TIDMSYNC
Syncona Limited
Publication of 2017 Annual Report and Notice of Annual General Meeting
21 July 2017
Syncona Limited ("Syncona"), a leading healthcare company focused on investing
in and building global leaders in life science, today announces that it has
published its Annual Report and Accounts for the year ended 31 March 2017
("2017 Annual Report"). In addition, Syncona has published its Notice of Annual
General Meeting 2017 and a circular relating to the 2017 Dividend.
Copies of these documents, together with the Form of Proxy for use in
connection with the 2017 Annual General Meeting, Charitable Allocation Form and
Cash Election Form, are available electronically on the Investor Relations
section of Syncona's website at www.synconaltd.com/investor-relations. Printed
copies of these documents are also being posted to shareholders where
requested.
Syncona's Annual General Meeting will be held at 10:30am on 8 September 2017 at
the offices of Northern Trust International Fund Administration Services
(Guernsey) Limited, Trafalgar Court, Les Banques, St Peter Port, Guernsey GY1
3QL.
In compliance with Listing Rule 9.6.1, the following documents have today been
submitted to the National Storage Mechanism and will shortly be available for
inspection at www.morningstar.co.uk/uk/nsm:
* 2017 Annual Report
* Notice of Annual General Meeting 2017
* Circular relating to 2017 Dividend
Disclosure & Transparency Rule ("DTR") 6.3.5R requires the Company to disclose
to the media certain information from its 2017 Annual Report if that
information is of a type that would be required to be disseminated in a
half-yearly report. The information contained in the Appendix to this
announcement, together with the Company's Full Year results for the year ended
March 31 2017, issued on 7:00am on 6 July 2017 (available at https://
www.synconaltd.com/results-centre), constitute the materials required by DTR
6.3.5R to be communicated to the media in unedited full text through a
Regulatory Information Service. This material is not a substitute for reading
the full 2017 Annual Report.
The information included in the Appendix is extracted from the 2017 Annual
Report which was approved by the Board of Directors on 5 July 2017. Defined
terms used in the Appendix refer to terms as defined in the 2017 Annual Report,
unless the context otherwise requires.
[S]
Enquiries
Syncona Ltd
Siobhan Weaver
Tel: +44 (0) 20 7611 2031
Copies of this press release and other corporate information can be found on
the company website at: www.synconaltd.com
Forward-looking statements - this announcement contains certain forward-looking
statements with respect to the portfolio of investments of Syncona Ltd. These
statements and forecasts involve risk and uncertainty because they relate to
events and depend upon circumstances that may or may not occur in the future.
There are a number of factors that could cause actual results or developments
to differ materially from those expressed or implied by these forward-looking
statements and forecasts. Nothing in this announcement should be construed as a
profit forecast.
About Syncona:
Syncona is a leading FTSE250 healthcare company focused on investing in and
building global leaders in life science. Our vision is to deliver
transformational treatments to patients in truly innovative areas of healthcare
while generating superior returns for shareholders. Our current investment
portfolio consists of seven high quality companies in life science and a
leading range of fund investments.
We seek to partner with the best, brightest and most ambitious minds in science
to build globally competitive businesses. We are established leaders in gene
therapy, cell therapy and advanced diagnostics, and focus on delivering
dramatic efficacy for patients in areas of high unmet need.
Our market leading funds portfolio seeks to generate superior returns by
investing in long only and alternative investment funds. This represents a
productively deployed evergreen funding base which enables us to take a long
term approach to investing in life sciences as we target the best new
opportunities and support our existing portfolio companies to grow and succeed.
Syncona is aligned with two of the premium charitable funders in UK science,
the Wellcome Trust, original founder of Syncona, and Cancer Research UK, both
of which are significant shareholders in our business. We make a donation of
0.3% of Net Asset Value to a range of charities each year.
Appendix
Responsibility statement
The Directors' responsibility statement below has been prepared in conjunction
with, and is extracted from, the 2017 Annual Report, whereas this announcement
and the announcement of the Company's Full Year results for the year ended
March 31 2017, issued on 7:00am on 6 July 2017, contain extracts from the 2017
Annual Report. The responsibility statement is repeated here solely for the
purpose of complying with DTR 6.3.5. These responsibilities are for the full
2017 Annual Report and not the extracted information presented in this
announcement or otherwise.
