018: 158.9p per share), a total return of 37.9 per cent (2018: 18.7 per cent)
-- Life science portfolio valued at GBP1,055.4 million (2018: GBP514.5 million), a 77.9 per cent
return (2018: 57.2 per cent), primarily driven by valuation increases in Blue Earth, Autolus
and Nightstar
Operational and Clinical Highlights
-- Foundation of three highly innovative portfolio companies OMASS Therapeutics (drug discovery),
Anaveon (immuno-oncology), and Quell Therapeutics (cell therapy), in line with Syncona's strategy
to found, build and fund global leaders in healthcare
-- Ongoing progress in the clinical pipeline with eight live clinical trials at year end
- Positive data delivered in Blue Earth (Glioma), Freeline (Haemophilia B) and Autolus (AUTO3
pALL and DLBCL, AUTO1 pALL and adult ALL)
- Commenced two new clinical trials Autolus (AUTO4, T Cell Lymphoma) and Gyroscope (FOCUS
trial, Dry Age-related Macular Degeneration)
-- Merger of Gyroscope (retinal gene therapy), with Orbit Biomedical (sub-retinal surgical platform),
to create the world's first end-to-end retinal gene therapy company with clinical, delivery
and manufacturing capabilities
-- Blue Earth Diagnostics (Blue Earth) (commercial stage PET imaging agent) filed a supplemental
New Drug Application with the U.S Food and Drug Administration (FDA) for use of Axumin in
Glioma
-- Strong progress developing industrial scale throughout the portfolio, in particular by continuing
to invest in and develop key areas such as manufacturing and delivery in gene and cell therapy
Financial Highlights
-- Capital deployment into life science companies of GBP138.6 million (2018: GBP127.2 million)
-- Strategic capital pool of GBP399.7 million at year end to fund our growing Life Science portfolio
(2018: GBP541.3m)
-- Blue Earth Diagnostics continued to deliver strong performance with sales of GBP83.9 million[1]
(2018: GBP35.9 million) and EBITDA of GBP28.7 million, Syncona's 89 per cent stake is now
valued at GBP267.5 million (2018: GBP186.8 million), a gain of GBP94.9 million over the year,
including a GBP14.2 million distribution from the company
-- Nightstar (retinal gene therapy) targeting inherited forms of blindness, reached agreement
to be acquired by Biogen for $877.0 million during the year, representing a 4.5x return on
original investment for Syncona; GBP255.8 million[2] of proceeds received post year-end (2018
valuation: GBP124.5 million).
-- Autolus (CAR-T cell immunotherapy) completed a successful $172.2 million NASDAQ IPO (in which
Syncona invested $24.0 million) followed by a $109.0 million follow-on financing post period
end in which Syncona invested a further $24.0 million. Our holding increased in value by GBP225.0
million to GBP328.2 million at year end (2018: GBP85.1 million).
-- Freeline (systemic gene therapy) completed an GBP88.4 million Series B financing with an GBP85
million commitment by Syncona.
-- Annual charitable donation of GBP4.3 million - continued support for Institute of Cancer Research
and The Syncona Foundation.
Outlook - strong momentum across our companies and opportunities
to invest at scale
As we look to the year ahead we have a high level of conviction
in our companies. While clinical and regulatory development
processes involve significant risk we believe our portfolio is well
placed and we anticipate strong momentum across our pipeline of
eight clinical trials (see Table 2). Particularly important
clinical value drivers this financial year are:
-- Freeline: B-AMAZE - Haemophilia B - Phase 1/2 clinical trial ongoing
-- Autolus - AUTO 1 in paediatric ALL and adult ALL Phase 1/2; AUTO 3 in paediatric ALL and DLBCL
- Phase 1/2. Following these updates there is the potential to commence up to three Phase
2 registration studies in Autolus.
We also anticipate commencing three new trials in our companies
Blue Earth, Freeline and Achilles (see Table 3) and continued
progression in the pipeline of preclinical programmes across the
portfolio.
Additionally, we expect sales and earnings growth from Axumin in
prostate cancer from Blue Earth, and an outcome from the FDA on the
potential expansion into Glioma.
We believe there is a clear opportunity to invest at scale in
the growing healthcare sector. We have built a portfolio of 10
companies at year end in innovative areas of life science, eight of
which we founded. Our high-conviction approach means that we expect
to deploy significant further capital across the portfolio this
year.
We also see a strong pipeline of opportunities to found new
companies. Our aim is to build a portfolio of 15-20 companies and
we remain focused on areas where we are strategically positioned,
such as cell and gene therapy, but also look at opportunities more
broadly across a range of modalities and therapeutic areas.
As a result, we are increasing our guidance on annual capital
deployment to GBP100 - 200 million this year (2018 guidance:
GBP75-150 million).
Martin Murphy, CEO, Syncona Investment Management Limited, said:
"Syncona continues to perform strongly driven by significant
commercial, clinical and financial progress across our life science
companies this year. We have continued to demonstrate the benefits
of our differentiated model, in particular with ongoing positive
commercial progress in Blue Earth, and with the sale of our retinal
gene therapy company Nightstar, to Biogen, for $877 million, five
years after we founded the business.
"We enter this financial year with strong momentum across the
business, a globally differentiated cell and gene therapy platform
and a rich pipeline of opportunities to continue deploying capital
and generating returns in life science. Our companies are well
positioned as they scale and progress through the development
cycle. Our long-term, strategic capital pool underpins the
execution of our strategy to found, build and fund globally leading
companies as we aim to deliver transformational treatments to
patients and generate superior returns for shareholders."
[S]
Enquiries
Syncona Ltd
Annabel Clay / Siobhan Weaver
Tel: +44 (0) 20 3981 7940
FTI Consulting
Brett Pollard / Ben Atwell / Natalie Garland-Collins
Tel: +44 (0) 20 3727 1000
About Syncona:
Syncona is a leading FTSE250 healthcare company focused on
founding, building and funding global leaders in life science. Our
vision is to deliver transformational treatments to patients in
truly innovative areas of healthcare while generating superior
returns for shareholders.
We seek to partner with the best, brightest and most ambitious
minds in science to build globally competitive businesses. We take
a long-term view, underpinned by a deep pool of capital, and are
established leaders in gene and cell therapy. We focus on
delivering dramatic efficacy for patients in areas of high unmet
need.
Copies of this press release, a company results presentation,
and other corporate information can be found on the company 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. In particular, many companies
in the Syncona Limited portfolio are conducting scientific research
and clinical trials where the outcome is inherently uncertain and
there is significant risk of negative results or adverse events
arising. In addition, many companies in the Syncona Limited
portfolio have yet to commercialise a product and their ability to
do so may be affected by operational, commercial and other
risks.
Table 1: Valuation movements in year:
Company 31 Mar Net invest- Valuat- 31 Mar % NAV Valuat- Fully Focus area
2018 ment ion change 2019 ion basis diluted
Value in period (GBPm) value owner-
(GBPm) (GBPm) (GBPm) ship
stake
(%)
Life science portfolio companies
--------- ----------------
Established
Advanced
Blue Earth 186.8 (14.2) 94.9 267.5 18.4 rDCF 89 diagnostics
-------- ------------ ------------ --------- ------ ------------- --------- ----------------
Maturing
Nightstar 124.5 13.8 120.0 ***258.3 17.7 Quoted 38 Gene therapy
-------- ------------ ------------ --------- ------ ------------- --------- ----------------
Autolus 85.1 18.1 225.0 328.2 22.6 Quoted 31 Cell therapy
-------- ------------ ------------ --------- ------ ------------- --------- ----------------
Freeline 36.0 57.5 - 93.5 6.4 Cost 80 Gene therapy
-------- ------------ ------------ --------- ------ ------------- --------- ----------------
Gyroscope* 19.6 9.0 0.3 28.9 2.0 Cost 81 Gene therapy
-------- ------------ ------------ --------- ------ ------------- --------- ----------------
Developing
Achilles 6.6 9.6 - 16.2 1.1 Cost 69 Cell therapy
-------- ------------ ------------ --------- ------ ------------- --------- ----------------
SwanBio 4.9 - 0.4 5.3 0.4 Cost 72 Gene therapy
-------- ------------ ------------ --------- ------ ------------- --------- ----------------
OMASS - 3.5 - 3.5 0.2 Cost 46 Therapeutics
-------- ------------ ------------ --------- ------ ------------- --------- ----------------
Anaveon - 3.7 - 3.7 0.2 Cost 47 Immuno-oncology
-------- ------------ ------------ --------- ------ ------------- --------- ----------------
Quell - 8.3 - 8.3 0.6 Cost 69 Cell Therapy
-------- ------------ ------------ --------- ------ ------------- --------- ----------------
Open forward
currency
contracts - - (2.5) (2.5) (0.2)
-------- ------------ ------------ --------- ------ ------------- --------- ----------------
Life Science investments
CRT Pioneer Adj.
Fund 30.8 3.5 - 34.3 2.4 Third-party
-------- ------------ ------------ --------- ------ ------------- --------- ----------------
Adj.
CEGX 9.8 - (5.9) 3.9 0.3 PRI
-------- ------------ ------------ --------- ------ ------------- --------- ----------------
Endocyte 9.0 (13.9) 4.9 0.0 0.0 Quoted
-------- ------------ ------------ --------- ------ ------------- --------- ----------------
Adaptimmune 11.6 (6.7) 4.9 0.3 Quoted
-------- ------------ ------------ --------- ------ ------------- --------- ----------------
Syncona
Collaborations 1.4 - - 1.4 0.1 Cost
-------- ------------ ------------ --------- ------ ------------- --------- ----------------
SUB-TOTAL 514.5 110.5 430.4 1,055.4 72.5
-------- ------------ ------------ --------- ------ ------------- --------- ----------------
Available
capital 550.3 - - **413.6 28.4
-------- ------------ ------------ --------- ------ ------------- --------- ----------------
Other net
liabilities (9.0) - - (13.9) (0.9)
-------- ------------ ------------ --------- ------ ------------- --------- ----------------
Capital
pool 541.3 - - 399.7 -
-------- ------------ ------------ --------- ------ ------------- --------- ----------------
TOTAL 1,055.8 1,455.1 100
-------- ------------ ------------ --------- ------ ------------- --------- ----------------
*Includes Orbit, following the merger of Gyroscope and Orbit
during 2019.
**Against which we have GBP121.5 million of uncalled
commitments. Refer to note 21
*** Expected proceeds as at 31 March 2019 of GBP258.3 million
with a foreign exchange loss of GBP2.5 million resulting in net
proceeds received of GBP255.8 million.
Table 2: Active clinical pipeline at year end*
Programme / Indication Status and next steps
Autolus - cell therapy / oncology
AUTO1 / Paediatric Phase 1/2 trials progressing, (assessing safety,
ALL dose and efficacy) data anticipated this financial
year
-----------------------------------------------------
AUTO1 / Adult ALL
-----------------------------------------------------
AUTO2 / Multiple
Myeloma
AUTO3 - Paediatric
ALL
AUTO3 - Adult DLBCL
AUTO4 - T cell Lymphoma
-----------------------------------------------------
Freeline
B-AMAZE - Haemophilia Phase 1/2 trial progressing (assessing safety,
B dose and efficacy, dose escalation and optimisation
phase), further data anticipated this financial
year
-----------------------------------------------------
Gyroscope
-----------------------------------------------------
FOCUS - Dry Age-Related Phase 1/2 trial progressing (assessing safety,
Macular Degeneration dose response and efficacy of two doses of
GT005). Anticipate completing first dose escalation
this financial year .
-----------------------------------------------------
*Excluding Nightstar, which has been acquired by Biogen
Table 3: Pre-clinical programmes anticipated to commence trials
in FY2020
Programme / Indication Status and next steps
Blue Earth - diagnostics
PSMA Phase 1 Expect to initiate and complete Phase 1 this
financial year
--------------------------------------------------
Freeline
Fabry's Expect to initiate Phase 1/2 trial in this
financial year
--------------------------------------------------
Achilles
--------------------------------------------------
Non-small cell lung Expect to initiate Phase 1/2 trial this financial
cancer year
--------------------------------------------------
Chairman's Foreword
I am delighted to report another year of strong growth and
significant progress. NAV increased to GBP1,455.1 million, or
216.8p per share[3], a 37.9 per cent total return for the 12
months. Performance was driven by the significant commercial and
financial progress of our life sciences companies, in particular
Biogen's recommended cash offer of $877.0 million for Nightstar in
March 2019.
We made significant strategic progress in 2019. At year end we
have 10 companies and a range of life science investments with a
combined holding value of GBP1,055.4 million, or 72.5 per cent of
net assets, and a capital pool of GBP399.7 million. Successful life
science companies scale rapidly and access to a strategic capital
pool allows the team to form a long-term view and take strategic
ownership stakes when founding and building our companies.
Well positioned to deliver superior returns
We have a differentiated model and a high conviction portfolio
of life science companies deeply enriched in advanced therapies,
and in particular cell and gene therapy.
Our life science companies continue to drive significant returns
for shareholders, building on the strong momentum of the last few
years. While the future is not without risk, we have an expert
multi-disciplinary team, a high-quality portfolio of life science
companies and a strategic pool of capital, which enables us to
drive strategy and execution across our portfolio.
Our long-term approach and strategy of founding, building and
funding businesses around exceptional science positions us well to
continue to deliver strong returns for shareholders.
Dividend and charitable donation
The Board has declared a final dividend of 2.3p per share (2018:
2.3p per share) for the year. We announced last year that the Board
would be reviewing the Company's dividend policy. Syncona's
investment objective is to achieve superior long-term capital
appreciation by founding, building and funding global leaders in
healthcare. Our companies are fast-growing and capital-intensive
and therefore moving forward the Directors believe it is no longer
appropriate for Syncona to pay a dividend.
Our charitable donations are an important part of what we do.
This year we are donating GBP4.3 million to support charities in
the field of healthcare, in particular cancer, and beyond, taking
total charitable donations since the Company was established in
2012 to GBP27.1 million. This funding is an important source of
income for the charities we support, and we are pleased to have
been able to assist them to continue the important work that they
do. We look forward to continuing to maintaining a charitable
donation in the years to come.
Continued Board evolution
It is important that the Board continues to evolve with our
strategy of building global leaders in life science. I have been
Chairman of the Company since its establishment in 2012 and plan to
step down from the Board later this financial year and I am
delighted Melanie Gee has joined the Board as a non-executive
director and Chair-designate. Melanie has a wealth of expertise
built from 30 years in investment banking and is an experienced
board member, serving on the boards of both FTSE 100 and 250
companies. Melanie is a fantastic addition and I welcome her to the
Board.
Jeremy Tigue, Chairman
13 June 2019
CEO Review
2019 was a year of significant progress for Syncona,
demonstrating that our model is working. We delivered financial and
operational milestones across the portfolio, encouraging early
clinical data in our key cell and gene therapy programmes, and
continued positive sales and earnings growth in our established
company, Blue Earth.
Our strategy in action
This year has seen us make continued progress towards achieving
what we set out to do at the foundation of Syncona - to deliver
transformational treatments for patients by founding leading
companies in exceptional areas of life science, building them for
global success and funding them over the long term. We focus on
technologies with the potential to deliver dramatic efficacy for
patients and support our companies with a strategic pool of capital
allocated with discipline against the best opportunities.
In line with this goal, in 2019 we:
-- Delivered positive sales growth and profitability growth from our established company Blue
Earth, demonstrating the commercial value of products which have a positive impact on patients'
lives
-- Delivered encouraging data in key clinical trials across our cell and gene therapy companies
Autolus, Nightstar and Freeline
-- Merged our companies Gyroscope and Orbit Biomedical to create the first end-to-end retinal
gene therapy company with clinical, delivery and manufacturing capabilities globally
-- Founded three new Syncona portfolio companies backing global academic leaders in areas of
high-innovation science
Validation of our model
The developments in Nightstar this year demonstrate the benefits
of our model. After founding the business in 2014, backing an
academic programme at Oxford University, Syncona spent five years
working in partnership with academic founder Robert MacLaren,
building the business and putting in place the strategy and team to
create a leading retinal gene therapy company. Over this time,
Nightstar delivered positive proof of concept studies across two
indications, built a strong clinical pipeline and commenced a
pivotal trial in Choroideremia. Syncona provided GBP56.4 million of
investment from Series A to post-IPO and remained a significant 38
per cent shareholder in the business when Nightstar agreed to be
acquired by Biogen for $877.0 million. The offer for Nightstar
represents a 4.5x multiple on original invested capital.
Our flexible, long-term ownership model ensures we have control
and flexibility over the management of our portfolio and we seek
never to be a forced seller. In this context, we were free to weigh
up the optimal outcome for Syncona. We are focused on risk-adjusted
returns for our shareholders and at the point of any portfolio or
investment decision we take into account the opportunity available
to the business, the market context, the level of scientific or
clinical risk, the level of funding required to take full advantage
of the opportunity and the potential return that could be delivered
today and in the future. It is our strategic capital pool that
allows us to take the best decisions for our companies and our
shareholders.
'Third Wave' gains momentum, Syncona is a strategic owner in
this space
The Third Wave of advanced therapies, in particular cell and
gene therapies, have continued to gain significant momentum this
year. We remain very encouraged by the strong regulatory support
and positive overall market setting for these undoubtedly
transformational medicines. It is our view that we are still in the
early days of the Third Wave, which has the potential to drive
decades of innovation in healthcare as personalised, tailored
medicines come to the fore powered by advances in genomic
understanding.
Syncona is a global leader in this area, and our portfolio
companies are very well placed to compete in a fast-growing space.
We have an early mover advantage and have made significant
strategic investments in areas like manufacturing and delivery,
which puts us in a strong position to enable the commercial success
of these emerging therapies.
We continue to have one of the world's leading gene therapy
platforms across multiple companies addressing the key tissue
compartments where gene therapy has delivered proof of concept,
namely the eye, the central nervous system and the liver. This
includes Gyroscope, our second retinal gene therapy company which
is seeking to be at the forefront of moving gene therapy from the
smaller monogenic diseases, like Choroideremia into more
genetically complex and more prevalent diseases.
