CIC Annual Report 2020

Annual Report and Accounts for the year ended 31 March 2020

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CAMBRIDGE INNOVATION CAPITAL

HEADING WELCOME TO

WE ENABLE VISIONARIES TO BUILD GLOBAL, CATEGORY-LEADING COMPANIES Cambridge Innovation Capital (CIC) is a venture capital investor focused on intellectual property rich technology and life science businesses in the Cambridge ecosystem.

Our unique relationship with the University of Cambridge, and sole focus on the Cambridge ecosystem, provides us with unparalleled access to investment opportunities. With our knowledge, experience and connections we work hard to build those opportunities into global, category-leading companies and create sustainable value for our stakeholders.

£275m £170m 30

SECURED FOR INVESTMENT

INVESTED/COMMITTED

PORTFOLIO COMPANIES

At 31 March 2020

ANNUAL REPORT AND ACCOUNTS FOR THE YEAR ENDED 31 MARCH 2020

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OVERVIEW

STRATEGIC REPORT

GOVERNANCE

FINANCIAL STATEMENTS

OVERVIEW Welcome to Cambridge Innovation Capital

IFC 02

Our value proposition

STRATEGIC REPORT At a glance

04

Our market

08

Our business model

12

Our strategic priorities

14

Our key performance indicators

16

Operational report

18

Financial review

36

Working with our stakeholders

38

GOVERNANCE Corporate governance and risk management framework

40

Leadership team and Board of Directors

46

Directors’ report

48

Statement of Directors’ responsibilities

50

FINANCIAL STATEMENTS Independent auditors’ report

52

Consolidated statement of comprehensive income

54

Consolidated statement of financial position

55

Consolidated statement of changes in equity

56

Consolidated statement of cash flows

57

Notes to the consolidated financial statements

58

Company balance sheet

71

Company statement of changes in equity

72

Notes to the Company financial statements

73

Company information

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CAMBRIDGE CAMBRIDGE INNOVATION INNOVATION CAPITAL CAPITAL

OUR VALUE PROPOSITION WORLD-CLASS INTELLECTUAL PROPERTY

UNIQUE ACCESS TO OPPORTUNITIES

GENERATED BY THE CAMBRIDGE ECOSYSTEM

THROUGH OUR DEEP RELATIONSHIPS WITHIN THE CAMBRIDGE COMMUNITY

READ ABOUT OUR MARKET ON PAGES 8 TO 11

READ ABOUT OUR BUSINESS MODEL ON PAGES 12 AND 13

RIGOROUS AND INSIGHTFUL ANALYSIS

A BALANCED AND DIVERSE PORTFOLIO

TO IDENTIFY THE BEST OPPORTUNITIES

OF AMBITIOUS TECHNOLOGY AND LIFE SCIENCE COMPANIES

READ MORE IN THE OPERATIONAL REPORT ON PAGES 18 TO 35

READ MORE IN THE OPERATIONAL REPORT ON PAGES 18 TO 35

KNOWLEDGEABLE AND EXPERIENCED TEAM WITH AN EXTENSIVE GLOBAL NETWORK READ ABOUT OUR TEAM ON PAGES 46 AND 47

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ANNUAL REPORT AND ACCOUNTS FOR THE YEAR ENDED 31 MARCH 2020

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OVERVIEW

STRATEGIC REPORT

GOVERNANCE

FINANCIAL STATEMENTS

CIC has grown since its launch to become a key part of the Cambridge ecosystem. It has provided support and investment to a portfolio of leading-edge businesses, each of which has the potential to substantially improve people’s lives.

We look forward to continuing our close relationship with the CIC team.

PROFESSOR STEPHEN TOOPE VICE-CHANCELLOR OF THE UNIVERSITY OF CAMBRIDGE

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CAMBRIDGE INNOVATION CAPITAL

AT A GLANCE Cambridge has always been at the forefront of science-based innovation.

As the leading venture capital investor in Cambridge, CIC plays a central role in commercialising this innovation for the benefit of society. In the last year, CIC’s existing portfolio has continued to grow in value and we are proud to add new investments in innovations ranging from quantum computing to molecular diagnostics.

EDWARD BENTHALL CHAIRMAN

WHO ARE WE? Cambridge Innovation Capital was founded in 2013 by the University of Cambridge to create a trusted local firm that would provide early stage capital to promising life science and technology businesses emerging from the University and the Cambridge ecosystem.

The Cambridge ecosystem holds one of the richest seams of scientific knowledge and technological innovation in the world. Since our foundation, we have raised £275 million from a geographically diverse range of institutional and strategic investors, with the University of Cambridge and its Endowment Fund providing approximately 25% of these funds.

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We have committed £170 million of these funds to 30 deep tech and life science companies in fields as diverse as surgical robotics, flexible electronics, microbiome science, genomic diagnosis, quantum computing software, peptide technology and edge intelligence and AI decision-making software.

Our ambition is to build these businesses into global, categoryleading companies, thereby creating sustainable value for our stakeholders.

ANNUAL REPORT AND ACCOUNTS FOR THE YEAR ENDED 31 MARCH 2020

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OVERVIEW

STRATEGIC REPORT

GOVERNANCE

FINANCIAL STATEMENTS

HOW HAVE WE PERFORMED? FINANCIAL

PORTFOLIO

PROFIT

£53.0m

CARRYING VALUE OF PORTFOLIO

(2019: £27.8m)

(2019: £186.3m)

NET ASSETS

£301.7m

CAPITAL INVESTED IN THE YEAR

(2019: £206.4m)

(2019: £44.9m)

CASH RESOURCES*

£91.6m

FAIR VALUE CHANGES IN THE YEAR

(2019: £135.0m)

(2019: £30.7m)

NET ASSETS PER SHARE

109.8p

NUMBER OF PORTFOLIO COMPANIES

(2019: 94.2p)

(2019: 26)

£291.5m £35.7m

£69.5m 30

* Comprising cash and deposits of £22.7 million (2019: £31.8 million) and capital available for drawdown of £68.9 million (2019: £103.2 million).

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CAMBRIDGE INNOVATION CAPITAL

AT A GLANCE

WHAT WILL BE THE KEY COMPONENTS TO OUR SUCCESS? OUR BUSINESS MODEL

Our unique position, as a preferred investor for the University of Cambridge, co-founder of two accelerators and sole focus on the Cambridge ecosystem, provides us with unparalleled access to emerging opportunities in one of Europe’s leading innovation hubs.

We apply our financial and people resources to invest in and support businesses with the potential to become global, category-leading companies to the benefit of the wider society.

We aspire, through constructing a balanced and diversified portfolio of such companies, to create a prosperous and sustainable business.

The University of Cambridge is the top source of founders of European venturebacked startups.

THE STATE OF EUROPEAN TECH 2018, ATOMICO

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OUR RELATIONSHIP WITH THE UNIVERSITY AND THE CAMBRIDGE ECOSYSTEM

Our business model is underpinned by our relationship with the University of Cambridge and our connections in the Cambridge ecosystem.

We are a preferred investor for the University and have a unique relationship with Cambridge Enterprise, the commercialisation arm of the University, the terms of which are governed by a Collaboration Agreement.

The Collaboration Agreement provides us with: •

privileged access to Cambridge Enterprise and its information systems, investment meetings and potential spin-out pipeline;

•

co-investment rights alongside Cambridge Enterprise at inception/seed stage; and

•

pre-emption rights of existing and future University equity stakes as a University affiliate.

We are a co-founder and investor in two Cambridge-based accelerators and have established invaluable relationships with research institutes, angel and network groups and intellectual property rich companies within the Cambridge ecosystem.

OUR PEOPLE

Venture capital is a people business and our people are our greatest strength. We have built a team with a unique set of skills and experiences that are well suited to the Cambridge ecosystem and supporting the companies we are building within it. We bring deep domain and operational expertise developed through our past experiences as entrepreneurs, scientists, operators and investors.

As we continue to grow as an organisation, we strive to attract and retain the best talent, with a strong focus on excellence and integrity.

We are constantly working hard to ensure we maintain an inclusive and collaborative culture – which we see as critical to our success.

Each member of our team is passionate about building the Cambridge ecosystem, drawing on his or her knowledge and experience to make a positive difference to the community in which we live and work.

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OVERVIEW

STRATEGIC REPORT

GOVERNANCE

HOW IS OUR PORTFOLIO CONSTRUCTED? Our balanced portfolio of ambitious life science and technology companies currently has a carrying value of

FINANCIAL STATEMENTS

£291.5M

OTHER

KEY: Life sciences Technology Graphic represents carrying value at 31 March 2020

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CAMBRIDGE INNOVATION CAPITAL

OUR MARKET We are based in, and focused on, the Cambridge ecosystem.

Our privileged position in one of Europe’s leading innovation ecosystems helps us source and secure the starting point from which we enable visionaries to build global, category-leading businesses.

We have chosen to focus our investment in this region due to its growing importance as one of Europe’s largest and fastest growing deep tech ecosystems. Cambridge is the third most active university innovation ecosystem, after MIT and Stanford, with more than 5,000 knowledge intensive companies comprising in excess of 61,000 highly skilled employees and generating £15.5 billion in turnover. Cambridge has created 17 billion-dollar businesses to date and the University of Cambridge is consistently ranked one of the top five universities in the world. Cambridge is the European location of choice for numerous global technology companies, including Amazon, Apple, Microsoft, Samsung, AstraZeneca and Arm.

OUR COMPETITIVE STRENGTHS

Our sole focus on the Cambridge ecosystem enables us to be uniquely connected and deeply embedded with every part of the community in which we work, including the University of Cambridge, leading research institutions, technology consultancies and angel and networking groups. We have established our reputation based on the strength of these relationships, our deep domain and operational expertise, and the mutual trust with the people with whom we work. This strategy ensures that we are not only the most active Series A investor in the Cambridge ecosystem, but we also participate in the biggest deals.

All of this is underpinned by our unique relationship with the University of Cambridge. Our position, as a preferred investor for the University,

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This continually evolving community is like a perpetual motion engine attracting fresh, bright people inspired to do things differently.

CHARLES COTTON FOUNDER OF CAMBRIDGE PHENOMENON AND CHAIRMAN OF CIC’S ADVISORY PANEL

provides us with unparalleled access to emerging opportunities and the potential to build an elite portfolio, in Europe’s innovation capital.

ONE OF EUROPE’S LEADING INNOVATION HUBS

The Cambridge ecosystem holds one of the richest seams of scientific knowledge and technological innovation in the world. With two universities, multiple leading research institutes, 109 Nobel Prize winners and the research and development departments of over 60 multinational businesses, Cambridge has generated 17 billion-dollar businesses, three of which have been valued at over $10 billion.

The foundation for innovation is the steady supply of excellent ideas, of which there is an abundance in Cambridge. Ingenuity and creativity,

alongside the fundamental research which underpins these ideas and combined with the constant exchange of ideas between academics and companies, governments and NGOs, has provided the recipe for this success.

Cambridge also benefits from a substantial seed and early-stage investment ecosystem which includes the University, through its seed funding activity managed

by Cambridge Enterprise, and a sophisticated network of serial entrepreneurs and business angels that take an active role in creating and supporting early-stage businesses. The combination of commercial and scientific expertise, working in tandem, has promoted the propagation of a wide range of intellectual property rich businesses.

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STRATEGIC REPORT

OVERVIEW

GOVERNANCE

FINANCIAL STATEMENTS

KEY TRENDS AND OPPORTUNITIES

IMPACT ON CIC

CAMBRIDGE INNOVATION Over the years the ecosystem has not only produced revolutionary innovations that continue to benefit society, but also world-leading companies, several specialist technology consultancies and a diverse community of successful entrepreneurs and angel investors.

Cambridge’s burgeoning innovation community provides a significant opportunity for us to capitalise on our unparalleled position within the ecosystem.

Many of the individuals behind these success stories have remained active in the ecosystem, sharing their experiences and guiding the next generation of Cambridge businesses.

GROWING GLOBAL REPUTATION Cambridge’s popularity as a world-class location for prestige businesses continues to soar.

Several multinational companies have targeted the city to access locally available innovation and talent.

AstraZeneca’s global headquarters are in Cambridge and Amazon, Apple, Microsoft, Samsung and Siemens each have research and development centres in the city.

CONTINUED DEVELOPMENT As Cambridge continues to expand and state-of-the-art facilities open for business, Cambridge will be an attractive proposition for further multinational companies to move into the area.

With so much activity, but inevitably limited financial and other resources, CIC needs to be highly selective in the allocation of its resources to maximise impact and preserve its position.

Cambridge’s allure is not limited to the fact that it is a major centre for research, development and innovation, and a melting pot of amazing minds. It is also great to live in a safe, inspiring and vibrant community, with high-quality schools and leisure time facilities.

The challenge for CIC, and many other Cambridge companies, is attracting high-calibre talent into an area with a relatively high cost of living, and then retaining that talent when there is so much opportunity in close proximity.

Combining leading science and technology with the experience of local entrepreneurs, and those attracted from around the world to be part of the Cambridge ecosystem, will drive further demand for space.

The challenge for CIC, and its portfolio companies, is to secure high-quality facilities in the ideal location, for the business and its employees, at a justifiable cost.

THE CAMBRIDGE ECOSYSTEM IS GLOBALLY RECOGNISED AS A CENTRE OF RESEARCH EXCELLENCE AND INNOVATION, WITH A GREAT TRACK RECORD FOR BUILDING CATEGORY-LEADING LIFE SCIENCES AND TECHNOLOGY BUSINESSES

World-class academic and commercial research

Global tech companies offer potential for strategic partnerships and channels to market

Substantial seed and earlystage capital

Rich pool of exceptional talent

Deep heritage and proven ecosystem to help scale knowledge intensive start-ups

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CAMBRIDGE INNOVATION CAPITAL

OUR MARKET

Our differentiators

WE ARE SOLELY FOCUSED ON ONE OF EUROPE’S LEADING INNOVATION HUBS

WE ARE A PREFERRED INVESTOR FOR THE UNIVERSITY OF CAMBRIDGE

WE ARE FOUNDERS AND CO-OWNERS OF TWO CAMBRIDGE ACCELERATORS

•

•

Long-term partnership with, and permanent link to, the University

•

•

Unique access to Cambridge Enterprise and its information systems, investment meetings and potential spin-out pipeline

•

Co-investment and pre-emption rights to existing and future University equity stakes

We have helped to establish two new accelerators, Start Codon for life sciences and healthcare businesses and DeepTech.labs for technology businesses, which will provide hands-on support to bridge the gap between translational research and “Series A” ready businesses

•

We will benefit from pre-emption rights in companies participating in the accelerators

•

Cambridge’s global reputation, unique heritage and commercial expansion, combined with the deep scientific expertise, highly educated workforce and established networks for earlystage funding, make Cambridge a particularly attractive place to establish, nurture and cultivate intellectual property rich businesses We work hard to develop the ecosystem and invest our time generously in coaching, mentoring, sponsoring and participating in a wide range of entrepreneurial and impact activities

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OVERVIEW

STRATEGIC REPORT

GOVERNANCE

FINANCIAL STATEMENTS

WE ARE SECTOR EXPERTS

WE ARE A VALUE-ADDING PARTNER

WE ARE A LEADING INVESTOR

•

We have built a team with a unique set of skills and experiences that are well suited to the Cambridge ecosystem and supporting the companies we are building within it

•

We meet hundreds of entrepreneurs and co-investors each year and strive to add value in every interaction

•

•

•

We bring deep domain and operational expertise developed through our past experiences as entrepreneurs, scientists, operators and investors

We are focused on growing the value of our investments by taking a hands-on approach including board participation, business planning and development, executive recruitment, commercialisation and scale-up

Our reputation is based on the strength of our relationships, our deep domain and operational expertise, and the mutual trust with the people with whom we work

•

We are the most active Series A investor in the Cambridge ecosystem and participate in the biggest deals

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CAMBRIDGE INNOVATION CAPITAL

OUR BUSINESS MODEL

We enable visionaries to build global, category-leading companies 1.

Our unique access helps us to source opportunities

4.

2.

We create sustainable value for our stakeholders

We select the businesses with the best potential

3.

We build global, category-leading companies

OUR BUSINESS MODEL IS UNDERPINNED BY OUR RELATIONSHIP WITH THE UNIVERSITY AND OUR CONNECTIONS IN THE CAMBRIDGE ECOSYSTEM

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OVERVIEW

STRATEGIC REPORT

1.

OUR UNIQUE ACCESS HELPS US TO SOURCE OPPORTUNITIES AS A PREFERRED INVESTOR FOR THE UNIVERSITY •

Unparalleled access to opportunities emerging from the University

•

Co-investment rights at inception/seed stage

•

Pre-emption rights of existing and future University equity stakes

OUR FOCUS ON CAMBRIDGE •

Co-founder and investor in two Cambridge-based accelerators

•

Established invaluable relationships with research institutes, angel and network groups and intellectual property rich companies within the Cambridge ecosystem

GOVERNANCE

FINANCIAL STATEMENTS

2.

WE SELECT THE BUSINESSES WITH THE BEST POTENTIAL OUR PEOPLE •

A unique set of skills and experiences that are well suited to the Cambridge ecosystem and supporting the companies within it

•

A track record in identifying, nurturing and cultivating intellectual property rich businesses

•

Access to a broad range of academic and industry experts

OUR PROCESS •

Rigorous and insightful analysis

•

Diligent and considered approval process

OUR REPUTATION •

Deep domain and operational expertise

•

The most active Series A investor, and participating in the biggest deals, in the Cambridge ecosystem

3.

