TIDMSUPP
RNS Number : 5106W
Schroder UK Public Private Tst plc
26 April 2021
Schroder UK Public Private Trust plc
Annual Report
Schroder UK Public Private Trust plc (the "Company") hereby
submits its Annual Report for the year ended 31 December 2020 as
required by the Financial Conduct Authority's Disclosure Guidance
and Transparency Rule 4.1.
The Company's Annual Report and Accounts for the year ended 31
December 2020 are being published in hard copy format and an
electronic copy will shortly be available to download from the
Company's website www.schroders.com/publicprivatetrust . It can
also be viewed at the following link:
http://www.rns-pdf.londonstockexchange.com/rns/5106W_1-2021-4-25.pdf
The Company has submitted its Annual Report and Accounts to the
National Storage Mechanism and it will shortly be available for
inspection at
https://data.fca.org.uk/#/nsm/nationalstoragemechanism .
Enquiries:
Gareth Faith
Schroder Investment Management Limited
Tel: 020 7658 5264
CHAIRMAN'S STATEMENT
Performance
The year ended 31 December 2020 was turbulent. Compared to the
prior year end, the net asset value fell 29.2% from 49.46p to
35.00p per share and the share price fell 19.2%, from 38.35p to
31.00p per share. While the reduction in NAV is disappointing, we
believe that significant progress has been made.
Valuations
The valuation at 31 December 2020 is clearly disappointing.
During the year, the Company's quoted holdings saw a decline in
value of 42.4% contributing 12.7% to the reduction in NAV. The
largest single negative contributor to performance was Rutherford
Health, which is listed but valued by the AIFM as an illiquid
investment as it takes into account the lack of market trading in
the shares. The holding was revalued to GBP34 million at 31
December, a loss of GBP47 million when compared with the holding
value of GBP81 million as of 31 December 2019. This valuation was
reduced to reflect slower than expected commercial progress and
increased risk to the business outlook for equity holders.
Overall, the Company's unquoted holdings saw a decline in value
of 15.6% contributing 14.8% to the full year reduction in NAV. In
Q4, the change in valuation comprised one significant positive
contributor, reflecting the sale of Kymab to Sanofi, and several
other smaller negative revaluations. The holding in Kymab was
revalued to GBP70 million reflecting the terms of the agreed sale
generating a fair value gain of GBP52 million after accounting for
the purchase of additional shares during the year and when compared
with the holding value of GBP14 million as of 31 December 2019. In
addition to Kymab, the only other unquoted holding that experienced
a fair value gain of greater than GBP5 million over the full year
was Inivata. The company was revalued to reflect its continued
progress, in addition to the strategic collaboration and investment
from NeoGenomics, Inc as described in the Top 10 holdings.
There were a number of other portfolio companies, mostly notably
Atom Bank, BenevolentAI and Industrial Heat, that experienced a
fair value loss of greater than GBP5 million over the full year.
Details of these writedowns and the reasons for them may be found
in the Portfolio Manager's report.
On a more positive note, the NAV as at 31 December 2020 does not
include any valuation adjustment for Oxford Nanopore Technologies
following its recent announcement that, subject to market
conditions and other matters not fully within its control, it
expects to undertake an initial public offering on the London Stock
Exchange in the second half of 2021. The year end valuation is
based on the latest financing round which has remained consistent
for over 12 months.
Progress on key objectives
The disappointment of some of the valuation writedowns in the
portfolio should not detract from the progress which has been made
by Schroders during the year under review. Two key objectives for
Schroders for 2020 were outlined in the 2019 Annual Report. These
were ensuring that the key value-creating portfolio companies
received the appropriate level of strategic support to maximize the
Company's investment return, and proactively seeking to pay down
the debt obligations.
Both objectives were designed to place the Company in a position
to rebalance the sector and company weightings over the longer
term. A significant amount of groundwork was laid during the year
and some evidence of this has been seen in a number of positive
announcements made since the year end.
Thanks to the proceeds from the basket of sales to Rosetta
Capital, which completed in March 2021, and from Sanofi's
acquisition of Kymab where Schroders worked closely with Kymab's
management team, 2021 will see our Portfolio Manager being able to
make new investments for the first time, enabling them to drive the
future direction of the portfolio.
We believe that the Company is in a much better position now
than it was a year ago. Despite the challenges from the pandemic in
2020, our Portfolio Manager has been successful in carrying out the
strategy for 2020 with the most critical progress being made on the
debt.
Gearing policy
In my last statement I reported that the Board would work with
Schroders to reduce the level of borrowings and that it was
important the Portfolio Manager was provided with the time to
achieve this while protecting shareholder value.
Accordingly, the Company's borrowings continued to be an area of
focus throughout the year under review and in January 2021, the
Board announced that the credit facility had been extended until 30
January 2023. Since then the balance has been repaid in full and
the term loan subsequently converted into a GBP55 million revolving
credit facility on 14 April 2021.
Whilst at the year end gearing represented 31.6% of NAV, as at
15 April 2021 the Company has moved to a net cash position of more
than 3%. This reduction in gearing follows the receipt of proceeds
from Rosetta Capital and Kymab referred to above.
Discount management
The share price discount to net asset value at the year end was
11.4% and volatility was high throughout the year. The Board is
seeking to renew the authority to purchase up to 14.99% of its
issued share capital, to be cancelled or held in treasury for
future reissuance. The Board did not use the authority in 2020 but
considers buybacks a useful mechanism for discount management and
will consider buybacks once the Company is in a position to do
so.
Board composition and Chair succession
In February the Company announced that Tim Edwards had been
appointed as an independent non-executive Director and would
succeed me as Chairman of the Company and a resolution proposing
his election as a Director is included in the Notice of Annual
General Meeting on page 79 of the Annual Report.
Tim is a qualified chartered accountant with a widespread
background in corporate finance and investment and extensive
management and advisory experience in the biopharmaceutical
industry. He is currently the chairman of Storm Therapeutics Ltd,
Karus Therapeutics Ltd and Modulus Oncology Ltd, a director of
AstronauTx Ltd and an independent non-executive director of Record
plc. Previously, Tim was a member of the governing board of
InnovateUK, the UK's innovation agency, a director of the UK Cell
and Gene Therapy Catapult and chairman of the UK BioIndustry
Association.
The appointment of Tim is in line with the Board's agreed
succession plans, as outlined last year, and follows an extensive
independent search over the last twelve months to find a candidate
with the appropriate balance of skills and experience to complement
those of the current Directors. My colleagues and I are delighted
to welcome him to the Board and are very much looking forward to
working with him.
The Board believes that it is important for appropriate new
skills to be brought to the Board and will continue to look to
refresh one Director every two to three years. All Directors will
continue to be subject to re-election each year at the AGM and will
not serve for a period over nine years.
The composition of the Board has materially changed since the
start of 2019 and I retire as Chair of the Company leaving it in
good hands. I believe I will see Tim and the Board continue to work
with Schroders and make positive progress in performance in the
years ahead.
Outlook
I write my last statement to you as Chair of the Company with
thanks for your patience over the last two years. The challenges of
2019 have been compounded by the COVID-19 pandemic and the
valuation at the end of year is disappointing. However, I retire
with cautious optimism for 2021.
There is still work to be done and challenges remain but we have
seen significant progress in 2020 and Schroders are now in a
position where they can support the strongest opportunities within
the existing portfolio, whilst at the same time being able to
invest into new high quality, high conviction public and private
opportunities.
Schroders' aims for the remainder of 2021 are outlined in their
report and the core tenets of the Company's strategy will be a
focus on high quality UK innovation, diversification by stage and
by sector and prudent debt utilisation. Schroders will also
actively seek to incorporate ESG considerations and alignment with
the UN SDGs as an important element of the investment process.
AGM
The AGM will be held at noon on Friday, 4 June 2021 at
Schroders' offices at 1 London Wall Place, London EC2Y 5AU. As at
the date of this report, the UK Government's roadmap out of
lockdown states that no earlier than 17 May 2021, step 3 will be
introduced and the rule of six or two households will apply
indoors. Therefore, to ensure the safety and security of our
shareholders, service providers, officers and guests, shareholders
are asked to comply with Government requirements and guidelines
relating to travelling and meetings and not attend the AGM.
Shareholders are encouraged to vote by proxy, appointing the Chair
of the meeting as their proxy. Proxy votes can be submitted
electronically through the registrar's portal. Details are on the
Company's webpages.
In the event that shareholders have a question for the Board,
please email amcompanysecretary@schroders.com and we will arrange
for a response to be provided to you.
Web Conference - Update from Schroders
Please join the portfolio managers for a webinar in which they
will report on the year ended 31 December 2020 and outline their
thoughts on the future direction of the portfolio. The presentation
will be followed by a live Q&A session.
The webinar will take place on 7 May 2021 at 11.30 am. Register
for the event at
http://www.schroders.com/publicprivatetrust/updates.
Susan Searle
Chair
23 April 2021
PORTFOLIO MANAGER'S REVIEW
Summary
- 2020 has been another difficult period for Schroder UK Public
Private Trust Plc ("SUPP") with the concentrated portfolio
inherited at the time of our appointment experiencing a downward
valuation at the period end.
- The Company reported a net asset value ("NAV") of 35.00p per
share as of 31 December 2020, a decrease of 20.2% relative to the
NAV as of 30 September 2020 (43.84p per share) and 29.2% relative
to the NAV as of 31 December 2019 (49.46p per share).
- In Q4, this change in valuation comprised one significant
positive contributor, reflecting the sale of Kymab to Sanofi, one
significant negative contributor, the revaluation of Rutherford
Health, and several other smaller negative revaluations.