In the year, we also further expanded our cell therapy franchise
through the creation of our new company, Quell Therapeutics,
focused on engineered T-Regulatory cells.
The important of a multi-disciplinary team: attracting
world-class leaders
Our team remains a key differentiator, with a central part of
our strategy being to take a hands-on approach and work in
partnership with our companies to deliver the best results. This
year the Syncona team have continued to work with company teams
across our portfolio to navigate and interrogate scientific,
clinical and commercial challenges in our existing companies, and
work with globally leading academics to found new businesses in
exciting areas of science.
As part of this, we continue our focus on bringing high-quality,
experienced people to develop the innovative technology within our
companies. Over the year we have continued to appoint world-class
leaders with the expertise to steward our companies through the
appropriate stage of their development cycle and who are attracted
by Syncona's long-term model and partnership approach.
Notably this year we appointed Khurem Farooq as Chief Executive
of Gyroscope. Khurem most recently held the position of Senior Vice
President of the Business Unit Immunology & Ophthalmology at
Genentech. Ian Clark, who most recently served as Chief Executive
of Genentech, has also been appointed as a Non-Executive
Director.
Dr Edwin Moses was also appointed as Chairman of Achilles. He
was most recently CEO of Ablynx NV which he built over 12 years
from a small R&D focused organisation to a commercial business
with a broad biologics pipeline, prior to its sale to Sanofi for
$4.8 billion in 2018. Dr Iraj Ali, a former Syncona Partner, also
became CEO of the business.
A series of other key commercial and operational hires were also
made into the portfolio. In OMASS, Ros Deegan moved from Boston to
join as Chief Executive, bringing more than 20 years' experience in
senior biotech roles, working alongside Dr Ali Jazayeri who was
appointed as Chief Scientific Officer and was formerly Chief
Technology Officer of Heptares. In Freeline, Brian Silver was
appointed CFO and Head of Corporate Development, joining from
healthcare group Perella Weinberg Partners.
Strategic capital pool central to our model
A strong balance sheet and certainty of funding is key to
delivering our strategy. Our capital pool is a strategic asset and
enables us to make long term commitments, for example in areas such
as manufacturing and delivery, and to attract world class
management teams as our companies scale. It also provides us with
the flexibility to support our companies for longer as we drive
long term decision making and navigate clinical risks. We believe
our capital pool needs to be sufficient to fund both new
opportunities and to scale our existing portfolio companies for a
minimum of two to three years, with our expected capital deployment
to be GBP100-200 million per year and, subject to the continued
progression of the portfolio, may exceed this amount in later
years.
As our companies' scale, we maintain a disciplined approach to
the allocation of capital to each portfolio company to maximise
risk adjusted returns for shareholders. As part of this process,
for any given company, we assess the risk and opportunities that
company faces to determine the optimum financing approach. We
typically remain the sole investor throughout initial rounds of
investments, however there will also be circumstances where the
right thing for the company, and Syncona's shareholders, will be to
bring in likeminded investors to support the company as it grows,
while maintaining a significant ownership stake.
Increasing momentum and scale in the portfolio
We continue to see exciting new opportunities for investment
both within the Third Wave and beyond, where new technological
advances are being applied to First and Second Wave modalities such
as small molecule drugs and biologics. We are focused on founding
companies in areas where the Syncona model can be applied to our
advantage as we seek to build a portfolio of 15-20 globally
competitive companies, adding new companies at a rate of
approximately 2-3 companies a year.
Our portfolio companies are scaling rapidly, and we believe they
are well-placed to continue to execute on strategy in line with
their development plans. Many of our companies are now conducting
clinical trials, where the data generated will be the core driver
of fundamental value. This process is never without risk, but we
believe our companies are positioned to navigate these processes as
they seek to deliver transformational treatments to patients.
Long term, we continue to focus on building a selective
portfolio companies and delivering 15 per cent IRR through the
cycle. We believe that our differentiated business model and
leading multi-disciplinary team, supported by our strategic pool of
capital, will enable us to capture superior risk-adjusted returns
for shareholders as we seek to build the next generation of
healthcare companies.
Martin Murphy, CEO Syncona Investment Management Limited
13 June 2019
Life Science review
Syncona's life science portfolio has performed strongly during
the year and our companies continue to make good progress against
their clinical and business plans, demonstrating strong momentum
across our portfolio. As at 31 March 2019, our portfolio was valued
at GBP1,055.4 million and had 10 companies: one Established company
delivering marketed products to patients, four Maturing clinical
stage companies and five Developing companies focused on
establishing operations and setting and implementing the strategic
vision.
Our progress during the year reinforces the benefits of our
highly-focused, hands-on and long-term approach. Our model means
that as we build our companies, the Syncona team is actively
involved operationally, bringing our differentiated,
multi-disciplinary skill set to bear across all aspects of the
businesses, from scientific development to clinical progression and
financial discipline and ultimately capturing the opportunity
available.
Established companies:
Blue Earth Diagnostics (18.4% NAV, 89% shareholding)
-- Strong financial performance with positive sales (GBP83.9 million) and EBITDA (GBP28.7 million)
in FY2019[4] and reaching a milestone dosing its 50,000(th) patient post year end.
-- Momentum in Axumin sales, with US units continuing to increase over the 2019 financial year
(Q1: 6,000, Q2: 6,500, Q3: 7,600, Q4 8,800).
-- Positive phase 3 clinical data in glioma; encouraging data from early clinical experience
in Blue Earth's second asset for the diagnosis of prostate cancer, rhPSMA-7, in an academic
setting
-- Expect continued positive earnings momentum, an FDA decision on filing for use of Axumin in
glioma in coming months and to initiate and complete a phase 1 clinical trial for rhPSMA-7
this financial year.
Blue Earth is a leading molecular imaging diagnostics company
focused on the development and commercialisation of novel PET
imaging agents. It has had another positive year delivering strong
financial performance with sales of GBP83.9 million and EBITDA of
GBP28.7 million for the year to 31 March 2019.[5] 50,000 patients
have now received an Axumin scan since the product was launched
commercially, enabling physicians to diagnose patients with
recurrent prostate cancer more effectively.
The business has continued to perform strongly in the US, with
US unit doses of 28,900 over the year, up from 13,000 doses over
the previous year. The US is Blue Earth's key market where the
opportunity is to treat approximately 70,000 patients annually.
Whilst Europe is a more fragmented market and challenging
reimbursement environment than the US, the company has expanded
access to Axumin in Europe over the year and it is now commercially
available in nine countries with more to follow. The company has
continued to progress development of its radio hybrid PSMA-targeted
agent, rhPSMA-7 reporting encouraging results from its early
clinical experience of the agent in an academic setting. Blue Earth
is expected to initiate and complete a Phase 1 trial this financial
year.
The company is also working towards a label extension for Axumin
in glioma, a form of brain cancer. During the year, the U.S. Food
and Drug Administration (FDA) has accepted a supplemental New Drug
Application (sNDA) for the expanded use of Axumin in adults for
glioma and we anticipate a decision in the coming months.
Maturing companies
Nightstar Therapeutics (17.7% NAV, 38% shareholding):
-- Agreement to be acquired by Biogen for $877.0 million.
-- Represents a 4.5x return and 72 per cent IRR for Syncona; GBP255.8
million[6] of proceeds received post year-end
Nightstar is our clinical-stage gene therapy company developing
treatments for rare inherited retinal diseases, and in March of
this year, we announced that the company had reached an agreement
to be acquired by Biogen.
Syncona founded Nightstar in 2013 with Professor Robert MacLaren
of Oxford University and took a hands-on, operational approach,
setting the business up for success over the long-term. It is a
strong example of our differentiated approach of founding, building
and funding innovative companies and we look forward to seeing
Nightstar work to deliver transformational treatments to patients
during the next phase of its development with Biogen.
Autolus (22.6% of NAV, 31% shareholding):
-- Significant year of clinical progress with data read-outs across four programmes
-- Data from six clinical trials expected to be delivered during the course of this financial
year and could move to up to three Phase 2 registration trials this financial year
Autolus, founded by Syncona in 2014, is our biopharmaceutical
company developing next-generation programmed T cell therapies for
the treatment of cancer. The company had a strong year, continuing
to progress its pipeline of therapies through the clinic and making
positive progress in developing its manufacturing capabilities.
During the year Autolus reported encouraging data in its AUTO3
programmes in paediatric Acute Lymphoblastic Leukaemia (pALL) and
Diffuse Large B-cell lymphoma (DLBCL), with the preliminary data
from both trials showing encouraging safety data and early clinical
efficacy. It also announced that it had dosed its first patient in
the Phase 1/2 trial of AUTO4 in T cell lymphoma. In the second
half, the company reported further positive data in AUTO1 pALL and
initial positive data in AUTO1 Adult ALL. Data from a number of
clinical trials will be delivered during the course of the year and
could result in the company moving in to up to three Phase 2 trials
this financial year.
The company has also continued to expand its manufacturing
capabilities, initiating manufacturing for clinical studies at the
Stevenage Catapult in mid-March 2019. It has announced plans for
further facilities in Enfield in the UK and Maryland in the US, the
latter of which will be a fully scaled commercial site. The company
is making good clinical progress on multiple fronts and has
established an economical and scalable product delivery platform,
which will enable it to ultimately commercialise its products for
patients.
Following completion of its successful IPO in July, the company
conducted a follow-on financing post period end, raising $109.0
million. Syncona invested in both the IPO and follow on offering
and retains a 30.0 per cent stake in the business.
Freeline (6.4% of NAV, 80% shareholding):
-- Reported encouraging initial data in December 2018 from two patients in first low dose cohort
for lead programme in Haemophilia B; the company has since entered the dose optimisation phase
-- Expect to report further data from Haemophilia B programme and initiate second programme in
Fabry disease over this financial year
Freeline, our gene therapy company focused on liver expression
for a range of chronic systemic disease is currently progressing
its lead programme in Haemophilia B through clinical development.
In December 2018, the company reported initial data from the first
two patients in programme, dosed in the lowest dose cohort and
reported mean FIX activity[7] levels of 45 per cent +/-5, with the
normal range being 50-150 per cent[8]. The company has since
entered the dose optimisation phase. During this period, dose
escalation is undertaken at a range of levels to establish the
optimal dose before commencing a registrational study. It will
report further data from this process this financial year.
The company has also continued to progress with its pipeline in
systemic diseases. Its second programme, Fabry disease, is expected
to enter the clinic in the coming months. Freeline has also
disclosed that the next programme in its pipeline will be in
Gaucher disease[9].
In 2016, Freeline made a significant early investment in
manufacturing capability, recognising the importance of a
commercial scale manufacturing platform in order to achieve its
ambition to take products all the way to market. Over the last
year, the business has made strong progress in developing this
platform to be able to deliver high-quality, consistent product at
commercial scale, notably securing suites at a leading contract
manufacturer and at the Cell and Gene Therapy Catapult centre,
which provides it with internal capability for its phase 1/2 trials
and will allow it to meet the commercial demand for its Haemophilia
B programme. Over the next financial year, the business is focused
on manufacturing GMP-grade[10] product, suitable for a pivotal
trial for its Haemophilia B programme, supporting its ambition to
ultimately deliver transformational treatments for patients.
Following the year end, Anne Prener informed the board of
Freeline that she will step down as Chief Executive Officer having
completed her strategic objective of bringing Freeline into the
clinic with two programs. Under Anne's leadership, the Company has
made excellent progress, enrolling several cohorts of patients in a
Phase 1/2 study for Haemophilia B and preparing to enroll patients
in its Fabry program. The Company is now well positioned to attract
a new CEO with commercial experience to lead Freeline through
late-stage clinical development and product launch.
Gyroscope (2.0% of NAV, 81% shareholding):
-- Significant strategic progress creating leading retinal gene therapy platform through merger
with Orbit Biomedical
-- Clinical-stage company, dosing of first patient in lead programme for dry AMD in January 2019
-- Anticipates completing the first dose escalation for this programme in FY2020
Gyroscope is a retinal gene therapy company focused on
developing genetically-defined therapies for the treatment of eye
diseases linked to an unbalanced complement system. It is one of
the first companies globally to move gene therapy out of rare
diseases and in to more prevalent disease. It is now clinical-stage
having commenced dosing in its lead programme in one of the most
severe forms of dry AMD with the first patient successfully dosed
in January 2019. The company anticipates completing the first dose
escalation for this programme during this financial year.
The company has also made significant strategic progress in the
year, merging with Syncona's surgical device company, Orbit
Biomedical, and creating the first fully integrated retinal gene
therapy company with high quality manufacturing and a surgical
platform that can support accurate, safe and consistent sub-retinal
delivery of treatments to patients with blinding conditions. It is
focused on delivering a therapeutic in a way that ensures higher
consistency of dosing, whilst allowing patients to receive a less
invasive treatment, which will be key to widespread use and
clinical effectiveness. The merger ensures Gyroscope now has the
key platform capabilities it requires to develop and deliver its
therapeutics commercially.
Developing companies (2.6% NAV)
Achilles, our cell therapy company which is focused on
immunotherapy to treat solid tumours (initially lung cancer and
melanoma) has made good operational progress in the period,
strengthening the leadership team. The company has also received
approval from UK regulatory authority, the Medicines and Healthcare
products Regulatory Agency (MHRA) to conduct two Phase I/II trials
evaluating the safety and clinical activity of clonal neoantigen T
cells ("cNeT") in patients with advanced non-small cell lung cancer
(NSCLC) and melanoma respectively. It expects to enrol the first
patient in its first programme in NSCLC in H1 FY2020.
SwanBio, a gene therapy company focused on neurological
disorders, has made good progress over the course of the year,
appointing key members of the management team and building out its
operations. The company expects to nominate the candidate for its
lead programme in this financial year and make progress in building
out its manufacturing capabilities.
In June, Syncona led a GBP14.0 million Series A financing in
OMASS Therapeutics, a biopharmaceutical company using structural
mass spectrometry to discover novel medicines. We have worked
closely with the OMASS team to develop a plan for the company which
is seeking to use its suite of proprietary technologies, developed
in the lab of globally leading academic Professor Dame Carol
Robinson, in order to discover and develop innovative small
molecule drug therapeutics.
Syncona also led a CHF 35.0 million Series A financing in a new
immuno-oncology company, Anaveon. The financing supports the
development of a selective Interleukin 2 ("IL-2") Receptor Agonist,
a type of protein that could therapeutically enhance a patient's
immune system to respond to tumours. The Syncona team is working in
close partnership with the company to build the business, focusing
on developing the clinical plan and strategy.
We also announced the foundation of a new company, Quell
Therapeutics, bringing together six leading academics in the cell
therapy space with a GBP35 million Series A financing. Quell has
been established with the aim of developing engineered T regulatory
(Treg)[11] cell therapies to treat a range of conditions such as
solid organ transplant rejection, autoimmune and auto-inflammatory
diseases. The Syncona team will work in close partnership with the
founders from University College London, Kings College London and
Hannover Medical as the business builds out its operations and
management team. Post year end, Iain McGill was appointed Chief
Executive of Quell. Iain is a leading pharmaceutical executive and
has spent the majority of his 25 years in the industry in the area
of solid organ and cell transplantation.
Life science investments (3.1% NAV):
Beyond Syncona's portfolio companies, where we typically have a
significant ownership stake and are a partner with operational and
strategic influence, we also have a small number of life science
investments which represent good opportunities to generate returns
for shareholders or provide promising options for the future in
areas where Syncona has deep domain knowledge.
The largest holding is the CRT Pioneer Fund, a fund managed by
Sixth Element Capital, which is focused on early stage investments
in highly innovative oncology programmes which were primarily
sourced from its proprietary pipeline agreement with Cancer
Research UK. Its investment period closed in March 2018 and the
manager is now focused on supporting the existing 11 investments in
the portfolio. Syncona contributed a net GBP3.5 million during the
year, with a further GBP14.9 million of uncalled commitments
remaining that we expect to be called within the next 24
months.
Strong momentum across our portfolio and exciting opportunities
to found new companies
We have a high level of conviction in the fundamentals of our
companies having founded them around exceptional science and built
them ambitiously, bringing in strong leadership teams. Over the
next year, we will continue to work in close partnership with them
in advancing their business plans and strong pipelines and we
believe they are well-positioned to continue to make good progress
in the year ahead.
We continue to see a number of excellent opportunities in cell
and gene therapy, areas where we have built deep domain expertise,
are strategically positioned with an early mover advantage and have
strong platform capabilities. We also see attractive pipeline
opportunities more broadly across a range of therapeutic areas and
modalities where we can deliver our strategy to build global
leaders aiming to take their products to market.
We remain focused on continuing to support our companies over
the long-term as they scale and progress through the clinic and
ultimately seek to deliver treatments to patients.
Chris Hollowood, Chief Investment Officer, Syncona Investment
Management Limited
13 June 2019
Finance review
Strong financial performance and significant commercial
progress
We ended the year with net assets of GBP1,455.1 million, or
216.8p per share, a 37.9 per cent total return with performance
driven by significant financial and commercial progress in our life
science companies, which generated a return of 77.9 per cent over
the 12 months.
Performance was primarily driven by the valuation increases in
three of our Established and Maturing portfolio companies, Autolus,
Blue Earth and Nightstar, which together added GBP439.9 million to
the value of the portfolio. The most material of these uplifts,
Autolus, was driven by its successful IPO on NASDAQ in June 2018
and the subsequent 85.1 per cent increase in its share price, and
our holding was valued at GBP328.2 million at the year-end, an
increase of GBP225.0 million over the 12 months. Our holding in
Blue Earth has increased in value by GBP94.9 million to GBP267.5
million at 31 March 2019, following continued strong commercial
performance of Axumin, the licencing of a new PSMA agent and
distributions to Syncona totalling GBP14.2 million. Our holding in
Nightstar was valued at GBP258.3 million[12] at the year-end, a
gain of GBP120.0 million, reflecting its proposed acquisition by
Biogen for a total of $877.0 million, which was announced in March
2019. The transaction completed in June 2019.
Beyond our Syncona portfolio companies, we have a small number
of life science investments. During the year, we invested $15
million (GBP11.6 million) in NASDAQ-listed Adaptimmune, a leader in
the engineered TCR cell therapy space, at $10.00 a share. At year
end the share price was $4.30, a decrease of 57 per cent. We also
sold our holding in NASDAQ-listed, Endocyte, during the year,
resulting in a total realised gain of GBP10.2 million on an
original investment of GBP4.0 million. CEGX is held at GBP3.9
million on an adjusted discounted Price of Recent Investment basis
(2018: GBP9.8 million).