4.

OUR PEOPLE

OUR SHAREHOLDERS

WE BUILD GLOBAL, CATEGORY-LEADING COMPANIES •

Active involvement in developing and implementing the strategy of the business

•

Monitor progress towards achieving key milestones

OUR PHILOSOPHY •

Rigorous screening and approval process

•

Simple, transparent and fair investment structures

OUR NETWORK •

Strategic and financial syndicate partners

•

Local and global life science and technology companies

WE CREATE SUSTAINABLE VALUE FOR OUR STAKEHOLDERS •

We are building category-leading companies from brilliant technologies to create a prosperous and sustainable business

OUR EXISTING, AND POTENTIAL NEW, PORTFOLIO COMPANIES •

We provide investment and value-added support to enable development, commercialisation and, ultimately, exit opportunities

THE UNIVERSITY OF CAMBRIDGE •

We are creating a world-class venture capital business in Cambridge to stimulate the development and commercialisation of impactful innovation

THE CAMBRIDGE ECOSYSTEM •

We are passionate about enhancing the ecosystem, drawing on our knowledge and experience to make a positive difference to the community in which we live and work

OUR TEAM •

We provide engaging and rewarding careers, encourage personal growth and cultivate an inclusive and collaborative culture – all of which we see as critical to our success

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CAMBRIDGE INNOVATION CAPITAL

OUR STRATEGIC PRIORITIES

1.

2.

BE THE FIRST CHOICE FOR ENTREPRENEURS, START-UPS AND INVESTORS WHO WANT TO BUILD A BUSINESS IN CAMBRIDGE

SELECT AND NURTURE COMPANIES THAT HAVE THE POTENTIAL TO DELIVER SUPERIOR RETURNS

• Consolidate our position as a leading investor in the Cambridge ecosystem

• Identify knowledge intensive and intellectual property rich companies with a clear path to commercialisation

• Strengthen our reputation for deep domain and operational expertise

LINK TO KPIs

LINK TO PRINCIPAL RISKS

• Execute our rigorous screening and approval process

• Continue to recruit and retain a world-class team with a unique set of skills

• Invest in companies that have the potential to disrupt whole markets and sectors

• Strive to add value to every interaction

• Support each investment by taking a hands-on approach and adding value

• Number of portfolio companies

• Total value of portfolio

• Net assets

• Capital invested in the year

• Realisations

• Fair value changes in the year

1

5

7

• 1

2

5

6

7

READ ABOUT OUR KEY PERFORMANCE INDICATORS ON PAGES 16 TO 17

READ ABOUT OUR PRINCIPAL RISKS ON PAGES 42 TO 45

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ANNUAL REPORT AND ACCOUNTS FOR THE YEAR ENDED 31 MARCH 2020

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OVERVIEW

STRATEGIC REPORT

GOVERNANCE

FINANCIAL STATEMENTS

3.

DRIVE GROWTH AND REALISE VALUE FOR OUR STAKEHOLDERS

• Influence corporate strategy and business development • Implement management changes and incentives • Facilitate access to capital markets and M&A advisers • Expedite realisations, as and when appropriate

• Growth in new assets • Net assets per share • Realisations

3

4

5

7

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CAMBRIDGE INNOVATION CAPITAL

OUR KEY PERFORMANCE INDICATORS KPI

NET ASSETS

GROWTH IN NET ASSETS

NET ASSETS PER SHARE

DESCRIPTION

The value of the Group’s assets less the value of its liabilities

The growth in net assets during the year

Net assets, plus committed capital, divided by fully diluted number of shares

2020

2020

2020

PERFORMANCE

2019 2018

COMMENTARY

£301.7m £206.4m

£95.3m

2019

£144.0m

2018

109.8p

2019

£62.4m

94.2p 86.0p

2018

£17.3m

The increase arises from fair value changes of £69.5 million (2019: £30.7 million) and net proceeds from the issue of shares of £42.5 million (2019: £34.4 million), less net operational expenditure which includes a provision of £12.3 million (2019: £nil) for management incentives During the year ended 31 March 2019 the Company secured £150.0 million of commitments, at 88.5 pence per share, of which £81.1 million (2019: £38.6 million) has been called

KPI DESCRIPTION

PERFORMANCE

TOTAL VALUE OF PORTFOLIO

CAPITAL INVESTED IN THE YEAR

FAIR VALUE CHANGES IN THE YEAR

The value of the Group’s interests in portfolio companies

The total capital deployed into portfolio companies during the year

The net change in the valuation of portfolio companies, such valuation determined in accordance with the Group’s accounting policy

2020

2020

2020

2019 2018

COMMENTARY

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£291.5m

£35.7m

2019

£186.3m £110.7m

2018

The £105.2 million increase (2019: £75.6 million) is attributable to capital invested and fair value changes during the year

£44.9m £32.7m

Funds were deployed into four new and 12 existing portfolio companies, increasing the cumulative amount invested to £163.0 million (2019: £127.3 million) from 236 (2019: 266) opportunities reviewed in the year

2019 2018

£69.5m £30.7m £19.8m

Fair value changes in the year increased cumulative fair value changes to £128.5 million (2019: £59.0 million), representing a 79% (2019: 46%) uplift on deployed capital

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STRATEGIC REPORT

OVERVIEW

NUMBER OF PORTFOLIO COMPANIES

REALISATIONS

The number of portfolio companies in the Group

The total cash received from interests in portfolio companies

2020

30

2019 2018

26 22

Three life science companies and one technology company were added during the year such that the portfolio comprised 17 and 13 companies, respectively, at 31 March 2020, 20 of which have a direct connection to the University of Cambridge

2020

FINANCIAL STATEMENTS

£0.3m

2019

£0.0m

2018

£0.0m

During the year the Group realised loan interest and capital from one of its portfolio companies

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GOVERNANCE

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CAMBRIDGE INNOVATION CAPITAL

OPERATIONAL REPORT Despite the recent challenges posed by the global coronavirus pandemic, we have made tremendous progress during the year. Our portfolio now includes one company valued in excess of £1 billion and another that has listed on Nasdaq, our first IPO. We have expanded the number of companies in, and value of, our portfolio, enhanced our potential deal flow with the creation of two accelerators and augmented our team to support the growth of the business.

IMPACT OF THE CORONAVIRUS PANDEMIC

Scheme (the “furlough” programme) and the Future Fund for innovative businesses. For the small number of companies in our portfolio, where cost reductions and government support are not sufficient to bridge the company through the next 12 months, we have developed revised financing plans that are in the process of being implemented.

We have been working with our portfolio companies to mitigate the impact of business interruption and other challenges posed by the world’s response to the pandemic. Our primary focus has been to ensure that each business has:

We are, inevitably, experiencing a significant slowdown in venture capital investment activity as other investors, like us, are focusing on supporting their existing portfolios. We have cash, deposits and shareholder commitments in excess of £90 million (at 31 March 2020) and are, therefore, in a strong position to continue supporting our portfolio and enhance the aggregate value of our holdings.

We are pleased to report that none of our employees have contracted COVID-19 to date. Following government guidance we continue to work from home as much as possible and as a result are conducting our investment and portfolio support activities remotely.

•

•

•

reviewed and revised, where applicable, its business plan, objectives, deliverables and potential cash requirements in the context of the global pandemic; taken all necessary but appropriate actions, including certain cost reduction measures, to conserve its cash resources while continuing to deliver its business plan; and sufficient funds to deliver its business plan, objectives and deliverables for at least the next 12 months.

Where a portfolio company currently has insufficient cash resources we have been working to help secure the additional capital required. This has included supporting those companies in applying for the government schemes that have been introduced during the current climate, specifically the Coronavirus Job Retention

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Amidst the global turmoil created by the pandemic, three of our portfolio companies are expanding their business activities as a direct result.

Sense Biodetection recently announced an accelerated programme to launch the world’s first instrument-free, point-of-care molecular diagnostic test for SARSCoV-2 (the strain of coronavirus that causes COVID-19), based on Sense’s proprietary technology platform. Sense has partnered with Phillips-Medisize, a Molex company and leading global medical device innovator, developer and manufacturer, to scale-up production of its test in order to meet the growing demand for rapid diagnostics.

Exvastat is developing intravenous imatinib for the treatment of Acute Respiratory Distress Syndrome (ARDS), a serious complication of coronavirus infection. A group of hospitals in the Netherlands has initiated a large randomised study with oral imatinib in patients with severe respiratory symptoms secondary to coronavirus infection who do not yet require ventilation to try and reduce the incidence of progression. Although this population has milder symptoms than those targeted by Exvastat’s product, the pathophysiology is the same and the results of this independent study will provide important insights into the clinical utility of imatinib in this condition.

AudioTelligence provides software algorithms that remove noise from microphone signals so that speech can be heard clearly. This technology is now in high demand as we all adapt to remote working and video conferencing.

PUTTING OUR CAPITAL TO WORK

During the year ended 31 March 2020, the Group made 22 investments (2019: 31) and deployed a total of £35.7 million (2019: £44.9 million) in four new and 12 existing portfolio companies, such that cumulatively £163.0 million (2019: £127.3 million) had been invested in 30 (2019: 26) companies.

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OVERVIEW

£35.7m

CAPITAL INVESTED IN THE YEAR

STRATEGIC REPORT

GOVERNANCE

FINANCIAL STATEMENTS

WE ADDED FOUR NEW COMPANIES TO OUR PORTFOLIO

We led the £3.3 million seed round in Riverlane, a quantum computing software developer transforming the discovery of new materials and drugs, in which Cambridge Enterprise, the commercialisation arm of the University of Cambridge, also participated. Riverlane’s software leverages the capabilities of quantum computers, which operate using the principles of quantum mechanics.

In the same way that graphics processing units accelerate machine learning workloads, Riverlane uses quantum computers to accelerate the simulation of quantum systems.

Riverlane is working with leading academics and companies on critical early use cases for its software, such as developing new battery materials and drug treatments. The company will use its seed funding to demonstrate its technology across a range of quantum computing hardware platforms, focused on early adopters in materials design and drug discovery. It will also expand its team of quantum software researchers and computational physicists.

We co-led the £12.3 million Series A funding round raised by Sense Biodetection, alongside Earlybird, which is developing a portfolio of instrument-free, point-of-care molecular diagnostic tests, a pioneering new class of diagnostic product. Sense Biodetection plans to invest the new funds in the development and manufacture of a range of tests utilising its novel and proprietary rapid molecular amplification technology, targeting in the first instance infectious disease applications such as COVID-19 and influenza. Instrument-free molecular diagnostics represent the ultimate flexible test format as the tests could be deployed in any setting and by a wide range of potential users. This has the potential to be transformational for the diagnostic industry, delivering for the first time true point-ofcare testing in a market-successful, single-use product format, allowing diagnostic tests to be readily adopted by new users and scaled to meet demand.

IMMUTRIN We participated in a £10.0 million Series B funding round in PredictImmune, a developer of pioneering prognostic tools for guiding treatment options and improving patient outcomes in immune-mediated diseases alongside Cambridge Enterprise and other new and existing investors. The Series B round cements PredictImmune’s strong financial position, enabling it to build on the successful launch of its first product, PredictSURE IBD™, with a major focus on continued commercial expansion across Europe, the USA and other territories. It also allows the organisation to expand its product development activities – extending existing programmes in inflammatory bowel disease as well as moving into a range of additional autoimmune areas including systemic lupus erythematosus. PredictImmune is aiming to build a portfolio of new products to complement and enrich its prognostic test pipeline in the coming years.

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In December 2019 we invested in Immutrin which has been established to develop novel and potentially transformative disease modifying therapeutic approaches to conditions caused by abnormal protein conformations in the tissues.

The approach has been devised

by Professor Sir Mark Pepys FRS (Emeritus Professor of Medicine at UCL, Honorary Fellow of Trinity College, Cambridge). Pepys is a world leading expert on the biology and clinical aspects of plasma proteins in the blood circulation. Implementation of the new strategy depends on immunological methods invented and developed by Sir Greg Winter FRS, Nobel Laureate 2018 and past Master of Trinity, who is the co-founder of the business.

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CAMBRIDGE INNOVATION CAPITAL

OPERATIONAL REPORT WE CONTINUED TO SUPPORT OUR EXISTING PORTFOLIO

CMR Surgical, which closed a £195.0 million Series C funding round, Europe’s largest private financing round in the medical technology sector, to commercialise its nextgeneration surgical robotic system, Versius®. We were an early investor in CMR Surgical having first invested in the company’s Series A round in 2016 and we have continued to provide financial support and guidance, enabling the realisation of the potential of the Versius® system. The proceeds will be used to drive the next stage of CMR Surgical’s growth, including the planned commercialisation of its Versius® system while supporting continued research and development, manufacturing and expansion. CMR Surgical is expected to launch initially in hospitals across Europe and Asia with further international expansion expected thereafter.

AudioTelligence, in which we participated in a £6.5 million Series A funding. AudioTelligence is dedicated to making speech clear and intelligible in a noisy world. While the adoption of voice-activated technologies in “smart” homes and workplaces is on the rise, the accuracy of modern speech recognition systems remains severely limited in noisy environments. To tackle this problem, AudioTelligence’s technology acts like autofocus for sound, using data-driven “blind audio signal separation” to focus on the source of interest, allowing it to be separated from interfering noises.

This enables microphones to focus on what users are saying, improving the audio quality for listeners, regardless of background noise.

Gyroscope Therapeutics, in which we participated in a £50.4 million Series B funding round alongside lead investor Syncona and which is developing gene therapies and surgical delivery systems for retinal diseases. With this new round of financing Gyroscope Therapeutics will continue to advance: the clinical development of the company’s investigational gene therapy GT005 for dry age-related macular degeneration (dry AMD), the leading cause of permanent vision

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impairment for people aged 65 and older; the manufacturing platform to meet patient need worldwide; and a second-generation Orbit Subretinal Delivery System to not only deliver Gyroscope’s investigational therapies, but also be licensed to other gene and cell therapy companies developing medicines.

Cytora, which closed a £25.0 million Series B financing round, to continue developing its artificial intelligencepowered insurance technology platform that enables insurers to underwrite more accurately, reduce frictional costs and achieve profitable growth. Cytora’s underwriting platform applies Machine Learning and Natural Language Processing techniques to public and proprietary data sets, including property construction features, company financials and local weather. The platform combines these data sets with an insurance company’s internal data to better predict risk, thereby ensuring more accurate risk pricing.

Prowler.io, where we participated in the $24.0 million funding round completed by Prowler.io to support product expansion and growth.

Prowler.io continues to define the artificial intelligence decisionmaking market, developing the world’s first technology that can help businesses and organisations make better decisions in processing dynamic, real-time data in complex and uncertain environments. Prowler. io’s core platform, VUKU, is being applied to managing logistics decisions, allocating resources, and assisting financial decisions in asset management. It is founded on a unique, integrated approach – combining branches of mathematics, engineering and economic theory.

While traditional approaches to problem-solving often rely on machines learning from vast, historic data sets, Prowler.io’s is data efficient, and learns in real time.

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STRATEGIC REPORT

OVERVIEW

GOVERNANCE

£69.5m

companies are licensees and partners.

The Series B funding will be used to support the company’s bold vision to give all machines a sense of hearing.

FAIR VALUE CHANGES IN THE YEAR

Storm Therapeutics, which closed a £14.0 million extension to its Series A financing, bringing the total Series A financing to £30.0 million. Storm Therapeutics is a drug discovery company that is tackling disease through modulating RNA modifying enzymes. The Series A extension will enable the business to advance its broad pipeline further in preclinical development and accelerate its programmes towards the clinic.

Bicycle Therapeutics, where we participated in the Nasdaq IPO to progress Bicycle Therapeutics’ pipeline of Bicycle® Toxin Conjugates and Immune Cell Agonists to treat cancer and other debilitating diseases.

Bicycle Therapeutics is the first company in our diverse portfolio to conduct an IPO and exemplifies the way in which we support the transformation of exciting, earlystage companies from the Cambridge ecosystem as they develop into global, category-leading companies.

Investments in existing portfolio companies have resulted in a fair value gain of £69.5 million (2019: £30.7 million) which has increased the cumulative net fair value gain to £128.5 million (2019: £59.0 million), representing a 79% (2019: 46%) uplift on invested capital as set out below.

Since the year end, the Group has invested £2.3 million in a new portfolio company such that the total capital currently committed to the portfolio is £172.6 million.