- Throughout 2020, at an operational level, we focused on
building relationships with the portfolio companies, contributing
to strategic thinking, honouring the Company's existing financial
commitments, selectively investing in new follow-on opportunities
within the financial constraints and working to pay down the
outstanding debt to enable longer-term repositioning.
- After the year end, the Company reported significant progress
with the full pay down of the debt facility with proceeds from the
Kymab exit and the sale of a portfolio of assets to Rosetta
Capital. The Company is thus now in a strong financial position to
execute its strategy and enable new and follow-on investments.
Top 10 Holdings
Kymab Group (16.5% of total investments)
Kymab develops monoclonal antibody therapeutics for oncology and
other disorders. Its proprietary platform allows for precise
production of a diverse range of fully humanized monoclonal
antibodies. Its pipeline includes programs in oncology, immune
disorders and several discovery-stage programs for other
indications.
In August 2020, Kymab announced that the primary endpoints in
its Phase 2a, randomized, double-blinded, placebo-controlled study
had been met. The proof-of-concept study, conducted across 20
European sites, evaluated the efficacy, safety and tolerability of
KY1005 in 88 adults with moderate to severe atopic dermatitis whose
disease could not be adequately controlled with topical
corticosteroids. KY1005 demonstrated a consistent treatment effect
versus placebo across various key endpoints, including in the
Eczema Area and Severity Index EASI and additional objective
clinical measures.
In January 2021, post period-end, Sanofi and Kymab announced
that they have entered into a Share and Purchase Agreement under
which Sanofi will acquire Kymab for an upfront payment of
approximately $1.1 billion and up to $350 million upon achievement
of certain milestones. The transaction was completed in April 2021.
Further details regarding the transaction are contained within the
investment activity section of this report.
Oxford Nanopore Technologies (16.3% of total investments)
Oxford Nanopore has developed a new generation of DNA
sequencers, which uniquely scale from small portable formats to
ultra-high throughput. They are unique in combining this
scalability with real-time data streaming and the ability to
sequence very long fragments of DNA/RNA, which provides very rich
biological data. The Company now has customers across the globe
using its technology for a range of scientific research including
pathogen analysis, cancer research, agriculture, human genetics and
environmental research.
During 2020, Oxford Nanopore successfully developed and launched
LamPORE, a new generation of test for the detection of SARS-CoV-2,
the virus that causes COVID-19. In August 2020, the significant
progress with LamPORE culminated in an agreement with the UK's
Department of Health and Social Care to support the UK's efforts to
manage the continued reduction of COVID-19 and containment of new
cases. By December 2020, a study of more than 23,000 samples across
four NHS sites had demonstrated the accuracy of LamPORE for the
detection of SARS-CoV-2 in both symptomatic and asymptomatic
populations. Oxford Nanopore has indicated that it intends to
submit an Emergency Use Authorisation application to the US FDA for
LamPORE COVID-19. The company also raised further capital from new
and existing investors including International Holdings Company
(IHC), RPMI Railpen and RT Puhua Genomics.
Finally, in March 2021, Oxford Nanopore notified shareholders
that is has started the process of preparing for a potential
Initial Public Offering ("IPO"). Whilst the timing of a potential
IPO is dependent on market conditions and other matters not fully
within its control, Oxford Nanopore currently expects the IPO to
occur in the second half of the year on the London Stock
Exchange.
Atom Bank (9.0% of total investments)
Atom Bank is the UK's first bank built exclusively for mobile.
It is redefining what a bank should be, making things easier, more
transparent and better value in a world of finance. Currently the
bank offers savings accounts, mortgages and business loans.
Throughout 2020, Atom Bank has continued to make progress
against its key operational, financial and strategic objectives. In
particular, the company has disclosed the substantial progress
achieved in redeveloping its banking stack and transitioning to the
cloud - a key long-term investment intended to accelerate the
speed, agility, data management and insight delivery in support of
new product launches, such as the Instant Access Saver (IAS)
account launched in September 2020. One indication of the success
of this project has been the consistently high customer ratings,
including recognition as Trustpilot's most trusted UK bank, Net
Promoter Scores in excess of +75 and at the time of writing, an App
store rating of 4.7 across both Android and iOS.
During the financial year, Atom took steps to improve asset
yields by increasing its lending to SMEs and refocusing its offer
to residential mortgage customers. The company now has a broader
balance sheet which affords more efficient liquidity management
with consequent benefits to net interest income. The result is an
underlying net interest income improvement over the year with
momentum that is expected to continue.
Post-period end, Atom announced that it had raised a further
GBP40 million from existing shareholders and guided towards
profitability from its mortgage and business lending within a year,
and to IPO the year after. Atom Bank is on course to achieve 100bps
of Net Interest Margin (NIM) by the end March 2021 with lending to
SMEs on its balance sheet having grown to over GBP700 million, a
tripling of business loans in the last 12 months. This growth has
been achieved both within the Coronavirus Business Interruption
Loan Scheme and independent of government schemes.
The latest funding round took place at a price of 60p per share,
which is significantly below the 2019 funding round price. This is
due to particularly weak sentiment around this sector in the public
markets throughout 2020, however, we see significant value growth
ahead as Atom approaches profitability and continues to scale.
Rutherford Health (8.0% of total investments)
Rutherford operates four innovative cancer treatment centres in
Newport, Northumberland, Thames Valley and Liverpool. The service
offering covers imaging, chemotherapy, immunotherapy, radiotherapy
and high energy proton therapy.
In May 2020, Rutherford announced that it had entered into a
framework agreement with NHS Shared Business Services ("NHS SBS"),
under which it is able to provide cancer treatment services on
demand by any NHS Trust at a pre-agreed set of prices. The
agreement lasts for two years with an option to extend for a
further two years and covers the complete range of services that
Rutherford offers, including radiotherapy, systemic anti-cancer
therapy (chemotherapy), proton beam therapy and diagnostic
services.
Post-period end, Rutherford announced a further framework
agreement with NHS England under which it will provide cancer
treatment and diagnostic imaging services to NHS Trusts and
clinical commissioning groups.
The company also provided an update on its funding situation
which highlighted the approaching need for financing during the
first quarter of 2021. In March 2021, Rutherford announced that it
has agreed an infrastructure investment with Equitix Investment
Management Ltd, for GBP40 million. The proceeds from the investment
will be used to repay the company's current debt of GBP18.6
million, for further investment in its infrastructure and for
mid-term working capital purposes. The investment is backed by the
freehold transfer of the Rutherford Cancer Centre South Wales and
supported by other security to be put in place over the company's
other centres. The agreement is for 25 years and the company will
have the option to repurchase the freehold of the South Wales
centre for an agreed nominal sum at expiry.
Inivata (6.2% of total investments)
Inivata is a leader in liquid biopsy, a transformative approach
that identifies tiny amounts of cancer DNA in the blood of patients
with cancer. The Company's technology is based on pioneering
research from the Cancer Research UK Cambridge Institute and
reinforced by multiple high calibre publications. Its lead product,
InVisionFirst(R)-Lung, is commercially available and helps
clinicians to make informed treatment decisions for patients with
Lung cancer. Further products in development help to manage
patients with early-stage cancer. The Company has a CLIA certified,
CAP accredited laboratory in Research Triangle Park, NC and
laboratories in Cambridge, UK.
In May 2020, Inivata announced the formation of a strategic
collaboration with NeoGenomics, Inc (NASDAQ: NEO), for the
commercialisation of its InVisionFirst(R)-Lung liquid biopsy test
in the United States which successfully launched in June 2020.
NeoGenomics also made a $25 million equity investment in Inivata to
take a minority shareholding with an option to buy the company
outright. The new funding is being used to enable the acceleration
of the company's innovative liquid biopsy products, including
further development work on RaDaR.
Post period-end, Inivata announced that it had raised a further
$35 million in the second close of its Series C financing round.
The round was led by Soleus Capital, who were joined by new
investors including Janus Henderson Investors and Farallon Capital
alongside existing investor IP Group. This latest funding takes the
total raised in the Series C to $60 million. The company also
announced that the U.S. Food and Drug Administration (FDA) had
granted Breakthrough Device Designation for its RaDaR assay. A
positive development will help accelerate the regulatory path of
RaDaR for use in detection of minimal residual disease (MRD) in
early-stage cancer patients.
Immunocore (6.1% of total investments)
Immunocore is a pioneering T cell receptor biotechnology
company, working to develop and commercialise a new generation of
transformative medicines to address unmet needs. The company's most
advanced programmes are in oncology and it has a rich pipeline of
programmes in infectious and autoimmune diseases.
In March 2020, Immunocore announced the completion of its Series
B private financing round, led by General Atlantic, generating more
than $130 million with participation from new and existing
investors. The proceeds enable the company to further expand and
accelerate its rapidly growing clinical stage pipeline of
ImmTAX(TM) molecules that includes three oncology programs in
MAGE-A4 (in collaboration with Genentech), NYESO-1 (in
collaboration with GlaxoSmithKline), and the lead program
tebentafusp (IMCgp100), which is in pivotal clinical studies as a
potential treatment for patients with metastatic uveal melanoma
("mUM"). The proceeds allowed the company to advance two wholly
owned clinical-stage internal programs for chronic Hepatitis B and
for PRAME, a target expressed in a wide range of tumours.
In November 2020, Immunocore announced that its Phase 3
IMCgp100-202 clinical trial of tebentafusp (IMCgp100) had met the
primary endpoint for Overall Survival ('OS') in its first
pre-planned interim analysis. The efficacy data confirmed the OS
observed in the phase 2 study of IMCgp100-102 in previously treated
mUM which was presented at the ESMO Immuno-Oncology Virtual
Congress 2020.