The Directors of the Company are:
Jeremy Tigue, Chairman
Ellen Strahlman, Non-Executive Director
Nicholas Moss, Non-Executive Director
Nigel Keen, Non-Executive Director
Peter Hames, Non-Executive Director
Tom Henderson, Non-Executive Director
The Directors confirm to the best of our knowledge:
1. The Financial Statements have been prepared in accordance with
International Financial Reporting Standards, give a true and fair view of the
assets, liabilities, financial position and profit or loss of the Group as a
whole; and
2. The management report in the 2017 Annual Report including information and
details in the Chairman's Statement, the Strategic Report, the Corporate
Governance Statements, the Directors' Report and the notes to the Financial
Statements, provides a fair review of the Company business and a description of
the principal risks and uncertainties facing the Company.
Principal risks and uncertainties
The execution of the Company's investment strategy is subject to risks and
uncertainties. During the year, the Company expanded its investment policy to
include investment in early-stage life science companies. Accordingly, the
principal risks and uncertainties have been updated to reflect new risks
associated with the financing of and investment in early-stage companies.
The principal risks that the Board has identified are set out in the table
below, along with the consequences and mitigation of each risk. Further
information on risk factors is set out in note 22 to the financial statements.
Life science portfolio
Description Impact Mitigation
Investment risk
The Company sources life The value of the The Company's Investment Advisor
science businesses for portfolio company employs highly experienced personnel
investment. Such depends on the who have considerable experience of
early-stage businesses performance of its building and developing early-stage
typically have limited future products and life science businesses.
products in development the Company may not Before making any investment, the
and, consequently, any realise its original Investment Advisor performs extensive
problems encountered in cost or any value from due diligence covering all the major
one product may have a its investment. business risks. Once the investment
particularly damaging It may take time and is made, the Investment Advisor's
effect on the prospects of significant resources personnel work closely with portfolio
that portfolio company. for the Company to companies, taking non-executive and
Early-stage life science realise its investment at times executive roles on portfolio
businesses will spend a and the portfolio company boards, monitoring progress
considerable proportion of company may not be and ensuring familiarity with issues
their resources on successful or may not and risks.
research and development grow rapidly and the Within the Investment Advisor's
into unproven technology, Company may not investment process, there is a robust
which may be unsuccessful realise its original and disciplined financing and capital
or may be commercially cost or any value from allocation framework, focused on the
unproductive and may its investment. achievement of key strategic and
require the injection of development milestones ahead of any
further capital by the further investment. Initial
Company to fully exploit investments may involve seed funding
the results of that to identify and mitigate early risks
research. before proceeding with more
substantial investments.
The Company ensures that it has
sufficient liquidity to fund its
early-stage investment programme and
the Investment Manager and Investment
Advisor maintain detailed financing
and capital allocation models on an
ongoing basis and forecasts are
produced for the Board that contain
appropriate stress testing.
General, commercial, technological and clinical risks
The Company's life science All of these risks The Company's Investment Advisor
investments are exposed to could potentially lead employs highly experienced personnel
a wide range of general, to a decline in the who have considerable experience of
commercial, technological value of a portfolio building and developing early-stage
and clinical risks. In company, or in extreme life science businesses. The
particular: cases lead to the Investment Advisor's personnel work
· Negative results from portfolio company closely with portfolio companies,
clinical trials failing. taking both executive and
· Intellectual property non-executive roles on portfolio
may fail to be granted or company boards, monitoring progress
may be infringed or copied and ensuring familiarity with issues
· Failure of a technology and risks.
platform in an early-stage In addition, the Investment Advisor's
company team can assist the management teams
· Failure to obtain of the portfolio companies with
regulatory approval for arranging specialist advice, for
new products developed example, communication advice to
· Failure to sell support them dealing with issues or
products profitably or in any likely issues.