Audio Analytic, in which we participated in a $12.0 million Series B funding round. Audio Analytic has developed cutting-edge AI sound recognition technology which can be embedded into consumer devices to make them more helpful to people, by understanding and reacting to the contextual information provided by sounds. Products featuring the company’s technology have already been deployed globally, and several of the world’s leading technology

31 MARCH 2019 £ MILLION

FINANCIAL STATEMENTS

ACTIVITY DURING THE YEAR

31 MARCH 2020

CARRYING VALUE

COST OF INVESTMENT

FAIR VALUE CHANGES

CARRYING VALUE

16.5

31.0

10.0

60.3

101.3

5.4

23.9

–

4.5

28.4

CASE STUDY

COST OF INVESTMENT

FAIR VALUE CHANGES

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14.5 18.5

Significant investments and activity during the year CMR Surgical Inivata PragmatIC

Page 28

13.4

7.8

21.2

–

–

21.2

Bicycle Therapeutics

Page 30

11.0

3.3

14.3

3.5

3.4

21.2

Carrick Therapeutics

5.0

0.3

5.3

1.4

0.1

6.8

AudioTelligence

2.6

–

2.6

2.0

0.7

5.3

Cytora

0.3

0.7

1.0

3.0

–

4.0

–

–

2.5

–

2.5

–

2.0

–

2.0

Sense Biodetection

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Riverlane

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Other investments

– 62.0

25.0

87.0

11.3

0.5

98.8

127.3

59.0

186.3

35.7

69.5

291.5

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CAMBRIDGE INNOVATION CAPITAL

OPERATIONAL REPORT OUR PORTFOLIO ALSO MADE SIGNIFICANT COMMERCIAL PROGRESS

Bicycle Therapeutics, a biotechnology company pioneering a new and differentiated class of therapeutics based on its proprietary bicyclic peptide (Bicycle®) technology, announced an exclusive strategic collaboration with Genentech, a member of the Roche group, to develop and commercialise Bicycle®based Immuno-oncology therapies.

Bicycle has received a $30 million upfront payment and potential discovery, development, regulatory and commercial milestones could total up to $1.7 billion. Bicycle also announced a collaboration with the Dementia Discovery Fund to use its Bicycle® technology for the development of novel therapeutics for neurodegenerative diseases.

CMR Surgical started the year by announcing the completion of the first set of robotically assisted surgical procedures in humans following the

receipt of CE approval. This milestone was followed in the autumn by the announcement of the first commercial sales in India and subsequently the first sales into the UK’s NHS. International commercialisation continued with the receipt of regulatory approval for Versius® in Australia early in 2020.

Gyroscope Therapeutics, a biotechnology company developing gene therapies for retinal diseases, merged with Orbit Biomedical, a medical device company focused on the precise and targeted delivery of gene and cell therapies into the retina. Under the Gyroscope name, the organisation will become the first fully integrated retinal gene therapy company with clinical, manufacturing and delivery capabilities.

Imagen, the leading SaaS video management platform business, announced that over the course of 2019 it had gained a number of new customer wins, helping these organisations to unlock the value

of their ever-growing video libraries.

Among these were several international sports organisations and federations, including Major League Baseball, the International Tennis Federation, the International Table Tennis Federation, Kosmos Tennis and the Badminton World Federation.

Inivata, a leader in liquid biopsy, initiated the commercial launch of its lead product InVisionFirst®-Lung in the US following receipt of final coverage decision for reimbursement for Medicare patients. The company received accreditation from the College of American Pathologists and entered into its first ex-US distribution agreement to cover the Middle East and Africa. Following the year end Inivata announced the formation of a strategic collaboration with NeoGenomics Inc, a leading US-based cancer diagnostics and services company, for the commercialisation of its InVisionFirst®-Lung liquid biopsy test in the United States.

PragmatIC, a world leader in ultra-lowcost flexible electronics, announced that in just two months it has received orders for over 20 million flexible integrated circuits (FlexICs).

Orders from customers in Europe, North America and Asia endorsed PragmatIC’s unique technology platform as the ideal solution for introducing connectivity into massmarket applications. PragmatIC also announced that it had entered into a strategic partnership with Schreiner MediPharm, a leading provider of specialty labels for the pharmaceutical and medical device industry.

£291.5m

CARRYING VALUE OF PORTFOLIO

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OVERVIEW

OUR TEAM

We have recently expanded our team with the appointment of Vin Lingathoti, as a Partner in our investment team, Nick Richards, as General Counsel, and Michelle Lamprecht, as Head of Marketing.

Vin is focused on software investments, having most recently been an Investment Executive at Cisco, leading investments and acquisitions in the US and Europe.

Before moving to the UK, Vin spent a decade in Silicon Valley, both as an investor and as an operator in deep tech companies. Earlier in his career, Vin held roles in corporate strategy and product management at EMC and SunGard. He also advised senior executives at multinational companies on strategic problems as a management consultant at The Boston Consulting Group.

STRATEGIC REPORT

Nick has over 15 years’ experience advising institutional, corporate and individual investors and the companies in which they invest, especially in the technology and life sciences sectors.

Prior to joining us, Nick was a senior associate at an international law firm having qualified into the private equity team of a Magic Circle law firm and completed a secondment to the legal department of Goldman Sachs.

Michelle has more than 20 years of experience of international leadership in strategic marketing across a range of public and privately owned organisations, such as Huntsman and MathWorks. Michelle’s previous roles include Group VP Marketing for Sepura and VP Marketing for The Vitec Group Production Solutions division.

FINANCIAL STATEMENTS

We are delighted to welcome Vin, Nick and Michelle – each brings considerable experience and a plethora of skills which not only complement our existing team but will be of great benefit to our portfolio companies.

We are also delighted that Carol Cheung has been promoted to Principal. Carol joined us as an Associate in 2016 to focus on our technology investments and is now responsible for managing our positions in Cytora and Geospock.

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GOVERNANCE

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CAMBRIDGE INNOVATION CAPITAL

OPERATIONAL REPORT OUR BOARD

During the £150 million fundraising that we completed in March 2019, we made the strategic decision that the Company will not seek a listing in the foreseeable future. As a result, we have more recently agreed that the Board should be scaled down such that on 31 March 2020 Dipti Amin, Adam Glinsman and Mike Muller, three of our Non-executive Directors, resigned from the Board. All three are shareholders and will remain close to the Company in various ways.

We thank each of them for their considerable contribution to CIC over the last few years and wish them well for the future.

Further to the above resignations the Board now comprises the Chairman, Edward Benthall, two Executive Directors, Andrew Williamson and Rob Sprawson, and four Non-executive Directors, two of whom are appointed on behalf of the University. Further details are provided in the Leadership team and Board of Directors on pages 46 and 47.

STRATEGIC INITIATIVE

During the year we announced the launch of Start Codon and established DeepTech.labs, two new accelerators that are focused on accelerating the translation of world-class research into commercially successful companies.

The Cambridge ecosystem has already created over a dozen billion-pound businesses and we believe that these accelerators will be important facilitators in creating many such successes. We are extremely proud to be founders and co-owners and we eagerly await the world-class businesses that will emerge from their programmes in the future. Further details are provided on the opposite page.

OUTLOOK

After six years of operation, we have established Cambridge Innovation Capital as a leading provider of capital and expertise in the Cambridge ecosystem. We are pleased to report that more than 65% of our portfolio comprises University of Cambridgeoriginated spin-out companies with the balance derived from the Cambridge ecosystem, which continues to expand and flourish faster than anywhere else in the UK. We are proud to be a key participant in such a thriving community and we continue to look forward with much anticipation to the future expansion and development of our business.

ACCELERATOR

KEY PEOPLE

ANDREW WILLIAMSON MANAGING PARTNER ROB SPRAWSON PARTNER AND CFO MICHAEL ANSTEY PARTNER ROBERT TANSLEY PARTNER VIN LINGATHOTI PARTNER 16 June 2020

CO-OWNERS

GOVERNANCE

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OVERVIEW

STRATEGIC REPORT

GOVERNANCE

FINANCIAL STATEMENTS

CAMBRIDGE ACCELERATORS We have been working closely with stakeholders in the ecosystem to establish two new accelerators: Start Codon for life sciences and healthcare businesses, and DeepTech.labs for technology businesses. The goal of these accelerators is to speed up the process of going from “bench to product” by compressing years of learning for many companies and researchers into a short, six-month window.

OUR STRATEGIC RATIONALE

The Cambridge ecosystem is globally recognised as a centre of academic excellence and innovation, with an incredible track record for building category-leading life sciences and technology businesses. However, we identified an important gap in the ecosystem: dedicated hands-on support to bridge the gap between translational research and “Series A” ready businesses.

Ian Thomlinson CHAIRMAN

Ewan Kirk CHAIRMAN

As an investor in the accelerator funds, we will benefit from pre-emption rights in companies participating in the accelerators.

THE PROGRAMME AND SUPPORT OFFERED TO ENTREPRENEURS The accelerators will provide several value-add services including:

Jason Mellad CEO

To be appointed CEO

•

seed funding;

•

world-class laboratory and working space;

•

advice on business models and product-directed discovery from experienced, hands-on mentors and potential partners;

•

access to the high density of world-class scientists in the ecosystem that can share expertise; and

•

access to a global network of investors and corporate partners.

PROGRESS UPDATE

Start Codon had a first close of its fund in January 2020. The team has moved into the Milner Therapeutics Institute and the first cohort of four companies enrolled in the six-month programme in February 2020.

DeepTech.labs was established in February 2020 and fundraising for its fund will commence later this year.

CIC is represented on the Board and Investment Committee

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CAMBRIDGE INNOVATION CAPITAL

CMR SURGICAL TRANSFORMING SURGERY. FOR GOOD. COMPANY DESCRIPTION •

•

•

CMR Surgical is on a mission to “Transform Surgery.

For Good”. In only six years, the company has gone from initial concept to having a next generation surgical robot operating across multiple countries, including the UK’s NHS, the globally accepted benchmark for value-based healthcare Versius® enables patients to benefit from the many advantages of minimal access surgery (MAS); surgeons benefit from the greater dexterity and vision that robotics brings, while reducing the physical and mental effort required to perform MAS; and hospitals benefit by being able to offer the likelihood of higher quality MAS that is costeffective across the entire patient episode As a surgeon recently commented, “Versius has created 21st century laparoscopy. It gives you the freedom of port placements, but with the benefits of fully wristed instruments, 3D HD vision, natural instrument control and a choice of ergonomic working positions that has the potential to reduce stress and fatigue”

RECENT DEVELOPMENTS •

Western General Hospital, part of NHS Lothian and Milton Keynes University Hospital NHS Trust, is the first to use Versius® in Europe. Further NHS hospitals are scheduled to introduce the system in 2020. These include both large teaching hospitals and smaller local centres and will open the door to a much wider use of robotic MAS

•

Along with leading hospitals in India, including HCG Curie Manavata Cancer Centre, Versius® has been used to perform a range of pelvic and abdominal surgeries, helping to treat patients with a range of conditions

•

The Versius® surgical robotic system received a European CE Mark in 2019 and TGA Approval in Australia in early 2020

•

In September 2019 the company completed a £195 million Series C round at a £1 billion pre-money valuation

•

Per Vegard Nerseth became Chief Executive Officer on 1 January 2020

POTENTIAL TO CHANGE THE WORLD •

MAS, also referred to as keyhole or laparoscopic surgery, is associated with a number of benefits compared to open surgery, including the reduction of surgical site infections, pain and scarring. MAS is also linked to faster recovery and discharge from hospital, with fewer post-operative bed days required

•

Robot assisted surgery offers the potential to be easier to master and less physically demanding than manual laparoscopy thereby having the potential to dramatically expand the use of MAS across the world for recovery. A 2018 report by the Office of Health Economics found that a shift to MAS led to a reduction in the average length of stays for gynaecology patients from 5.5 days to just 1.5 days in 95% of cases

£101.3m CARRYING VALUE

8.8% EQUITY HOLDING

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OVERVIEW

STRATEGIC REPORT

GOVERNANCE

FINANCIAL STATEMENTS

As surgeons, our aim is to provide the most effective care possible for our patients and I believe that using robotic assisted keyhole surgery will be a vital part of this in the years to come. The Versius system could help to provide surgeons with greater precision and improved vision during surgery, as well as taking the physical strain during long procedures. The portability of the system is a big bonus for us too as we can transfer it in minutes to another operating theatre to be readied for the next patient.

BARRIE KEELER, CONSULTANT COLORECTAL SURGEON MILTON KEYNES UNIVERSITY HOSPITAL

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CAMBRIDGE INNOVATION CAPITAL

PRAGMATIC

CREATE MORE The mission at PragmatIC is to inspire innovators to build extraordinary solutions that improve everyday life. We provide a unique technology platform and infrastructure to create flexible integrated circuits at a fraction of the cost and time required for traditional silicon chips. Our FlexIC Foundry™ service allows designers to create their own novel solutions, and our ConnectIC® standard products extend RFID and NFC use cases to everyday items where silicon is not cost effective.

The opportunity is huge, and we aim to embed our technology in a trillion items within the next decade.

SCOTT WHITE CEO OF PRAGMATIC

£21.2m CARRYING VALUE

32.6% EQUITY HOLDING

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STRATEGIC REPORT

OVERVIEW

GOVERNANCE

FINANCIAL STATEMENTS

COMPANY DESCRIPTION •

PragmatIC is a world leader in ultra-low-cost flexible electronics with a unique technology platform to create silicon-free flexible integrated circuits (FlexICs)

•

The ConnectIC family of standard products, launched in 2019, addresses the RFID/NFC market. The products bring significant advantages in terms of cost and are thinner than a human hair, making them easy to embed into everyday items, thus enabling the potential for trillions of smart objects that can connect with consumers and their environments

•

The FlexIC Foundry allows anyone to design custom FlexICs, combining the unique technology with rapid turnaround times and low fixed costs. This allows designers to iterate and test their creations within weeks, accelerating the development cycle

•

The FlexLogIC® fab-in-a-box manufacturing system is a fully automated fabrication line which supports a remarkable production cycle time of less than one day. With its compact footprint and self-contained design, FlexLogIC is ideal for distributed production of FlexICs around the world, allowing agile JIT production to meet changing local demand while minimising inventory costs

RECENT DEVELOPMENTS •

Launched the ConnectIC® family of ultra-low-cost RFID flexible integrated circuits for applications including stock control, supply chain assurance, brand protection and consumer engagement

•

Received orders for over 20 million units within two months of launch

•

First FlexLogIC line commissioned

•

Recently launched FlexIC Foundry offering that allows fabless design of silicon-free chips

•

Strategic partnerships with leading global RFID/NFC inlay (tag) manufacturers such as Avery Dennison

•

Delivering solutions for a diverse range of global brands including Unilever and the NHS

POTENTIAL TO CHANGE THE WORLD •

FlexLogIC “fab-in-a-box” enables highly scalable manufacturing with 100× lower capex than an equivalent capacity silicon fabrication plant

•

Vision to embed FlexICs in a trillion smart objects over next decade

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CAMBRIDGE INNOVATION CAPITAL

BICYCLE THERAPEUTICS WE DIDN’T WAIT FOR THE NEXT ADVANCE AGAINST CANCER. WE CREATED IT

COMPANY DESCRIPTION •

Bicycle Therapeutics is a clinical-stage biopharmaceutical company developing a novel class of medicines, referred to as Bicycles®, for diseases that are underserved by existing therapeutics

•

Bicycles® are fully synthetic short peptides constrained with small molecule scaffolds to form two loops that stabilize their structural geometry. This constraint facilitates target binding with high affinity and selectivity, making Bicycles® attractive candidates for drug development

•

Bicycle is headquartered in Cambridge, UK, with many key functions and members of its leadership team located near the biotech hub of Boston, Massachusetts

RECENT DEVELOPMENTS •

In May 2019, Bicycle completed its initial public offering (IPO), with gross proceeds of $64.9 million

•

Entered into strategic collaboration with Genentech to discover, develop and commercialize novel immunooncology therapies, with potential payments of up to $1.7 billion

•

November 2019: dosed first patient in Phase I/II trial of BT5528, a second-generation Bicycle® Toxin Conjugate (BTC) targeting EphA2 in patients with solid tumours. April 2020: dosed second cohort of patients in the monotherapy arm. May 2020: announced that the first patient was dosed in the BT5528 + nivolumab arm of the Phase I dose escalation

•

Announced collaboration with Cancer Research UK to develop new immuno-oncology candidate

POTENTIAL TO CHANGE THE WORLD •

Bicycles® address therapeutic needs and clinical applications that cannot be reached with existing treatment modalities

•

Bicycles® represent a unique therapeutic class, combining the pharmacological properties normally associated with a biologic with the manufacturing and pharmacokinetic advantages of a small molecule, yet with no signs of immunogenicity observed to date

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OVERVIEW

STRATEGIC REPORT

GOVERNANCE

FINANCIAL STATEMENTS

£21.2m CARRYING VALUE

9.7% EQUITY HOLDING

Last year was transformational for Bicycle as the completion of our initial public offering and the strengthening of corporate leadership enabled successful execution against our pipeline development strategy. This year is already off to a strong start, with two new immuno-oncology collaborations.

We believe our anticipated near-term milestones will further demonstrate the role we could play in creating a muchneeded new treatment paradigm for people living with cancer and other serious diseases.

KEVIN LEE CEO OF BICYCLE THERAPEUTICS

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CAMBRIDGE INNOVATION CAPITAL

RIVERLANE

PIONEERING QUANTUM SOFTWARE We build ground-breaking software that transforms quantum computers from experimental technology into commercial products. Going deep into the stack, we help hardware partners build better full-stack solutions so they can focus on the physics. And we work with the chemical, pharmaceutical and materials industries to improve algorithms and specify early killer applications of quantum computers.