Since the year end, Immunocore has announced the completion of
its $75 million Series C financing round, its initial public
offering (IPO) on Nasdaq raising gross proceeds of $312 million and
guided towards interim results from the IMCgp100-202 Phase 3
clinical trial to be presented at an upcoming scientific
conference. If approved, Immunocore believes tebentafusp would be
the first new therapy for the treatment of mUM in 40 years.
BenevolentAI (5.1% of total investments)
BenevolentAI creates and applies artificial intelligence (AI)
and machine learning to transform the way medicines are discovered
and developed. Benevolent integrates its technology into every step
of the drug discovery process from hypothesis generation to
late-stage clinical development. The Benevolent Platform(R) is used
by scientists and technologists to find new ways to treat disease,
improve the efficacy and lower the development time and costs of
new treatments.
In November 2020, BenevolentAI highlighted that baricitinib, a
drug it first identified as a potential treatment for COVID-19, has
been granted Emergency Use Authorization ("EUA") by the U.S. Food
and Drug Administration ("FDA"). The rheumatoid arthritis drug,
owned and marketed by Eli Lilly under the brand name Olumiant(TM),
is now authorised for use in hospitalised COVID-19 patients who
require supplemental oxygen or invasive mechanical ventilation.
This EUA decision further validated the AI-derived hypothesis of
baricitinib as a potential treatment for COVID-19, first published
by BenevolentAI in The Lancet on February 4, 2020. The speed at
which baricitinib entered clinical trials reflected the urgency of
the pandemic and is testament to the strength of BenevolentAI's
initial hypothesis. This action from the FDA for the EUA of
baricitinib is an important milestone that has progressed at an
unprecedented pace.
Since the year end, BenevolentAI announced two important
updates. Firstly, AstraZeneca had selected a novel chronic kidney
disease (CKD) target to advance to its drug development portfolio,
a major milestone since formation of the strategic collaboration in
2019 to discover new drugs for CKD and idiopathic pulmonary
fibrosis (IPF). The collaboration combines AstraZeneca's scientific
expertise and rich datasets with BenevolentAI's target
identification platform and biomedical knowledge graph to
understand these two complex diseases' underlying mechanisms and
identify new and more efficacious drug targets.
Secondly, the company announced the dosing of the first patient
in its randomised first-in-human clinical trial for BEN-2293, a
molecule designed and developed to treat Atopic Dermatitis.
Reaction Engines (3.0% of total investments)
Reaction Engines is developing an innovative engine, called
SABRE, to enable more efficient and accessible space and hypersonic
travel. This core vision has created a wealth of intellectual
property which is being spun off to deliver a step change in
performance and efficiency in an array of commercial
industries.
In August 2020, Reaction Engines and Rolls-Royce plc announced a
new strategic partnership agreement to develop high-speed aircraft
propulsion systems and explore applications for Reaction Engines'
thermal management technology within civil and defence aerospace
gas turbine engines and hybrid-electric systems. Rolls-Royce also
disclosed a further investment in Reaction Engines as part of a
wider funding round. The two companies have been working together
since 2018, including the first phase of a UK Ministry of Defence
contract to undertake design studies, research, development,
analysis and experimentation related to high-Mach advanced
propulsion systems.
IDEX Biometrics ASA (2.7% of total investments)
Idex Biometrics is a leading provider of fingerprint biometric
sensors that are being used in an increasing range of security
applications including access control and, most significantly, in
the next generation of payment cards.
Over the course of 2020, Idex completed certification processes
with major card schemes in the US, Europe and China, and continued
to work with leading card manufacturers on scaling up the
production of cards incorporating Idex's sensors. These are
important milestones in preparing its cards for mass market
rollouts by major card issuers. Idex also completed two private
placements for a total of NOK 175m.
Post period-end, Idex completed a larger placing of NOK 229m
which should fund the business through to breakeven expected in H2
2022.
AMO Pharma (2.7% of total investments)
AMO Pharma is a biopharmaceutical company working to identify
and advance promising therapies for the treatment of serious and
debilitating diseases in patient populations with significant areas
of unmet need, including rare, debilitating childhood onset
neurogenetic disorders with limited or no treatment options. As
well as developing AMO-02 for congenital myotonic dystrophy, the
company is progressing AMO-01 as a clinical stage treatment for
Phelan McDermid Syndrome and AMO-04 as a clinic ready potential
medicine for Rett Syndrome and related disorders.
In January 2020, AMO Pharma announced the initiation of patient
enrolment in its pivotal clinical trial for AMO-02 following the
completion of the design and outcomes measures of the trial with
regulators and a successful $35 million financing with new
investors.
In November 2020, AMO Pharma announced that AMO-02 had been
granted a Rare Paediatric Disease ('RPD') designation by the FDA.
The FDA grants RPD designation for serious and life-threatening
diseases that primarily affect children aged 18 years or younger
and fewer than 200,000 people in the United States. The designation
qualifies AMO Pharma to receive fast track review for AMO-02 and a
priority review voucher ('PRV') at the time of marketing approval.
PRVs are transferable and can be used by drug developers to earn an
expedited six-month review of a new drug application by the
FDA.
Additional Company Updates
Seedrs
-- In October 2020, Seedrs and Crowdcube announced their
proposed merger in a move designed to accelerate their plans to
create the world's largest private equity marketplace.
-- In November 2020, the UK Competition and Markets Authority
(CMA) referred the merger for an in-depth Phase 2 investigation
under its fast-track procedure at the request of the merging
companies.
-- Post period end, the CMA published its provisional findings
which concluded that, in their opinion, the transaction may be
expected to result in a substantial lessening of competition within
the supply of equity crowdfunding platforms to small and medium
enterprises and investors in the UK. The only effective remedy is
likely to be the prohibition of the merger.
-- Hence, following further evaluation, both companies decided
to walk away from the transaction. As commented on by the company,
we are extremely disappointed by the findings and firmly disagree
with the CMA's view that this would be an anti-competitive
transaction. We still believe that this would be a positive outcome
for small UK businesses, strengthening a vital source of funding
within the broader ecosystem, and supporting thousands of ambitious
companies at such a critical time.
Autolus Therapeutics
-- During 2020, Autolus Therapeutics made continued good
progress with its principal programmes, AUTO1 for adult Acute
Lymphoblastic Leukemia (aALL) and AUTO3 for Diffuse Large B Cell
Lymphoma (DLBCL).
-- At the American Society of Haematology Conference in December
2020, the company presented further data from its AUTO1 programme
for aALL, showing a strong efficacy and safety profile. Full data
from a pivotal study is now expected in 2022, representing a slight
delay to the previous schedule.
-- The company also presented an update on its AUTO3 programme
for DLBCL. This showed an encouraging safety profile - including
the feasibility of administering in an outpatient setting - and
good levels of complete remission at the three-month stage, but
with some question marks remaining over durability of response.
-- The company has since announced that it will seek a partner
to develop AUTO3 and will focus in the near term on further
developing and extending the applications of AUTO1.
-- Shortly after the year end, the company raised capital in
early 2021 that it anticipates will provide it with the required
funding into 2023.
Federated Wireless
-- In February 2020, Federated Wireless announced significant
commercial partnerships with both Microsoft Azure Marketplace and
Amazon Web Services. Both partnerships relate to Federated
Wireless' new Connectivity-as-a-Service offering that lets U.S.
enterprises buy and deploy private 4G and 5G networks with a single
click. An end-to-end managed service provided by Federated Wireless
which includes discovery, planning, design, build, operation and
support, enabling enterprises to reap the benefits of 5G with
minimum risk and capital expenditure.
-- In March 2020, Federated Wireless confirmed that it had
secured $13.7 million in additional Series C funding from existing
investors Allied Minds and Pennant Investors - funding which will
be used to accelerate expansion and adoption of the company's
partnership with Amazon Web Services and Microsoft Azure to offer
Connectivity-as-a-Service.
Mafic
-- In July 2020, Mafic USA announced the commencement of
operations at its new basalt fiber production facility in Shelby,
North Carolina. The facility is the world's largest and the first
such in North America capable of producing 6,000 metric tons of
basalt fiber annually, nearly 30 percent of the current global
output of basalt fiber.
-- This milestone marked a major step forward in the company's
goal to bring basalt fiber to North American markets and to produce
on a commercially viable scale. Mafic is looking to commercialise
basalt fibers for a wide array of industrial applications because
of their strength and ability to replace materials susceptible to
corrosion. The material has been used for decades, but until now,
it has been produced in limited quantities. Mafic's goal is to
bring large-scale production of basalt fiber to the construction,
automotive and thermal markets, among others.
- Mafic continues to require further capital to reach break even
and profitability. We are hopeful that this can be achieved,
however funding uncertainty remains.
ReNeuron Group
-- In June 2020, ReNeuron Group announced positive data from its
Phase 2a clinical trial of stem cell treatment for Retinitis
Pigmentosa (RP).
-- The Company also announced that it had received regulatory
approval in both the US and UK to expand its Phase 2a clinical
study to treat patients with RP at a higher dose level.
-- The company expects to be able to seek approval in the second
half of 2021 to commence a single pivotal clinical study with its
stem cell therapy candidate in RP.
-- ReNeuron raised GBP17.5 million in Q4 2020 to support these clinical studies.
Ombu
-- In December 2020, it was announced that Hambro Perks, a UK
venture firm and investment management platform, had agreed to
acquire the entire issued share capital of Ombu Group Limited
("Ombu"), a specialist investor in early and growth stage
environmental technologies, in which the Company is a minority
shareholder.
-- The transaction was financed by HP Environmental Technologies
Fund LP ("HPET"), a newly established vehicle focussed on emerging
environmental technologies with anchor investors which include
Hambro Perks, Ombu's existing management team and several other
private and institutional investors.