Three new investments and investment cashflow in line with
guidance
Three new companies were founded in the year, which together
with milestone payments to our existing life science companies and
other investments, resulted in capital deployed of GBP138.6
million, in line with prior year guidance of GBP75 million to
GBP150 million.
While the absolute level of deployment will be dependent on our
investment pipeline, our current expectation is that the Company
will invest between GBP100 million and GBP200 million over the next
12 months.
Uncalled commitments reflect new investments and financing
rounds
Uncalled commitments stood at GBP121.5 million at the year end,
of which GBP101.7 million relate to milestone payments associated
with the life science portfolio and GBP14.9 million to the CRT
Pioneer Fund over the next 24 months. The remaining GBP4.9 million
of the uncalled commitments relate to investments held in the
capital pool.
These payments are generally delivered over a number of tranches
linked to the relevant portfolio company achieving key strategic
and development goals set at the time of financing. This is a risk
management tool and enables Syncona to ensure companies are
tracking to their strategic plans.
Strategic capital base and significant liquidity in the capital
pool
Syncona has a strategic capital base with net cash resources of
GBP197.9 million (2018: GBP76.2 million) and GBP201.8 million of
further liquidity in investments (2018: GBP465.1 million in fund
investments). In addition, we received proceeds of GBP255.8
million[13] from the sale of Nightstar following the completion of
the transaction, taking proforma liquidity in the capital pool to
GBP655.5 million. Against this we have milestone payments to
existing portfolio companies of GBP101.7 million, visibility on a
number of financings across our portfolio in the coming 12-24
months and a strong pipeline of new opportunities
Successful life science companies scale rapidly, therefore
access to a deep capital pool allows the team to take a long-term
view and retain strategic ownership stakes when founding and
building our companies. Certainty of funding is key in delivering
our strategy and we believe our capital pool needs to be sufficient
to fund the investment pipeline and portfolio company financing
rounds for a minimum of two to three years.
Liquidity profile GBPm
Net Cash 197.9
------
< 1 month 21.5
------
1-3 months 23.1
------
3-12 months 82.5
------
> 12 months 74.7
------
TOTAL 399.7
------
Over the last two years, Syncona has evolved the investment
parameters of its capital pool to focus on liquidity and capital
preservation in order to support Syncona's strategy and key goal of
founding, building and funding global leaders in healthcare. To
support this strategy, we have further simplified the management of
the capital pool, redeeming all legacy fund investments except for
certain longer term funds. As part of this process, we have
increased our weighting to cash, cash equivalents and fixed income
products with higher liquidity and lower volatility. This year, our
fund investments generated a return of 1.43 per cent in the year
ended 31 March 2019.
Expenses
The Company's ongoing charges ratio was 0.92 per cent for the 12
months[14], which compares to 1.01 per cent in 2018, with the
decrease reflecting the growth in NAV, the absence of one-off
costs[15] and effective cost management as the Company has scaled.
Syncona Investment Management Limited's ("SIML") management fee is
capped at 1.1% of net assets and management fees paid to SIML in
2019 totalled GBP8.9 million (2018: GBP5.8 million), or 0.70 per
cent of NAV (2018: 0.79 per cent) [16]. Allowing for the costs
associated with the Company's Long-Term Incentive Plan, ongoing
charges increased to 1.84 per cent (2018: 1.58 per cent).
Long-Term Incentive Plan
To provide long-term alignment of interest with shareholders,
Syncona's Long-Term Incentive Plan ("LTIP") was adopted by
shareholders in December 2016 and replaced the original performance
scheme that was put in place at the time of the establishment of
Syncona in 2012.
The strong performance of the life science portfolio has
significantly exceeded the growth hurdle[17] for the LTIP. The LTIP
scheme vests on a straight-line basis over a four-year period with
awards settled in cash and Syncona shares. At the year end the
total liability for the cash settled element was revalued at
GBP17.2 million (2018: GBP5.4 million), of which GBP6.4 million
would be payable if all eligible MES were realised in the current
financial year, and the number of shares in the Company that could
potentially be issued increased by 10,046,397 shares, taking the
fully-diluted number of shares to 671,268,706. Further details on
the LTIP can be found in the Remuneration Report in the Annual
Report to be published in due course and in notes 2 and 13.
Dividend
The Board has declared a final dividend of 2.3p per share (2018:
2.3p per share) for the year. Syncona's investment objective is to
achieve superior long-term capital appreciation by founding,
building and funding global leaders in healthcare. The portfolio is
now predominantly invested in fast growing, capital intensive, life
science companies and during the year the Board reviewed the
dividend policy and has decided that it will no longer be
appropriate to pay a dividend moving forward.
Charitable donations
Syncona is donating GBP1.9 million to the Institute of Cancer
Research and GBP2.4 million to The Syncona Foundation (for onward
distribution to nominated charities) for the 2019 year. Syncona
commits a minimum of 0.3% of its net asset value to charitable
causes in the field of healthcare, in particular cancer, and
beyond. Further details on our charitable donations can be found in
the Corporate Social Responsibility statement in the Annual
Report.
Foreign exchange
At the year-end, we continued to hold the Company's foreign
exchange exposure in the life science portfolio unhedged with the
exception of the investment in Nightstar ahead of the anticipated
completion of its acquisition by Biogen in June 2019. Within the
capital pool we continue to hedge all of the euro-denominated share
classes, and 92.5 per cent of the exposure to US Dollar-denominated
share classes and cash balances. At the year end, the unrealised
loss on the associated forward contracts was GBP0.6 million.
Valuation policy
The valuation of investments is conducted in accordance with
International Private Equity and Venture Capital Valuation
Guidelines. At 31 March 2019, the life science investments were
valued at cost, Price of Recent Investment, rDCF, adjusted
third-party or quoted basis. In the case where Syncona is the sole
institutional investor and substantive clinical data which is
material to Syncona has been generated in life science portfolio
companies, we will use input from an independent valuations advisor
in our determination of the fair value of investments. Capital pool
investments are valued by reference to third-party pricing.
John Bradshaw, Chief Financial Officer, Syncona Investment
Management Limited
13 June 2018
Valuation policy for life science investments and clinical trial
disclosure process
Valuation policy for life science investments
The Group's investments in life science companies are, in the
case of quoted companies, valued based on bid prices in an active
market as at the reporting date.
In the case of the Group's investments in unlisted companies,
the fair value is determined in accordance with the International
Private Equity and Venture Capital ("IPEVC") Valuation Guidelines.
These include the use of recent arm's length transactions,
Discounted Cash Flow ("DCF") analysis and earnings multiples.
Wherever possible, the Group uses valuation techniques which make
maximum use of market based inputs.
The following considerations are used when calculating the fair
value of unlisted life science companies:
-- The cost generally represents fair value as of the transaction date. Similarly, where there
has been a recent investment in the unlisted company by third parties, the Price of Recent
Investment ("PRI") generally represents fair value as of the transaction date, although further
judgement may be required to the extent that the instrument in which the recent investment
was made is different from the instrument held by the Group.
-- The length of period for which it remains appropriate to use cost or the PRI depends on the
specific circumstances of the investment and the stability of the external environment and
adequate consideration needs to be given to the current facts and circumstances. Where there
is objective evidence that an investment has been impaired or increased in value since the
investment was made, such as observable data suggesting a change of the financial, technical
or commercial performance of the underlying investment, the Group carries out an enhanced
assessment based on one of the alternative methodologies set out in the IPEVC Valuation Guidelines.
-- DCF involves estimating the fair value of an investment by calculating the present value of
expected future cash flows, based on the most recent forecasts in respect of the underlying
business. Given the difficulty involved with producing reliable cash flow forecasts for seed,
start-up and early-stage companies, the DCF methodology will more commonly be used in the
event that a life science company is in the final stages of clinical testing prior to regulatory
approval or has filed for regulatory approval.
-- Independent Adviser - the Group's determination of the fair values of certain investments
took into consideration multiple sources including management and publicly available information
and publications and certain input from independent advisers L.E.K. Consulting LLP ("L.E.K."),
who have undertaken an independent review of certain investments and have assisted the Group
with its valuation of such investments. The review was limited to certain limited procedures
that the Group identified and requested it to perform within an agreed limited scope.
-- As with any review of investments these can only be considered in the context of the limited
procedures and agreed scope defining such review and are subject to assumptions which may
be forward looking in nature and subjective judgements. Upon completion of such limited agreed
procedures, L.E.K. estimated an independent range of fair values of those investments subjected
to the limited procedures. In making such a determination the Group considered the review
as one of multiple inputs in the determination of fair value. The limited procedures within
the agreed scope are limited by the information reviewed and did not involve an audit, review,
compilation or any other form of verification, examination or attestation under generally
accepted auditing standards and was based on the review of multiple defined sources. The Group
is responsible for determining the fair value of the investments, and the agreed limited procedures
in the review performed to assist the Group in its determination are supplementary to the
inquiries and procedures that the Group is required to undertake to determine the fair value
of the said investments for which the Directors are ultimately responsible.
Where the Group is the sole institutional investor and until
such time as substantial clinical data has been generated
investment will be valued by reference to Cost or PRI subject to
adequate consideration being given to current facts and
circumstances. Once substantial clinical data has been generated
the Group will use input from an independent valuations advisor to
assist in the determination of fair value.
Valuation of the life science % of life science % of net assets
portfolio portfolio
------------------------------ ----------------- ---------------
Cost 15.2 11.1
------------------------------ ----------------- ---------------
Discounted Cash Flow 25.3 18.4
------------------------------ ----------------- ---------------
Quoted 55.9 40.6
------------------------------ ----------------- ---------------
Adjusted Price of Recent
Investment 0.4 0.3
------------------------------ ----------------- ---------------
Third Party 3.2 2.4
------------------------------ ----------------- ---------------
Clinical trial disclosure process
Currently, Syncona's portfolio companies are progressing with
eight clinical trials. These trials represent both a significant
opportunity and risk for each company and for Syncona Ltd.
Unlike typical randomised controlled pharmaceutical clinical
trials, currently all eight clinical trials are open-label trials.
Open label trials are clinical studies in which both the
researchers and the patients are aware of the drug being given. In
some cases the number of patients in a trial may be relatively
small. Data is generated as each patient is dosed with the drug in
a trial and is collected over time as results of the treatment are
analysed and, in the early stages of these studies, dose-ranging
studies are completed.
Because of the trial design, clinical data in open-label trials
is received by our portfolio companies on a frequent basis.
However, individual data points need to be treated with caution,
and it is typically only when all or substantially all of the data
from a trial is available and can be analysed that meaningful
conclusions can be drawn from that data about the prospect of
success or otherwise of the trial. In particular it is highly
possible that early developments (positive or negative) in a trial
can be overtaken by later analysis with further data as the trial
progresses.
Our portfolio companies may decide or be required to announce
publicly interim clinical trial data, for example where the company
or researchers connected with it are presenting at a scientific
conference, and Syncona will generally also issue a simultaneous
announcement about that clinical trial data. Syncona would also
expect to announce its assessment of the results of a trial at the
point we conclude on the data available to us that it has succeeded
or failed. We would not generally expect to announce our assessment
of interim clinical data in an ongoing trial otherwise, although we
will review all such data to enable us to comply with our legal
obligations such as under the EU Market Abuse Regulation or
otherwise.
Principal risks and uncertainties
The principal risks that the Board has identified are set out in
the following table, along with the consequences and mitigation of
each risk. Further information on risk factors is set out in note
19 to the Consolidated Financial Statements.
Description Impact Mitigation Changes in the
year
Failure to attract or retain key personnel (unchanged)
The expertise, If the Investment The Investment The Board
due diligence, Manager does not Manager recognises
risk management succeed in carries out that the execution
skills and integrity retaining regular of the Company's
of the staff at skilled personnel market investment
the Investment or is unable to comparisons strategy
Manager are key continue to for staff and is dependent
to the success attract executive on the specialist
of the Company. all personnel remuneration. expertise of
The industries necessary Senior a small number
in which the Investment for the executives are of key individuals
Manager operates development shareholders within the
are highly specialised and operation of in the Company Investment
and require highly their business, and Manager.
qualified and experienced it may not be staff of the Organisational
management and able Investment capability and
personnel. to execute the Manager succession
Given the relatively Company's participate planning
small size of the investment in the Syncona within the
team, the execution strategy Long Investment
of the Company's successfully. Term Incentive Manager is
investment strategy Plan. discussed
is dependent on In addition, the by the Board.
a small number Investment The Directors
of key individuals. Manager are focused on
There is a risk encourages ensuring that
that employees staff the Investment
could be approached development Manager retains
by other organisations and inclusion its existing
or could otherwise through key staff and
choose to leave coaching and is able to attract
the Investment mentoring additional staff
Manager. and carries out where needed
regular to deliver the
objective Company's
setting investment
and appraisals. strategy.
A central part
of
the Company's
strategy
is to bring in
high-quality
and experienced
people
to manage our
portfolio
companies. These
teams
are supported by
strong
Non-Executive
Directors,
typically global
leaders
in their fields,
to
work alongside
the
Investment
Manager
to drive success
in
the portfolio
companies.
=========================================================== ================== ================= ==================
Risk in making early stage investments (unchanged)
The Company invests The Company may The Investment It is increasingly
in and builds life not realise an Manager clear that the
science businesses. attractive return employs highly best businesses
In many cases these or, in some experienced require
are at a very early cases, personnel, with significant
stage, in many may not realise deep capital to be
cases before there its original cost scientific committed from
is any or any substantial or any value from expertise the outset, to
clinical evidence its investment. and considerable enable a robust
of effectiveness In addition the experience business plan
or a commercially Company may need of building and to be executed
viable way to deliver to invest developing by a high quality
the technology. significant early-stage life team. The overall
Evaluating such additional time, science result for any
opportunities is capital and businesses, who one business
inherently uncertain management are is to improve
and may require resources in therefore its chances of
significant capital order well-positioned success, but
to be invested to realise any to evaluate the it also materially
before these uncertainties return. risks increases the
can be resolved. Failures of and capital at risk
investments opportunities. if there is a
may affect the Before making failure. We
Company's wider any believe
reputation for investment, the our existing
building Investment processes are
successful Manager performs appropriate to
life science extensive address and
businesses due diligence mitigate
and impact our covering the evolving
share price, make all the major risk profile
it more difficult scientific but keep this
to recruit high and business under review.
quality personnel risks,
to the Investment and develops an
Manager or our operational
businesses, or plan to mitigate
have other these.
negative This will
impacts. typically
involve the
Investment
Manager's
personnel
working closely
with
the portfolio
company,
taking
non-executive
and at times
executive
roles on
portfolio
company boards.
The Investment
Manager
has a robust and
disciplined
financing and
capital
allocation
framework,
and investments
may
involve seed
funding
or tranching to
identify
and mitigate
early
risks before
proceeding
with more
substantial
investments.
=========================================================== ================== ================= ==================
Clinical trial risks (increased)
The Company's life A failure to This is the key We have separated
science investments demonstrate risk our clinical
are typically development that a clinical that underpins trials as a
stage businesses product is our separate
engaged or seeking effective, business model risk, to recognise
to engage in clinical or the discovery and that a growing
trials of new products. of material drives returns. number of our
There are risks toxicity To life science
arising from any issues, is likely manage it we companies are
clinical trial: to result in a need progressing
* Risk of negative results from clinical trials decline in the to have a strong clinical
value of the management trials. There
portfolio team, with is risk inherent
* Risk of adverse events from clinical trials company, or even robust in this activity,
lead to the culture and as companies
portfolio process, test pre-clinical
company failing. and hire the hypotheses in
Even where a best a human setting.
clinical people within Results from
trial the clinical trials
demonstrates portfolio will either enable
some efficacy, companies. our companies
data may be The Investment to progress
insufficiently Manager further
clear to satisfy employs highly with development
regulatory experienced if positive,
requirements personnel with or can result
or to establish deep in failure both
commercial scientific at a programme
differentiation, expertise and company level
and in that case and considerable if negative or
further studies experience if there are
may be required of building and adverse events.
incurring delay developing During the year,
and expense. This early-stage life two new clinical
in turn may science trials launched,
impact businesses. The taking the total
the value of such Investment number of clinical
portfolio Manager's trials across
company. personnel our portfolio
A significant work closely to eight.
adverse with
event during a portfolio
clinical trial companies,
may result in taking both
material executive
harm to one or and
more individuals. non-executive
It may also roles on
result portfolio
in a halt or company boards,
delay monitoring
to the clinical progress and
trial, or require ensuring
additional familiarity with
studies issues
to ascertain the and risks.
cause of the Members of the
event. portfolio
It may also companies'
result management
in significant teams have
reputational significant
issues experience in
for Syncona. the
management of
clinical
programmes and
have
dedicated
internal
resource to
establish
and monitor each
of
the clinical
programmes
in order to
maximise
successful
outcomes.
Business and
clinical
strategies will
seek
to mitigate
development
risk, for
example
by carefully
considering
trial design, or
by
seeking to have
multiple
trials in
different
indications.
In addition, the
Investment
Manager's team
can
assist the
management
teams of the
portfolio
companies with
arranging
specialist
advice.