STEVE BRIERLY CEO OF RIVERLANE

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STRATEGIC REPORT

OVERVIEW

GOVERNANCE

FINANCIAL STATEMENTS

£2.0m CARRYING VALUE

27.6% EQUITY HOLDING

COMPANY DESCRIPTION •

•

•

Riverlane builds ground-breaking software to unleash the power of quantum computers. Its operating system, Deltaflow.OS, is portable across technologies, so early adopters don’t need to choose which technology to pursue With a multidisciplinary team of worldleading researchers, the mission is to make quantum computers useful sooner

Computing Theory in Practice (QCTIP) conference attracted more than 500 global experts and attendees •

POTENTIAL TO CHANGE THE WORLD •

A consortium led by Riverlane has been awarded a £7.6 million grant from the government’s Industrial Challenge Strategy Fund to install a highly innovative quantum operating system on every quantum computer in the UK, accelerating the commercialisation of the UK’s quantum computing sector

•

The project will create a hardwareaware system that allows portability of software across different hardware platforms while working at highest possible performance

Riverlane collaborates with some of the world leaders in quantum computing including OQC, Hitachi, SEEQC and University of Cambridge, amongst others

RECENT DEVELOPMENTS •

Launch of Deltaflow.OS operating system

•

Recruited a team of 15 quantum researchers

•

Riverlane’s inaugural Quantum

In June 2019 Riverlane raised £3.3 million in a Seed round led by Cambridge Innovation Capital and Amadeus Capital Partners and with participation from Cambridge Enterprise

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CAMBRIDGE INNOVATION CAPITAL

SENSE BIODETECTION

TRANSFORMING DIAGNOSTICS Our COVID-19 test product can allow infected patients to be isolated sooner whilst providing reassurance to uninfected individuals including healthcare workers that they can return to work without infecting others. Due to its flexibility, speed and accuracy, the test can be deployed for rapid patient triage within hospitals as well as primary care practices, pharmacies and community centres and even distributed for use by individuals in isolation who suspect they may have COVID-19.

HARRY LAMBLE CEO OF SENSE BIODETECTION

£2.5m 15.4% CARRYING VALUE

EQUITY HOLDING

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OVERVIEW

STRATEGIC REPORT

COMPANY DESCRIPTION •

•

Sense Biodetection is developing an entirely new class of clinical diagnostic product, an instrumentfree molecular test that combines the superior performance of laboratory testing with the proven market benefits of disposable rapid immunoassays, for everyday users to improve treatment and enable informed decisions in a decentralised healthcare system

RECENT DEVELOPMENTS •

In March 2020 Sense Biodetection launched an accelerated programme to launch the world’s first instrument-free, point-of-care molecular diagnostic test for SARS-CoV-2, the coronavirus responsible for the COVID-19 pandemic

•

Sense Biodetection is partnering closely with Phillips-Medisize, a Molex company and leading global medical device innovator, developer and manufacturer, to scale-up production of its test in order to meet the growing demand for rapid diagnostics

FINANCIAL STATEMENTS

In October 2019 Sense Biodetection raised £12.3 million in a Series A funding led by Cambridge Innovation Capital to support the development and clinical validation of its first diagnostic test

POTENTIAL TO CHANGE THE WORLD •

Instrument-free molecular diagnostics represent the ultimate flexible test format as the tests could be deployed in any setting and by a wide range of potential users

•

This technology has the potential to be transformational for the diagnostic industry, delivering for the first time, true point-of-care testing in a market-successful, single-use product format, allowing diagnostic tests to be readily adopted by new users and scaled to meet demand

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GOVERNANCE

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CAMBRIDGE INNOVATION CAPITAL

FINANCIAL REVIEW STATEMENT OF COMPREHENSIVE INCOME

During the year ended 31 March 2020 the Group made a profit of £53.01 million (2019: £27.85 million). The principal components of the profit are fair value changes on investments and administrative expenses as summarised below: 2020 £ MILLION

Fair value changes in investments Administrative expenses

69.53

30.71

(16.94)

(3.35)

0.16

0.04

Finance income

0.39

0.46

Net losses of associates

(0.13) –

Profit and total comprehensive income for the year

53.01

£53.01m

2019 £ MILLION

Other operating income

Tax

PROFIT/(LOSS) ATTRIBUTABLE TO EQUITY HOLDERS

– (0.01)

£27.85m £17.30m

£1.69m 2016

27.85

2018

2017

2020

2019

£(0.04)m

The Group measures the fair value of its unquoted investments in line with International Private Equity and Venture Capital (“IPEV”) Valuation Guidelines.

The fair values of investments in quoted companies are based on bid prices in an active market at the reporting date. For the Group’s investments in unquoted companies, where there are often no current earnings, no short-term future earnings or positive cash flows, it is often difficult to make reliable cash flow forecasts. The Group considers that fair value estimates based entirely on observable market data are of greater reliability than those based on assumptions. In such circumstances, the price of recent investment is considered to be the best estimate of fair value at the date of investment and is therefore used as the de facto starting position for any fair value estimate made by the Group. Accordingly, where there has been a recent investment by a third party, the price of that investment will also provide the starting position for fair value, subject to adjustment for any subsequent milestones or impairments. The Group’s accounting policy for valuing its investments is provided in note 3 to the consolidated financial statements.

NET ASSETS £301.74m

£206.38m £143.99m £126.66m £51.09m 2016

2017

2018

2019

2020

During the year the Group recorded a fair value gain of £69.53 million (2019: £30.71 million) which predominantly arose on the Group’s investments in CMR Surgical and Inivata. Further details are provided in the Operational Report on pages 18 to 35.

CASH AND SHORT-TERM DEPOSITS

ADMINISTRATIVE EXPENSES Core administrative expenses

2020 £ MILLION

2019 £ MILLION

4.27

3.16

Provision for management incentives

12.28

–

Share based payments, including employer’s NIC

0.39

0.19

16.94

3.35

11

9

Average number of employees during the year

Administrative expenses primarily relate to people costs, facilities expenditure and professional fees and for the year ended 31 March 2020 include a provision of £12.28 million (2019: £nil) for management incentives. The provision arises because net assets at 31 March 2020 plus outstanding commitments from shareholders exceeds the preferred return on capital provided by shareholders.

£68.92m

£33.68m £26.93m

2016

£31.76m £22.68m

2017

2018

2019

2020

Core administrative expenses have increased during the year due to a combination of an expanded team and enhanced remuneration following the £150 million fundraising completed in March 2019, legal, regulatory and other fees incurred in relation to the expansion of the Group, including establishing a coinvestment structure, and general inflationary pressures.

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ANNUAL REPORT AND ACCOUNTS FOR THE YEAR ENDED 31 MARCH 2020

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OVERVIEW

STRATEGIC REPORT

GOVERNANCE

STATEMENT OF FINANCIAL POSITION

FINANCIAL STATEMENTS

CARRYING VALUE OF INVESTMENTS AT 31 MARCH

At 31 March 2020 the Group had: •

net assets attributable to shareholders of £301.74 million (2019: £206.38 million);

30

•

additional committed capital of £68.92 million (2019: £111.42 million); and

£291.55m

•

fully diluted total issued shares of 337.47 million (2019: 337.39 million).

As a result, the adjusted net assets per fully diluted share was 109.8 pence (2019: 94.2 pence), a rise of 15.6 pence and 16.6% (2019: 8.2 pence and 9.5%) over the prior year.

Investments Cash and cash equivalents

2020 £ MILLION

2019 £ MILLION

292.49

186.29

22.68

31.76

Other net assets and (liabilities)

(13.43)

Net assets

301.74

206.38

Share capital and premium account

126.98

84.48

3.34

3.49

Share based payments reserve

£186.29m

22 £110.71m 19

(11.67)

Capital reserve

128.54

59.01

Retained profit

42.88

59.40

301.74

206.38

Total equity

26

The value of the Group’s holdings in portfolio companies increased to £291.55 million at 31 March 2020 (2019: £186.29 million) after net fair value gains of £69.53 million (2019: £30.71 million) and investments of £35.75 million (2019: £44.87 million).

In addition, the Group had committed, subject to milestones, a further £5.91 million and $1.77 million (2019: £3.71 million and $3.53 million) at the end of the year. The Operational Report on pages 18 to 35 contains further details on the Group’s portfolio, including key developments during the year.

The Group has also invested in two accelerators, further details of which are provided on page 25.

During the year ended 31 March 2019 the Company secured £150.00 million of commitments from existing and new shareholders, increasing the total amount of capital raised to £275.00 million. At 31 March 2020 £81.08 million (2019: £38.58 million) had been drawn down with the balance, £68.92 million, expected to be drawn down in the next year or so.

At 31 March 2020 cash and cash equivalents amounted to £22.68 million (2019: £31.76 million).

12

£58.16m

£24.72m

2016

2017

2018

2019

2020

KEY: Number of companies in portfolio Fair value changes Cash Invested

The Group continues to place cash, which is surplus to nearterm investment and working capital requirements, with financial institutions, in accordance with the Group’s treasury policy. Details of the credit ratings of the Group’s cash counterparties are provided in note 19 to the consolidated financial statements.

Other net assets and (liabilities) at 31 March 2020 includes a provision of £12.28 million (2019: £nil) for management incentives.

TAXATION

The Group’s business model seeks to deliver long-term value to its stakeholders by supporting categoryleading businesses in rapidly growing technology sectors. The Group primarily seeks to generate capital growth from its holdings in these companies over the longer term but has historically made cumulative losses from its operations from a UK tax perspective.

ROB SPRAWSON PARTNER AND CFO 16 June 2020

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CAMBRIDGE INNOVATION CAPITAL

WORKING WITH OUR STAKEHOLDERS STATEMENT BY THE DIRECTORS IN PERFORMANCE OF THEIR DUTIES IN ACCORDANCE WITH S172(1) COMPANIES ACT 2006

The Directors consider, both individually and together as a Board, that they have acted in the way that they consider, in good faith, would be most likely to promote the success of the Company for the benefit of its members as a whole.

COMPANIES ACT REQUIREMENTS

LONG-TERM CONSEQUENCES

DUTY TO PROMOTE THE SUCCESS OF THE COMPANY

A director of a company must act in the way he considers, in good faith, would be most likely to promote the success of the company for the benefit of its members as a whole, and in doing so have regard (amongst other matters) to: •

the likely consequences of any decision in the long term;

•

the interests of the company’s employees;

•

the need to foster the company’s business relationships with suppliers, customers and others;

•

the impact of the company’s operations on the community and the environment;

•

the desirability of the company maintaining a reputation for high standards of business conduct; and

•

the need to act fairly as between members of the company.

The following table illustrates how the Board has had regard to the matters set out above when performing its duties under s172(1) Companies Act 2006 for the year ended 31 March 2020.

SPECIFIC INITIATIVES THIS YEAR

IN THE CONTEXT OF OUR BUSINESS

We invest in intellectual property rich technology and life science businesses in the Cambridge ecosystem and work hard to build these businesses into global, category-leading companies

Cambridge accelerators

Long-term thinking is fundamental to our business – each investment is typically held for at least five years before being realised Read more in Our business model on pages 12 and 13 EMPLOYEE INTERESTS

We strive to attract and retain the best talent, with a strong focus on excellence and integrity

Employee survey

We are constantly working hard to ensure we maintain an inclusive and collaborative culture – which we see as critical to our success Read more in At a glance on pages 4 to 7 FOSTER RELATIONSHIPS WITH STAKEHOLDERS

Our primary stakeholders, other than our members and team, are our existing, and potential new, portfolio companies, the University of Cambridge and the Cambridge ecosystem

IMPACT ON THE COMMUNITY AND ENVIRONMENT

Each member of our team is passionate about building the Cambridge ecosystem and making a positive difference to the community in which we live and work

Read more in Our differentiators on pages 10 and 11

Cambridge accelerators Joint board meeting with Cambridge Enterprise Cambridge accelerators

The potential impact of our portfolio companies should not be underestimated. If successful they will make a material difference to the world in which we live Read more in the Operational report on pages 18 to 25

HIGH STANDARDS OF BUSINESS CONDUCT

We expect our team to adopt the highest values surrounding quality, integrity and ethics

None

We have detailed written policies, all of which have been communicated to our team Read more in Corporate governance and risk management framework on pages 40 to 45

ACT FAIRLY BETWEEN MEMBERS

We maintain an ongoing dialogue with our shareholders, with the Executive Directors and other Partners providing regular and ad hoc updates, as and when appropriate

Quarterly shareholder updates

Read more in Corporate governance and risk management framework on pages 40 to 45

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ANNUAL REPORT AND ACCOUNTS FOR THE YEAR ENDED 31 MARCH 2020

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OVERVIEW

STRATEGIC REPORT

GOVERNANCE

FINANCIAL STATEMENTS

CAMBRIDGE ACCELERATORS

The Cambridge ecosystem is globally recognised as a centre of academic excellence and innovation, with a great track record for building category-leading life sciences and technology businesses. However, we identified an important gap in the ecosystem: dedicated hands-on support to bridge the gap between translational research and “Series A” ready businesses.

We have been working closely with other stakeholders in the ecosystem to establish two new accelerators: Start Codon for life sciences and healthcare businesses, and DeepTech.labs for technology businesses. The goal of these accelerators is to speed up the process of going from “bench to product” by compressing years of learning for many companies and researchers into a short, six-month window.

As an investor in the accelerator funds, we will benefit from pre-emption rights in companies participating in the accelerators.

EMPLOYEE SURVEY

Even though we employ less than 15 people, employee engagement is critical to our success. Several years ago we implemented a “Mutual Development Plan” and “Temperature Check” for all staff. Each year every employee discusses their personal and professional development objectives with their line manager and the agreed objectives are documented in the employee’s Mutual Development Plan. Each quarter every employee discusses their progress towards these objectives with their line manager and completes a “Temperature Check” to help determine the level of job satisfaction and any area(s) for concern.

During the year we introduced an employee survey that is completed, on a confidential basis, by all employees on a quarterly basis. The questions in the first part of the survey remain unchanged, so that we can assess, in aggregate, certain qualitative trends, but the questions in the second part of the survey are determined each quarter to enable us to canvas the collective views of our employees on a range of matters pertinent to the business.

JOINT BOARD MEETING WITH CAMBRIDGE ENTERPRISE

Our unique relationship with the University of Cambridge is partly reflected by the appointment, by the University, of two Directors to our Board, but also by our close working relationship, on a day-to-day basis, with Cambridge Enterprise, the commercialisation arm of the University.

To strengthen our relationship further and to facilitate a common strategy for the commercialisation of intellectual property emanating from the University, we determined that the Chairmen, Executive Directors and selected Non-executive Directors of both companies should meet on at least an annual basis. The first such meeting was held in November 2019.

QUARTERLY SHAREHOLDER UPDATES

At the start of the financial year we sought feedback from our shareholders on the quality, frequency and mode of our communications. We received extremely positive feedback on both the quality and transparency of our reporting in the Annual and Half Year Reports and in relation to our provision of quarterly portfolio and financial reports. However, several shareholders expressed a desire for more frequent opportunities to speak to us directly in relation to the status of our portfolio and investment activities.

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As a result of the above we have implemented a quarterly meeting schedule. The first three meetings each year, during which we present an update on activities and provide an opportunity for a direct dialogue and question and answer session with our shareholders, are arranged as webinars. The fourth meeting is arranged soon after our financial year end and includes a dinner and full day in-person event with our shareholders, although unfortunately we had to revert our inaugural meeting in May 2020 to a webinar due to the coronavirus pandemic.

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CORPORATE GOVERNANCE AND RISK MANAGEMENT FRAMEWORK

BOARD SCHEDULE OF MATTERS RESERVED FOR THE BOARD

Advisory Panel Legal advisers Technical consultants

THE BOARD

The Board consists of the Chairman, the Managing Partner and the Chief Financial Officer, collectively the Executive Directors, and four Nonexecutive Directors, two of whom are considered by the Board to be independent. The biographies of members of the Board are provided on pages 46 and 47.

The Board seeks to provide entrepreneurial leadership, albeit in compliance with its corporate governance and risk management framework, to help identify, invest in and build intellectual property rich life science and technology companies that have the potential to become global category-leaders. The Board acknowledges that nurturing great ideas into global businesses can take a long time and, as such, presents certain strategic and operational challenges.

The Board meets at least six times a year to review, formulate and approve the Group’s strategy, budgets and corporate actions and oversee progress towards defined goals. The Board recognises that to achieve its ambition it needs to maintain and periodically review its policy and decision-making framework while ensuring that the necessary financial and human resources are in place to implement its strategy and regularly

CIC-AR2020 Governance.indd 40

Remuneration Committee

Operational matters Executive Directors and other Partners

Investment activities Investment Committee

Key

40

Nomination Committee

Audit and Risk Management Committee

Legal advisers Financial advisers Independent assurance

Strategic

Operational

External

monitoring the Group’s performance against key financial and non-financial indicators.

The Directors are responsible for: •

promoting the long-term success of the Group, taking into account the interests of its shareholders and other key stakeholders;

•

ensuring that obligations to shareholders and other key stakeholders are understood and met; and

•

Information, analysis and recommendations

Entrepreneurial leadership and monitoring of performance

The Board is focused on building global, category-leading life science and technology businesses in the Cambridge ecosystem and is accountable to the Company’s shareholders for its corporate governance and risk management framework which is summarised below.

the integrity of the Group’s financial information and that financial controls and risk management systems are robust and comprehensive.

The Board has adopted a schedule of matters that are significant to the Group, due to their strategic, financial or reputational implications, and reserved for its decision and approval.