-- The sale of Ombu facilitated a cash exit for several
shareholders in Ombu, however, as Portfolio Manager we elected to
contribute the Company's shareholding in return for a partnership
interest in HPET. We deemed that the cash acquisition price offered
to be more reflective of the shareholder dynamics surrounding Ombu,
than a fundamental assessment of the portfolio value, so wanted to
retain future value creation potential from this holding.
-- It was anticipated that, based on the terms of the
transaction, the Company's AIFM would revalue the holding to a
valuation of GBP4.0 million implied by the acquisition price.
However, following developments within the portfolio prior to
period end the holding was revalued to GBP6.6 million as of 31
December 2020.
Spin Memory
-- In July 2020, Spin Memory announced an extension of its
Series B funding round, receiving additional investment of $8.25
million from its major investors including Arm, Applied Ventures,
LLC (the venture capital arm of Applied Materials, Inc.) and Abies
Ventures (Abies), as well as the company's founding investor,
Allied Minds.
-- During 2020, Spin was able to "tape out" the demonstration
chip co-developed with Arm pursuant to its joint development
agreement, entered in Q4 2018, representing the first time that
Spin was able to demonstrate its Endurance Engine technology in
silicon.
-- Unfortunately, the work-from-home orders in the State of
California due to COVID-19 delayed the required testing of the chip
for nine months. The testing did commence in early Q4 2020, however
this delay affected Spin's ability to secure new customers.
-- So, coupled with an unexpected loss of a government bid in
late Q4 2020, Spin is now facing significant liquidity issues which
have sparked a new funding round impacting the holding valuation as
at the year-end.
Ratesetter
-- In September 2020, Metro Bank PLC completed the acquisition
of Retail Money Market LTD ("RateSetter") for an initial
consideration of GBP2.5 million, with additional consideration of
up to GBP0.5 million payable 12 months after completion subject to
the satisfaction of certain criteria and a further consideration of
up to GBP9 million payable on the third anniversary of the
completion of the transaction, subject to the satisfaction of
certain key performance criteria.
-- The acquisition did not include RateSetter's holding in
RateSetter Australia (now Plenti Group) which was retained by
RateSetter shareholders.
Source: Portfolio companies, including information disclosed
publicly on their websites.
Outlook
As evidenced in this report, 2020 has been another challenging
year for the Company on several fronts. However, within the
constraints of the situation inherited at the time of our
appointment, our focus as Portfolio Manager has remained resolutely
on addressing the key objectives for 2020; (1) ensuring that the
key value-creating portfolio companies receive the appropriate
level of strategic support to maximize the Company's investment
return, and (2) seeking proactively to pay down the debt
obligations. Both objectives were designed to place the Company in
a position to rebalance the sector and company weightings over the
longer term. This process was made harder by external factors that
created one of the most challenging market periods we have
experienced in recent history. However, we feel that significant
progress has been made over the last twelve months to transition
the Company into a position of strength.
On the first of these two objectives, we are pleased with the
progress achieved with several companies progressing towards
important valuation creation events, both within the 2020 financial
year but most notably post period-end. Key developments include the
sale of Kymab to Sanofi, Inivata's strategic partnership and
investment from NeoGenomics with an option to buy the company
outright, the IPO of Immunocore on Nasdaq and Oxford Nanopore's
intention to float. These developments improve both the outlook for
the Company's NAV and the liquidity profile of the portfolio going
forward. We also navigated the period within the financial
constraints inherited, honouring the Company's existing financial
commitments and selectively investing in new follow-on
opportunities.
Secondly, on the pay down of the debt, we are excited to report
that following the completion of both the Rosetta basket and Kymab
sales generating gross proceeds of over GBP115 million, the Company
is now in a net cash position having fully repaid its outstanding
debt which stood at GBP113 million as of 31 December 2019. This
represents a tremendous leap forward in the repositioning of the
fund which will enable us to support the strongest opportunities
within the Company's existing portfolio, whilst at the same time
being able to invest into new high quality, high conviction
opportunities, both public and private.
Our current aim is to invest in two new private companies and
two new public companies during 2021, and we have started curating
an exciting pipeline of innovative UK businesses for consideration.
In this regard, our strategy will remain true to the Company's
origins, leveraging our extensive sourcing capabilities in the
public and private markets, but complemented by Schroder's
structure of strict governance and control processes.
The core tenets of the Company's strategy will continue to
be:
(1) Focused on high quality UK innovation. We will be looking to
invest in world class innovative businesses founded in the UK.
These will be companies with disruptive innovations, significant
growth potential, high quality management teams and supported by
highly credible co-investors. The significant weighting to UK
companies will continue to be a core strength given the opportunity
set that we see in the market.
(2) Mindful of diversification by stage and sector. We will look
to build out a balanced portfolio of venture, growth, and public
companies across our core sectors. While we expect the existing
portfolio to naturally transition from private to public
investments, new private investments in the portfolio will
typically be targeted at the 'growth' stage where the companies are
already generating revenue with proven unit economics and scaling
towards profitability. For the avoidance of doubt, we will not be
looking to target early-revenue companies that require numerous
rounds of further financing with a particular reliance on any one
shareholder.
(3) Prudent debt utilisation. We intend to use the Company's
debt facility prudently to improve operational efficiency and
minimise return dilution. The facility will only be used on a
short-term basis to fund expenses and investments, but only when
there is visibility of paying down the incremental amount within
twelve months from future realisations (based on a
probability-weighted assessment). Lastly, it is the Company's
intention to keep the loan balance below 10% of gross asset value.
At the time of writing, the Company's revolving credit facility can
provide additional liquidity of up to GBP55 million in addition to
the Company's cash on hand.
Other areas of the strategy that we intend to consider in more
depth in consultation with the Board include opportunities at the
pre-IPO, cross-over stage between public and private markets, where
the Company is uniquely positioned given its hybrid investment
strategy, and more active implementation of sustainability as a
tool to enhance value creation within the portfolio. As referenced
in the Approach to Sustainability section of this report, we see
active incorporation of ESG and alignment with the UN SDGs as an
important part of the investment process and something that we will
target when making new investments. We also intend to engage more
deeply with portfolio companies to ensure that environmental,
social and governance matters remain front of mind and help provide
guidance on strategy and reporting in this regard.
In summary, while the scale of the reduction to the NAV reported
in these annual results is clearly disappointing, from a
forward-looking perspective we remain encouraged by the groundwork
delivered over the period and excited by the opportunity to make
new investments from a position of strength through 2021 and
beyond.
Schroder Investment Management Limited
23 April 2021
PRINCIPAL RISKS AND UNCERTAINTIES
The Audit, Risk and Valuation Committee has carried out a robust
assessment of its principal risks during the period under review,
including those that would threaten its business model, future
performance, solvency, liquidity or reputation. The process
involves the maintenance of a risk register, which identifies the
risks facing the Company and assesses each risk on a scale,
classifying the likelihood of the risk and the potential impact of
each risk to the Company. This helps the Board focus on any
identified risk of particular concern and aids the development of
the Board's risk appetite. In developing the risk management
process, the Board took into consideration the Guidance on Risk
Management, Internal Control and Related Financial and Business
Reporting issued by the Financial Reporting Council (FRC). The
Board has established controls to mitigate the risks faced by the
Company, which are reviewed on a regular basis to ascertain the
effectiveness of each control.
The principal risks and uncertainties faced by the Company are
set out below. The risks arising from the Company's financial
instruments are set out in note 19 on pages 71 to 75 of the Annual
Report.
COVID-19
The COVID-19 pandemic continues to have a very general
widespread economic impact. While vaccinations may well allow a
good economic recovery the longer-term impacts could also be
significant, although these are unclear at the time of writing.
The consequences for the Company may well be lower valuation
levels and greater difficulty in realising disposals and/or lower
prices realised on disposal. Risks 1-6 listed below are all likely
exacerbated by the COVID-19 pandemic.
The Board receives regular updates from the Portfolio Manager
regarding the impact of the disease in terms of both portfolio
management activities, the impact on investee companies and their
responses to the pandemic. The Board also receives assurances that
service providers have implemented business continuity plans.
Risk Mitigation
1. General economic and market risk
Besides COVID-19 there are many other The Portfolio Manager keeps the Board
factors which can affect the general fully briefed with their economic
economic outlook and thus the business & market outlook. While the Portfolio
prospects for investee companies Manager's style is to be a patient,
and their valuations. longer-term and supportive investor,
the Portfolio Manager is willing
In particular, the extraordinary to take advantage of favourable market
economic measures adopted by governments conditions to make disposals and
globally in 2020 in response to COVID-19 to invest when market conditions
to maintain economic activity may are difficult.
prove insufficient or misguided.
Unanticipatedly low or high levels The aim is for the Company to be
of inflation are both real possibilities at least 90% invested at all times
with potentially material consequential but the Company maintains a credit
impacts on valuations. facility in order to take advantage
of opportunities and may be up to
In addition: 110% invested.
Climate change can create sudden The Company expects to continue to
economic dislocations as a result invest in particular situations and
of flooding, droughts, famines, civil technologies whose business performance
war, etc. which in turn can have may have less correlation with the
significant market impact; and broader equity market.
Following a long period of strong Over a full market cycle the expectation
equity market performance, and even is the Company will be on average
more so in certain technology sectors, 100% invested. Thus, the Company
a sharp correction is possible. This will retain a reasonable element
could lead to lower valuation levels of market exposure. The Board believes
for both quoted and unquoted securities, that this approach aligns with shareholders'
a more difficult funding environment expectations and that investing in
and difficulties for companies seeking this asset class is not well suited
initial public offerings (IPOs). to market timing.
Realisation of value may thus be
postponed.