=========================================================== ================== ================= ==================
General, commercial and technological risks (unchanged)
The Company's life All of these The Investment We have separated
science investments risks Manager out these risks
are exposed to could potentially employs highly from the clinical
a wide range of lead to a decline experienced trial risks above.
general, commercial in the value of personnel with Given that only
and technological a portfolio deep one of our life
risks. In particular: company, scientific science companies
* Intellectual property may fail to be granted or may or even lead to expertise has a product
be infringed or copied the portfolio and considerable that has completed
company experience clinical trials,
failing. of building and these risks are
* Failure of a technology platform in an early-stage developing typically a less
company early-stage life significant factor
science for us at the
businesses. The current time,
* Failure to obtain regulatory approval for new Investment but we expect
products developed Manager's these risks to
personnel become a greater
work closely focus as our
* Failure to sell products profitably or in sufficient with life science
volumes portfolio companies progress
companies, through the clinic
taking both towards
* Changes in pharmaceutical pricing practices executive commercialisation.
and
non-executive
* Launch of competing products roles on
portfolio
company boards,
* Reputational damage monitoring
progress and
ensuring
* Targeted public campaigns familiarity with
issues
and risks.
* Latent product defects resulting in claims
------------------ ----------------- ------------------
Dominance of portfolio by a few larger investments and/or sector
focus (increased)
Within its life If a portfolio The Board The Company's
science portfolio, company considers strategy is to
the Company is experiences the performance build successful
seeking to build financial or of life science
a focused portfolio operational its largest companies, and
of 15-20 leading difficulties, portfolio during the year
life science companies. fails companies and we have seen
Accordingly, a to achieve the significant value
large proportion anticipated portfolio's creation in
of the overall results or, where concentration several
value of the life relevant, suffers in specific of our life
science portfolio from poor stock sub-sectors science
may, at any time, market conditions on a quarterly companies. While
be accounted for and if, as a basis. this does create
by one, or a few, result, Business and a greater
portfolio companies. its value were clinical concentration
The Company's life to be adversely strategies seek risk, we believe
science portfolio affected, this to it to be in line
may also be focused could have an diversify the with our strategy.
on a small number adverse concentration During the year
of sub-sectors impact on the risk in any one shareholders
within the life overall portfolio approved changes
science sector. value of the life company, for to our investment
Accordingly, a science example policy that gave
material proportion investment by seeking to us more
of the overall portfolio. have flexibility
value of the life Similarly, if the multiple to hold a
science investment technology or products significant
portfolio may, technologies under part of our
at any time, be utilised in a development portfolio
invested in a specific specific in different in a small number
sub-sector. sub-sector prove indications. of life science
This risk has increased to be At 31 March companies, to
as a result of commercially 2019, support us in
positive developments unproductive or the Company's delivering our
within portfolio unsuccessful, three strategy.
companies that then largest
have resulted in the value of the investments
the Company recognising Company's in its life
value increases investments science
and committing in the respective portfolio are
further investment. sub-sector(s) valued
could at GBP854.0
be negatively million
impacted. representing
58.7
per cent of the
net
asset value of
the
Company. One of
these
companies,
Nightstar,
received an $877
million
approach from
Biogen,
which completed
in
June 2019.
------------------ ----------------- ------------------
Financing and exit risk (unchanged)
Life science businesses Lack of funding The Company During the year
are capital intensive. may restrict the maintains we have more
Instability in ability of a a strong clearly set out
equity and debt portfolio liquidity our desired
markets and/or company in the position to fund capital
the market's appetite Company's life life pool to enable
for investment science portfolio science us to support
in life science to fund ongoing investments, our life science
companies could research and and seeks to companies. At
result in an inability development maintain 31 March 2019,
to finance new and a minimum of two the Company had
investments and/or commercialisation to available
unattractive pricing programmes and three years of liquidity
for life science the ability of anticipated in its capital
companies, either the Company to investment pool of GBP399.7
in public markets invest in new, (existing million. The
or sales to financial attractive and proposed new sale of Nightstar
or strategic acquirers. investment portfolio has provided
opportunities. companies) plus us with an
This could result two additional
in the portfolio to three years GBP255.8m and
company being of takes our capital
unable costs. This pool to GBP655.5
to continue its enables million (pro
development, it to avoid forma including
impacting being that amount).
the value of the a "forced However, given
investment. seller" our anticipated
A lower value may (whether through level of
be realised in sale investment,
the event of a or dilution) in we keep this
sale of a unattractive under close
portfolio market review.
company at a time conditions.
when markets are Where
unstable or have appropriate
reduced appetite the Company may
for life science seek
companies. to bring in
high-quality
external capital
into
portfolio
companies,
to support those
businesses
through later,
more
capital
intensive
development
stages.
Portfolio
companies
are established
with
robust business
models
that should be
attractive
to external and
public
market investors
or
strategic
acquirors
even in
challenging
market
conditions.
------------------ ----------------- ------------------
Capital Pool risk (decreased)
The Company's capital Any loss or The Investment During the year
pool is exposed illiquidity Manager we simplified
to the risk of loss of the capital holds the the management
or illiquidity if pool capital of our capital
the instruments may prevent the pool in pool away from
in which it is held Company from instruments fund investments
do not perform in financing that are chosen to ensure it
line with their its life science to focuses on the
objectives. investments, as protect against key criteria
well as having a risk of high liquidity
direct impact on and provide and low
net asset value appropriate volatility.
of the Company. liquidity, with As a result we
return believe the
a secondary overall
consideration. risk of our
The risk capital
parameters pool has reduced.
for the capital
pool
are carefully
considered
by the
Investment
Manager and the
actual
performance
monitored
on an ongoing
basis.
In the event of
concerns,
a greater
portion
of the capital
pool
may be held in
cash
or
cash-equivalent
instruments.
=========================================================== ================== ================= ==================
Description Impact Mitigation Changes in the
year
Systems and controls (unchanged)
The potential loss Disruption of the Systems and control During the year
of operation of business of the procedures are developed the Administrator
core systems or Investment Manager and reviewed regularly changed from
sensitive data leading or the Administrator. and the Board receives Northern Trust
to damage and disruption reports annually from to Citco, and
to the Investment the Investment Manager systems and controls
Manager or the Administrator's and the Administrator have been updated
business. on their internal to reflect that
controls. change.
------------------------------ --------------------------- ---------------------
Impact of political and economic uncertainty, and changes to law
and regulation (unchanged)
Political and economic There could be The Company and the During the year
uncertainty, including potential risks Investment Manager we considered
impacts from the to research funding monitor, and respond the risks around
EU referendum or and so the pipeline to, changes in law a "Hard Brexit"
similar scenarios, of attractive opportunities; and regulation, including and steps that
and changes to to attracting and any changes in tax could be taken
law and regulation, retaining talent or other legislation, to mitigate those
could impact the and so the ability with the support of risks. We continue
Investment Manager, to build successful professional advisers to keep these
the Company or businesses in line where appropriate. risks under review.
its portfolio companies. with plan; or to
the ability to
profitably commercialise
new products.
Changes in legislation
and government
policy may adversely
impact the Investment
Manager's ability
to execute the
investment strategy
of the Company
or result in significant
additional costs
being incurred.
Changes to tax
laws may impact
the Company's returns
or the returns
that shareholders
may receive from
the Company.
================================ ============================== =========================== =====================
Responsibility statement
The Directors' responsibility statement below has been prepared
in conjunction with, and is extracted from, the Company's Annual
Report and Accounts for the year ended 31 March 2019 ("2019 Annual
Report"), whereas this announcement contains extracts from the 2019
Annual Report. The responsibility statement is repeated here solely
for the purpose of complying with DTR 6.3.5. These responsibilities
are for the full 2019 Annual Report and not the extracted
information presented in this announcement or otherwise.
The Directors of the Company are:
Jeremy Tigue, Chairman
Melanie Gee, Non-Executive Director
Tom Henderson, Non-Executive Director
Rob Hutchinson, Non-Executive Director
Nigel Keen, Non-Executive Director
Nicholas Moss, Non-Executive Director
Gian Piero Reverberi, Non-Executive Director
Ellen Strahlman, Non-Executive Director
The Directors confirm to the best of our knowledge:
1. The Financial Statements contained in the 2019 Annual Report
have been prepared in accordance with International Financial
Reporting Standards, give a true and fair view of the assets,
liabilities, financial position and profit or loss of the Group and
the undertakings included in the consolidation taken as a whole;
and
2. The management report in the 2019 Annual Report including
information and details in the Strategic Report, the Corporate
Governance Statements, the Directors' Report and the notes to the
Financial Statements, provides a fair review of the Company
business and a description of the principal risks and uncertainties
facing the Company and the undertakings included in the
consolidation taken as a whole; and
3. The 2019 Annual Report, taken as a whole, is fair, balanced
and understandable and provides the information necessary for
shareholders to assess the Company's performance, business model
and strategy.
GROUP PORTFOLIO STATEMENT
As at 31 March 2019
% of Group
Fair Value NAV
GBP'000 2019
Life science portfolio
Life science companies
Autolus Therapeutics plc 328,200 22.6
Blue Earth Diagnostics Limited 267,470 18.4
Nightstar Therapeutics plc 258,344 17.7
Freeline Therapeutics Limited 93,500 6.4
Gyroscope Therapeutics Limited 28,875 2.0
Achilles Therapeutics Limited 16,166 1.1
Companies of less than 1% of NAV 31,095 2.1
Total life science companies(1) 1,023,650 70.3
CRT Pioneer Fund(2) 34,311 2.4
Open forward currency contracts (2,488) (0.2)
Total life science portfolio(3) 1,055,473 72.5
---------- ------------
Capital pool investments
Sagil Latin American Opportunities 21,507 1.5
Funds of less than 1% of NAV 37,383 2.6
---------- ------------
58,890 4.1
Equity funds
The SFP Value Realisation 33,906 2.3
---------- ------------
33,906 2.3
Fixed income and credit funds
Polygon Convertible Opportunity 20,930 1.4
Wyetree RETRO 18,665 1.3
---------- ------------
39,595 2.7
Fixed term funds
Permira V 21,054 1.4
Portland Hill 20,414 1.4
Chenavari European Deleveraging Opportunities 14,171 1.0
Funds of less than 1% of NAV 13,832 1.0
69,471 4.8
Open forward currency contracts 1,908 0.1
Total capital pool investments(2) 203,770 14.0
---------- ------------
Other net assets
Cash and cash equivalents(4) 211,748 14.6
Charitable donations (4,300) (0.3)
Other assets and liabilities (11,578) (0.8)
Total other net assets 195,870 13.5
---------- ----------
Total net asset value of the Group 1,455,113 100.0
========== ==========
(1) The fair value of Syncona Holdings Limited amounting to
GBP1,048,249,690 is comprised of investments in life science
companies of GBP1,021,161,530 (including the open forward currency
contracts of GBP(2,488,458)), investments in Syncona Investment
Management Limited of GBP4,050,743, other net assets of
GBP25,867,467 in Syncona Portfolio Limited and other net
liabilities of GBP2,830,050 in Syncona Holdings Limited.
(2) The fair value of the investment in Syncona Investments LP
Incorporated amounting to GBP421,828,431 is comprised of the
investment in the capital pool investments of GBP203,769,671
(including the open forward currency contracts of GBP1,908,145),
the investment in the CRT Pioneer Fund of GBP34,311,339, cash of
GBP198,704,854 and other net liabilities of GBP14,957,433.
(3) The life science portfolio of GBP1,055,472,869 consists of
life science investments totalling GBP1,021,161,530 (including the
open forward currency contracts of GBP(2,488,458)) held by Syncona
Holdings Limited and the CRT Pioneer Fund of GBP34,311,339 held by
Syncona Investments LP Incorporated.
(4) Total cash held by the Group is GBP211,747,675. Of this
amount GBP90,748 is held by Syncona Limited. The remaining
GBP211,656,927 is held by its subsidiaries other than portfolio
companies ("Syncona Group Companies"). Cash held by Syncona Group
Companies is not shown in Syncona Limited's Consolidated Statement
of Financial Position.
See note 1 for a description of Syncona Holdings Limited and
Syncona Investments LP Incorporated.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the year ended 31 March 2019
2019 2018
Notes Revenue Capital Total Revenue Capital Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Investment income
Other income 7 34,631 - 34,631 28,747 - 28,747
Total investment
income 34,631 - 34,631 28,747 - 28,747
------- ------- ------- ------- ------- -------
Net gains on financial
assets at fair
value through profit
or loss 8 - 404,487 404,487 - 167,694 167,694
Total gains - 404,487 404,487 - 167,694 167,694
------- ------- ------- ------- ------- -------
Expenses
Charitable donations 9 4,300 - 4,300 4,752 - 4,752
General expenses 10 23,556 - 23,556 18,858 - 18,858
Total expenses 27,856 - 27,856 23,610 - 23,610
------- ------- ------- ------- ------- -------
Profit for the
year 6,775 404,487 411,262 5,137 167,694 172,831
======= ======= ======= ======= ======= =======
Earnings per Ordinary
Share 15 1.03p 61.21p 62.24p 0.78p 25.43p 26.21p
======= ======= ======= ======= ======= =======
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 year 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 31 March 2019
Notes 2019 2018
GBP'000 GBP'000
ASSETS
Non-current assets
Financial assets at fair value through
profit or loss 11 1,470,078 1,064,521
Current assets
Bank and cash deposits 91 981
Trade and other receivables 12 8,833 5,445
Total assets 1,479,002 1,070,947
----------- -----------
LIABILITIES AND EQUITY
Non-current liabilities
Share based payment 13 10,834 4,450
Current liabilities
Share based payment 13 6,351 943
Payables 14 6,704 9,791
Total liabilities 23,889 15,184
----------- -----------
EQUITY
Share capital 15 766,037 763,016
Distributable capital reserves 689,076 292,747
Total equity 1,455,113 1,055,763
----------- -----------
Total liabilities and equity 1,479,002 1,070,947
----------- -----------
Total net assets attributable to holders
of Ordinary Shares 1,455,113 1,055,763
=========== ===========
Number of Ordinary Shares in Issue 15 661,222,309 659,952,090
----------- -----------
Net assets attributable to holders of
Ordinary Shares (per share) 15 GBP2.20 GBP1.60
----------- -----------
Diluted Shares (per share) 15 GBP2.17 GBP1.59
----------- -----------
The audited Consolidated Financial Statements were approved on
13 June 2019 and signed on behalf of the Board of Directors by:
Jeremy Tigue Rob Hutchinson
Chairman Director
CONSOLIDATED STATEMENT OF CHANGES IN NET ASSETS ATTRIBUTABLE TO
HOLDERS OF ORDINARY SHARES
As at 31 March 2019
Share Capital Revenue
Notes capital reserves reserves Total
GBP'000 GBP'000 GBP'000 GBP'000
As at 31 March 2017 760,327 134,911 - 895,238
Total comprehensive income
for the year - 167,694 5,137 172,831
Transactions with shareholders:
Distributions 16 - (9,858) (5,285) (15,143)
Scrip dividend shares
issued during the year 15 2,689 - - 2,689
Share based payments - - 148 148
As at 31 March 2018 763,016 292,747 - 1,055,763
======== ========= ========= =========
Total comprehensive income
for the year - 404,487 6,775 411,262
Transactions with shareholders:
Distributions 16 - (8,158) (7,020) (15,178)
Scrip dividend shares
issued during the year 15 3,021 3,021
Share based payments - - 245 245
As at 31 March 2019 766,037 689,076 - 1,455,113
======== ========= ========= =========
CONSOLIDATED STATEMENT OF CASH FLOWS
For the year ended 31 March 2019
Notes 2019 2018
GBP'000 GBP'000
Cash flows from operating activities
Profit for the year 411,262 172,831
Adjusted for:
Gains on financial assets at fair value
through profit or loss 8 (404,487) (167,694)
--------- ---------
Operating cash flows before movements
in working capital 6,775 5,137
Increase in other receivables (3,388) (673)
(Decrease)/increase in other payables (3,087) 3,729
--------- ---------
Net cash generated from operating activities 300 8,193
--------- ---------
Cash flows from investing activities
Purchase of financial assets at fair
value through profit or loss (119,419) (114,133)
Return of capital contribution 130,386 119,270
--------- ---------
Net cash generated from investing activities 10,967 5,137
--------- ---------
Cash flows from financing activities
Distributions 16 (12,157) (12,454)
--------- ---------
Net cash used in financing activities (12,157) (12,454)
--------- ---------
Net increase in cash and cash equivalents (890) 876
Cash and cash equivalents at beginning
of the year 981 105
--------- ---------
Cash and cash equivalents at end of the
year 91 981
========= =========
Supplemental disclosure of non-cash investing
and financing activities
Issue of shares 15 3,021 2,689
Scrip dividend shares issued during the
year 15 (3,021) (2,689)
--------- ---------
Net non-cash investing and financing
activities - -
--------- ---------
Cash held by the Company and Syncona Group companies is
disclosed in the Group portfolio statement.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 March 2019
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 on 26 October 2012 when it commenced its business.
The Company makes its life science investments through Syncona
Holdings Limited (the "Holding Company") in which the Company is
the sole shareholder. The Company maintains its capital pool
through Syncona Investments LP Incorporated (the "Partnership"), in
which the Company is the sole limited partner. The general partner
of the Partnership is Syncona GP Limited (the "General Partner"), a
wholly-owned subsidiary of the Company. Syncona Limited and Syncona
GP Limited are collectively referred to as the "Group".
On 12 December 2017 Syncona Investment Management Limited
("SIML"), a subsidiary, was appointed as the Company's Alternative
Investment Fund Manager ("Investment Manager") replacing BACIT (UK)
Limited ("BACIT") which became a sub-delegate to the Investment
Manager on the same date. On 31 March 2018 the sub-delegate
relationship between the Company, SIML and BACIT was
terminated.
2. ACCOUNTING POLICIES
The following accounting policies have been applied consistently
in dealing with items which are considered to be material in
relation to the Group's financial statements:
Preliminary announcement
The financial information contained in this preliminary
announcement does not constitute full accounts as defined in the
Companies (Guernsey) Law, 2008 and has been extracted from the
statutory accounts for the year ended 31 March 2019. The auditors
have issued an unqualified report on these statutory accounts. The
Company expects to publish full financial statements that comply
with IFRS in June 2019, a copy is available upon written request
from the Company's registered office.