Otherwise the Board has delegated: •

portfolio company, and potential portfolio company, related matters to the Investment Committee, which comprises the Chairman, Executive Directors and other Partners of the Company, although all Directors are provided with all briefing papers and may attend meetings; and

•

operational matters to the Executive Directors and other Partners.

maintaining a satisfactory dialogue with shareholders.

All Directors are equally accountable to the Group’s shareholders for the proper stewardship of its affairs and the long-term success of the Group.

The responsibility of the Directors is collective, taking into account their respective roles as Executive and Nonexecutive Directors. The Executive Directors, together with their fellow Partners, are directly responsible for developing and implementing strategy and running the day-to-day operations of the Group. The Nonexecutive Directors are responsible for constructively challenging and contributing to proposals on strategy, scrutinising the performance of management, determining levels of remuneration and for succession planning. The Non-executive Directors must also satisfy themselves as to

CIC maintains an ongoing dialogue with its shareholders, with the Executive Directors and other Partners offering them regular updates as and when appropriate. The Chairman and Non-executive Directors are also available to discuss corporate governance and other matters with shareholders as and when required.

ANNUAL REPORT AND ACCOUNTS FOR THE YEAR ENDED 31 MARCH 2020

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OVERVIEW

BOARD COMMITTEES

The Board has established an Audit and Risk Management Committee, a Remuneration Committee and a Nomination Committee, each with formally delegated duties and responsibilities and written terms of reference as summarised below. In addition, separate committees may be established by the Board to consider specific issues as and when the need arises.

AUDIT AND RISK MANAGEMENT COMMITTEE

The Audit and Risk Management Committee is chaired by Clive Birch and its other member is Edward Benthall. Dipti Amin was a member of the Committee until her resignation as a Director on 31 March 2020.

The Committee meets formally at least twice a year and otherwise as required. It is responsible for ensuring that the financial performance of the Company is appropriately reported and reviewed and its role includes monitoring the integrity of the financial statements of the Company, reviewing internal control and risk management systems, reviewing any changes to accounting policies, reviewing and monitoring the extent of the non-audit services undertaken by external auditors and advising on the appointment of external auditors.

NOMINATION COMMITTEE

The Nomination Committee comprises Edward Benthall (Chair of the Committee) and Ian Leslie.

Mike Muller was a member of the Committee until his resignation as a Director on 31 March 2020. The Committee is expected to meet when appropriate, but at least once a year, to consider the structure, size and composition of the Board, retirements and appointments of additional and replacement Directors and make appropriate recommendations to the Board.

REMUNERATION COMMITTEE

The Remuneration Committee is chaired by Humphrey Battcock and its other member is Clive Birch.

Adam Glinsman was a member of the Committee until his resignation as a Director on 31 March 2020. The Committee is expected to meet not less than twice a year and at such other times as required. It is responsible for determining, within

STRATEGIC REPORT

the agreed terms of reference, the Company’s policy on the remuneration packages of the Company’s Chairman, Executive Directors, company secretary and such other members of the executive management as it is designated to consider.

The Committee also has the responsibility for determining, within the terms of the Company’s policy and in consultation with the Chairman of the Board and/or the Managing Partner, the total individual remuneration package for the Company’s Executive Directors, company secretary and such other members of the executive management as it is designated to consider (including bonuses, incentive payments and share options or other share awards).

The remuneration of Non-executive Directors is a matter for the Chairman and Executive Directors of the Board.

No Director or manager is allowed to partake in any discussions as to their own remuneration.

INTERNAL CONTROL

The Board is responsible for establishing and monitoring internal control systems and for reviewing the effectiveness of these systems. The Board views the effective operation of a rigorous system of internal control as critical to the success of the Group.

It recognises that such systems can provide only reasonable and not absolute assurance against material misstatement or loss.

The key elements of the Group’s internal control system, all of which have been in place during the financial year and up to the date these financial statements were approved, are summarised below. In addition, the Group’s financial risk management objectives and policies and exposure to market, liquidity and credit risk are provided in note 19 to the consolidated financial statements.

CONTROL ENVIRONMENT AND PROCEDURES

FINANCIAL STATEMENTS

policy, which has been communicated to employees, that sets out the process to follow if an employee feels that it is appropriate to make a disclosure.

IDENTIFICATION AND EVALUATION OF PRINCIPAL RISKS AND UNCERTAINTIES

The operations of the Group and the implementation of its strategy and objectives are subject to a number of key risks and uncertainties as set out on pages 42 to 45. The Board ensures that appropriate controls and procedures are in place to monitor and, where possible, mitigate these risks and formally reviews them at least once a year.

The Board reviews the Group’s interests in its portfolio companies on a quarterly basis, although the performance of specific portfolio companies may be reviewed more frequently if there are likely to be any strategic, financial or reputational implications.

INFORMATION AND FINANCIAL REPORTING SYSTEMS

The Group has systems and controls in place to ensure adequate accounting records are maintained and transactions are recorded accurately and fairly to permit the preparation of the financial statements in accordance with IFRS. The Board approves the Group’s annual budget each year and reviews the actual performance in comparison to the budget as presented in the management accounts each month.

INTERNAL AUDIT

The Group does not maintain a separate internal audit function due to the size of the Group and the fact that the Executive Directors and other Partners exercise close control over operations. Notwithstanding the above, the Audit and Risk Management Committee considers the need for an internal audit function each year.

The Group has a clear operational structure with defined responsibilities and accountabilities and expects its employees to adopt the highest values surrounding quality, integrity and ethics. The Group has detailed written policies and procedures in place, including a formal whistleblowing

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CAMBRIDGE INNOVATION CAPITAL

CORPORATE GOVERNANCE AND RISK MANAGEMENT FRAMEWORK SUMMARY OF PRINCIPAL RISKS, POTENTIAL IMPACT AND MITIGATION

A summary of the principal risks affecting the Group and the steps taken to manage each risk is set out below.

RISK

1.

If the Group ceases to invest in opportunities arising from the University of Cambridge or the Cambridge ecosystem, the University may terminate the Group’s preferred investor status

DESCRIPTION

IMPACT

MITIGATION

RISK TREND: DECREASED

The Group may not be aware of potential opportunities because of an ineffective working relationship with the University of Cambridge, Cambridge Enterprise or the Cambridge ecosystem

The quality and quantity of opportunities may diminish which would have an adverse effect on the value and long-term growth prospects of the Group

The Group has a Collaboration Agreement with Cambridge Enterprise, the commercialisation arm of the University, which describes the Group’s rights of access to University of Cambridge spinouts and its working relationship with Cambridge Enterprise

During the year the Group strengthened its reputation, cofounded two Cambridge-based accelerators and deployed £35.75 million (2019: £44.87 million) into four new and 12 existing portfolio companies (2019: four new, 17 existing) following review of 236 (2019: 266) opportunities

The Group may not be included in funding rounds because the academics, entrepreneurs and companies concerned may choose to accept funding from third parties Competition for opportunities may increase, thus reducing the number of attractive opportunities available The University and Cambridge ecosystem may not generate opportunities that are sufficiently attractive to warrant investment

The Group has co-founded two Cambridge-based accelerators and will benefit from preemption rights in companies participating therein The University of Cambridge is represented on the Group’s Board and Advisory Panel.

In addition, every employee works, lives and socialises in the Cambridge ecosystem amongst the resident academics and entrepreneurs

STRATEGIC PRIORITIES Read more on pages 14 and 15 • Be the first choice for entrepreneurs, start-ups and investors who want to build a business in Europe’s largest innovation hub KPIs Read more on pages 16 and 17 • Number of portfolio companies • Capital invested in the year

The Group’s employees, Board and Advisory Panel are actively engaged in sourcing new opportunities from key organisations and contacts within the Cambridge ecosystem

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ANNUAL REPORT AND ACCOUNTS FOR THE YEAR ENDED 31 MARCH 2020

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OVERVIEW

RISK

2.

The Group may overestimate or underestimate the opportunity and/or future potential of a portfolio company

STRATEGIC REPORT

GOVERNANCE

FINANCIAL STATEMENTS

DESCRIPTION

IMPACT

MITIGATION

RISK TREND: NO CHANGE

The Group may not identify and acquire appropriate investments

The Group may pass on credible investment opportunities and portfolio companies may not generate a return, both of which would have an adverse effect on the value and long-term growth prospects of the Group

The Group’s employees and Board have significant experience in evaluating opportunities and the commitment of financial and other resources is subject to a rigorous due diligence and approval process

The Group has invested in 30 companies (2019: 26) with a carrying value of £291.55 million (2019: £186.29 million)

The Group’s assessment of an opportunity may not accurately reflect the actual value or eventual outcome of the opportunity

STRATEGIC PRIORITIES Read more on pages 14 and 15 • Select and nurture companies that have the potential to deliver superior returns KPIs Read more on pages 16 and 17 • Total value of portfolio • Number of portfolio companies

RISK

3.

The Group’s portfolio companies may not fulfil their potential

DESCRIPTION

IMPACT

MITIGATION

RISK TREND: INCREASED

There is no guarantee that intellectual property protection is obtained, or effectively enforced, by portfolio companies

The Group’s portfolio companies may not flourish as anticipated, and indeed may fail, which would have an adverse impact on the value and long-term growth prospects of the Group

The Group’s employees and Board have significant experience in developing and growing earlystage technology companies to significant value

Although the Group invested £35.75 million (2019: £44.87 million) in the year and aggregate fair value changes increased to £128.54 million (2019: £59.01 million), representing a 79% (2019: 46%) uplift on deployed capital, the coronavirus pandemic may adversely impact the potential for portfolio companies to fulfil their ambitions

The technology and intellectual property held by portfolio companies may be rendered obsolete by, for example: • other technological advances; • competing products; • changes in market/ demand; and/or • evolving industry standards Portfolio companies may fail to bring products to market on a timely basis and in line with market requirements and expectations Portfolio companies may not be able to attract sufficient additional capital to achieve their business objectives

Under-performance and failure of portfolio companies may make it more difficult for the portfolio company to secure additional capital

The Group usually requires, as a condition of its support, representation on the board of a portfolio company to help identify and resolve critical issues promptly The Group has access to significant cash resources which it deploys diligently to help minimise the Group’s exposure to loss

• Select and nurture companies that have the potential to deliver superior returns • Drive growth and realise value for our stakeholders KPIs Read more on pages 16 and 17 • Growth in net assets • Capital invested in the year • Fair value of changes in the year

The Group maintains close relationships with a variety of strategic and financial syndicate investors who focus on differing stages of development and horizon periods

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STRATEGIC PRIORITIES Read more on pages 14 and 15

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CAMBRIDGE INNOVATION CAPITAL

CORPORATE GOVERNANCE AND RISK MANAGEMENT FRAMEWORK RISK

4.

The Group may not be able to realise value from its portfolio companies

DESCRIPTION

IMPACT

MITIGATION

RISK TREND: INCREASED

There is no guarantee that the investments that the Group has made will generate gains or income for the Group

Portfolio companies may not develop and mature in line with the Group’s expectations

The Group usually requires, as a condition of its support, representation on the board of a portfolio company to help identify and resolve critical issues promptly and, when appropriate, to expedite realisations

The coronavirus pandemic is likely to have an adverse impact on mergers and acquisitions and the potential to complete an IPO in the next 12 months

The Group typically holds minority stakes so may not be able to exercise its influence over portfolio companies, including in the sale or transfer of its holding in that portfolio company The Group may not be able to realise value from its portfolio companies for a number of years

RISK

5.

The Group’s ability to achieve its objectives is dependent on attracting and retaining key personnel within the Group and its portfolio companies

44

CIC-AR2020 Governance.indd 44

The Group may be forced to exit from a portfolio company, may be unable to realise value from a portfolio company or may suffer dilution of its interest in a portfolio company, all of which may have an adverse impact on the value and long-term growth prospects of the Group

STRATEGIC PRIORITIES Read more on pages 14 and 15 • Drive growth and realise value for our stakeholders KPIs Read more on pages 16 and 17 • Growth in net assets • Net assets per share • Realisations

DESCRIPTION

IMPACT

MITIGATION

RISK TREND: INCREASED

The ability to attract and retain key individuals is often critical to successful commercialisation of intellectual property

A loss of key personnel or a delay in recruiting or an inability to recruit and integrate a suitable replacement may have an adverse impact on the value and long-term growth prospects of the Group

The Group compares the remuneration of its employees, and the employees of its portfolio companies, to relevant peer groups

The coronavirus pandemic and Brexit are likely to affect the ability of the Group and portfolio companies to attract key personnel from outside the UK

Key personnel, including the founders, may leave a portfolio company if, for example, they are not incentivised appropriately Portfolio companies may not have the financial resources to offer competitively attractive salaries and other incentivisation packages

The Group seeks, and encourages its portfolio companies to seek, to offer balanced incentive packages comprising an appropriate mix of salary, benefits and performance-based incentives The Group encourages staff development through internal coaching and external training and performs regular objective setting and appraisal

STRATEGIC PRIORITIES Read more on pages 14 and 15 • Be the first choice for entrepreneurs, start-ups and investors who want to build a business in Europe’s largest innovation hub • Select and nurture companies that have the potential to deliver superior returns • Drive growth and realise value for our stakeholders KPIs Read more on pages 16 and 17 • Growth in net assets • Total value of portfolio • Capital invested in the year

ANNUAL REPORT AND ACCOUNTS FOR THE YEAR ENDED 31 MARCH 2020

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OVERVIEW

RISK

6.

The Group has limited capital and is exposed to portfolio and liquidity risk

STRATEGIC REPORT

GOVERNANCE

FINANCIAL STATEMENTS

DESCRIPTION

IMPACT

MITIGATION

RISK TREND: NO CHANGE

The Group will need to allocate capital appropriately to fund the development and scale-up of portfolio companies to allow them to fulfil their potential

The failure of portfolio companies may make it more difficult for the Group to raise additional capital

The Group has access to significant cash resources that it can deploy in attractive portfolio companies

The Group’s interest in portfolio companies may be diluted due to its inability to participate in funding rounds

The aggregate commitment to any portfolio company is limited to a percentage of net assets at the time of deploying, or committing to deploy, additional capital. In addition, the Group considers portfolio risk when considering new opportunities

The Group has access to cash, deposits and shareholder commitments of £91.60 million (2019: £135.00 million). The ten largest portfolio companies, by carrying value, account for 80% (2019: 80%) of the total value of the portfolio

A significant proportion of the overall value of the Group may reside within a small proportion of the Group’s portfolio companies at any one time The Group may not manage its liquidity requirements sufficiently

The Group’s overall performance may become overly dependent on a small number of portfolio companies Liquid funds may not be available as and when required to support portfolio companies

The Group has a Treasury Policy that is periodically reviewed to ensure that it is fit for purpose The Group monitors the future funding requirements of its portfolio companies and the aggregate requirement helps to determine the Group’s funding strategy

STRATEGIC PRIORITIES Read more on pages 14 and 15 • Select and nurture companies that have the potential to deliver superior returns • Drive growth and realise value for our stakeholders KPIs Read more on pages 16 and 17 • Net assets • Total value of portfolio • Capital invested in the year

RISK

DESCRIPTION

IMPACT

MITIGATION

RISK TREND: INCREASED

7.

Such changes may impact:

The quality and quantity of opportunities may diminish and the Group’s portfolio companies may not flourish as anticipated, and indeed may fail, each of which would have an adverse impact on the value and long-term growth prospects of the Group

The Group utilises professional advisers as appropriate to support its monitoring of, and response to, capital market conditions and legislative changes

The coronavirus pandemic and Brexit are likely to impact the macroenvironment for the Group’s portfolio companies

Changes in legislation, government policy and economic environment, including but not limited to the impact of coronavirus pandemic and Brexit, may have an adverse effect on the Group and its portfolio companies

• Cambridge Enterprise and/or the University of Cambridge directly; • the quantum of research funding made available to research institutions which may impact on the quality and quantity of their research output; • the resources available to generate intellectual property and commercial opportunities; • the availability of tax credits and other incentives for research and development; • the terms on which monies are provided to generate intellectual property; and • the way in which intellectual property can be commercialised

The success of those portfolio companies which require significant capital may be influenced by the market’s appetite for supporting early-stage companies

The Group prepares a budget on an annual basis and monitors actual performance against this budget The Group monitors the future funding requirements, trading performance and development progress of its portfolio companies

A material downturn in the UK’s and/or global economic health would have an adverse effect on the trading environment of, and availability of capital for, portfolio companies

• Be the first choice for entrepreneurs, start-ups and investors who want to build a business in Europe’s largest innovation hub • Select and nurture companies that have the potential to deliver superior returns • Drive growth and realise value for our stakeholders KPIs Read more on pages 16 and 17 • • • •

Net assets Total value of portfolio Capital invested in the year Number of portfolio companies

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STRATEGIC PRIORITIES Read more on pages 14 and 15

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CAMBRIDGE INNOVATION CAPITAL

LEADERSHIP TEAM AND BOARD OF DIRECTORS EDWARD BENTHALL CHAIRMAN

N A

Edward has been involved with CIC since its inception. He was Chairman of Cambridge Enterprise Limited, the University of Cambridge’s commercialisation arm, between 2010 and 2014. Before that he was Chairman of the Campaign Council for the University’s 800th Anniversary Campaign. Until April 2012, Edward was a Partner of Charterhouse Capital Partners, a leading UK private equity firm. Edward is also Chairman of the Eden Trust, the parent charity of the Eden Project.