sufficient volumes
· Changes in
pharmaceutical pricing
practices
· Launch of competing
products
· Reputational damage
· Targeted public
campaigns
· Latent product defects
resulting in claims
Dominance of portfolio by a few larger investments and/or sector focus
Within its life science If a portfolio company The Board considers the performance
portfolio, the Company is experiences financial of its largest portfolio companies
seeking to build a focused or operational and the portfolio's concentration on
portfolio of up to 20 difficulties, fails to specific sub-sectors on a quarterly
leading life science achieve anticipated basis.
companies. Accordingly, a results or, where The Company's Investment Advisor
large proportion of the relevant, suffers from employs highly experienced personnel
overall value of the life poor stock market who have considerable experience of
science portfolio may, at conditions and if, as building and developing early-stage
any time, be accounted for a result, its value life science businesses. The
by one, or a few, were to be adversely Investment Advisor's personnel work
portfolio companies. affected, this could closely with portfolio companies,
The Company's life science have an adverse impact taking non-executive and at times
portfolio may also be on the overall value executive roles on portfolio
focused on a small number of the life science companies' boards, monitoring
of sub-sectors within the investment portfolio. progress and ensuring familiarity
life science sector. Similarly, if the with issues and risks.
Accordingly, a material technology or At 31 March 2017, the Company's three
proportion of the overall technologies utilised largest investments in its life
value of the life science in a specific science portfolio represented 19.4
investment portfolio may, sub-sector prove to be per cent of the net asset value of
at any time, be invested commercially the Company.
in a specific sub-sector. unproductive or
unsuccessful, then the
value of the Company's
investments in the
respective sub-sector
(s) could be
negatively impacted.
Market risk - realising investment portfolio companies
Instability in equity and It may take longer to The Investment Advisor, alongside the
debt markets and/or the realise value from portfolio company management team, is
market's appetite for investments in focused on ensuring that portfolio
investment in life science portfolio companies. company business models appeal to
companies could result in both strategic acquirers as well as
an inability to access public markets.
capital markets or realise In addition, the Company seeks to
value in portfolio ensure that it has sufficient
companies through sales to liquidity to fund its portfolio
financial or strategic companies through the cycle and
acquirers. should not therefore be dependent on
third-party funding or realisations
from its life science portfolio to
fund further investments into a
portfolio company. The Investment
Manager and Investment Advisor
maintain detailed financing and
capital allocation models on an
ongoing basis and forecasts are
produced for the Board that contain
appropriate stress testing. To
further mitigate this risk, the
Investment Advisor maintains strong
relationships with potential
strategic acquirers and other leading
investors in the sector.
Market risk - political and economic uncertainty may negatively impact the
Company's ability to achieve its strategic objectives
Political and economic There could be The Company's Investment Manager and
uncertainty, including potential risks to Investment Advisor monitor these
impacts from the EU research funding and developments, with the help of
referendum or similar to attracting and professional advisers, as
scenarios, could have retaining talent. appropriate, to ensure it is prepared
several potential impacts, for any potential impacts.
including changes to the The UK government recognises these
labour market available to challenges and we believe will seek
the Investment Advisor and to address them as part of its
underlying portfolio industrial strategy.
companies, or regulatory
environment in which the
Company and its investment
portfolio companies
operate.
Funds portfolio
Description Impact Mitigation
Investment risk
The funds portfolio is Any underperformance The Company's Investment Manager
exposed to the risk that of the funds portfolio employs highly experienced personnel
its portfolio fails to will have an impact on who have considerable experience in
perform in line with its net asset value of the investing in capital markets. The
objectives if it is Company and the Investment Manager performs due
inappropriately invested longer-term liquidity diligence on potential new
or markets move adversely. for life science investments, including an assessment
The funds portfolio has investments. of investment risk and, after the
significant indirect investment is made, post investment
exposure to risks through monitoring of their performance. The
the underlying portfolios Board reviews reports from the
of the investment Investment Manager at each quarterly
entities. Due to the lack Board meeting, paying particular
of transparency in many of attention to the constitution of the
the underlying assets, it portfolio, the performance and
is not possible to volatility of underlying investments
quantify or hedge the and the liquidity forecast prepared
impact of these risks on by the Investment Manager and
the portfolio as each Investment Advisor.
investment entity may have
complex and changing risk
dynamics that are not
observable or predictable.