This announcement has been prepared using recognition and
measurement principles of IFRS as endorsed for use in the European
Union (IFRS). This announcement does not contain sufficient
information to comply with IFRS.
The same accounting and presentation policies were used in the
preparation of the statutory accounts for the year ended 31 March
2018.
Basis of preparation
The 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 Company's net assets currently consist of securities and cash
amounting to GBP1,455.1 million (31 March 2018: GBP1,055.8 million)
of which 34.64% (31 March 2018: 31.4%) are readily realisable
within three months in normal market conditions, and liabilities
including uncalled commitments to underlying investments and funds
amounting to GBP121.6 million (31 March 2018: GBP72.0 million).
Accordingly, the Company has adequate financial resources to
continue in operational existence for 12 months following the
approval of the Consolidated Financial Statements. Hence, the
Directors believe that it is appropriate to continue to adopt the
going concern basis in preparing the Consolidated Financial
Statements.
Basis of consolidation
The General Partner is consolidated in full; the Company and the
General Partner consolidated form the Group.
The results of the General Partner during the year are included
in the Consolidated Statement of Comprehensive Income from the
effective date of incorporation. The financial statements of the
General Partner are prepared in accordance with United Kingdom
Accounting Standards. Where necessary, adjustments are made to the
financial statements of the General Partner to bring the accounting
policies used into line with those used by the Group. During the
year, no such adjustments have been made. 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 IFRS 9. The Partnership
and the Holding Company both meet the definition of Investment
Entities as described in note 3.
New standards adopted by the Group
The following accounting policies have been applied consistently
in dealing with items which are considered to be material in
relation to the Group's financial statements:
The Group has adopted IFRS 9 "Financial Instruments" ("IFRS 9"),
which replaces the existing guidance in IAS 39 Financial
Instruments: Recognition and Measurement, which became effective
from 1 January 2018 and adopted by the Group on 1 April 2018. As
outlined below the impact of adopting IFRS 9 on the Consolidated
Financial Statements was not material for the Group and there was
no adjustment to retained earnings on application at 1 April 2018.
In line with the transition guidance in IFRS 9, the Group has not
restated the prior year results on adoption.
IFRS 9 also introduces a new expected credit loss ("ECL")
impairment model for financial instruments held at amortised cost
which involves a three-stage approach whereby financial assets move
through the three stages as their credit quality changes. The stage
dictates how an entity measures impairment losses and applies the
effective interest rate method. On initial recognition, entities
will record a day-1 loss equal to the 12 month ECL, unless the
assets are considered credit impaired. There was no material impact
on adoption from the application of the new impairment model for
the Group.
The adoption of IFRS 9 has no material impact on the Group's
classification of financial assets and financial liabilities as
financial assets and liabilities are still measured on a fair value
basis.
The Group has adopted IFRS 15 "Revenue from Contracts with
Customers" which became effective from 1 January 2018 and adopted
by the Group on 1 April 2018, replacing IAS 18 "Revenue". The
standard provides a single, principles based five-step model to be
applied to all contracts with customers. Material revenue streams
have been reviewed and there are no changes to the recognition of
income by the Group as a result of the new standard.
Standards, amendments and interpretations not yet effective
At the date of approval of these Consolidated Financial
Statements, the following standards and interpretations, which have
not been applied in these Consolidated Financial Statements, were
in issue but not yet effective:
IFRS 16 - Leases (effective accounting periods starting on or
after 1 January 2019).
Amendments to IFRS 9 - Prepayments features with negative
compensation (effective accounting periods on or after 1 January
2019).
Amendments to IAS 28 - Long term interests in associates and
joint ventures (effective accounting periods on or after 1 January
2019).
IFRS 16 "Leases" introduces a comprehensive model for the
identification of lease arrangements and accounting treatments for
both lessors and lessees. Distinctions of operating leases (off
balance sheet) and finance leases (on balance sheet) are removed
for lessee accounting, and are replaced by a model where a
right-of-use asset and a corresponding liability have to be
recognised for all leases by lessees except for short-term leases
and leases of low value assets. The Group has no material leases
and therefore it is not anticipated that there will be a material
impact on the Group's financial statements.
Standards, amendments and interpretations not yet effective
(continued)
Amendments to IFRS 9 - Prepayments features with negative
compensation. The narrow-scope amendments made to IFRS 9 in
December 2017 enable entities to measure certain prepayable
financial assets with negative compensation at amortised cost.
These assets, which include some loan and debt securities, would
otherwise have to be measured at fair value through profit or loss.
To qualify for amortised cost measurement, the negative
compensation must be 'reasonable compensation for early termination
of the contract' and the asset must be held within a 'held to
collect' business model. The amendments are not expected to have a
material impact on the Group's financial statements.
Amendments to IAS 28- Long term interests in associates and
joint ventures. The amendments clarify the accounting for long-term
interests in an associate or joint venture, which in substance form
part of the net investment in the associate or joint venture, but
to which equity accounting is not applied. Entities must account
for such interests under IFRS 9 before applying the loss allocation
and impairment requirements in IAS 28 Investments in Associates and
Joint Ventures. The amendments are not expected to have a material
impact on the Group's financial statements.
Financial instruments
Financial assets and derivatives are recognised in the Group's
Consolidated Statement of Financial Position when the Group becomes
a party to the contractual provisions of the instrument.
The Group has adopted IFRS 9, which replaces the existing
guidance in IAS 39 Financial Instruments: Recognition and
Measurement.
Policy effective from 1 April 2018
Under IFRS 9, on initial recognition, a financial asset is
classified as measured at amortised cost, fair value through other
comprehensive income, or fair value through profit or loss.
-- Financial assets at fair value through profit or loss
The Group classifies its financial assets as investments at fair value through profit or loss
based on the Group's business model and the contractual cash flow characteristics of the financial
assets. On 1 April the Investment Manager assessed which business models apply to the financial
assets and determined that the financial assets held by the Group would continue to be classified
at fair value through profit or loss.
-- Financial assets measured at amortised cost
Financial assets are measured at amortised cost if held within a business model whose objective
is to hold financial assets in order to collect contractual cash flows and its contractual
terms give rise on specified dates to cash flows that are solely payments of principal and
interest on the principal amount outstanding. The Group includes in this category short-term
non-financing receivables including trade and other receivables.
As at 31 March 2019 there are no financial assets measured at fair value through other comprehensive
income.
-- Financial liabilities measured at amortised cost
This category includes all financial liabilities, other than those measured at fair value
through profit or loss. The Group includes in this category short-term payables.
Policy effective before 1 April 2018
The Group classified its financial assets and financial
liabilities into the following categories in accordance with IAS
39, financial assets at fair value through profit and loss, loan
and receivables. The classification depended on the nature and
purpose of the financial assets and was determined at the time of
initial recognition.
-- Financial assets at fair value through profit or loss ("investments")
Investments purchased were initially recorded at fair value, being the consideration given
and excluding transaction or other dealing costs associated with the investment. Gains and
losses on investments sold are recognised in the Statement of Comprehensive Income in the
period in which they arise. The appropriate classification of the investments was determined
at the time of the purchase and was re-evaluated on a regular basis. The adoption of IFRS
9 had no impact on this classification.
-- Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments
that are not quoted in an active market. The carrying amounts, being cost, shown in the Consolidated
Statement of Financial Position approximate the fair values due to the short term nature of
these loans and receivables.
Forward currency contracts
Forward foreign currency contracts are derivative contracts and
as such are recognised at fair value on the date on which they are
entered into and subsequently remeasured at their fair value. Fair
value is determined by rates in active currency markets. Whilst the
Group holds no forward currency contracts, forward currency
contracts are held by the Partnership and Syncona Portfolio Limited
for hedging purposes only.
Other financial liabilities
Other financial liabilities include all other financial
liabilities other than financial liabilities at fair value through
profit or loss. The Group's other financial liabilities include
payables. The carrying amounts shown in the Consolidated Statement
of Financial Position approximate the fair values due to the
short-term nature of these other financial liabilities.
Offsetting of financial instruments
Financial assets and financial liabilities are offset and the
net amount reported in the Consolidated Statement of Financial
Position if, and only if, there is a currently enforceable legal
right to offset the recognised amounts and there is an intention to
settle on a net basis, or to realise assets and settle the
liabilities simultaneously.
Fair value - life science portfolio
The Group's investments in life science companies are, in the
case of quoted companies, valued based on bid prices in an active
market as at the reporting date.
In the case of the Group's investments in unlisted companies,
the fair value is determined in accordance with the International
Private Equity and Venture Capital ("IPEVC") Valuation Guidelines.
These include the use of recent arm's length transactions,
Discounted Cash Flow ("DCF") analysis and earnings multiples.
Wherever possible, the Group uses valuation techniques which make
maximum use of market-based inputs.
The following considerations are used when calculating the fair
value of unlisted life science companies:
-- The cost generally represents fair value as of the transaction date. Similarly where there
has been a recent investment in the unlisted company by third parties, the Price of Recent
Investment ("PRI") generally represents fair value as of the transaction date, although further
judgement may be required to the extent that the instrument in which the recent investment
was made is different from the instrument held by the Group.
-- The length of period for which it remains appropriate to use cost or the PRI depends on the
specific circumstances of the investment and the stability of the external environment and
adequate consideration needs to be given to the current facts and circumstances. Where there
is objective evidence that an investment has been impaired or increased in value since the
investment was made, such as observable data suggesting a change of the financial, technical,
or commercial performance of the underlying investment, the Group carries out an enhanced
assessment based on one of the alternative methodologies set out in the IPEVC Valuation Guidelines.
-----------------------------------------------------------------------------------------------------
-- DCF involves estimating the fair value of an investment by calculating the present value of
expected future cash flows, based on the most recent forecasts in respect of the underlying
business. Given the difficulty involved with producing reliable cash flow forecasts for seed,
start-up and early-stage companies, the DCF methodology will more commonly be used in the
event that a life science company is in the final stages of clinical testing prior to regulatory
approval or has filed for regulatory approval.
-----------------------------------------------------------------------------------------------------
-- Independent Adviser - The Group's determination of the fair values of certain investments
took into consideration multiple sources including management and publicly available information
and publications and certain input from independent advisors L.E.K. Consulting LLP ("L.E.K."),
who has undertaken an independent review of certain investments and has assisted the Group
with its valuation of such investments. The review was limited to certain limited procedures
that the Group identified and requested it to perform within an agreed limited scope.
-----------------------------------------------------------------------------------------------------
As with any review of investments these can only be considered
in the context of the limited procedures and agreed scope defining
such review and are subject to assumptions which may be forward
looking in nature and subjective judgements. Upon completion of
such limited agreed procedures, L.E.K. estimated an independent
range of fair values of those investments subjected to the limited
procedures. In making such a determination the Group considered the
review as one of multiple inputs in the determination of fair
value. The limited procedures within the agreed scope are limited
by the information reviewed and did not involve an audit, review,
compilation or any other form of verification, examination or
attestation under generally accepted auditing standards and was
based on the review of multiple defined sources. The Group is
responsible for determining the fair value of the investments, and
the agreed limited procedures in the review performed to assist the
Group in its determination are supplementary to the inquiries and
procedures that the Group is required to undertake to determine the
fair value of the said investments for which the Directors are
ultimately responsible.
Fair value - capital pool investments
The Group's capital pool investments in underlying funds are
ordinarily valued using the values (whether final or estimated) as
advised to the Investment Manager by the managers, general partners
or administrators of the relevant underlying fund. The valuation
date of such investments may not always be coterminous with the
valuation dates of the Company and in such cases the valuation of
the investments as at the last valuation date is used. The net
asset value ("NAV") reported by the administrator may be unaudited
and, in some cases, the notified asset values are based upon
estimates. The Group or the Investment Manager may depart from this
policy where it is considered such valuation is inappropriate and
may, at its discretion, permit any other valuation method to be
used if it considers that such valuation method better reflects
value generally or in particular markets or market conditions and
is in accordance with good accounting practice.
Derecognition of financial instruments
A financial asset is derecognised when: (a) the rights to
receive cash flows from the financial asset have expired, (b) the
Group retains the right to receive cash flows from the financial
asset, but has assumed an obligation to pay them in full without
material delay to a third party under a "pass through arrangement";
or (c) the Group has transferred substantially all the risks and
rewards of the financial asset, or has neither transferred nor
retained substantially all the risks and rewards of the financial
asset, but has transferred control of the financial asset.
A financial liability is derecognised when the contractual
obligation under the liability is discharged, cancelled or
expired.
Impairment of financial assets
IFRS 9 requires the Group to record ECLs on all financial assets
held at amortised cost, all loans and trade receivables, either on
a 12-month or lifetime basis. Given the limited exposure of the
Group to credit risk, this amendment has not had a material impact
on the financial statements. The Group only holds receivables with
no financing component and which have maturities of less than 12
months at amortised cost and therefore has applied the simplified
approach to recognise lifetime expected credit losses permitted by
IFRS 9.
Commitments
Through its investment in the Holding Company and the
Partnership, the Group has outstanding commitments to investments
that are not recognised in the Consolidated Financial Statements.
Refer to note 21 for further details.
Share based payments
Certain employees of SIML participate in equity incentive
arrangements under which they receive awards of Management Equity
Shares ("MES") in the Holding Company above a base line value set
out at the date of award. The MES are not entitled to dividends but
any dividends or capital value realised by the Group in relation to
the Holding Company are taken into account in determining the value
of the MES. If an individual remains in employment for the
applicable vesting period, they then have the right to sell 25% of
their vested MES to the Company each year. The price is determined
using a formula stipulated in the Articles of Association
("Articles") of the Holding Company.
The Group's policy is to settle half of the proceeds (net of
expected taxes) in Company shares which must be held for at least
12 months, with the balance paid in cash. Consequently, the
arrangements are deemed to be partly an equity-settled share based
payment scheme and partly a cash-settled share based payment scheme
under IFRS 2 "Share based payments" in the Consolidated Financial
Statements of the Group.
The fair value of the MES at the time of the initial
subscription is determined by an independent third-party valuer in
accordance with IFRS 2 and taking into account the particular
rights attached to the MES as described in the Articles. The
external valuer is supplied with detailed financial information
relating to the relevant businesses. Using this information, the
fair value is measured using a probability-weighted expected
returns methodology, which is an appropriate future-orientated
approach when considering the fair value of shares that have no
intrinsic value at the time of issue. The approach replicates that
of a binomial option pricing model. In this case, the expected
future payout to the MES was made by reference to the expected
evolution of the Holding Company's value, as provided by SIML
management, including expected dividends and other realisations
which is then compared to the base line value. This is then
discounted into present value terms adopting an appropriate
discount rate. The "capital asset pricing methodology" was used
when considering an appropriate discount rate to apply to the
payout expected to accrue to the MES on realisation.
When MES are granted, a share based payment charge is recognised
in the Consolidated Statement of Comprehensive Income of the
employing company, SIML, equal to the fair value at that date,
spread over the vesting period. In its own financial statements,
the Company records a capital contribution to the Holding Company
with an amount credited to the share based payments reserve in
respect of the equity-settled proportion and to liabilities in
respect of the cash-settled proportion (see below).
When the Company issues new shares to acquire the MES, the fair
value of the MES is credited to share capital.
To the extent that the Company expects to pay cash to acquire
the MES, the fair value of the MES is recognised as a liability in
the Company's Consolidated of Financial Position. The fair value is
established at each balance sheet date and recognised in the
Consolidated Statement of Comprehensive Income throughout the
vesting period, based on the proportion vested at each Statement of
Financial Position date and adjusted to reflect subsequent
movements in fair value up to the date of acquisition of the MES by
the Company.
The fair value paid to acquire MES (whether in shares in the
Company or cash) will result in an increase in the carrying value
of the Holding Company by the Company.
Income
All income is accounted for on an accruals basis and is
recognised in the Consolidated Statement of Comprehensive Income.
Income is further discussed in note 7.
Expenses
Expenses are accounted for on an accruals basis. Expenses
incurred on the acquisition of investments at fair value through
profit or loss are presented within the Capital column of the
Consolidated Statement of Comprehensive Income. All other expenses
are presented within the Revenue column of the Consolidated
Statement of Comprehensive Income. Charitable donations are
accounted for on an accruals basis and are recognised in the
Consolidated Statement of Comprehensive Income. Expenses directly
attributable to the issuance of shares are charged against capital
and recognised in the Consolidated Statement of Changes in Net
Assets Attributable to Holders of Ordinary Shares.
Cash and cash equivalents
Cash and cash equivalents comprise cash at bank and demand
deposits. Cash equivalents are short-term, highly liquid
investments that are readily convertible to known amounts of cash
and which are subject to insignificant changes in value.
Translation of foreign currency
Items included in the Group's Consolidated Financial Statements
are measured using the currency of the primary economic environment
in which it operates (the "functional currency"). The Consolidated
Financial Statements are presented in Sterling (GBP), which is the
Group's functional and presentational currency.
Transactions in currencies other than Sterling are translated at
the rate of exchange ruling at the date of the transaction.
Monetary assets and liabilities denominated in foreign currencies
at the date of the Consolidated Statement of Financial Position are
translated into Sterling at the rate of exchange ruling at that
date.
Foreign exchange differences arising on retranslation are
recognised in the Consolidated Statement of Comprehensive Income.
Non-monetary assets and liabilities that are measured in terms of
historical cost in a foreign currency are translated using the rate
of exchange at the date of the transaction.
Non-monetary assets and liabilities denominated in foreign
currencies that are stated at fair value are retranslated into
Sterling at foreign exchange rates ruling at the date the fair
value was determined.
Presentation of the Consolidated Statement of Comprehensive
Income
In order to better reflect the activities of an investment
company and in accordance with guidance issued by the AIC,
supplementary information which analyses the Consolidated Statement
of Comprehensive Income between items of a revenue and capital
nature has been presented alongside the Consolidated Statement of
Comprehensive Income.