===============================================
2. Portfolio concentration risk
Some of the Company's investments The Company's portfolio is monitored
have demonstrated relatively more closely by the Board, the AIFM and
success and/or required more funding the Portfolio Manager. The Company
than others, which has led to those seeks to invest in a diversified
investments representing larger proportions portfolio across a wide range of
of the portfolio than might be expected. companies so as to mitigate against
While both the Board and the Portfolio the risk posed by an individual early-stage
Manager feel that undue concentration or early-growth company. However,
is not desirable in the longer term, the Board is mindful that the Company
in the shorter term, portfolio concentration was established with the aim of providing
can be acceptable. In any event, long-term growth and that concentration
the nature of the investments means can be a sign of success as a result
that any rebalancing of the portfolio of assets backed becoming more valuable.
will likely take time, as they cannot Short-term liquidity problems with
always be sold quickly. The Portfolio the Company's underlying holdings,
Manager, under delegated authority which may be compounded by market
from the Board, has authority regarding events, should be mitigated over
portfolio construction and managing time when such companies deliver
questions of portfolio concentration on their milestones and value is
in the best interests of the shareholders. recognised.
This approach is in line with the
Portfolio Manager's investment strategy The Board also considers increased
and investment philosophy. The alternative, specific risk that may arise from
of imposing limits on the size of increased concentration, as the result
any one investment, other than at of the relative success of certain
the time of investment, would potentially investee companies. The Board discusses
result in the Company being a forced this risk with the Portfolio Manager,
seller of an investment that still and where appropriate with the AIFM,
had further growth potential. with a view to considering whether
or not to seek to reduce the size
The risk linked to any portfolio of particularly large holdings within
concentration might be compounded the portfolio. However, the Board
due to the nature of some of the is mindful that through the AIFM
businesses and the risks associated it has delegated investment management
with both commercial and technical decisions to the Portfolio Manager
milestones. to make as it sees fit.
The Board regularly receives updates
from the Portfolio Manager on the
engagement the team is conducting
with all investee companies to challenge
them on delivery of value to investors
and their proposed route to success.
The Board can challenge the Portfolio
Manager to engage more vigorously
and/or seek partial disposals to
reduce the risk of delayed or limited
success by investee companies
===============================================
3. Performance risk
There is always, for any investment This risk is mitigated by the Board
portfolio, the generic risk of poor monitoring the performance of the
performance arising as a result of portfolio and the decisions made
poor decisions made by the Portfolio by the Portfolio Manager through
Manager. In addition, given the long-term detailed reporting on the decisions.
nature of this investment strategy The Board seeks to evaluate the general
(up to 10 years) and the absence quality and nature of portfolio decisions
of a clear benchmark, it is not necessarily as well as the performance. Where
easy to make an evaluation of the the Board determines that the Portfolio
Portfolio Manager based simply on Manager is not performing to a satisfactory
returns over shorter periods. standard, the Board, together with
the AIFM for the portfolio, may decide
to terminate the appointment of the
Portfolio Manager under the terms
of its contract.
===============================================
4. General valuation risk
The valuation of unquoted early stage The Company employs LFS, the AIFM,
companies is inherently subjective. who has been delegated responsibility
Valuation at a fixed point in time for the valuation of the assets in
may not be representative of the the portfolio. LFS, in turn, uses
medium or longer term. Particular extensive research and input from
events at a company or particular its own valuation specialist provider,
funding rounds may have a significant IHSMarkit. They conduct a regular
impact. Information may not be as rolling review of the valuation of
widely available as with public companies. all portfolio assets and also review
Companies may not yet have meaningful their valuations in the event of
revenues or profits. Considerable any significant triggers at individual
uncertainty may exist around the investee companies. They follow the
eventual feasibility and value of widely respected and widely followed
a particular technology or its commercialisation. IPEV guidelines in executing these
valuations; these processes are explained
on pages 62 and 63 of the Annual
Report.
===============================================
5. Portfolio specific valuation risk
Where other portfolio managers seek The Board receives updates from the
to make disposals of securities held Portfolio Manager regarding disposal,
in portfolios they manage and these investment and funding plans. In
securities are also held by the Company, as much as the Portfolio Manager
the valuation of these securities is aware of the holdings the Fund
may thereby be affected. Equally, is seeking to sell (because these
simply market anticipation of these were publicly disclosed), the Portfolio
disposals may also impact valuations. Manager can adjust the divestment
plan accordingly. In addition, where
As the new Manager of the LF Equity necessary and possible, the Portfolio
Income Fund (the "Fund"), formerly Manager can seek to postpone or avoid
the LF Woodford Equity Income Fund, further funding. The Portfolio Manager
which used to be managed by the Company's regularly categorises the Company's
previous Portfolio Manager, seeks positions in terms of relative future
to make disposals of unquoted positions importance, which helps the Board
in the Fund, in order to return capital assess divestment and funding decisions.
to investors, these disposals may
also, indirectly, when the Company's
independent valuation agent, LFS,
references prices of recent transactions,
lead to downward revaluation of some
of the Company's holdings.
In as much as the wider market and
other investors in the Company's
investee companies are also aware
of the disposal process of the Fund
they may seek more demanding terms
on any future funding rounds which
may also in turn impact valuations.
===============================================
6. Investee company specific risk
The Company invests in a variety The Portfolio Manager conducts regular
of biopharma and technology businesses, reviews of these businesses through
many of them relatively early stage, engaging regularly with all investee
where the technology is not yet fully companies to monitor progress. The
proven or commercialised. This can Portfolio Manager also carries out
offer very significant financial due diligence on the relevant technologies
success when the technology delivers and obtains regular updates. The
but also carries downside risks particular Portfolio Manager uses its own proprietary
to the companies concerned. The eventual analytics to assess the prospects
outcome for some of these companies for investee companies and may also
may be somewhat binary in as much seek expert third party opinions
as either the technology works, or regarding the likely success of the
it does not, resulting in the company technology. The Board seeks assurance
concerned becoming worth significantly from the Portfolio Manager through
less. Failure may materialise, for its regular portfolio review meetings
instance, in the case of clinical that thorough research has been,
trials for a biotechnology business, and is being, conducted.
in the case of scaling up or commercialisation
of an engineering business or in The Board can challenge the Portfolio
terms of the appearance of a new, Manager to engage more vigorously
previously unknown competitor for and/or seek partial disposals to
a software company. Leading edge reduce the risk of delayed or limited
commercial scientific development success by investee companies.
in many fields is by its nature risky.
The performance of the Company's
individual holdings, together with
market events, may thus create short-term
volatility in the Company's NAV.
===============================================
7. Gearing risk
The Company has the ability to employ The Board receives regular reports
gearing up to a maximum of 20 per from the Administrator on the outstanding
cent of NAV, calculated at the time amount of the debt and regular reports
of borrowing. The Company has utilised from the Portfolio Manager on the
its gearing facility in order to programme of disposals. Gearing is
invest further behind specific portfolio reviewed by the Board at each Board
companies which means there is less meeting and more often, as necessary.
flexibility to make new investments The Portfolio Manager provides weekly
and provide follow-on funding to updates to the debt provider.
the portfolio companies. A higher
level of gearing may have a significant The Board monitors the progress of
downside effect on the Company's the reduction in gearing and seeks
NAV during a period of poor performance to confirm with the Portfolio Manager
or decline in the market and may that this process is nevertheless
impact the Company's debt covenants. preserving shareholder value.
A significant downturn in the values The Portfolio Manager also provides
of equity market assets, which also a thorough analysis of any anticipated
impacts the valuations of unquoted funding decisions and possible liquidity
assets, could mean it is significantly events of the portfolio companies.
more difficult to realise disposals This allows the Board to assess the
or that the prices that can be realised Company's ability to meet its commitments
are materially below the current and maintain its financing facility.
carrying values. Thus, this may also When loan facility terms are being
trigger a need to renegotiate the reconsidered, the Board works very
debt facility or simply affect valuation closely with the Portfolio Manager
levels. to optimise any agreement.
In January 2021, the Company extended
its credit facility to 30 January
2023. The commitment under the facility
was reduced to GBP107.03 million,
in-line with the amount drawn under
the facility at that time and consistent
with the Company's intention to reduce
borrowings. In March 2021, the commitment
under the facility was reduced to
GBP60 million and was converted to
a revolving credit facility. In April
2021, the balance under the revolving
credit facility was paid in full
and converted to a GBP55 million
revolving credit facility. Further
details are included in note 22 to
the Accounts on page 76 of the Annual
Report. The Board views the reduction
in the loan balance as a significant
mitigation of gearing risk.
===============================================
8. Portfolio Manager and key man
risk The Portfolio Manager has a compensation
The Portfolio Manager operates a and incentive scheme to retain key
team approach to portfolio management staff and has developed a suitable
and decision making so the risk arising succession planning programme, which
from the departure of one or more seeks to ease the impact that the
of the Portfolio Manager's key investment loss of a key investment professional
professionals should not necessarily may have on the Company's performance.
prevent the Company from achieving The Portfolio Manager will notify
its investment objective. any change in its key professionals
to the Board at the earliest possible
The Portfolio Managers' resources opportunity and the Board will be
could become stretched through the made aware of all efforts made to
launch of new products or team departures fill a vacancy.
leading to a lack of focus on the
Company's portfolio. Furthermore, investment decisions
are made by a team of professionals,
The Portfolio Manager could terminate mitigating the impact of the loss
its contract with the Company. This of any key professional within the
event would have an impact on the Portfolio Manager's organisation
management of the portfolio and would on the Company's performance.
constitute a technical default on
the debt facility, requiring renegotiation Recent experience suggests that the
or substitution, likely on less favourable Board would be able to identify an
terms. alternative Portfolio Manager should
the need arise.