B

ANDREW WILLIAMSON MANAGING PARTNER

B

Andrew has an undergraduate degree in Natural Science and a PhD in Physics from the University of Cambridge. After completing his PhD, Andrew performed postdoctoral research on solar power at the National Renewable Energy Laboratory before joining Lawrence Livermore National Laboratory (LLNL) in California, USA where he was a Lawrence Fellow and Project Leader for Nanomaterials research. Andrew left LLNL to complete an MBA at the University of California, Berkeley and from there joined Physic Ventures in San Francisco. Immediately prior to joining the Company, Andrew was a Partner at True North Venture Partners based in Chicago where he led that firm’s investments in energy and materials.

ROB SPRAWSON PARTNER AND CFO

B

Rob has more than 25 years of professional and commercial experience providing strategic, financial and corporate finance advice to boards and shareholders of both private and publicly quoted companies, especially in the pharmaceutical, biotechnology, technology and technology consulting industries in the Cambridge ecosystem and further afield. His previous roles have included being Chief Financial Officer of an ophthalmic specialty pharmaceutical company, a molecular diagnostic company and of Warwick Ventures Limited, the commercialisation arm of the University of Warwick, having previously worked for ten years in Corporate Finance at PricewaterhouseCoopers. Rob is a Fellow of the Institute of Chartered Accountants in England and Wales.

MICHAEL ANSTEY PARTNER

Michael has a DPhil in Zoology in the field of neurobiology from the University of Oxford.

Immediately prior to joining the Company, he was a Principal in the Healthcare Practice Area at the Boston Consultancy Group (BCG), where he advised multinational healthcare businesses across North America, Europe, India, and Japan on a broad range of topics including corporate strategy, sales and marketing, market access, R&D strategy and M&A. He also co-founded a biotechnology company focused on developing small molecule drugs that target protein-protein interactions implicated in disease. Prior to joining BCG, Michael was an Investment Analyst at Oxford Capital Partners.

VIN LINGATHOTI PARTNER

Vin is a software engineer by background and has spent over a decade in Silicon Valley working with tech companies. Immediately prior to joining the Company he led venture investments and acquisitions for Cisco Systems in London and San Jose. At Cisco, he was responsible for investments in Panaseer, Behaviosec, Intersec, 6Wind and Worldsensing. He was also involved in several acquisitions in IoT, Cybersecurity, Datacenter and Enterprise Networking. Vin has an MBA from The Wharton School, University of Pennsylvania and an MS in computer science from University of Potsdam, Germany.

KEY:

B

Board

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A

Audit and Risk Management Committee

N

Nomination Committee

R

Remuneration Committee

ANNUAL REPORT AND ACCOUNTS FOR THE YEAR ENDED 31 MARCH 2020

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OVERVIEW

STRATEGIC REPORT

GOVERNANCE

FINANCIAL STATEMENTS

ROBERT TANSLEY PARTNER

Robert qualified in medicine from University College London and worked in hospital medicine before joining the pharma industry in development, regulatory and management roles at Sanofi, the MHRA and Roche. Robert then spent a decade in early stage biotech companies including as Medical Director for Arakis (sold to Sosei Inc.), founder and CEO of the malariafocused company Treague and founding CEO of the University of Copenhagen spin-out, Avilex Pharma. In addition, he was part of the founding team of Nasdaq-listed KalVista Pharmaceuticals set up in collaboration with its scientific co-founders from Harvard Medical School. Robert is a member of the Royal College of Obstetricians & Gynaecologists and the Faculty of Pharmaceutical Medicine and has an MBA from London Business School and an MPhil in Biostatistics from the University of Cambridge.

HUMPHREY BATTCOCK INDEPENDENT NON-EXECUTIVE DIRECTOR

R B

Humphrey was previously co-head of Europe and on the executive committee of Advent International which he joined in 1994. Advent International is one of the world’s leading private equity firms with operations in ten countries. During his tenure, the firm increased its assets under management from £200 million to £30 billion. Prior to Advent, Humphrey was at Trinity Capital Partners, a UK-focused technology venture capital firm. Humphrey is a chartered accountant, with an MBA from London Business School and a Physics degree from Cambridge University. Humphrey is a member of the Cambridge University Campaign Board and a panel member of the Competition and Market Authority, as well as a trustee of Sadler’s Wells, the Institute for Research in Schools and The Centre for Homelessness Impact.

CLIVE BIRCH INDEPENDENT NON-EXECUTIVE DIRECTOR

R A B

Clive Birch is a retired PricewaterhouseCoopers partner. Clive was partner in charge of the Cambridge office for 15 years up to 2010, during which time he was responsible for all aspects of that stand-alone business. The majority of Clive’s clients were technology and healthcare companies and, as the partner responsible for them, he not only looked after their audit needs but also helped them deal with the rigours of setting up systems and processes, dealing with outside stakeholders and corporate governance. He was also part of the teams involved in fundraising and listing those clients on various markets. Clive is a Governor of Birkbeck College, part of London University, and is Chairman of Pigeon Land Limited.

IAN LESLIE NON-EXECUTIVE DIRECTOR

N B

Ian Leslie is Director of Information Services at the University of Cambridge and is Special Advisor to the Vice-Chancellor on environmental sustainability. He was previously Professor of Computer Science at the University’s Computer Laboratory with interests in operating systems, distributed systems and networks. Ian was also formerly Head of the Computer Laboratory and Pro-Vice-Chancellor for Research for the University, with responsibility for coordinating research policy, providing academic oversight of grants and contracts and interacting with both industrial sponsors and the UK government. Ian is a Fellow of Christ’s College.

ANDY NEELY NON-EXECUTIVE DIRECTOR

B

Andy Neely is Pro-Vice-Chancellor: Enterprise and Business Relations at the University of Cambridge and former Head of the Institute for Manufacturing (IfM) and of the Manufacturing and Management Division of Cambridge University Engineering Department.

He is a Fellow of Sidney Sussex College and founding director of the Cambridge Service Alliance. Previously he was a Fellow of Churchill College and has held appointments at Cranfield University, London Business School, Nottingham University and British Aerospace.

He was also Deputy Director of AIM Research, the UK’s management research initiative, from 2003 until 2012.

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CAMBRIDGE INNOVATION CAPITAL

DIRECTORS’ REPORT REPORT OF DIRECTORS

The Directors present their report together with the audited consolidated financial statements for the year ended 31 March 2020. The objectives and future developments of the Company are addressed within the Strategic Report.

CORPORATE GOVERNANCE AND RISK MANAGEMENT FRAMEWORK

Information on the Group’s corporate governance and risk management framework is provided on pages 40 to 45.

RESULTS AND DIVIDENDS

During the year, the Group made a profit after tax for the year ended 31 March 2020 of £53.01 million (2019: £27.85 million).

The Directors do not recommend the payment of a dividend (2019: £nil).

DIRECTORS The Directors who served during the year and up to the date of signing the financial statements were as follows: Edward Benthall

Executive Chairman

Victor Christou

Chief Executive Officer

Resigned 16 April 2019

Andrew Williamson

Managing Partner

Appointed 9 May 2019

Rob Sprawson

Partner and Chief Financial Officer

Dipti Amin

Independent Non-executive Director

Humphrey Battcock

Independent Non-executive Director

Clive Birch

Independent Non-executive Director

Adam Glinsman

Independent Non-executive Director

Resigned 31 March 2020

Mike Muller

Independent Non-executive Director

Resigned 31 March 2020

Ian Leslie

Non-executive Director

Andy Neely

Non-executive Director

Resigned 31 March 2020

DIRECTORS’ EMOLUMENTS

Directors’ emoluments are disclosed in note 7 to the consolidated financial statements.

DIRECTORS’ INTERESTS IN SHARES

The Directors who held office during the year ended 31 March 2020 had the following beneficial interests in the shares of the Company: AT 31 MARCH 2020 NUMBER OF ORDINARY SHARES

NUMBER OF CLASS A COMMITMENT SHARES

AT 31 MARCH 2019 % OF VOTING SHARE CAPITAL

NUMBER OF ORDINARY SHARES

NUMBER OF CLASS A COMMITMENT SHARES

% OF VOTING SHARE CAPITAL

Dipti Amin

153,235

130,381

0.08%

72,832

210,784

0.08%

Humphrey Battcock

152,624

129,862

0.08%

72,541

209,945

0.08%

Edward Benthall

513,874

129,862

0.19%

433,791

209,945

0.19%

26,251

22,337

0.01%

12,477

36,111

0.01% 0.01%

Clive Birch Victor Christou^

9,157

7,792

0.01%

4,352

12,597

Adam Glinsman

330,532

137,653

0.14%

245,644

222,541

0.14%

Michael Muller

122,099

103,890

0.07%

58,033

167,956

0.07%

^ Victor Christou’s interests are held by a connected party.

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ANNUAL REPORT AND ACCOUNTS FOR THE YEAR ENDED 31 MARCH 2020

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OVERVIEW

STRATEGIC REPORT

GOVERNANCE

FINANCIAL STATEMENTS

The Directors who held office during the year ended 31 March 2020 had the following beneficial interests in options over the ordinary shares of the Company:

Victor Christou

Rob Sprawson

Andrew Williamson

AT 31 MARCH 2019

GRANTED DURING THE YEAR

EXERCISED DURING THE YEAR

AT 31 MARCH 2020

EXERCISE PRICE (PENCE)

1,435,709

–

–

1,435,709

0.17

178,150

–

152,325

0.01

29,228

–

62,146

27,390

125,518

66,882

DIRECTORS’ INDEMNITIES

As detailed in the Company’s Articles of Association, indemnities were in force during the financial year and also at the date of approval of the financial statements between the Company and each of its Directors under which the Company has agreed to indemnify each Director, to the extent permitted by law, in respect of certain liabilities incurred as a result of carrying out his/her duties as a Director of the Company. The Company has Directors’ and Officers’ Liability Insurance and it is the intention to maintain such a policy in the future.

SHAREHOLDER

%

Cambridge University as trustee of the Cambridge University Endowment Fund

18.3%

Union Bancaire Privée

15.0%

The Chancellor, Masters and Scholars of the University of Cambridge

12.4%

Fosun Industrial

6.7%

Private Equity Solutions

5.0%

Legal & General

3.7%

Oman Investment Fund

3.7%

Bluesky Partnership II LP

3.7%

Lisbet Rausing

3.3%

POLITICAL DONATIONS

The Group did not make any political donations during the year (2019: £nil).

0.17

(9,009)

80,527

0.01

(12,012)

180,388

0.01

Material events occurring since the balance sheet date are disclosed in the Strategic Report and in note 21 to the consolidated financial statements.

DISCLOSURE OF INFORMATION TO THE INDEPENDENT AUDITORS

In accordance with Section 418 of the Companies Act 2006, each Director in office at the date the Directors’ report is approved confirms that: •

so far as the Director is aware, there is no relevant audit information of which the Company’s auditors are unaware; and

•

he has taken all the steps that he ought to have taken as a Director in order to make himself aware of any relevant audit information and to establish that the Company’s auditors are aware of that information.

APPOINTMENT OF AUDITORS

A resolution to reappoint PricewaterhouseCoopers LLP, together with a resolution to authorise the Directors to determine their remuneration, will be proposed at the forthcoming Annual General Meeting.

GOING CONCERN

The Group’s cash and short-term deposits, together with the remaining commitments to invest secured from existing and new investors during the year ended 31 March 2019, are sufficient to meet the investment requirements and operational needs of the Group for at least a year from the date of approval of the financial statements.

Given the above, the Directors confirm that they have a reasonable expectation that the Group will have adequate resources to continue in operational existence for the foreseeable future and accordingly they continue to adopt the going concern basis in preparing the financial statements.

Approved by the Board of Directors and signed on its behalf by EDWARD BENTHALL CHAIRMAN 16 June 2020

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29,228

–

POST BALANCE SHEET EVENTS

SUBSTANTIAL SHAREHOLDERS

As at 16 June 2020, the Company had the following shareholders with interests of 3% or more, in aggregate, of the Company’s ordinary and class A commitment shares.

The ordinary and class A commitment shares carry equal voting rights, equal rights to income and distributions of assets on liquidation, or otherwise, and no right to fixed income. The Company’s issued share capital is disclosed in note 17 to the consolidated financial statements. Other than as shown below, so far as the Company and its Directors are aware, no other person holds or is beneficially interested in a disclosable interest in the Company.

(25,825)

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CAMBRIDGE INNOVATION CAPITAL

STATEMENT OF DIRECTORS’ RESPONSIBILITIES IN RESPECT OF THE FINANCIAL STATEMENTS

The Directors are responsible for preparing the Annual Report and the financial statements in accordance with applicable law and regulation.

Company law requires the Directors to prepare financial statements for each financial year. Under that law the Directors have prepared the Group financial statements in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union and Company financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards, comprising FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland”, and applicable law).

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 Group and Company and of the profit or loss of the Group and Company for that period. In preparing the financial statements, the Directors are required to: •

select suitable accounting policies and then apply them consistently;

•

state whether applicable IFRSs as adopted by the European Union have been followed for the Group financial statements and United Kingdom Accounting Standards, comprising FRS 102, have been followed for the Company financial statements, subject to any material departures disclosed and explained in the financial statements;

•

make judgements and accounting estimates that are reasonable and prudent; and

•

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

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The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Group and Company’s transactions and disclose with reasonable accuracy at any time the financial position of the Group and Company and enable them to ensure that the financial statements comply with the Companies Act 2006.

The Directors are also responsible for safeguarding the assets of the Group and Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

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

In the case of each Director in office at the date the Directors’ Report is approved: •

so far as the Director is aware, there is no relevant audit information of which the Group and Company’s auditors are unaware; and

•

they have taken all the steps that they ought to have taken as a Director in order to make themselves aware of any relevant audit information and to establish that the Group and Company’s auditors are aware of that information.

Approved by the Board of Directors and signed on its behalf by EDWARD BENTHALL CHAIRMAN 16 June 2020

ANNUAL REPORT AND ACCOUNTS FOR THE YEAR ENDED 31 MARCH 2020

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OVERVIEW

STRATEGIC REPORT

FINANCIAL STATEMENTS

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GOVERNANCE

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CAMBRIDGE INNOVATION CAPITAL

INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OF CAMBRIDGE INNOVATION CAPITAL PLC

REPORT ON THE AUDIT OF THE FINANCIAL STATEMENTS OPINION

In our opinion: •

Cambridge Innovation Capital plc’s Group financial statements and Company financial statements (the “financial statements”) give a true and fair view of the state of the Group’s and of the Company’s affairs as at 31 March 2020 and of the Group’s profit and cash flows for the year then ended;

•

the Group financial statements have been properly prepared in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union;

•

the Company financial statements have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards, comprising FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland”, and applicable law); and

•

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

We have audited the financial statements, included within the Annual Report and Accounts (the “Annual Report”), which comprise: the consolidated statement of financial position and the Company balance sheet as at 31 March 2020; the consolidated statement of comprehensive income, the consolidated statement of cash flows, and the consolidated and Company statements of changes in equity for the year then ended; and the notes to the financial statements, which include a description of the significant accounting policies.

BASIS FOR OPINION

We conducted our audit in accordance with International Standards on Auditing (UK) (“ISAs (UK)”) and applicable law. Our responsibilities under ISAs (UK) are further described in the Auditors’ responsibilities for the audit of the financial statements section of our report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

INDEPENDENCE We remained independent of the Group in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, which includes the FRC’s Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements.

CONCLUSIONS RELATING TO GOING CONCERN

We have nothing to report in respect of the following matters in relation to which ISAs (UK) require us to report to you where: •

the Directors’ use of the going concern basis of accounting in the preparation of the financial statements is not appropriate; or

•

the Directors have not disclosed in the financial statements any identified material uncertainties that may cast significant doubt about the Group’s and Company’s ability to continue to adopt the going concern basis of accounting for a period of at least 12 months from the date when the financial statements are authorised for issue.

However, because not all future events or conditions can be predicted, this statement is not a guarantee as to the Group’s and Company’s ability to continue as a going concern.

REPORTING ON OTHER INFORMATION

The other information comprises all of the information in the Annual Report other than the financial statements and our auditors’ report thereon. The Directors are responsible for the other information. Our opinion on the financial statements does not cover the other information and, accordingly, we do not express an audit opinion or, except to the extent otherwise explicitly stated in this report, any form of assurance thereon.

In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated. If we identify an apparent material inconsistency or material misstatement, we are required to perform procedures to conclude whether there is a material misstatement of the financial statements or a material misstatement of the other information. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report based on these responsibilities.

With respect to the Strategic Report and Directors’ Report, we also considered whether the disclosures required by the UK Companies Act 2006 have been included.

Based on the responsibilities described above and our work undertaken in the course of the audit, ISAs (UK) require us also to report certain opinions and matters as described below.

STRATEGIC REPORT AND DIRECTORS’ REPORT In our opinion, based on the work undertaken in the course of the audit, the information given in the Strategic Report and Directors’ Report for the year ended 31 March 2020 is consistent with the financial statements and has been prepared in accordance with applicable legal requirements.