3. CRITICAL ACCOUNTING JUDGEMENTS AND SOURCES OF ESTIMATION
UNCERTAINTY
The preparation of the Group's Consolidated Financial Statements
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 at the
reporting date. However, uncertainties about these assumptions and
estimates, in particular relating to underlying investments of
private equity investments and the life science investments could
result in outcomes that require a material adjustment to the
carrying amount of the assets or liabilities affected in future
periods.
Critical accounting judgements
In the process of applying the Group's accounting policies,
management has made the following judgements, which have the most
significant effect on the amounts recognised in the Consolidated
Financial Statements:
Fair value - life science portfolio
In the case of the Group's investments in unlisted companies,
the fair value is determined in accordance with the IPEVC. These
include the use of recent arm's length transactions, DCF analysis
and earnings multiples. Wherever possible, the Group uses valuation
techniques which make maximum use of market-based inputs.
The key judgement relates to whether there is objective evidence
that suggests the investment has been impaired or increased in
value due to observable data, technical, or commercial
performance.
Where the Group is the sole institutional investor and until
such time as substantial clinical data has been generated
investment will be valued by reference to Cost or PRI subject to
adequate consideration being given to current facts and
circumstances. Once substantial clinical data has been generated
the Group will use input from an independent valuations advisor to
assist in the determination of fair value.
Functional currency
As disclosed in note 2, the Group's functional currency is
Sterling. Sterling is the currency in which the Group measures its
performance and reports its results. Ordinary Shares are
denominated in Sterling and dividends are paid in Sterling. The
Directors believe that Sterling best represents the functional
currency, although the Group has significant exposure to other
currencies as described in note 19.
Assessment as investment entity
Entities that meet the definition of an investment entity within
IFRS 10 are required to measure their subsidiaries, other than
those that provide investment services to the Group, at fair value
through profit or loss rather than consolidate them.
The criteria which define an investment entity are as
follows:
-- An entity that obtains funds from one or more investors for the purpose of providing those
investors with investment services;
-- An entity that commits to its investors that its business purpose is to invest funds solely
for returns from capital appreciation, investment income or both; and
-- An entity that measures and evaluates the performance of substantially all of its investments
on a fair value basis.
The Company meets the criteria as follows:
The Company is a closed-ended investment company and has a
number of investors who pool their funds to gain access to the
Company's investment services and investment opportunities to which
they might not have had access individually. The Company, being
listed on the London Stock Exchange, obtains funding from a diverse
group of external shareholders.
The key judgement relates to whether the business purpose of the
Company is consistent with that of an investment entity. The
Company has the intention to realise the constituents of each of
its investment classes. Some investments are held long term, but
for each investment there is an intention to exit the investment at
a price and timing that is deemed suitable to the Group. During the
year, the Company agreed to the sale of its shareholding in
Nightstar Therapeutics plc.
The Holding Company and the Partnership both measure and
evaluate the performance of substantially all of their investments
on a fair value basis. The fair value method is used to represent
the Company's performance in its communication to the market,
including investor presentations. In addition, the Company reports
fair value information internally to the Board of Directors, who
use fair value as a significant measurement attribute to evaluate
the performance of its investments.
The IFRS 10 investment entity exemption requires investment
entities to hold subsidiaries that are themselves investment
entities, at fair value through profit or loss. As the Holding
Company and the Partnership meet the criteria of investment
entities, they and their underlying subsidiaries have not been
consolidated by the Group.
Sources of estimation uncertainty
The Group's investments consist of its investments in the
Holding Company and the Partnership, both of which are classified
at fair value through profit or loss and are valued accordingly, as
disclosed in note 2. The key source of estimation uncertainty is
related to the valuation of the Holding Company's life science
investments, the investment in the CRT Pioneer Fund and the
Partnership's private equity investments.
The Life Science portfolio is very illiquid. Many of the
companies are early stage investments and privately owned.
Accordingly, a market value can be difficult to determine. The
accounting policy for all investments is described in note 2 and
the fair value of all investments is described in note 20. In the
case where Syncona is the sole institutional investor and
substantive clinical data has been generated, Syncona will use
input from an independent valuations advisor in its determination
of the fair value of investments.
As at the year end, none of the Partnership's underlying
investments have imposed restrictions on redemptions. However,
underlying managers often have the right to impose such
restrictions. The Directors believe it remains appropriate to
estimate their fair values based on NAV as reported by the
administrators of the relevant investments.
The Directors believe that such NAV represents fair value
because subscriptions and redemptions in the underlying investments
occur at these prices at the Consolidated Statement of Financial
Position date, where permitted.
The share based payment charge is an estimate linked to the
future valuation of the Holding Company. The Holding Company holds
life science investments whose valuations are a source of
estimation uncertainty as set out above.
4. OPERATING SEGMENTS
The Group is made up of two main components, the "life science
portfolio" and the "Capital pool investments". 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 capital pool
investments. The life science portfolio and the Capital pool
investments 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 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 Group
Portfolio Statement.
Capital pool investments
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. During the year the
Group commenced the reduction of its fund investments and increased
its weighting to cash and cash equivalents.
Details of the underlying assets are shown in the Group
Portfolio Statement.
Information about reporting segments
The following provides detailed information for the Group's two
reportable segments for the year ended 31 March 2019 and 31 March
2018:
Life science Capital pool
As at 31 March 2019 portfolio investments Unallocated(1) Total
GBP'000 GBP'000 GBP'000 GBP'000
Revenue - - 34,631 34,631
Capital growth 431,893 (27,406) - 404,487
Expenses - - (27,856) (27,856)
Net assets 1,055,473 203,770 195,870 1,455,113
Life science Capital pool
As at 31 March 2018 portfolio investments Unallocated(1) Total
GBP'000 GBP'000 GBP'000 GBP'000
Revenue - - 28,747 28,747
Capital growth 162,933 4,761 - 167,694
Expenses - - (23,610) (23,610)
Net assets 514,543 465,102 76,118 1,055,763
(1) Revenue as explained in note 7 is unrelated to either
segment's performance. Expenses include the dividends, donations
and expenses for the year, which are not appropriate to allocate by
segment. Unallocated net assets are primarily made up of cash and
are unrelated to either segment's performance.
The net assets of each segment can be agreed to the Group
Portfolio Statement. The capital growth can be agreed to the
Consolidated Statement of Comprehensive Income.
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
Principal place
Subsidiary of business Principal activity % interest(1)
Syncona GP Limited Guernsey General Partner 100%
Syncona Holdings Limited Guernsey Portfolio management 100%
Syncona Investments LP Incorporated Guernsey Portfolio management 100%
There are no significant restrictions on the ability of
subsidiaries to transfer funds to the Company.
Indirect interests in subsidiaries
Principal
placeof
Indirect Subsidiaries business Immediate parent Principal activity % interest(1)
Syncona Investments
Syncona Discovery Limited UK LP Inc Portfolio management 100%
Syncona Holdings
Syncona Portfolio Limited Guernsey Limited Portfolio management 100%
Syncona Portfolio
Syncona IP Holdco Limited UK Limited Portfolio management 100%
Syncona Investment Management Syncona Holdings
Limited UK Limited Portfolio management 100%
Syncona Collaboration Syncona Portfolio
(E) Limited UK Limited Research 100%
Blue Earth Diagnostics Syncona Portfolio
Limited UK Limited Advanced diagnostics 89%
Freeline Therapeutics Syncona Portfolio
Limited UK Limited Gene therapy 87%
Gyroscope Therapeutics Syncona Portfolio
Limited UK Limited Gene therapy 86%
Achilles Therapeutics Syncona Portfolio
Limited UK Limited Cell therapy 69%
Syncona Portfolio
Quell Therapeutics Limited UK Limited Gene therapy 58%
Syncona Portfolio
SwanBio Limited USA Limited Gene therapy 58%
Principal
place of
Indirect associates business Immediate parent Principal activity % interest(1)
Nightstar Therapeutics Syncona Portfolio
plc UK Limited Gene therapy 38%
Syncona Portfolio
Omass Therapeutics Limited UK Limited Cell therapy 37%
Autolus Therapeutics Syncona Portfolio
plc UK Limited Cell therapy 31%
Syncona Portfolio
Anaveon AG Switzerland Limited Gene therapy 20%
(1) Based on undiluted issued share capital and excluding the
MES issued by Syncona Holdings Limited (see note 13).
6. TAXATION
The Company and the General Partner are exempt from taxation in
Guernsey under the provisions of The Income Tax (Exempt Bodies)
(Guernsey) Ordinance, 1989 and have both paid an annual exemption
fee of GBP1,200 (31 March 2018: GBP1,200).
The General Partner is incorporated and tax resident in
Guernsey, its corporate affairs being managed solely in Guernsey.
Having regard to the non-UK tax residence of the General Partner
and the Company, and on the basis that the Partnership is treated
as transparent for UK and Guernsey tax purposes and that the
Partnership's business is an investment business and not a trade,
no UK tax will be payable on either the General Partner's or the
Company's shares of Partnership profit (save to the extent of any
UK withholding tax on certain types of UK income such as
interest).
Some of the Group's underlying investments may be liable to tax,
although the tax impact is not expected to be material to the
Group, and is included in the fair value of the Group's
investments.
7. INCOME
The Group's income relates to cash transfers from the
Partnership which are used for paying costs and dividends of the
Group. Cash transferred from the Partnership to the Group for the
purposes of investment in the Holding company is not regarded as
income.
During the year, income received from the Partnership amounted
to GBP34,631,000 (31 March 2018: GBP28,746,812) of which
GBP4,300,000 (31 March 2018: GBP4,757,729) remained receivable at
31 March 2019. The receivable reflects the charitable donation of
the Group.
8. 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 Holding Company and
Partnership.
Note 2019 2018
GBP'000 GBP'000
Net gains/(losses) from:
The Holding Company 8.a 431,893 162,933
The Partnership 8.b (27,406) 4,761
404,487 167,694
======== =======
8.a Movements in the Holding Company:
2019 2018
GBP'000 GBP'000
Residual income from liquidated subsidiaries - 726
Expenses (100) (44)
Movement in unrealised gains on life science
investments at fair value through profit or
loss 431,993 162,251
Net gains on financial assets at fair value
through profit or loss 431,893 162,933
======= =======
8.b Movements in the Partnership:
2019 2018
GBP'000 GBP'000
Investment income 610 1,821
Rebates and donations 2,527 2,355
Expenses (63) (236)
Realised gains on financial assets at fair
value through profit or loss 76,965 43,670
Movement in unrealised losses on financial
assets at fair value through profit or loss (60,459) (26,744)
Gains on forward currency contracts 997 20,370
Losses on foreign currency (13,352) (7,728)
-------- --------
Gains on financial assets at fair value through
profit or loss 7,225 33,508
Distributions (34,631) (28,747)
-------- --------
Net (losses)/gains on financial assets at
fair value through profit or loss (27,406) 4,761
======== ========
9. CHARITABLE DONATIONS
The Group has agreed to make a donation to charity of 0.3% of
the total NAV of the Group calculated on a monthly basis, half
donated to The Institute of Cancer Research ("ICR") and half
donated to The Syncona Foundation (previously The BACIT
Foundation), and these donations are made by the General Partner.
For the years ending 31 March 2017 and 31 March 2018, the Group
agreed that the charitable donations will not be less than
GBP4,751,608. The Group has agreed with The Syncona Foundation that
the charitable donations to it will not be less than GBP2,375,804
for the year ended 31 March 2019. Any amount paid to ICR in excess
of half of 0.3% of the total NAV of the Group in those years will
be recovered by reducing the charitable donations in subsequent
years provided that the charitable donation to ICR will not as a
result be reduced below GBP2,375,804.
During the year, accrued charitable donations amounted to
GBP4,300,155 (31 March 2018: GBP4,751,608). As at 31 March 2019,
GBP4,300,155 (31 March 2018: GBP4,751,608) remained payable.
10. GENERAL EXPENSES
2019 2018
GBP'000 GBP'000
Directors' fees 355 219
Auditor's remuneration 232 34
Share based payments 11,792 5,494
Termination expense - 3,800
Investment management fees 8,923 7,604
Other expenses 2,254 1,707
23,556 18,858
======= =======
Auditor's remuneration includes audit fees in relation to the
Group of GBP31,830 (31 March 2018: GBP34,351). Total audit fees
paid by the Group and the Syncona Group Companies for the year
ended 31 March 2019 totalled GBP172,515 (31 March 2018:
GBP128,923). Additional fees paid to the auditor were GBP28,100 (31
March 2018: GBP26,500) which relates to work performed at the
interim review of GBP21,600 (31 March 2018: GBP20,000) and other
non-audit fees of GBP6,500 (31 March 2018: GBP6,500).
On 31 March 2018 the Investment Management Agreement between the
Company and BACIT was terminated in consideration for a cash
payment of GBP3,800,000, as disclosed in note 17. During the year
ended 31 March 2018, fees of GBP1,826,719 were charged by BACIT to
the Group.
Further details of the Share based payments can be found in note
13.
11. FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS
Note 2019 2018
GBP'000 GBP'000
The Holding Company 11.a 1,048,250 488,347
The Partnership 11.b 421,828 576,174
1,470,078 1,064,521
========= =========
11.a The net assets of the Holding Company
2019 2018
GBP'000 GBP'000
Cost of the Holding Company's investment at
the start of the year 325,510 180,479
Purchases during the year 131,422 120,091
Realised gains on transfer of assets - 24,940
Cost of the Holding Company's investments
at the end of the year 456,932 325,510
Net unrealised gains on investments at the
end of the year 594,148 162,148
--------- -------
Fair value of the Holding Company's investments
at the end of the year 1,051,080 487,658
Other current (liabilities)/assets (2,830) 689
Financial assets at fair value through profit
or loss at the end of the year 1,048,250 488,347
========= =======
The realised gains on transfer of assets relates to the transfer
of the life science investments to the subsidiary Syncona Portfolio
Limited.
11.b The net assets of the Partnership
2019 2018
GBP'000 GBP'000
Cost of the Partnership's investments at the
start of the year 381,381 464,434
Purchases during the year 170,275 95,524
Sales during the year (433,051) (209,070)
Return of capital (12,313) (13,177)
Net realised gains on disposals during the
year 76,965 43,670
--------- ---------
Cost of the Partnership's investments at the
end of the year 183,257 381,381
Net unrealised gains on investments at the
end of the year 52,916 113,017
--------- ---------
Fair value of the Partnership's investments
at the end of the year 236,173 494,398
Open forward currency contracts 1,908 1,511
Cash and cash equivalents 198,705 78,712
Other net current (liabilities)/assets (14,958) 1,553
Financial assets at fair value through profit
or loss at the end of the year 421,828 576,174
========= =========
12. TRADE AND OTHER RECEIVABLES
2019 2018
GBP'000 GBP'000
Due from related parties (see note 17) 4,495 -
Investment income receivable 4,300 4,758
Prepayments 38 687
8,833 5,445
======= =======
13. SHARE BASED PAYMENTS
Share based payments are associated with awards of Management
Equity Shares ("MES") in the Holding Company, relevant details of
which are set out in note 2.
The total cost recognised in the Consolidated Statement of
Comprehensive Income is shown below:
2019 2018
GBP'000 GBP'000
Charge relating to issue of new MES - 4
Charge relating to previously issued MES - 292
Charge related to revaluation of the liability
for cash settled share awards 11,792 5,199
Total 11,792 5,495
======= =======
Amounts recognised in the Consolidated Statement of Financial
Position, representing the carrying amount of liabilities arising
from share based payments transactions are shown below:
2019 2018
GBP'000 GBP'000
Share based payments - current 6,351 943
Share based payments - non-current 10,834 4,450
Total 17,185 5,393
======= =======
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.
The fair value of the MES is established via external valuation
as set out in note 2. Vesting is subject only to the condition that
employees must remain in employment at the vesting date. Each MES
is entitled to share equally in value attributable to the Holding
Company above the applicable base line value, provided that the
applicable hurdle value of 15% growth in the value of the Holding
Company above the base line value at the date of award has been
achieved.
The fair value of awards made in the year ended 31 March 2019
was GBP1,520,000 (31 March 2018: GBP11,776). This represents
12,607,898 new MES issued (31 March 2018: 557,639).
The number of MES outstanding are shown below:
2019 2018
At the start of the year 27,664,909 27,785,324
Issued 12,607,898 557,639
Cancelled (3,488,660) (678,054)
Outstanding at the end of the year 36,784,147 27,664,909
=========== ==========
Weighted average remaining contractual life
of outstanding MES, years 2.24 2.75
Vested MES at the year end 14,798,030 6,781,629
Realisable MES at the year end 3,900,433 1,695,407
At 31 March 2019, if all MES were realised the number of shares
issued in the Company, as a result would be 10,046,397 (31 March
2018: 4,620,436). The per share value of net assets attributable to
holders of Ordinary Shares would fall from GBP2.20 to GBP2.17 if
these shares were issued.
14. PAYABLES
2019 2018
GBP'000 GBP'000
Charitable donations payable 4,300 4,752
Management fees payable 1,242 852
Termination expense payable - 3,800
Due from related party (see note 17) 500 -
Other payables 662 387
------- -------
6,704 9,791
======= =======
15. SHARE CAPITAL
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 Company is
a closed-ended investment company with an unlimited life.
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 share capital in accordance with The
Companies (Guernsey) Law, 2008.
2019 2018
GBP'000 GBP'000
Ordinary Share Capital
Balance at the start of the year 763,016 760,327
Scrip dividend shares issued during the year 3,021 2,689
Balance at the end of the year 766,037 763,016
======= =======
2019 2018
Shares Shares
Ordinary Share Capital
Balance at the start of the year 659,952,090 658,387,407
Scrip dividend shares issued during the year 1,249,383 1,564,683
Share based payment shares issued during the
period 20,836 -
Balance at the end of the year 661,222,309 659,952,090
=========== ===========
In August 2018, GBP3,021,008 (1,249,383 Ordinary Shares) in new
Ordinary Shares were issued at a price of 241.8p as a result of the
2018 scrip dividend.
In August 2017, GBP2,688,751 (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.