===============================================
9. Outsourced service provider risk
The Company has no employees and The performance of the Company's
the Directors have been appointed service providers is monitored closely
on a non-executive basis. The Company by the Board and in particular by
is reliant upon the performance of the Management Engagement Committee.
third-party service providers for The Management Engagement Committee
its executive function. The AIFM, monitors service providers and their
the Portfolio Manager, the Depositary, activities. Each of the service providers
the Company Secretary and the Administrator has a notice period so as to allow
will be performing services that an alternative to be appointed.
are integral to the operation of
the Company. Failure of any of its The controls and operations of each
third- party service providers to service provider, other than the
perform in accordance with the terms Company Secretary and Portfolio Manager,
of its appointment could have a material are subject to a detailed analysis
detrimental impact on the operation of their operations, which includes
of the Company. Furthermore, any testing their key systems to identify
of the Company's service providers any weaknesses, by independent auditors
could terminate their contract. on at least an annual basis. The
findings of each review are detailed
in assurance reports, copies of which
are provided to the Audit, Risk and
Valuation Committee for its review,
so that it can gain a greater understanding
of the risk management processes
and how they apply to the Company's
business.
The Directors also received confirmation
from the AIFM, Portfolio Manager,
depositary and custodian, and the
registrar on the arrangements for
working during the COVID-19 pandemic
lockdown.
===============================================
10. Currency risk
In as much as the Portfolio Manager The Portfolio Manager regularly reports
now no longer seeks to hedge non-sterling to the Board and highlights any significant
currency exposures through forward impacts of currency movements on
foreign exchange contracts and some the value of investments.
of the Company's investments are
based wholly or partly outside the
UK or have revenues in currencies
other than sterling then the value
of the portfolio, in sterling terms,
may be affected negatively by a rise
in sterling relative to these other
currencies and, equally, positively
by a fall in sterling.
===============================================
11. Cyber risk
Each of the Company's service providers The Board receives controls reports
is at risk of cyber attack, data from its service providers which
theft, service disruption, etc. While describe the protective measures
the risk of financial loss by the they take as well as their business
Company is probably small, the risk recovery plans. In addition, the
of reputational damage and the risk Board received presentations from
of loss of control of sensitive information the Portfolio Manager, on cyber risk
is more significant, for instance and the additional steps it and its
a GDPR breach. Many of the Company's service providers were taking during
service providers and the Board often the COVID-19 pandemic and the need
have sensitive information regarding for employees to work from home.
transactions or pricing and information
regarded as inside information in
regulatory terms. Data theft or data
corruption per se is regarded as
a lower order risk as relevant data
is held in multiple locations.
===============================================
Risk assessment and internal controls review by the Board
Risk assessment includes consideration of the scope and quality
of the systems of internal control operating within key service
providers, and ensures regular communication of the results of
monitoring by such providers to the Audit, Risk and Valuation
Committee, including the incidence of significant control failings
or weaknesses that have been identified at any time and the extent
to which they have resulted in unforeseen outcomes or contingencies
that may have a material impact on the Company's performance or
condition.
No significant control failings or weaknesses were identified
from the Audit, Risk and Valuation Committee's ongoing risk
assessment which has been in place throughout the financial year
and up to the date of this report or the controls reports that were
received from all service providers and reviewed by the Committee.
The Board is therefore satisfied that it has undertaken a detailed
review of the risks facing the Company.
Going Concern
T he Board has considered the Company's principal risks and
uncertainties (including whether there are any emerging risks); has
scrutinised the detailed cash flow forecast prepared by the
Portfolio Manager; and considered their assessment of the
likelihood and quantum of funds which could be raised from sales of
investments. The Portfolio Manager has also performed a range of
stress tests, and demonstrated to the Board that even in an adverse
scenario of depressed markets and restrictions on sales in the
private equity market, the Company could still generate sufficient
funds from sales of investments to meet its liabilities over the
next twelve months. As a result, the Board is comfortable that the
Company will have sufficient liquid funds to pay operating
expenses.
The Board has also considered the provisions in the new
revolving credit facility, and have taken into account that the
outstanding loan balance has been fully repaid after the accounting
date.
On this basis, the Board considers it appropriate to adopt the
going concern basis of accounting in the Company's accounts, and
has not identified any material uncertainties to the Company's
ability to continue as a going concern over a period of at least
twelve months from the date of approval of these financial
statements.
Viability Statement
The Board has assessed the prospects of the Company over the
five-year period ending 31 December 2025. The Board considers a
five-year period to be appropriate because it is the minimum
holding period that it would recommend to a prospective investor
considering purchasing shares in the Company.
The Board has considered the Principal Risks set out on above
and detailed cash flow forecasts prepared by the Portfolio Manager,
and stress case scenarios, including the possibility of breach of
its loan covenants.
The Board believes that the portfolio will provide shareholders
with satisfactory returns from the investment portfolio over a
five-year period and that there will be continued demand for the
Company's shares.
Although there may well be short term strains arising from the
current economic crisis driven by the COVID-19 pandemic, and some
companies in the portfolio may be severely affected, the
portfolio's exposure to healthcare companies which may benefit from
the pandemic will help to provide a balance. Based on current
understanding, as with other pandemics, the impact will diminish
over time and the opportunities arising from investing in new
innovative businesses will remain. It should therefore be possible
for the new Portfolio Manager to have moved materially to implement
the new strategy within a five-year timeframe. Having considered
all of the Company's resources, strategy, risks and probabilities,
the Board has a reasonable expectation that the Company will
continue to operate and meet its liabilities as they fall due,
during the five year period to 31 December 2025.
By order of the Board
Schroder Investment Management Limited
Company Secretary
23 April 2021
Board of Directors
Susan Searle (Chair)
Raymond Abbott
Scott Brown
Stephen Cohen (Chairman of Audit, Risk and Valuation
Committee)
Tim Edwards
Jane Tufnell (Senior Independent Director)
STATEMENT OF DIRECTORS' RESPONSIBILITIES
The Directors are responsible for preparing the annual report
and the financial statements in accordance with applicable laws and
regulations. Company law requires the Directors to prepare
financial statements for each financial year. Under that law, the
Directors have elected to prepare the financial statements in
accordance with UK Accounting Standards and applicable law,
including FRS 102 "The Financial Reporting Standard applicable in
the UK and Republic of Ireland". Under company law, the Directors
must not approve the financial statements unless they are satisfied
that they give a true and fair view of the state of affairs of the
Company as at the end of each financial year and of the profit or
loss of the Company for that period.
In preparing these financial statements, the Directors are
required to:
- present fairly the financial position, financial performance
and cash flows of the Company;
- select suitable accounting policies in accordance with United
Kingdom Generally Accepted Accounting Practice (UK GAAP) and then
apply them consistently;
- present information, including accounting policies, in a
manner that provides relevant, reliable, comparable and
understandable information;
- make judgements and estimates that are reasonable and prudent;
- state whether applicable UK accounting standards have been
followed, subject to any material departures disclosed and
explained in the financial statements; and
- prepare the financial statements on a going concern basis
unless it is inappropriate to presume that the Company will
continue in business.
The Directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the Company's
transactions and disclose with reasonable accuracy at any time the
financial position of the Company and enable them to ensure that
the financial statements comply with the Companies Act 2006. They
are also responsible for safeguarding the assets of the Company and
hence for taking reasonable steps for the prevention and detection
of fraud and other irregularities.
The Directors are also responsible for preparing the Strategic
Report, the Directors' Report, the Directors' Remuneration Report
and the report of the Audit, Risk and Valuation Committee in
accordance with the Companies Act 2006 and applicable regulations,
including the requirements of the Listing Rules and the Disclosure
Guidance and Transparency Rules.
The Directors have delegated responsibility to the Portfolio
Manager for the maintenance of the Company's corporate and
financial information included on its web pages. Legislation in the
UK governing the preparation and dissemination of financial
statements may differ from legislation in other jurisdictions.
Each of the Directors, whose names are listed above, confirms
that, to the best of their knowledge:
- the financial statements, prepared in accordance with
applicable accounting standards, give a true and fair view of the
assets, liabilities, financial position and profit/loss of the
Company; and
- the Strategic Report contained in the annual report and
financial statements include a fair review of the development and
performance of the business and the position of the Company,
together with a description of the principal risks and
uncertainties that it faces.
The AIC Code of Corporate Governance requires directors to
ensure that the annual report and financial statements are fair,
balanced and understandable. In order to reach a conclusion on this
matter, the Board has requested that the Audit, Risk and Valuation
Committee advises on whether it considers that the annual report
and financial statements fulfil these requirements. The process by
which the Audit, Risk and Valuation Committee has reached these
conclusions is set out in its report on pages 38 to 39 of the
Annual Report. As a result, the board has concluded that the annual
report and financial statements for the year ended 31 December
2020, taken as a whole, are fair, balanced and understandable and
provide the information necessary for shareholders to assess the
Company's position and performance, business model and
strategy.