In light of the knowledge and understanding of the Group and Company and their environment obtained in the course of the audit, we did not identify any material misstatements in the Strategic Report and Directors’ Report.

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ANNUAL REPORT AND ACCOUNTS FOR THE YEAR ENDED 31 MARCH 2020

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OVERVIEW

STRATEGIC REPORT

GOVERNANCE

FINANCIAL STATEMENTS

RO PA OF

RESPONSIBILITIES FOR THE FINANCIAL STATEMENTS AND THE AUDIT

RESPONSIBILITIES OF THE DIRECTORS FOR THE FINANCIAL STATEMENTS As explained more fully in the Statement of Directors’ responsibilities in respect of the financial statements, the Directors are responsible for the preparation of the financial statements in accordance with the applicable framework and for being satisfied that they give a true and fair view.

The Directors are also responsible for such internal control as they determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, the Directors are responsible for assessing the Group’s and the Company’s ability to continue as a going concern, disclosing as applicable, matters related to going concern and using the going concern basis of accounting unless the Directors either intend to liquidate the Group or the Company or to cease operations, or have no realistic alternative but to do so.

AUDITORS’ RESPONSIBILITIES FOR THE AUDIT OF THE FINANCIAL STATEMENTS Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors’ report that includes our opinion.

Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

OTHER REQUIRED REPORTING COMPANIES ACT 2006 EXCEPTION REPORTING

Under the Companies Act 2006 we are required to report to you if, in our opinion: •

we have not received all the information and explanations we require for our audit; or

•

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

•

certain disclosures of Directors’ remuneration specified by law are not made; or

•

the Company financial statements are not in agreement with the accounting records and returns.

We have no exceptions to report arising from this responsibility.

SIMON ORMISTON (SENIOR STATUTORY AUDITOR) FOR AND ON BEHALF OF PRICEWATERHOUSECOOPERS LLP CHARTERED ACCOUNTANTS AND STATUTORY AUDITORS CAMBRIDGE 17 June 2020

A further description of our responsibilities for the audit of the financial statements is located on the FRC’s website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditors’ report.

USE OF THIS REPORT This report, including the opinions, has been prepared for and only for the Company’s members as a body in accordance with Chapter 3 of Part 16 of the Companies Act 2006 and for no other purpose. We do not, in giving these opinions, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior consent in writing.

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CAMBRIDGE INNOVATION CAPITAL

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 MARCH 2020

NOTE

2020 £

2019 £

69,533,378

30,709,963

Administrative expenses

(16,935,927)

(3,349,461)

Other operating income

162,489

41,373

52,759,940

27,401,875

9

386,700

462,201

13

(130,667)

–

53,015,973

27,864,076

Fair value changes in investments

Operating profit

6

Finance income Share of net losses of associates accounted for using the equity method Profit on ordinary activities before taxation Tax on profit on ordinary activities

10

Profit and total comprehensive income for the year attributable to the equity holders

(2,869)

(16,134)

53,013,104

27,847,942

All activities derive from continuing operations.

The notes on pages 58 to 70 are an integral part of these financial statements.

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ANNUAL REPORT AND ACCOUNTS FOR THE YEAR ENDED 31 MARCH 2020

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OVERVIEW

STRATEGIC REPORT

GOVERNANCE

FINANCIAL STATEMENTS

CONSOLIDATED STATEMENT OF FINANCIAL POSITION AT 31 MARCH 2020

NOTE

2020 £

2019 £

Assets Non-current assets Property, plant and equipment

11

29,217

37,094

Investments held at fair value

12

292,117,595

186,293,337

Investments accounted for using the equity method

13

369,332

–

292,516,144

186,330,431

Current assets Trade and other receivables

14

Cash and cash equivalents

Total assets

824,236

433,022

22,683,388

31,756,200

23,507,624

32,189,222

316,023,768

218,519,653

Liabilities Current liabilities Trade and other payables

15

Net assets

(14,287,399)

(12,136,916)

301,736,369

206,382,737

50,022,430

50,020,029

Share premium account

76,951,727

34,461,609

Share based payment reserve

3,343,750

3,495,741

128,540,469

59,007,091

Equity Issued share capital

17

Capital reserve Retained earnings Total equity

42,877,993

59,398,267

301,736,369

206,382,737

The notes on pages 58 to 70 are an integral part of these financial statements.

The consolidated financial statements on pages 54 to 70 of Cambridge Innovation Capital plc, registered number 08243718, were authorised for issue by the Board of Directors on 16 June 2020 and were signed on its behalf by ROB SPRAWSON DIRECTOR AND CFO

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CAMBRIDGE INNOVATION CAPITAL

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 31 MARCH 2020

NOTE

At 1 April 2018 Profit for the year and total comprehensive income Fair value changes in investments

12

ISSUED SHARE CAPITAL £

SHARE PREMIUM ACCOUNT £

SHARE BASED PAYMENT RESERVE £

CAPITAL RESERVE £

RETAINED EARNINGS £

TOTAL EQUITY £

50,009,375

57,200

3,369,044

28,297,128

62,260,288

143,993,035

–

–

–

–

27,847,942

27,847,942

–

–

–

30,709,963

10,654

34,404,409

(30,709,963)

–

Transactions with owners Share capital issued (net of expenses) Share based payments

8

At 31 March 2019 Profit for the year and total comprehensive income Fair value changes in investments

12

34,415,063

–

–

126,697

–

–

126,697

50,020,029

34,461,609

3,495,741

59,007,091

59,398,267

206,382,737

–

–

–

–

53,013,104

53,013,104

–

–

–

69,533,378

2,401

42,490,118

–

–

–

–

–

54,596

–

–

(69,533,378)

–

Transactions with owners Share capital issued (net of expenses) Share based payments

8

Transfer to liabilities of cash-settled share based payments

8

At 31 March 2020

(206,587)

50,022,430

76,951,727

3,343,750

42,492,519 54,596 (206,587)

128,540,469

42,877,993

301,736,369

The notes on pages 58 to 70 are an integral part of these financial statements.

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ANNUAL REPORT AND ACCOUNTS FOR THE YEAR ENDED 31 MARCH 2020

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OVERVIEW

STRATEGIC REPORT

GOVERNANCE

FINANCIAL STATEMENTS

CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 31 MARCH 2020

NOTE

2020 £

2019 £

52,759,940

27,401,875

(69,533,378)

(30,709,963)

Cash flows from operating activities Operating profit Adjustments for: Fair value changes in investments

12

Share based payments

8

54,596

126,697

Depreciation

11

22,895

43,208

Gain on sale of property, plant and equipment (Increase)/decrease in trade and other receivables

(347)

–

(479,535)

582,441

Increase/(decrease) in trade and other payables

12,954,366

Cash used in operating activities

(4,221,463)

Income tax paid Net cash used in operations

(202,802) (2,758,544)

(2,869)

(16,134)

(4,224,332)

(2,774,678)

(15,163)

(1,263)

Cash flows from investing activities Purchase of property, plant and equipment

11

492

Proceeds from sale of property, plant and equipment Purchase of investments

12

(36,276,208) 19,897

Repayment of loans by portfolio companies

(499,999)

Purchase of investments accounted for using the equity method

–

Movement in short-term deposits

440,451

Treasury investment returns and interest received Net cash used in investing activities

– (44,874,466) – – 1,400,000 295,905

(36,330,530)

(43,179,824)

42,498,665

38,581,929

Cash flows from financing activities Proceeds from issue of shares

17

Share issue costs Funds (returned)/received in advance of notice of drawdown being given Net cash generated from financing activities Net change in cash and cash equivalents

15

(2,841,837)

(1,331,174)

(8,174,778)

8,174,778

31,482,050 (9,072,812)

45,425,533 (528,969)

Cash and cash equivalents at beginning of the year

31,756,200

32,285,169

Cash and cash equivalents at end of the year

22,683,388

31,756,200

The notes on pages 58 to 70 are an integral part of these financial statements.

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CAMBRIDGE INNOVATION CAPITAL

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2020

1. GENERAL INFORMATION

Cambridge Innovation Capital plc is incorporated in England and Wales and is domiciled in the UK, the address of its registered office being Hauser Forum, 3 Charles Babbage Road, Cambridge, England, CB3 0GT. Cambridge Innovation Capital plc and its wholly owned subsidiaries disclosed in note H to the Company’s financial statements form “the Group” and the Group’s consolidated financial statements presented herein are in sterling. The Group invests in and otherwise supports intellectual property rich companies based in and around Cambridge and/or with a connection to the University of Cambridge.

2. BASIS OF PREPARATION

The Group’s cash and short-term deposits, together with commitments to invest secured from existing and new investors during the year, are sufficient to meet the investment requirements and operational needs of the Group for at least a year from the date of approval of the financial statements.

Given the above, the financial statements for the year ended 31 March 2020 have been prepared: •

•

on a going concern basis and under the historical cost convention, as modified by the revaluation of certain financial assets and financial liabilities at fair value through the income statement; and in accordance with International Financial Reporting Standards (“IFRS”) as adopted by the European Union (“EU”), interpretations of the IFRS Interpretations Committee (formerly the IFRIC) and the Companies Act 2006 applicable to companies reporting under IFRS.

The Group has reviewed its accounting policies following the adoption of IFRS 16 “Leases” and has concluded that there is no impact on the financial statements from adopting these new standards. As a result, the principal accounting policies adopted in the preparation of these financial statements have been consistently applied to all the years presented.

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The preparation of the financial statements in conformity with IFRS as endorsed by the EU requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Group’s accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial statements, are disclosed in note 4.

3. SIGNIFICANT ACCOUNTING POLICIES BASIS OF CONSOLIDATION

The consolidated financial statements include the financial information of the Company and its subsidiary undertakings.

The financial information of the subsidiary undertakings is prepared for the same reporting period as the Company, using consistent accounting policies. Subsidiary undertakings are consolidated from the date on which control is transferred to the Group and would cease to be consolidated from the date on which control is transferred out of the Group. Intragroup transactions, profits and balances are eliminated in full on consolidation.

ASSOCIATES

Associates are accounted for using the equity method of accounting.

Under the equity method, interests in associates are initially recognised at cost and adjusted thereafter to recognise the Group’s share of the post-acquisition profits or losses and movements in other comprehensive income.

SEGMENTAL REPORTING

The Chief Operating Decision Maker has been identified as the Company’s Board of Directors. The Board is of the opinion that the Group operates one operating segment, that of investing in and otherwise supporting intellectual property rich companies based in and around Cambridge and/or with a connection to the University of Cambridge. The Board assesses the performance of the operating segment using financial information which is measured and presented in a manner consistent with that in the financial statements. All of the assets of the Group are related to that operating segment and are held

in either the UK or Jersey, a British Crown dependency.

PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment is stated at cost (or deemed cost) less accumulated depreciation and accumulated impairment losses.

Cost includes the original purchase price and costs directly attributable to bringing the asset to its working condition for its intended use.

Depreciation on assets is calculated, using the straight-line method, to allocate the cost to their residual values over their estimated useful lives, as follows: •

leasehold improvements, five years;

•

furniture and equipment, three years; and

•

computer equipment, three years.

INVESTMENTS

The Group classifies all its equity investments which are not subsidiaries or associates as financial assets at fair value through profit or loss. These financial assets are initially recognised at fair value, which is normally the transaction price, and subsequently carried at fair value with any changes in fair value recognised in profit or loss in the period in which they arise.

The Group measures the fair value of its equity investments in line with International Private Equity and Venture Capital (“IPEV”) Valuation Guidelines and adopted the December 2018 IPEV Valuation Guidelines with effect from 1 April 2018.

The fair values of investments in quoted companies are based on bid prices in an active market at the reporting date.

For the Group’s investments in unquoted companies, where there are often no current earnings, no short-term future earnings or positive cash flows, it is often difficult to make reliable cash flow forecasts. The Group considers that fair value estimates based entirely on observable market data are of greater reliability than those based on assumptions. In such circumstances, the price of recent investment is considered to be the best estimate of fair value at the date of investment and is therefore used as the de facto starting position for

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OVERVIEW

any fair value estimate made by the Group. Accordingly, where there has been a recent investment by a third party, the price of that investment will also provide the starting position for fair value, subject to adjustment for any subsequent milestones or impairments.

Where the Group considers that the price of recent investment, unadjusted, is no longer relevant and there are limited or no comparable companies or transactions from which to infer value, the Group carries out an enhanced assessment based on milestone analysis and industry and sector analysis.

When appropriate, the Group may consider the use of external advisers to assess the reasonableness of any change in fair value estimated by the Group.

The following factors are considered in the assessment of the fair value of any investment: •

where the investment was made recently, its cost will generally provide the basis of fair value.

The length of period for which it remains appropriate to use the price of a recent investment depends on the specific circumstances of the investment and the stability of the external environment;

•

the price of any recent third party investment; and

•

where the equity structure of a portfolio company involves different class rights in a sale or liquidity event, the Group takes these rights into account when forming a view of the value of its investment.

At each measurement date, or if the Group considers that there is a reason to believe that the fair value might have changed between measurement dates, an assessment is made of the required adjustment to the fair value estimate of the investment. Wherever possible, the adjustment is based on objective data from the company in which the investment was made.

When applying the milestone analysis approach to investments in companies in early or development stages, the Group seeks to determine whether there is an indication of change in fair value based on a consideration of

STRATEGIC REPORT

performance against any milestones that were set at the time of the investment, as well as taking into consideration key market drivers for the investee company and the overall economic environment.

Where deterioration in value is assessed to have occurred, the Group reduces the carrying value of the investment to reflect the estimated decrease. In these circumstances, the fair value of the investment is reduced by 25%, 50%, 75% or 100%, as judged appropriate by the Group.

If there is evidence of positive developments and value creation unrelated to recent investments, the Group may increase the fair value estimate of the investment. However, it is often difficult to determine the specific value attributable to those positive developments and the costs and risks associated with realising that value.

Factors which the Group considers in its assessment of the fair value of an investment include, inter alia: technical measures such as product development phases and patent approvals; financial measures such as changes in the rate of cash consumption; changes in profitability expectations; and market and sales measures such as product development phases, market launches and geographic expansions.

TRADE AND OTHER RECEIVABLES

Trade and other receivables are classified as loans and receivables and are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less provision for impairment. Any change in their value through impairment or reversal of impairment is recognised in the consolidated statement of comprehensive income.

SHORT-TERM DEPOSITS

Short-term deposits represent bank deposits with an original maturity of over three months.

CASH AND CASH EQUIVALENTS

Cash and cash equivalents includes cash in hand, deposits held at call with banks, and other short-term highly liquid investments with original maturities of three months or less.

FINANCIAL STATEMENTS

FINANCIAL LIABILITIES

Financial liabilities are obligations to pay cash or other financial assets and are recognised when the Group becomes a party to the contractual provisions of the instrument. Financial liabilities, unless required to be categorised as at fair value through profit or loss, are recorded initially at fair value and subsequently at amortised cost using the effective interest method, with interest-related charges recognised as an expense in finance cost in the consolidated statement of comprehensive income.

A financial liability is derecognised only when the obligation is extinguished.

SHARE BASED PAYMENTS

The Group operates a share based payment compensation plan, under which the entity receives services from employees as consideration for equity instruments (options) of the Company.

Given that it is the Directors’ intention that such options will be settled in the form of cash, the options are accounted for as cash-settled. Such options are measured at fair value at the balance sheet date. The Group recognises a liability at the balance sheet date based on these fair values, taking into account the estimated number of options that will actually vest and the current proportion of the vesting period. Changes in the value of this liability are recognised in the consolidated statement of comprehensive income. The social security contributions payable in connection with the grant of options is considered an integral part of the grant itself, and the charge is treated as a cash-settled transaction. The fair value of cash-settled transactions is measured at each balance sheet date and is recognised as an expense over the vesting period.

PENSION COSTS

The Group makes payments for each employee to a defined contribution scheme or a scheme of their choice.

The assets of the defined contribution scheme are held separately from the Group in independently administered funds. Contributions made by the Group are charged to the consolidated statement of comprehensive income in the period to which they relate.

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GOVERNANCE

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CAMBRIDGE INNOVATION CAPITAL

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2020 MANAGEMENT INCENTIVE PLAN

The Group operates a management incentive plan for all employees.

Before any payment to a participant becomes due, the Group must first have returned the aggregate capital raised from shareholders, together with a compounded hurdle rate of 8% per annum. At the point at which the hurdle rate has been exceeded, a provision is included for the unrealised gain due to participants. The provision is measured by reference to net assets, with movements in the provision charged/credited to the consolidated statement of comprehensive income within administrative expenses.

TAXATION

Taxation expense comprises current and deferred tax recognised in the reporting period. Tax is recognised in the profit and loss account, except to the extent that it relates to items recognised in other comprehensive income or directly in equity. In this case tax is also recognised in other comprehensive income or directly in equity respectively.

Current or deferred taxation assets and liabilities are not discounted.

CURRENT TAX Current tax is the amount of income tax payable in respect of the taxable profit for the period or prior periods.

Tax is calculated on the basis of tax rates and laws that have been enacted or substantively enacted by the period end.

DEFERRED TAX Deferred income tax is recognised on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the consolidated financial statements.

However, deferred tax liabilities are not recognised if they arise from the initial recognition of goodwill; deferred income tax is not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination

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that at the time of the transaction affects neither accounting nor taxable profit or loss. Deferred income tax is determined using tax rates (and laws) that have been enacted or substantively enacted by the balance sheet date and are expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled.