The Company has issued one Deferred Share to The Syncona
Foundation for GBP1.
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 year 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:
2019 2018
Earnings for the purposes of earnings per
share GBP411,262,000 GBP172,831,499
Basic weighted average number of shares 660,759,419 659,356,224
Basic revenue earnings per share 1.0p 0.8p
Basic capital earnings per share 61.2p 25.4p
Basic earnings per share 62.2p 26.2p
Diluted weighted average number of shares 670,805,816 663,980,947
Diluted revenue earnings per shares 1.0p 0.8p
Diluted capital earnings per share 60.3p 25.2p
Diluted earnings per share 61.3p 26.0p
2019 2018
Issued share capital at start of year 659,952,090 658,387,407
Weighted effect of share issues
Scrip dividend 25 July 2018 791,959 973,104
Share based payment 13 August 2018 15,370 -
Potential Share based payment share issues 10,046,397 4,620,436
-------------- --------------
Diluted weighted average number of shares 670,805,816 663,980,947
============== ==============
D. NAV per share
2019 2018
Net assets for the purposes of NAV per share GBP1,455,112,953 GBP1,055,763,499
Ordinary Shares in issue 661,222,309 659,952,090
NAV per share 220.1p 160.0p
Diluted number of shares 671,268,706 664,572,526
Diluted NAV per share 216.8p 158.9p
16. DISTRIBUTION TO SHAREHOLDERS
The Company may pay a dividend at the discretion of the
Board.
During the year ended 31 March 2019, the Company declared and
paid a dividend of 2.3p (31 March 2018: 2.3p) per share amounting
to GBP15,178,477 (31 March 2018: GBP15,142,910) relating to the
year ended 31 March 2018 (31 March 2017). The dividend was
comprised of GBP12,157,469 cash (31 March 2018: GBP12,454,159) and
a scrip dividend of GBP3,021,008 (31 March 2018: GBP2,688,751).
See note 22 for details of the 2019 dividend.
17. RELATED PARTY TRANSACTIONS
The Group has various related parties; life sciences investments
held by the Holding Company, the Investment Manager, the Company's
Directors and The Syncona Foundation.
Life science investments
The Group makes equity investments in some life science
investments where it retains control. The Group has taken advantage
of the investment entity exception as permitted by IFRS 10 and has
not consolidated these investments, but does consider them to be
related parties. The total amounts included for investments where
the Group has control are set out below:
2019 2018
GBP'000 GBP'000
Investments with control 420,949 248,728
======= =======
The Group makes other equity investments where it does not have
control but may have significant influence through its ability to
participate in the financial and operating policies of these
companies, therefore the Group considers them to be related
parties. The total amounts included for investments where the Group
has significant influence are set out below:
2019 2018
GBP'000 GBP'000
Investments with significant influence 593,745 226,025
======= =======
During the year SIML, an indirectly held subsidiary of the
Company, charged the life science investments a total of GBP478,521
(31 March 2018: GBP340,189) in relation to Directors' fees.
Investment Manager
Until 12 December 2017 BACIT was the Group's Investment Manager,
on which date BACIT became a sub-delegate to SIML. BACIT charged
the Group an annual fee of 0.19% of NAV per annum. With effect from
12 December 2017, SIML became the Investment Manager of the Group.
SIML is an indirectly held subsidiary of the Company.
For the year ended 31 March 2019 SIML was entitled to receive an
annual fee of up to 1.10% of NAV (31 March 2018: 1.00%) per
annum.
2019 2018
GBP'000 GBP'000
Amounts paid to BACIT - 5,627
Amounts paid to SIML 8,923 5,778
On 31 March 2018, the sub-delegate relationship between the
Company, SIML and BACIT was terminated in consideration for a cash
payment of GBP3,800,000, which is included in the GBP5,627,000
above.
During the year SIML received fees from its portfolio companies
of GBP478,522 (31 March 2018: GBP440,368).
Company Directors
At the year end, the Company had seven Directors, all of whom
served in a Non-Executive capacity. The Directors Jeremy Tigue,
Nicholas Moss and Rob Hutchinson also serve as Directors of the
General Partner. Thomas Henderson was a Director of BACIT until May
2018.
Nigel Keen is Chairman of the Investment Manager and receives a
fee of GBP128,388 (31 March 2018: GBP128,388) per annum, payable by
the Investment Manager, in respect of his services to the
Investment Manager.
Gian Piero Reverberi was appointed as Non-Executive Director
with effect from 1 April 2018. Nicholas Moss was appointed as
Senior Independent Director and Rob Hutchinson succeeded him as
Chair of the Audit Committee with effect from 1 April 2018.
Directors' fees for the year to 31 March 2019, including
outstanding Directors' fees at the end of the year, are set out
below.
2019 2018
GBP'000 GBP'000
Directors' fees for the year 355 219
Payable at end of the year 125 -
For further details, please refer to the remuneration report
which will be published in the Annual Report.
The Syncona Foundation
Charitable donations are made by the Company to The Syncona
Foundation. The Syncona 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 donated to The Syncona Foundation during
the year ended 31 March 2019 was GBP2,375,804 (31 March 2018:
GBP2,375,804).
As at 31 March 2019, the Company has a payable to the Holding
Company amounting to GBP500,000 (2018: GBPNil), and receivable from
the Partnership and Holding Company amounting to GBP500,000 (2018:
GBPNil) and GBP3,953,202 (2018: GBPNil) respectively.
18. FINANCIAL INSTRUMENTS
In accordance with its investment objectives and policies, the
Group holds financial instruments which at any time may comprise
the following:
-- securities and investments held in accordance with the investment objectives and policies;
-- cash and short-term receivables and payables arising directly from operations; and
-- derivative instruments including forward foreign currency contracts.
The financial instruments held by the Group are comprised
principally of the investments in the Holding Company and the
Partnership.
Details of the Group's significant accounting policies and
methods adopted, including the criteria for recognition, the basis
of measurement and the basis on which income and expenses are
recognised, in respect of its financial assets and liabilities are
disclosed in note 2.
2019 2018
GBP'000 GBP'000
Financial assets at fair value through profit
or loss
The Holding Company 1,048,250 488,347
The Partnership 421,828 576,174
--------- ---------
Total financial assets at fair value through
profit or loss 1,470,078 1,064,521
--------- ---------
Financial assets measured at amortised cost
Bank and cash deposits 91 981
Other financial assets 8,795 4,758
--------- ---------
Total financial assets measured at amortised
cost 8,886 5,739
--------- ---------
Financial liabilities measured at amortised
cost
Share based payments (17,185) (5,393)
Other financial liabilities (6,704) (9,791)
--------- ---------
Total financial liabilities measured at amortised
cost (23,889) (15,184)
--------- ---------
Net financial assets 1,455,075 1,055,076
========= =========
The financial instruments held by the Group's underlying
investments are comprised principally of life science investments,
hedge, equity, long-term alternative investment funds and cash.
The table below analyses the carrying amounts of the financial
assets and liabilities held by the Holding Company by category as
defined in IFRS 9 (see note 2).
2019 2018
GBP'000 GBP'000
Financial assets at fair value through profit
or loss
Investment in Subsidiaries 1,051,080 486,208
Receivable - 726
--------- -------
Total financial assets at fair value through
profit or loss 1,051,080 486,934
--------- -------
Financial assets measured at amortised cost
Other financial assets 1,123 1,450
--------- -------
Financial liabilities measured at amortised
cost
Other financial liabilities (3,953) (37)
--------- -------
Net financial assets of the Holding Company 1,048,250 488,347
========= =======
The table below analyses the carrying amounts of the financial
assets and liabilities held by the Partnership by category as
defined in IFRS 9.
2019 2018
GBP'000 GBP'000
Financial assets at fair value through profit
or loss
Listed investments - 166,677
Unlisted investments 236,173 327,721
Unrealised gains on open forward foreign currency
contracts 1,908 1,511
Total financial assets designated at fair
value through profit or loss 238,081 495,909
-------- -------
Financial assets measured at amortised cost
Current assets 199,964 85,084
-------- -------
Financial liabilities measured at amortised
cost
Current liabilities (16,217) (4,819)
-------- -------
Net financial assets of the Partnership 421,828 576,174
======== =======
19. FINANCIAL RISK MANAGEMENT AND ASSOCIATED RISKS
Capital risk management
The Group's objectives when managing capital include the
safeguarding of the Group's ability to continue as a going concern
in order to provide returns for shareholders and benefits for other
stakeholders and to maintain an optimal capital structure to reduce
the cost of capital.
The Group does not have externally-imposed capital
requirements.
The Group may incur indebtedness for the purpose of financing
share repurchases or redemptions, making investments (including as
bridge finance for investment obligations), satisfying working
capital requirements or to assist in payment of the Charitable
Donation, up to a maximum of 20% of the NAV at the point of
obtaining debt. The Group may utilise gearing for investment
purposes if, at the time of incurrence, it considers it prudent and
desirable to do so in light of prevailing market conditions. There
is no limitation on indebtedness being incurred at the level of the
underlying investments.
Financial risk management
The Group is exposed to a variety of financial risks as a result
of its activities. These risks include market risk (including
market price risk, foreign currency risk and interest rate risk),
credit risk and liquidity risk. These risks have existed throughout
the year and the Group's policies for managing them are summarised
below.
The risks below do not reflect the risks of the underlying
investment portfolios of the financial assets at fair value through
profit or loss. The Group has very significant indirect exposure to
a number of risks through the underlying portfolios of the
investment entities. This is in line with the strategy of the Group
in order to achieve capital gains. There is no mechanism to
"control" these risks without considerably prejudicing return
objectives.
Due to the lack of transparency in many of the underlying assets
in particular those held by the Partnership it is not possible to
quantify or hedge the impact of these risks on the portfolio as
each investment entity may have complex and changing risk dynamics
that are not easily observable or predictable. These risks will
include extensive interest, foreign exchange and other market risks
which are magnified by significant gearing in many cases, resulting
in increased liquidity and return risk.
Syncona Limited
Syncona Limited is exposed to financial risks through its
investments in the Holding Company and the Partnership. The risks
and policies for managing them are set out in the sections
below.
The Holding Company
Market price risk
The Holding Company invests in early stage life science
companies that typically have limited products in development, any
problems encountered in development may have a damaging effect on
that company's business and the value of the investment.
This is mitigated by the employment of highly experienced
personnel and the performance of extensive due diligence prior to
investment.
Foreign currency risk
Foreign currency risk represents the potential losses or gains
on the life science investments future income streams and the
potential losses or gains on investments made in US Dollars by the
Holding Company's underlying investments.
2019 2018
GBP'000 GBP'000
10% increase 103,308 21,186
10% decrease (126,383) (25,893)
As at 31 March 2019, the Holding Company had one open forward
foreign currency contracts (31 March 2018: Nil).
Mark to 2019
market Unrealised
Sell Buy equivalent losses
'000 GBP'000 GBP'000 GBP'000
Sterling/USD forward currency
contract
Settlement date 12 June 2019 $336,700 254,948 257,436 (2,488)
Total unrealised losses as
at year end (2,488)
==========
The following tables present the Holding Company's assets and
liabilities in their respective currencies, converted into the
Group's functional currency.
2019
CHF USD GBP Total
GBP'000 GBP'000 GBP'000 GBP'000
Financial assets at fair value
through profit or loss 3,700 591,493 455,887 1,051,080
Receivables - - 1,123 1,123
Payables - - (3,953) (3,953)
------- ------- ------- ---------
Total 3,700 591,493 453,057 1,048,250
======= ======= ======= =========
2018
USD GBP Total
GBP'000 GBP'000 GBP'000
Financial assets at fair value through
profit or loss 233,041 254,617 487,658
Receivables - 726 726
Payables - (37) (37)
Total 233,041 255,306 488,347
======= ======= =======
Interest rate risk
Interest rate risk is negligible in the Holding Company as
minimal cash and no debt is held.
Credit risk
The equity investments in life science companies are highly
illiquid and cannot be recovered from the investee. The investments
are held for the long term and will typically be realised through
the sale of the companies concerned, whether in a private
transaction or through the public markets.
Liquidity risk
Liquidity risk is the risk that the financial commitments made
by the Holding Company are not able to be met as they fall due. The
Holding Company holds minimal cash and has no access to debt and
instead relies on liquidity from the Partnership. The liquidity
risk associated with the Partnership is set out in the Partnership
section below.
The table below details the Holding Company's liquidity analysis
for its financial assets and liabilities.
Greater
Within 1 1 to 3 3 to 12 than 2019
month months months 12 months Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Financial assets at
fair value through
profit or loss - 258,344 - 792,736 1,051,080
Receivables - - - 1,123 1,123
Payables - - (32) (3,921) (3,953)
-------- ------- ------- ---------- ---------
Total - 258,344 (32) 789,938 1,048,250
======== ======= ======= ========== =========
Percentage 0.0% 24.6% 0.0% 75.4% 100.0%
-------- ------- ------- ---------- ---------
Greater
Within 1 1 to 3 3 to 12 than 2018
month months months 12 months Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Financial assets at
fair value through
profit or loss 8,983 - - 478,675 487,658
Receivables - - 726 - 726
Payables (37) - - - (37)
-------- ------- ------- ---------- -------
Total 8,946 - 726 478,675 488,347
======== ======= ======= ========== =======
Percentage 1.8% 0.0% 0.2% 98.0% 100.0%
-------- ------- ------- ---------- -------
The Partnership
Market price risk
The overall market price risk management of each of the holdings
of the Partnership is primarily driven by their respective
investment objectives. The Investment Manager assesses the risk in
the Partnership's portfolio by monitoring exposures, liquidity, and
concentrations of the underlying funds' investments, in the context
of the historic and current volatility of their asset classes, and
the Investment Manager's risk appetite. The maximum risk resulting
from financial instruments is generally determined by the fair
value of underlying funds. The overall market exposure as at 31
March 2019 is shown in the Consolidated Statement of Financial
Position.
The financial instruments are sensitive to market price risk;
any increase or decrease in market price will have an equivalent
effect on the market value of the financial instruments.
Foreign currency risk
Foreign currency risk represents the potential losses or gains
the Partnership may suffer through holding foreign currency assets
in the face of foreign exchange movements. The Partnership's
treatment of currency transactions is set out in note 2 to the
Consolidated Financial Statements under "Translation of foreign
currency" and "Forward currency contracts". Currency risk exists in
the underlying investments, the analysis of which is not
feasible.
The investments of the Partnership are denominated in US
Dollars, Euros, Swedish Krona and Sterling. The Partnership's
functional and presentation currency is Sterling; hence, the
Consolidated Statement of Financial Position may be significantly
affected by movements in the exchange rates between the foreign
currencies previously mentioned. The Investment Manager may manage
exposure to Euro and US Dollar movements by using forward foreign
currency contracts to hedge exposure to investments in Euro and US
Dollar denominated share classes.
As at 31 March 2019, the Partnership had two open forward
foreign currency contracts (31 March 2018: two).
Mark to 2019
market Unrealised
Sell Buy equivalent gains
'000 GBP'000 GBP'000 GBP'000
Sterling/Euro forward currency
contract
Settlement date 7 May 2019 EUR47,200 41,618 40,675 943
Sterling/USD forward currency
contract
Settlement date 7 May 2019 $177,800 137,149 136,184 965
Total unrealised gains as
at year end 1,908
==========
Mark to 2018
market Unrealised
Sell Buy equivalent gains
'000 GBP'000 GBP'000 GBP'000
Sterling/Euro forward currency
contract
Settlement date 11 July 2018 EUR80,000 71,156 70,361 795
Sterling/USD forward currency
contract
Settlement date 11 July 2018 $247,000 176,070 175,354 716
Total unrealised gains as
at year end 1,511
==========
The following tables present the Partnership's assets and
liabilities in their respective currencies, converted into the
Group's functional currency.
2019
USD EUR GBP Total
GBP'000 GBP'000 GBP'000 GBP'000
Financial assets at
fair value
through profit or
loss 123,321 41,387 71,465 236,173
Cash and cash
equivalents 34,128 416 164,161 198,705
Trade and other
receivables 7 - 1,252 1,259
Unrealised gains on
forward
currency contracts (136,184) (40,675) 178,767 1,908
Payables - - (16,217) (16,217)
21,272 1,128 399,428 421,828
===================== ===================== ===================== =====================
2018
USD EUR GBP SEK Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Financial assets at
fair value through
profit or loss 208,040 58,943 225,241 2,174 494,398
Bank and cash deposits 44,489 8,174 26,039 10 78,712
Trade and other receivables 172 13 6,187 - 6,372
Unrealised (losses)/gains
on forward currency
contracts (175,354) (70,361) 247,226 - 1,511
Payables - - (4,819) - (4,819)
--------- -------- ------- ------- -------
77,347 (3,231) 499,874 2,184 576,174
========= ======== ======= ======= =======
Foreign currency sensitivity analysis
The table below details the sensitivity of the Partnership's NAV
to a 10% change in the Sterling exchange rate against the US
Dollar, Euro and Swedish Krona with all other variables held
constant. The sensitivity analysis percentage represents the
Investment Manager's assessment, based on the foreign exchange rate
movements over the relevant period and of a reasonably possible
change in foreign exchange rates.
2019 2019 2018 2018 2018
USD EUR USD EUR SEK
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
10% increase 13,675 4,608 (23,038) 221 (199)
10% decrease (11,188) (3,770) 28,157 (271) 243
The above includes the effect of the Group's hedging
strategy.
Interest rate risk
Interest receivable on bank deposits or payable on bank
overdrafts are affected by fluctuations in interest rates, however
the effect is not expected to be material. All cash balances
receive interest at variable rates. Interest rate risk may exist in
the Partnership's underlying investments, the analysis of which is
impractical.
Credit risk
Credit risk in relation to listed securities transactions
awaiting settlement is managed through the rules and procedures of
the relevant stock exchanges. In particular settlements for
transactions in listed securities are effected by the Custodian on
a delivery against payment or receipt against payment basis.
Transactions in unlisted securities are affected against binding
subscription agreements. Credit risk may exist in the Partnership's
underlying investments, the analysis of which is impractical.