Signed on behalf of the Board of Directors by:
Susan Searle
Chair
23 April 2021
INCOME STATEMENT FOR THE YEARED 31 DECEMBER 2020
2020 2019
Revenue Capital Total Revenue Capital Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Losses on investments
held at fair
value through
profit or loss - (126,095) (126,095) - (421,175) (421,175)
Losses on derivative
contracts - - - - (9,373) (9,373)
Losses on foreign
exchange - (193) (193) - (1) (1)
---------------------- -------- --------- --------- -------- --------- ---------
Total return - (126,288) (126,288) - (430,549) (430,549)
Portfolio management
fee (1,923) - (1,923) - - -
Other administrative
expenses (1,240) - (1,240) (3,115) - (3,115)
---------------------- -------- --------- --------- -------- --------- ---------
Net loss before
finance costs
and taxation (3,163) (126,288) (129,451) (3,115) (430,549) (433,664)
Finance costs (1,909) - (1,909) (2,841) - (2,841)
---------------------- -------- --------- --------- -------- --------- ---------
Net loss before
taxation (5,072) (126,288) (131,360) (5,956) (430,549) (436,505)
Taxation - - - - - -
---------------------- -------- --------- --------- -------- --------- ---------
Net loss after
taxation (5,072) (126,288) (131,360) (5,956) (430,549) (436,505)
---------------------- -------- --------- --------- -------- --------- ---------
Basic and diluted
loss per share (0.56)p (13.90)p (14.46)p (0.67)p (48.08)p (48.75)p
The "Total" column of this statement is the Income Statement of
the Company. The "Revenue" and "Capital" columns represent
supplementary information prepared under guidance issued by The
Association of Investment Companies. The Company has no other items
of other comprehensive income, and therefore the net loss after
taxation is also the total comprehensive income for the year.
All revenue and capital items in the above statement derive from
continuing operations. No operations were acquired or discontinued
in the year.
STATEMENT OF CHANGES IN EQUITY FOR THE YEARED 31 DECEMBER
2020
Called-up
share Share Capital Revenue
capital premium reserves reserve Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
At 31 December
2018 8,270 813,099 (6,385) (7,784) 807,200
Net loss after
taxation - - (430,549) (5,956) (436,505)
Issue of shares 816 78,105 - - 78,921
Share issue
costs - (187) - - (187)
---------------- --------- -------- --------- -------- ---------
At 31 December
2019 9,086 891,017 (436,934) (13,740) 449,429
Net loss after
taxation - - (126,288) (5,072) (131,360)
---------------- --------- -------- --------- -------- ---------
At 31 December
2020 9,086 891,017 (563,222) (18,812) 318,069
---------------- --------- -------- --------- -------- ---------
STATEMENT OF FINANCIAL POSITION AT 31 DECEMBER 2020
2020 2019
GBP'000 GBP'000
Fixed assets
Investments held at fair value through
profit or loss 421,152 561,115
--------------------------------------- --------- ---------
Current assets
Debtors 26 30
Cash at bank and in hand 6,379 2,234
--------------------------------------- --------- ---------
6,405 2,264
--------------------------------------- --------- ---------
Current liabilities
Creditors: amounts falling due within
one year (109,488) (1,050)
--------------------------------------- --------- ---------
Net current (liabilities)/assets (103,083) 1,214
--------------------------------------- --------- ---------
Total assets less current liabilities 318,069 562,329
--------------------------------------- --------- ---------
Creditors: amounts falling due after
more than one year - (112,900)
--------------------------------------- --------- ---------
Net assets 318,069 449,429
--------------------------------------- --------- ---------
Capital and reserves
Called-up share capital 9,086 9,086
Share premium 891,017 891,017
Capital reserves (563,222) (436,934)
Revenue reserve (18,812) (13,740)
--------------------------------------- --------- ---------
Total equity shareholders' funds 318,069 449,429
--------------------------------------- --------- ---------
Net asset value per share 35.00p 49.46p
CASH FLOW STATEMENT FOR THE YEARED 31 DECEMBER 2020
2020 2019
GBP'000 GBP'000
Cash flows from operating activities
Net loss before finance costs and taxation (129,451) (433,664)
Adjustments for:
Losses on investments held at fair value
through profit or loss 126,095 421,175
Net movement in foreign forward currency
contracts - 9,373
Net movement in foreign exchange - 1
Decrease/(increase) in debtors 4 (19)
Increase in creditors 1,430 578
-------------------------------------------- --------- ---------
Net cash flow from operating activities (1,922) (2,556)
-------------------------------------------- --------- ---------
Cash flows from investment activities
Purchases of investments (6,859) (137,143)
Proceeds from sales of investments 20,727 191,387
Settlement of foreign forward currency
contracts - (15,349)
-------------------------------------------- --------- ---------
Net cash flow from investment activities 13,868 38,895
-------------------------------------------- --------- ---------
Cash flows from financing activities
Issue of shares - 6,000
Share issue costs - (187)
Finance costs (1,933) (2,852)
Repayment of loan (5,868) -
-------------------------------------------- --------- ---------
Net cash flow from financing activities (7,801) 2,961
-------------------------------------------- --------- ---------
Change in cash and cash equivalents 4,145 39,300
Cash and cash equivalents at the beginning
of the year 2,234 (149,966)
Reclassification of overdraft liabilities
in the year(1) - 112,900
-------------------------------------------- --------- ---------
Cash and cash equivalents at the end
of the year 6,379 2,234
-------------------------------------------- --------- ---------
(1) Following the amendments to the term facility agreement with
The Northern Trust Company during the prior year, the overdraft was
reclassified as a loan.
NOTES TO THE ACCOUNTS
1. Accounting Policies
Basis of accounting
Schroder UK Public Private Trust plc ("the Company") is
registered in England and Wales as a public company limited by
shares. The Company's registered office is 1 London Wall Place,
London EC2Y 5AU.
The accounts are prepared in accordance with the Companies Act
2006, United Kingdom Generally Accepted Accounting Practice ("UK
GAAP"), in particular in accordance with Financial Reporting
Standard (FRS) 102 "The Financial Reporting Standard applicable in
the UK and Republic of Ireland", and with the Statement of
Recommended Practice "Financial Statements of Investment Trust
Companies and Venture Capital Trusts" (the "SORP") issued by the
Association of Investment Companies in October 2019. All of the
Company's operations are of a continuing nature.
The accounts have been prepared on a going concern basis under
the historical cost convention, as modified by the revaluation of
investments and derivative financial instruments held at fair value
through profit or loss. The Directors believe that the Company has
adequate resources to continue operating for at least 12 months
from the date of approval of these accounts. In forming this
opinion, the Directors have taken into consideration: the controls
and monitoring processes in place; the Company's level of debt and
other payables; the low level of operating expenses, comprising
largely variable costs which would reduce pro rata in the event of
a market downturn; the Company's cash flow forecasts and the
liquidity of the Company's investments. Further details of the
Directors' considerations in forming this opinion are given on page
31 of the Annual Report. The financial statements have been
prepared on the assumption that approval as an investment trust
will continue to be granted.
The Company has adopted the provisions of Sections 11 and 12 of
FRS 102 for measuring and disclosing its financial instruments.
The accounts are presented in sterling and amounts have been
rounded to the nearest thousand.
The accounting policies applied to these accounts are consistent
with those applied in the accounts for the year ended 31 December
2019.
2. Portfolio management fee
2020 2019
GBP'000 GBP'000
Portfolio management fee 1,923 -
------------------------- ------- -------
1,923 -
------------------------- ------- -------
The Company appointed Schroder Investment Management Limited
(SIML) as Portfolio Manager, effective from 13 December 2019. Under
the terms of the new management agreement, SIML is entitled to a
management fee, effective from 13 March 2020 and a performance fee,
subject to achieving performance targets. Details of these
calculations are set out in the Directors' Report on page 35 of the
Annual Report. No performance fee is payable for the current or
prior year and no provision is required at 31 December 2020.
Details of all transactions with the current and previous
Portfolio Managers are given in note 16 on page 70 of the Annual
Report.
3. Other administrative expenses
2020 2019
GBP'000 GBP'000
Other administration expenses 562 1,869
Valuation fees 293 282
Directors' fees(1) 191 210
Company secretarial fee 44 122
Auditor's remuneration for the audit of the
Company's annual accounts(2) 150 346
Auditor's remuneration for audit related services
interim review(2) - 286
-------------------------------------------------- ------- -------
1,240 3,115
-------------------------------------------------- ------- -------
(1) Full details are given in the Directors' Remuneration Report
on pages 44 to 46 of the Annual Report.
(2) The annual audit fee includes VAT amounting to GBP25,000
(2019: GBP46,000). The interim review fee includes VAT amounting to
nil (2019: GBP38,000).
4. Finance costs
2020 2019
GBP'000 GBP'000
Bank loan/overdraft fees and interest 1,909 2,841
-------------------------------------- ------- -------
1,909 2,841
-------------------------------------- ------- -------
5. Taxation
(a) Analysis of tax charge for the year
2020 2019
Revenue Capital Total Revenue Capital Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
-------------------- ------- ------- ------- ------- ------- -------
Taxation on ordinary - - - - - -
activities
-------------------- ------- ------- ------- ------- ------- -------
The Company has no corporation tax liability for the year ended
31 December 2020 (2019: nil).
(b) Factors affecting tax charge for the year
2020 2019
Revenue Capital Total Revenue Capital Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Net loss on ordinary
activities before
taxation (5,072) (126,288) (131,360) (5,956) (430,549) (436,505)
------------------------ ------- --------- --------- ------- --------- ---------
Net loss on ordinary
activities before
taxation
multiplied by
the Company's
applicable rate
of
corporation tax
for the year of
19.0% (2019: 19.0%) (964) (23,995) (24,959) (1,132) (81,804) (82,936)
Effects of:
Capital loss on
investments - 23,995 23,995 - 81,804 81,804
Unrelieved loan
relationship deficit 363 - 363 540 - 540
Unrelieved management
expenses 601 - 601 560 - 560
Expenses not deductible
for corporation
tax purposes - - - 32 - 32
------------------------ ------- --------- --------- ------- --------- ---------
Taxation on ordinary
activities - - - - - -
------------------------ ------- --------- --------- ------- --------- ---------
(c) Deferred taxation
Given the Company's intention to meet the conditions required to
retain its status as an Investment Trust Company, no provision has
been made for deferred tax on any capital gains or losses arising
on the revaluation or disposal of investments.