These risks will include
extensive interest,
foreign exchange and other
market risks which are
magnified by significant
gearing in many cases,
resulting in increased
liquidity and return risk.
Operational
Description Impact Mitigation
Failure to attract or retain key personnel
The expertise, due If the Investment The Investment Advisor carries out
diligence, risk management Manager and/or regular market comparisons for staff
skills and integrity of Investment Advisor do and executive remuneration. Senior
the staff at the Company's not succeed in executives are shareholders in the
Investment Manager and retaining skilled Company and executives of the
Investment Advisor are key personnel or are Investment Advisor participate in the
to the success of the unable to continue to Syncona Long Term Incentive Plan. In
Company. attract all personnel addition the Investment Advisor
The industries in which necessary for the encourages staff development and
the Investment Manager and development and inclusion through coaching and
Investment Advisor operate operation of their mentoring and carries out regular
are specialised and business, they may not objective setting and appraisals.
require highly qualified be able to execute the The Investment Manager's personnel
and experienced management Company's investment are shareholders in the Company and
and personnel. strategy successfully. they are incentivised by the BACIT UK
Given the relatively small Agreement, details of which are on
size of the team, the page 65.
execution of the Company's
investment strategy is
dependent on a small
number of key individuals.
There is a risk that
employees could be
approached by other
organisations or could
otherwise choose to leave
the Investment Manager or
Investment Advisor.
Financing risk
The financial risks, including market, credit and liquidity risk, faced by the
Company, where relevant, are set out in note 22 of the financial statements.
These risks and the controls in place to mitigate them are reviewed at each
quarterly Board meeting.
Financing risk and the Lack of funding may The Company has a strong liquidity
inability to match funding restrict the ability position and ensures that it has
to the timing of of a portfolio company sufficient liquidity to fund its
investments by the in the Company's life early-stage investment programme. The
Investment Advisor, science portfolio to Investment Manager and Investment
including delayed fund ongoing research Advisor maintain detailed financing
distributions from the and development and and capital allocation models on an
funds portfolio, or commercialisation ongoing basis and forecasts are
holdings in the funds programmes and the produced for each Board meeting that
portfolio not being sold, ability of the Company contain appropriate stress testing.
or being sold for less to invest in new,
than expected. attractive investment
opportunities.
This could, in some
cases, result in the
Investment Advisor
having to seek funding
from third-party
investors, thereby
diluting the Company's
ownership of the
portfolio company. In
extreme cases, it may
result in the
portfolio company
being forced to sell
off its assets or
cease its development,
thereby impacting the
value of
the investment.
Systems and controls
The potential loss of Disruption of the Systems and control procedures are
operation of core systems business of the developed and reviewed regularly and
or sensitive data leading Investment Manager and the Board receives reports annually
to damage and disruption /or Investment Advisor from the Investment Manager,
to the Investment Manager or Administrator. Investment Advisor and Administrator
and/or Investment Advisor on their internal controls.
or Administrator's
business.
Legal and regulatory
Description Impact Mitigation
Changes in law and regulations may adversely affect the Company
The Company is subject to Any material changes The Company, its Investment Manager
laws and regulations of to laws or regulations and Investment Advisor utilise
national and local could adversely affect professional advisers, as
governments. In the Company, its appropriate, to support its
particular, the Company is Investment Manager and monitoring of, and response to,
subject to, and is Investment Advisor, in changes in law and regulation,
required to comply with, the ability to operate including any changes in tax or other
regulation of the UKLA and in accordance with any legislation.
certain regulatory such changed
requirements that are requirements. This
applicable to registered could in turn
closed-ended collective adversely affect the
investment schemes which returns that
are domiciled in Guernsey. shareholders may
In addition, changes in receive from the
legislation and government Company.
policy may occur that
could adversely impact the
ability of the Investment
Manager and Investment
Advisor to execute the
investment strategy of the
Company. Changes to tax
laws may impact the
Company's returns or the
returns that shareholders
may receive from the
Company.
END
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