The principal credit risks for the Partnership are in relation
to deposits with banks. Citco Custody (UK) Limited ("Citco"), acts
as the principal banker to the Partnership, and as custodian of its
assets, a role previously fulfilled by Northern Trust (Guernsey)
Limited. The securities held by Citco as Custodian are held in
trust and are registered in the name of Syncona Investments LP
Incorporated. Citco is "non-rated" however the Investment Manager
takes comfort over the credit risk of Citco as they have proven to
rank amongst the "Best in Class" and "Top rated" in the recognised
industry survey carrying a global presence and over 40 years of
experience in the provision of custodian and other services to
their clients and the hedge fund industry. The credit risk
associated with debtors is limited to any unrealised gains on open
forward foreign currency contracts, as detailed above, and other
receivables.
Liquidity risk
The Partnership is exposed to the possibility that it may be
unable to liquidate its assets as it otherwise deems advisable as
the Partnership's underlying funds or their managers may require
minimum holding periods and restrictions on redemptions. Further,
there may be suspension or delays in payment of redemption proceeds
by underlying funds or holdbacks of redemption proceeds otherwise
payable to the Partnership until after the applicable underlying
fund's financial records have been audited. Therefore, the
Partnership may hold receivables that may not be received by the
Partnership for a significant period of time, may not accrue any
interest and ultimately may not be paid to the Partnership. As at
31 March 2019, no suspension from redemptions existed in any of the
Partnership's underlying investments (31 March 2018: Nil).
The table below details the Partnership's liquidity analysis for
its financial assets and liabilities. The table has been drawn up
based on the undiscounted net cash flows on the financial assets
and liabilities that settle on a net basis and the undiscounted
gross cash flows on those financial assets and liabilities that
require gross settlement.
Greater
Within 1 1 to 3 3 to 12 than 2019*
month months months 12 months Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Financial assets at
fair value through
profit or loss 21,494 23,089 87,686 103,904 236,173
Cash and cash equivalents 198,705 - - - 198,705
Trade and other receivables 1,259 - - - 1,259
Unrealised gains on
forward currency contracts - 1,908 - - 1,908
Payables (11,915) - - - (11,915)
Distribution payable - - (4,302) - (4,302)
Total 209,543 24,997 83,384 103,904 421,828
======== ======= ======= ========== ========
Percentage 49.7% 5.9% 19.8% 24.6% 100.0%
-------- ------- ------- ---------- --------
Greater
Within 1 1 to 3 3 to 12 than 2018*
month months months 12 months Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Financial assets at
fair value through
profit or loss 172,648 44,395 99,771 177,584 494,398
Cash and cash equivalents 78,712 - - - 78,712
Trade and other receivables 6,372 - - - 6,372
Unrealised gains on
forward currency contracts - - 1,511 - 1,511
Payables (61) - - - (61)
Distribution payable - - (4,758) - (4,758)
-------- ------- ------- ---------- -------
Total 257,671 44,395 96,524 177,584 576,174
======== ======= ======= ========== =======
Percentage 44.7% 7.7% 16.8% 30.8% 100.0%
-------- ------- ------- ---------- -------
* The liquidity tables above reflect the anticipated cash flows
assuming notice was given to all underlying investments as at 31
March 2019 and 31 March 2018. They include a provision for "audit
hold back" which most hedge funds can apply to full redemptions and
any other known restrictions the managers of the underlying funds
may have placed on redemptions. Where there is currently no firm
indication from the underlying manager on the expected timing of
the receipt of redemption proceeds, the relevant amount is included
in the "greater than 12 months" category. The liquidity tables are
therefore conservative estimates.
20. FAIR VALUE MEASUREMENT
IFRS 13 "Fair value measurement" 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 31 March
2019 and 31 March 2018:
2019
Level 1 Level 2 Level 3 Total
Assets GBP'000 GBP'000 GBP'000 GBP'000
Financial assets at fair value
through profit or loss:
The Holding Company - - 1,048,250 1,048,250
The Partnership - - 421,828 421,828
Total assets - - 1,470,078 1,470,078
======= ======= ========= =========
2018
Level 1 Level 2 Level 3 Total
Assets GBP'000 GBP'000 GBP'000 GBP'000
Financial assets at fair value
through profit or loss:
The Holding Company - - 488,347 488,347
The Partnership - - 576,174 576,174
Total assets - - 1,064,521 1,064,521
======= ======= ========= =========
These amounts represent the unadjusted net asset value of the
Partnership and the Holding Company.
The underlying assets of the Partnership and the Holding Company
are shown below.
The following table presents the Holding Company's financial
assets and liabilities by level within the valuation hierarchy as
at 31 March 2019 and 31 March 2018:
Asset type Level 31 March 31 March Valuation Significant unobservable Impact on
2019 2018 technique inputs valuation
GBP'000 GBP'000 GBP'000
Publicly
available
share price
at balance
Listed investment 1 591,493 133,475 sheet date n/a n/a
----- -------- -------- ----------------- ------------------------ --------------
Price of latest
funding round Price of
(investment latest
made less than funding
12 months ago) 2 15,457 97,849 round n/a n/a
----- -------- -------- ----------------- ------------------------ --------------
Net assets
Syncona Group of Syncona
companies 3 4,051 2,472 Group companies - -
----- -------- -------- ----------------- ------------------------ --------------
Publicly
available
exchange
rates at
balance
Forward contracts 2 (2,488) - sheet date n/a n/a
----- -------- -------- ----------------- ------------------------ --------------
The main unobservable
input is
the variance in
the price of the
last
funding round due
to a lack of an
active market for
the investment.
A
Price of latest reasonable shift
funding round Price of in the Fair Value
(investment latest of the investment
made more than funding would
12 months ago)(1) 3 145,262 54,977 round be +/-10%. +/- GBP14,526
----- -------- -------- ----------------- ------------------------ --------------
Unobservable inputs
include
management's assessment
of the
performance of
the investee
company, uplift
in Fair Value and
calculations of
any impairments.
Future The main unobservable
earnings Inputs are:
potential, Discount rate with Discount
discount a reasonable rate
for lack possible shift - GBP20,000
of marketability of +/-2% Revenue + GBP25,000
Investments and time with a reasonable
valued on discounted value of possible shift Revenue
cash flow forecasts 3 267,470 186,828 money of +/-10%. +/- GBP56,000
----- -------- -------- ----------------- ------------------------ --------------
The main unobservable
input is
the variance in
the price of the
last
funding round due
to a lack of an
active market for
the investment.
A
Price of reasonable shift
Adjusted price latest in the Fair Value
of funding of
latest funding round adjusted the investment
round(2) 3 3,968 10,607 by management would be +/-10%. +/- GBP397
----- -------- -------- ----------------- ------------------------ --------------
(1) Valuation made by reference to price of recent funding round
unadjusted following adequate consideration of current facts and
circumstances.
(2) Valuation made by reference to price of recent funding round
adjusted following adequate consideration of current facts and
circumstances.
The following table presents the movements in Level 3
investments of the Holding Company for the year ended 31 March
2019:
Life Syncona
science Group 2019 2018
investments companies Total Total
GBP'000 GBP'000 GBP'000 GBP'000
Opening balance 252,412 2,472 254,884 205,316
Transfer to Level
3 4,177 - 4,177 (59,938)
Purchases 70,741 1,036 71,777 37,353
Gains/(losses) on
financial
assets at fair
value through
profit or loss 89,370 543 89,913 72,153
Closing balance 416,700 4,051 420,751 254,884
=========================== ==================== ==================== ====================
The net gains for the year included in the Consolidated
Statement of Comprehensive Income in respect of Level 3 investments
in the Holding Company held at the year end amounted to
GBP89,913,000 (2018: GBP72,152,873).
During the year ended 31 March 2019, the valuation of a life
science investment was adjusted by management and has therefore
moved from Level 2 to Level 3. This resulted in GBP4,177,000
transferring from Level 2 to Level 3.
The following table presents the Partnership's financial assets
and liabilities by level within the valuation hierarchy as at 31
March 2019 and 31 March 2018:
Level 31 March 31 March Valuation Significant Impact on
2019GBP'000 2018GBP'000 technique unobservable valuation
inputs GBP'000
Publicly
available
share price
at balance
Listed investments 1 - 162,084 sheet date n/a n/a
----- ------------ ------------ --------------- ----------------------- ------------
Publicly
available
share price
at balance
Listed investments 2 - 4,593 sheet date n/a n/a
----- ------------ ------------ --------------- ----------------------- ------------
Publicly
available
exchange
rates at
balance
Forward contracts 2 1,908 1,511 sheet date n/a n/a
----- ------------ ------------ --------------- ----------------------- ------------
Valuation
produced
by fund
administrator.
Inputs
into fund
components
are from
Unlisted fund observable
investments 2 152,805 241,396 inputs n/a n/a
----- ------------ ------------ --------------- ----------------------- ------------
The main unobservable
input
include the assessment
of the
performance of
the underlying
fund by the fund
administrator.
A reasonable possible
Valuation shift in the
produced Fair Value of the
Long-term unlisted by fund instruments
investments 3 49,057 55,518 administrator would be +/-10%. +/- GBP4,906
----- ------------ ------------ --------------- ----------------------- ------------
Unobservable inputs
include the
fund manager's
assessment of the
performance and
potential of the
underlying assets,
changes in
market value and
any calculations
of impairment.
A reasonable
possible shift
Valuation in the Fair Value
produced of
CRT pioneer by fund the instruments
fund 3 34,311 30,807 administrator would be +/-10%. +/- GBP3,431
----- ------------ ------------ --------------- ----------------------- ------------
During the year ended 31 March 2019, one fund was moved from
Level 1 to Level 2. This resulted in GBP3,968,218 transferring from
Level 1 to Level 2 (31 March 2018: no transfers).
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. The Group's liquidity analysis is detailed in note 19.
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.
The following table presents the movements in Level 3
investments of the Partnership for the year ended 31 March
2019:
CRT Pioneer Capital 2019 2018
Fund pool investment Total Total
GBP'000 GBP'000 GBP'000 GBP'000
Opening balance 30,807 55,518 86,325 60,860
Purchases 4,423 209 4,632 31,927
Return of capital (919) (11,394) (12,313) (13,177)
Gains on financial assets
at fair value through profit
or loss - 4,724 4,724 6,715
Closing balance 34,311 49,057 83,368 86,325
=========== ================ ======== ========
The net gains for the year included in the Statement of
Comprehensive Income in respect of Level 3 investments of the
Partnership held at the year end amounted to GBP4,473,997 (31 March
2018: GBP6,714,678 gains).
21. COMMITMENTS AND CONTINGENCIES
The Group had the following commitments as at 31 March 2019:
2019 2018
Uncalled Uncalled
commitment commitment
GBP'000 GBP'000
Life science portfolio
Milestone payments to life science companies 101,738 47,105
CRT Pioneer Fund 14,915 19,338
Capital pool investments 4,924 5,575
----------- -----------
Total 121,577 72,018
=========== ===========
The commitments are expected to fall due in the next 24
months.
22. SUBSEQUENT EVENTS
These Consolidated Financial Statements were approved for
issuance by the Board on 13 June 2019. Subsequent events have been
evaluated until 11 June 2019.
Melanie Gee joined the Board as a non-executive director and
Chair-designate on 4 June 2019.
A scrip dividend for the year ended 31 March 2019 of 2.3 pence
per Ordinary Share will be paid on 29 July 2019 to those
shareholders on the register of members of the Company as at 20
June 2019.
Between 31 March 2019 and 11 June 2019 the fair value of the
Group's holdings in companies whose shares are listed on NASDAQ
experienced a combined net fair value decrease of GBP159.1m.
The sale of Nightstar to Biogen completed on 7 June 2019.
Glossary
ALL
Acute lymphocytic leukaemia - a cancer of the bone marrow and
blood in which the body makes abnormal white blood cells.
AAV
Adeno-associated virus - a non-enveloped virus that can be
engineered to deliver DNA to target cells.
Autoimmune diseases
A condition in which your immune system mistakenly attacks your
body.
Axumin
Diagnostic imaging agent that can help detect and localise
recurrent prostate cancer.
BACIT
BACIT (UK) Limited.
Capital pool
Pool of cash, cash equivalents and a portion of fixed term funds
less other net liabilities.
Capsid
The protein shell of a virus.
Choroideremia
A rare, degenerative, X-linked genetic retinal disorder
primarily affecting males.
Company
Syncona Limited.
CRT Pioneer Fund
The Cancer Research Technologies Pioneer Fund LP. The CRT
Pioneer Fund is managed by Sixth Element Capital and invests in
oncology focused assets.
CSO
Chief Scientific Officer.
DLBCL
Diffuse large B-cell lymphoma - an aggressive type of blood
cancer that can arise in lymph nodes (glands) or outside of the
lymphatic system.
Dry AMD
Dry age-related macular degeneration - a progressive and
debilitating loss of vision in the centre of the visual field
(macula) and a very common cause of blindness in the elderly.
EBITDA
Earnings before interest, tax, depreciation and amortization
Fabry's disease
A rare genetic disease resulting from a deficiency of the enzyme
alpha-galactosidase A leading to dysfunctional lipid metabolism and
abnormal glycolipid deposits.
General Partner
Syncona GP Limited.
Glioma
A type of brain cancer
Group
Syncona Limited and Syncona GP Limited are collectively referred
to as the "Group".
Haemophilia B
A genetic disorder caused by missing or defective Factor IX that
can result in dangerously low levels of the essential clotting
protein.
Holding Company
Syncona Holdings Limited
ICR
The Institute of Cancer Research.
Immunotherapy
A type of therapy that uses substances to stimulate or suppress
the immune system to help the body fight cancer, infection, and
other diseases.
Interleukin 2 Receptor Agonist
A type of protein that could therapeutically enhance a patient's
immune system to respond to tumours
Investment Manager
BACIT held the Alternative Fund Investment Manager role until 12
December 2017. From this date, Syncona Investment Management
Limited became the Alternative Fund Investment Manager.
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.
Lymphocytes
Specialised white blood cells that help to fight infection.
Lymphoma
A type of cancer that affects lymphocytes and
lymphocyte-producing cells in the body.
Mass spectrometry
An analytical technique that measures the mass-to-charge ratio
of proteins.
Melanoma
A type of skin cancer
MES
Management Equity Share
Multiple myeloma
Blood cancer arising from plasma cells found in the bone
marrow.
NAV
Net Asset Value.
NAV total return
Movement in NAV per share plus dividend per share.
Neuroblastoma
A cancer that develops from immature nerve cells found in
several areas of the body, and most commonly arises in and around
the adrenal glands.
Non-small cell lung cancer (NSCLC)
A group of lung cancers that are named for the kinds of cells
found in the cancer and how the cells look under a microscope.
Ongoing charges ratio
Expenses from all Syncona Group Companies in addition to the
expenses in the Group's consolidated statement of comprehensive
income, divided by average NAV for the year. It includes a charge
of GBP11.8m associated with the Syncona Long-Term Incentive
Plan.
pALL / aLL
Paediatric/adult acute lymphocytic leukaemia - a cancer of the
bone marrow and blood occurring during childhood in which the body
makes abnormal white blood cells (lymphocytes).
Partnership
Syncona Investments LP Incorporated.
PET
Positron emission tomography - a type of medical imaging test,
which uses a radioactive drug to help locate and visualise certain
diseases in the body.
Prostate Specific Membrane Antigen ("PSMA")
A type II membrane protein which is expressed in all forms of
prostate tissue.
rDCF
Risk Adjusted Discounted Cash Flow.
Return
Time Weighted Rate of Return is the method used for return
calculations.
RPGR
A gene that provides instructions for making a protein that is
essential for normal vision.
SIML
Syncona Investment Management Limited.
Stargardt's disease
A form of juvenile macular dystrophy; a rare inherited condition
causing loss of central vision.
Syncona Group companies
The Company and its subsidiaries other than its portfolio
companies.
T cell
A type of lymphocyte white blood cell, which forms part of the
immune system and develops from stem cells in the bone marrow.
T cell lymphoma
A type of cancer that forms in T cells
T regulatory cells (Tregs)
A subset of T cells with the potential to downregulate the
immune system.
The Syncona Foundation
The Foundation distributes funds to a range of charities,
principally those involved in the areas of life science and health
care.
X-linked Retinitis Pigmentosa ("XLRP")
A rare inherited X-linked recessive genetic retinal disorder
primarily affecting males and most often caused by mutations in the
RPGR gene.
[1] Unaudited, sales for the 12 months ended 31 March 2019.
[2] Expected proceeds as at 31 March 2019 of GBP258.3 million
with a foreign exchange loss of GBP2.5 million resulting in net
proceeds received of GBP255.8 million.
[3] Fully diluted
[4] Unaudited figures for the 12 months ended 31 March 2019.
[5] Unaudited figures for the 12 months ended 31 March 2019.
[6] Refer to footnote 2.
[7] Level of Factor IX, an essential clotting protein
[8] The normal range of FIX activity in the general population's
blood is between 50% and 150%
[9] An inherited metabolic disorder characterised by the
progressive build-up of glucocerebroside in lysosomes throughout
the body
[10] Good Manufacturing Practice
[11] Tregs are a subset of T cells with the potential to
downregulate the immune system
[12] Refer to footnote 2
[13] Refer to footnote 2
[14] The ongoing charges ratio includes expenses from all
Syncona Group Companies in addition to the expenses in the Group's
consolidated statement of comprehensive income, divided by average
NAV for the year. It excludes a charge of GBP11.8 million (2018:
GBP5.5 million) associated with the Syncona Long-Term Incentive
Plan.
[15] Associated with the payment to BACIT (UK) for the cessation
of the Investment Management Agreement
[16] See footnote 14
[17] Excluding CRT Pioneer Fund. Participants in Syncona's LTIP
scheme are issued Management Equity Shares ("MES") in Syncona
Holdings Limited, relevant details of which are set out in note 2
and 13. The fair value of the MES is established via external
valuation.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
FR EAFKAFAKNEAF
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