The Company has an unrecognised deferred tax asset of
GBP3,731,000 (2019: GBP2,801,000) based on a prospective
corporation tax rate of 19% (2019: 17%). In its 2020 budget, the
government announced that the main rate of corporation tax would
remain at 19% for fiscal years beginning on 1 April 2020 and 2021.
It is unlikely that the Company will generate sufficient taxable
profits in the future to utilise these expenses and therefore no
deferred tax asset has been recognised in the accounts.
6. Dividends
No dividends have been paid or proposed in respect of the year
ended 31 December 2020 (2019: nil).
7. Basic and diluted loss per share
2020 2019
GBP'000 GBP'000
Revenue loss (5,072) (5,956)
Capital loss (126,288) (430,549)
------------------------------------------- ----------- -----------
Total loss (131,360) (436,505)
------------------------------------------- ----------- -----------
Weighted average number of shares in issue
during the year 908,639,238 895,442,758
Revenue loss per share (0.56)p (0.67)p
Capital loss per share (13.90)p (48.08)p
------------------------------------------- ----------- -----------
Total basic and diluted loss per share (14.46)p (48.75)p
------------------------------------------- ----------- -----------
The basic and diluted loss per share is the same because there
are no dilutive instruments in issue.
8. Creditors: amounts falling due within one year
2020 2019
GBP'000 GBP'000
Bank loan 107,032 -
Portfolio management fee payable 1,923 -
Other creditors and accruals 533 1,050
--------------------------------- ------- -------
109,488 1,050
--------------------------------- ------- -------
The bank loan is drawn on the Company's facility with The
Northern Trust Company, which expires on 15 January 2021. The loan
is secured on all the Company's assets. The agreement requires
that, subject to an allowance for operating expenses, the proceeds
of Private Asset sales must be used to make loan repayments, which
cannot be redrawn. Furthermore, the Company may not make further
Private Assets investments until certain repayments have been made.
The loan agreement also requires the Company to seek to maintain a
balance between the listed and unlisted investments in the
portfolio. Interest payable is calculated at LIBOR, for one month
or other agreed loan period, plus a margin of 1.5%.
Details of an extension to the loan facility, and repayments
after the accounting date, are given in note 22 on page 76 of the
Annual Report.
The Directors consider that the carrying amount of creditors
falling due within one year approximates to their fair value.
9. Creditors: amounts falling due after more than one year
2020 2019
GBP'000 GBP'000
Bank loan - 112,900
10. Called-up share capital
2020 2019
GBP'000 GBP'000
Ordinary shares allotted, called up and
fully paid:
Ordinary shares of 1p each:
Opening balance of 908,639,238 (2019:
827,000,000) shares 9,086 8,270
Issue of nil (2019: 81,639,238) shares - 816
----------------------------------------- -------- --------
Closing balance of 908,639,238 (2019:
908,639,238) shares 9,086 9,086
----------------------------------------- -------- --------
11. Net asset value per share
2020 2019
Net assets attributable to shareholders
(GBP'000) 318,069 449,429
Shares in issue at the year end 908,639,238 908,639,238
---------------------------------------- ----------- -----------
Net asset value per share 35.00p 49.46p
---------------------------------------- ----------- -----------
12. Disclosures regarding financial instruments measured at fair value
The Company's financial instruments within the scope of FRS 102
that are held at fair value comprise its investment portfolio and
derivative financial instruments.
FRS 102 requires that financial instruments held at fair value
are categorised into a hierarchy consisting of the three levels
below. A fair value measurement is categorised in its entirety on
the basis of the lowest level input that is significant to the fair
value measurement.
Level 1 - valued using unadjusted quoted prices in active
markets for identical assets.
Level 2 - valued using observable inputs other than quoted
prices included within Level 1.
Level 3 - valued using inputs that are unobservable.
Details of the Company's policy for valuing investments and
derivative instruments are given in note 1(b) on pages 62 and 63 of
the Annual Report and 1(g) on page 64 of the Annual Report. Level 3
investments have been valued in accordance with note 1(b) (i) -
(iv) .
At 31 December, the Company's investment portfolio and any
derivative financial instruments were categorised as follows:
2020
Level 1 Level 2 Level 3 Total
GBP'000 GBP'000 GBP'000 GBP'000
Investments
in equities - quoted 32,697 - 33,889 66,586
- unquoted - - 354,566 354,566
------------------------- ------- ------- ------- -------
Total 32,697 - 388,455 421,152
-------------------------- ------- ------- ------- -------
2019
Level 1 Level 2 Level 3 Total
GBP'000 GBP'000 GBP'000 GBP'000
Investments
in equities - quoted 53,476 - 80,811 134,287
- unquoted - - 426,828 426,828
------------------------- ------- ------- ------- -------
Total 53,476 - 507,639 561,115
-------------------------- ------- ------- ------- -------
There have been no transfers between Levels 1, 2 or 3 during the
year (2019: nil).
Movements in fair value measurements included in Level 3 during
the year are as follows:
2020 2019
GBP'000 GBP'000
Opening book cost 702,358 580,006
Opening investment holding (losses)/gains (194,719) 158,760
------------------------------------------ --------- ---------
Opening valuation 507,639 738,766
Purchases at cost 9,952 126,733
Investments received as consideration
for share issue - 72,921
Sales proceeds (11,654) (81,390)
Net movement in investment holding gains
and losses (117,482) (349,391)
------------------------------------------ --------- ---------
Closing valuation 388,455 507,639
------------------------------------------ --------- ---------
Closing book cost 663,223 702,358
Closing investment holding losses (274,768) (194,719)
------------------------------------------ --------- ---------
Total level 3 investments held at fair
value through profit or loss 388,455 507,639
------------------------------------------ --------- ---------
The Company received GBP11,654,000 (2019: GBP81,390,000) from
Level 3 investments sold in the year. The book cost of the
investments when they were purchased was GBP49,087,000 (2019:
GBP77,302,000). These investments had been revalued over time and,
until they were sold, any unrealised gains or losses were included
in the fair value of the investments.
13. Events after the accounting date that have not been
reflected in the financial statements
Loan facility with The Northern Trust Company
The Company arranged a new, amended loan facility agreement with
The Northern Trust Company, effective from 15 January 2021. The
initial proceeds of two transactions detailed below, totalling
GBP115.1 million, have been received by the Company post the
accounting date, and GBP107,032,000 of that amount has been used to
fully pay down the loan. Under the terms of the new loan facility
agreement, following the above repayment, the arrangement changes
to a "Revolving Facility Commitment", and the principal terms of
this are as follows:
- The facility limit is reduced to GBP55 million;
- The termination date is 30 January 2023;
- Interest on any drawings will accrue daily and will be
calculated at the aggregate of The Bank of England Base Rate, a 2%
margin and a 0.6% facility fee, per annum.
Material transactions after the accounting date
Acquisition of certain of the Company's investments by Rosetta
Capital Limited
Under the terms of a transaction completed in February 2021, the
Company's investments detailed below, have been acquired by Rosetta
Capital. The initial sales proceeds of GBP52.9 million were
received by the Company in March 2021, including recompense for
GBP2.9 million of follow-on payments made after the accounting date
relating to Carrick Therapeutics and Mission Therapeutics, and
GBP1.0 million from a positive adjustment to the acquisition price
due to changes in the values of the listed portfolio companies
Mereo BioPharma and ReNeuron. An additional amount of GBP5.0
million may be receivable, dependent on the divestment of
Immunocore by Rosetta Capital.
The investments acquired by Rosetta Capital were as follows:
Percentage Valuation
of the Company's in the accounts
holding sold (of portion sold)
% GBP'000
Portfolio company
Inivata 50 13,069
Immunocore 48 12,274
Carrick Therapeutics 100 11,155
Mission Therapeutics 100 4,488
Mereo BioPharma 100 4,052
ReNeuron 61 2,575
PsiOxus Therapeutics 100 615
--------------------- ---------------- -----------------
48,228
--------------------- ---------------- -----------------
Acquisition of Kymab Limited, by Sanofi S.A.
Under the terms of a transaction completed in February 2021, the
Company's entire holding in Kymab, valued at GBP69.6 million in the
accounts, has been acquired by Sanofi. The consideration agreed was
as follows:
- The initial proceeds of GBP63.2 million were received by the Company in April 2021;
- In addition, circa US$6.1 million will be held in escrow as a
guarantee against warranties; of which 50% will be released after 6
months and the remainder after 18 months, subject to certain
deductions; and
- An amount of up to US$26.9 million is potentially receivable
over the next 13 years; this is dependent on the achievement of
various development and regulatory milestones.
Status of announcement
2019 Financial Information
The figures and financial information for 2019 are extracted
from the published Annual Report and Accounts for the year ended 31
December 2019 and do not constitute the statutory accounts for that
year. The 2019 Annual Report and Accounts have been delivered to
the Registrar of Companies and included the Report of the
Independent Auditors which was unqualified and did not contain a
statement under either section 498(2) or section 498(3) of the
Companies Act 2006.
2020 Financial Information
The figures and financial information for 2020 are extracted
from the Annual Report and Accounts for the year ended 31 December
2020 and do not constitute the statutory accounts for the year. The
2020 Annual Report and Accounts include the Report of the
Independent Auditors which is unqualified and does not contain a
statement under either section 498(2) or section 498(3) of the
Companies Act 2006. The 2020 Annual Report and Accounts will be
delivered to the Registrar of Companies in due course.
Neither the contents of the Company's webpages nor the contents
of any website accessible from hyperlinks on the Company's webpages
(or any other website) is incorporated into, or forms part of, this
announcement.
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