Deferred income tax assets are recognised only to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilised.

Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities and when the deferred income tax assets and liabilities relate to income taxes levied by the same taxation authority on either the same taxable entity or different taxable entities where there is an intention to settle the balances on a net basis.

4. CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS

In determining and applying accounting policies, judgement is often required in respect of items where the choice of specific policy, accounting estimate or assumption to be followed could materially affect the reported results or the net asset position of the Group. Management considers that certain accounting estimates and assumptions relating to the valuation of investments are critical accounting estimates. The treatment of equity investments has been detailed above.

5. SEGMENTAL REPORTING

The Group’s property, plant and equipment (note 11) and investments (notes 12 and 13) are held in the UK and Jersey, respectively. The Group’s short-term deposits and cash and cash equivalents are held in Jersey except for £3,161,445 (2019: £22,749,436) which is held in the UK.

EQUITY

Equity comprises the following: •

share capital represents the nominal value of equity shares;

•

share premium represents the excess over nominal value of the fair value of consideration received for equity;

•

share based payment reserve represents equity-settled share based remuneration until such instruments are exercised;

•

capital reserve represents fair value gains and losses on investments which are initially recorded through the statement of comprehensive income but are transferred to the capital reserve to track the cumulative gains and losses; and

•

retained earnings represents retained profits less accumulated losses.

ANNUAL REPORT AND ACCOUNTS FOR THE YEAR ENDED 31 MARCH 2020

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OVERVIEW

STRATEGIC REPORT

GOVERNANCE

6. OPERATING PROFIT

FINANCIAL STATEMENTS

2020 £

2019 £

Operating profit is stated after charging/(crediting) Depreciation Other operating income

22,895

43,208

(162,489)

(41,373)

35,000

21,515

Services provided by the Group’s auditors Fees payable to the Group’s auditors and their associates for the audit of the Company and the consolidated financial information Fees payable to the Group’s auditors for other services Tax compliance services Other assurance services Other services

7,500

10,510

–

10,000

–

5,000

42,500

47,025

7. EMPLOYEES AND DIRECTORS

The average monthly number of persons (including Executive Directors but excluding Non-executive Directors) employed by the Group during the year was: 2020 NUMBER

2019 NUMBER

Investment staff

6

6

Support staff

5

3

11

9

2020 £

2019 £

By primary activity

Employee benefit expenses for the above persons 1,882,874

1,468,770

Social security costs

282,419

187,458

Other pension costs

164,582

183,502

54,596

126,697

Wages and salaries

Share based payments (note 8) Cash-settled share based payment expense (note 8)

294,355

–

2,678,826

1,966,427

862,466

661,204

51,012

63,292

Key management, being Executive and Non-executive Directors, compensation Emoluments Other pension costs Employer’s National Insurance Share based payments Cash-settled share based payment expense

110,227

81,827

18,482

46,407

54,831

–

1,097,018

852,730

287,698

272,348

Emoluments of the highest paid Director Emoluments Other pension costs

24,645

35,772

312,343

308,120

Two Directors, including the highest paid Director, exercised options during the year ended 31 March 2020 (2019: no Directors exercised options).

At 31 March 2020 there were two Directors (2019: two) who were members of a defined contribution pension scheme to which the Company contributed.

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CAMBRIDGE INNOVATION CAPITAL

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2020

8. SHARE BASED PAYMENTS OPTIONS OVER SHARES HELD BY THE EMPLOYEE BENEFIT TRUST

Certain employees have been granted call options over ordinary shares of the Company held by the Cambridge Innovation Capital plc Employee Benefit Trust. The terms provide that shares may be acquired at a fixed price in tranches commencing one year from the date of employment and expiring on the earlier of six months after an Initial Public Offering and ten years from the date of the award. If an employee leaves, there is no impact on vested tranches but unvested tranches expire on the leaving date.

Movements in the number of options outstanding and their related weighted average exercise prices are as follows: AT 31 MARCH 2019

GRANTED DURING THE YEAR

EXERCISED DURING THE YEAR

LAPSED DURING THE YEAR

AT 31 MARCH 2020

Number

2,842,188

–

–

2,754,501

Exercisable

2,842,188

n/a

n/a

n/a

2,754,501

0.1711

n/a

0.1711

n/a

0.1711

4.7496

n/a

n/a

n/a

3.7309

4,863

n/a

(150)

n/a

4,713

Exercise price for all options (pence) Weighted average remaining contractual life (years) Proceeds receivable on exercise (£)

(87,687)

The fair value of the options over shares held by the Employee Benefit Trust has been calculated based on the fair value of the shares at the date of grant less the nominal exercise price. During the year a charge of £nil (2019: £nil) has been recorded in relation to options over shares held by the Employee Benefit Trust.

OPTIONS OVER SHARES ISSUED IN ACCORDANCE WITH THE COMPANY’S INCENTIVE SCHEMES

Certain employees have been granted options over ordinary shares of the Company in accordance with the Company’s incentive schemes. The options granted to date provide that shares may be acquired at a fixed price in tranches commencing two years, and expiring after five years, from the date of the award. If an employee leaves and is considered a good leaver, vested tranches expire one year after leaving and unvested tranches expire one year after the future vesting date. If an employee leaves and is considered a bad leaver, vested and unvested tranches lapse on the leaving date.

Movements in the number of options outstanding and their related weighted average exercise prices are as follows: GRANTED DURING THE YEAR

706,314

198,848

–

n/a

n/a

n/a

865

Exercise price for all options (pence)

0.0100

0.0100

0.0100

0.0100

0.0100

Weighted average remaining contractual life (years)

4.0613

n/a

n/a

n/a

3.4426

71

20

Number Exercisable

Proceeds receivable on exercise (£)

EXERCISED DURING THE YEAR

(84,082)

(8)

LAPSED DURING THE YEAR

AT 31 MARCH 2020

AT 31 MARCH 2019

(33,803)

(3)

787,277

79

During the year it was determined that options over shares issued in accordance with the Company’s incentive shemes would be cash, rather than equity, settled based on the net assets per share most recently approved by the Board. As a result the aggregate share based payment charge of £206,587, including the charge in the year to date of £54,596 (2019: £126,697), was transferred from equity to liabilities in the Statement of Financial Position.

The liability for cash-settled options is based on the net assets per share most recently approved by the Board, assumes an annual leavers rate of 10% and is prorated for the extent to which each option has vested. At 31 March 2020 the aggregate liability, including employer’s National Insurance contributions, for these options was £474,462 (2019: £nil) and during the year a charge of £387,745 (2019: £nil) has been recorded.

Previously the fair value of the options over ordinary shares issued in accordance with the Company’s incentive schemes has been calculated using the Black–Scholes valuation model. The fair value of options granted during the prior year was £0.8612 and the inputs into the model for those awards were as follows: 2019

Share price at date of grant

£0.8613

Expected volatility

100%

Expected life

4 years

Expected dividend yield

0%

Risk free rate

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1%

ANNUAL REPORT AND ACCOUNTS FOR THE YEAR ENDED 31 MARCH 2020

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OVERVIEW

STRATEGIC REPORT

GOVERNANCE

9. FINANCE INCOME Bank and other interest

FINANCIAL STATEMENTS

2020 £

2019 £

386,700

462,201

10. TAX ON PROFIT ON ORDINARY ACTIVITIES

The relationship between the expected tax expense based on the standard corporation tax rate of the Company and the tax expense actually recognised in the income statement is reconciled as follows:

Profit on ordinary activities before taxation

2020 £

2019 £

53,015,973

27,864,076

19%

19%

Expected tax expense

10,073,035

5,294,174

Income not subject to tax (fair value changes)

(13,211,342)

(5,834,893)

Standard corporation tax rate

3,084,785

Expenses not tax deductible

529,124

50,653

Tax loss carried forward not recognised

–

Utilisation of tax losses not previously recognised Tax on profit on ordinary activities

(2,869)

– (4,539) (16,134)

The standard rate of UK Corporation Tax is currently 19% and is expected to remain at 19% for the foreseeable future. As a result, deferred tax has been calculated at 19% (2019: 17%) in these financial statements (see note 16).

11. PROPERTY, PLANT AND EQUIPMENT

FURNITURE AND EQUIPMENT £

COMPUTER EQUIPMENT £

TOTAL £

60,840

56,169

50,642

167,651

–

–

1,263

1,263

60,840

56,169

51,905

168,914

Additions

–

3,002

Disposals

–

(1,792)

LEASEHOLD IMPROVEMENTS £

Cost At 1 April 2018 Additions At 31 March 2019

At 31 March 2020

12,161 (12,006)

15,163 (13,798)

60,840

57,379

52,060

170,279

20,936

33,401

34,275

88,612

12,168

18,126

12,914

43,208

33,104

51,527

47,189

131,820

12,168

5,144

5,583

22,895

(1,792)

(11,861)

(13,653) 141,062

Accumulated depreciation At 1 April 2018 Provided in the year At 31 March 2019 Provided in the year Disposals At 31 March 2020

– 45,272

54,879

40,911

At 31 March 2020

15,568

2,500

11,149

29,217

At 31 March 2019

27,736

4,642

4,716

37,094

Net book amount

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CAMBRIDGE INNOVATION CAPITAL

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2020

12. INVESTMENTS HELD AT FAIR VALUE

PORTFOLIO COMPANIES £

FUND INVESTMENTS £

TOTAL £

110,708,908

At 1 April 2018

110,708,908

–

Investments

44,874,466

–

44,874,466

Fair value changes in investments

30,709,963

–

30,709,963

At 31 March 2019

186,293,337

–

186,293,337

Investments

35,753,770

568,966

36,322,736

Fair value changes in investments

69,533,378

–

69,533,378

Realisations

(31,856)

At 31 March 2020

291,548,629

– 568,966

(31,856) 292,117,595

The Directors have determined that the Company meets the definition of an investment entity as set out in IFRS 10, “Consolidated Financial Statements” and, therefore, investments that are held as part of the Group’s investment portfolio are carried in the consolidated statement of financial position at fair value even though the Group may have significant influence over these companies.

At 31 March 2020 the Group held investments in the following entities: PORTFOLIO COMPANIES

Abcodia Limited Audio Analytic Limited AudioTelligence Limited Bicycle Therapeutics plc Carrick Therapeutics Limited CMR Surgical Limited Congenica Limited Cytora Limited Exvastat Limited Fluidic Analytics Limited Geospock Limited Gyroscope Therapeutics Limited Imagen Limited Immutrin Limited Inivata Limited Jukedeck Limited Microbiotica Limited Morphogen-IX Limited Origami Energy Limited PervasID Limited Polyprox Limited PragmatIC Printing Limited Predictimmune Limited Prowler.io Limited River Lane Research Limited Sense Biodetection Limited Storm Therapeutics Limited Swim.ai Incorporated Undo Limited Z Factor Limited

PRIMARY INSTRUMENT

% HELD

Convertible loan Series A Preferred shares A Preferred shares Ordinary shares Preferred shares Preferred shares A Ordinary shares B Preferred shares Series A shares Series A shares Series A1 Preferred shares Series B Preferred shares Series A shares Seed shares Series B Preference shares A Ordinary shares Seed shares Series B shares A Ordinary shares Ordinary shares Ordinary shares A Ordinary shares A Ordinary shares Series A Preferred shares Ordinary Preferred shares B Preferred shares A Preferred shares Series B Preferred stock B Preferred shares Series A shares

19.6% 18.6% 31.4% 9.7% 8.2% 8.8% 25.5% 4.4% 50.7% 1.2% 25.3% 2.8% 42.6% 20.8% 24.1% 34.6% 27.7% 15.9% 14.9% 12.4% 16.5% 32.6% 4.1% 12.5% 27.6% 15.4% 17.5% 13.9% 24.3% 1.8%

PRIMARY INSTRUMENT

% HELD

Loan Capital

26.7% 3.1%

FUND INVESTMENTS

Start Codon Fund 1 Limited Partnership Start Codon Carry Limited Partnership

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ANNUAL REPORT AND ACCOUNTS FOR THE YEAR ENDED 31 MARCH 2020

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OVERVIEW

STRATEGIC REPORT

GOVERNANCE

FINANCIAL STATEMENTS

All of the Group’s investments are in unquoted entities, other than Bicycle Therapeutics plc which is listed on Nasdaq. All of the entities are incorporated in England and Wales with the exception of Carrick Therapeutics Limited, which is registered in Ireland, Swim.ai Incorporated, which is registered in Delaware in the United States and Start Codon Carry Limited Partnership, which is registered in Scotland.

During the year Jukedeck Limited entered into liquidation. Immediately prior to appointing administrators the Group realised £31,856 from Jukedeck Limited, £11,959 of which is held in escrow pending completion of the liquidation process.

At 31 March 2020 the Group had committed, subject to certain milestone provisions contained in the relevant legal documentation, to make further investments of £5.9 million and $1.8 million (2019: £3.7 million and $3.5 million) in portfolio companies and £2.4 million (2019: £nil) as fund investments. As these relate to future investments they have not been included in the financial statements.

Please also see the post balance sheet events disclosed in note 21.

13. INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD Details of the Group’s interests in associated undertakings are as follows: ENTITY

PRINCIPAL ACTIVITY

REGISTERED ADDRESS

2020

2019

Start Codon Limited

Life science accelerator

Cambridge Biomedical Innovation Hub, Clifford Allbutt Building, Hills Road, Cambridge, England, CB2 0AH

26.6%

–

Accelerator Advisor Limited

Technology accelerator

c/o Mills & Reeve LLP, Botanic House, 100 Hills Road, Cambridge, CB2 1PH

27.9%

–

2020 £

2019 £

Summarised financial information is respect of the associated undertakings is set out below: SUMMARISED STATEMENT OF FINANCIAL POSITION (100%)

Non-current assets Cash and cash equivalents

4,063

–

1,193,613

–

117,335

–

(157,000)

–

Net assets

1,158,011

–

Group’s share of net assets

369,332

–

Other current assets Other current liabilities

SUMMARISED STATEMENT OF COMPREHENSIVE INCOME (100%)

(491,989)

Operating loss

–

Taxation

– –

Loss and total comprehensive expense for the period

(491,989)

–

Group's share of loss for the period

(130,667)

–

The following table reconciles the summary information above to the carrying amount of the Group’s interests in associated undertakings 2020 £

2019 £

–

–

Investments

499,999

–

Loss from continuing operations

(130,667)

–

369,332

–

At 1 April

At 31 March

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CAMBRIDGE INNOVATION CAPITAL

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2020

14. TRADE AND OTHER RECEIVABLES

2020 £

2019 £

Prepayments and accrued income

282,347

416,716

Other receivables

541,889

16,306

824,236

433,022

All amounts are short-term. The carrying values of receivables are considered reasonable approximations to fair value. All of the receivables have been reviewed for indicators of impairment.

15. TRADE AND OTHER PAYABLES

2020 £

2019 £

Trade payables

89,381

85,058

Social security and other taxes

82,295

58,073

14,115,723

3,819,007

Accruals and deferred income

–

8,174,778

14,287,399

12,136,916

Other payables

All trade and other payables are unsecured, interest free and payable on demand. The carrying values of trade and other payables are all in pounds sterling and are considered reasonable approximations to fair value. Other payables relates to a subscription received in advance of notice for drawdown being given that was returned to the shareholder concerned immediately following the year end.

16. DEFERRED TAX

There were no deferred tax assets or liabilities recognised by the Group during the year reported on. A deferred tax asset would be recognised only when sufficient taxable profits are expected to be generated to relieve the trading losses.

2020 £

2019 £

304,000

280,500

Deferred tax amounts not provided for are as follows Trade losses unrelieved Other timing differences

2,332,467

–

2,636,467

280,500

The Company may also benefit from a tax deduction when the outstanding call options over ordinary shares of the Company are exercised. Such a benefit would create an additional tax deductible expense.

17. EQUITY

2020 £

2019 £

Allotted, called up and fully paid –

–

25,880

21,078

1 (2019: 1) special share of £0.0001 258,799,586 (2019: 210,775,782) ordinary shares of £0.0001 each 77,879,446 (2019: 125,903,250) class A commitment shares of £0.00005 each 499,926,562,500 (2019: 499,926,562,500) deferred shares of £0.0001 each

3,894

6,295

49,992,656

49,992,656

50,022,430

50,020,029

On 24 April 2018 the Company issued one special share to the University of Cambridge. The special share: •

entitles the University of Cambridge to be issued ordinary shares for no consideration if, on the issue of ordinary or class A commitment shares to third parties, its founding shareholding falls below 5% of the then in issue ordinary and class A commitment shares;

•

carries no right to participate in the income of the Company;

•

carries no right to receive notice of, or to attend, speak or vote at, any general meeting of the Company;

•

entitles the holder to the nominal value of the special share on a return of assets on liquidation or capital reduction or otherwise; and

•

is not transferable.

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OVERVIEW

STRATEGIC REPORT

GOVERNANCE

FINANCIAL STATEMENTS

During the year ended 31 March 2019: •

the Company secured £150 million of commitments; and

•

in relation to this commitment, the Company issued 43,588,282 ordinary shares at a subscription price of £0.885 each and 125,903,250 class A commitment shares at a subscription price of £0.00005 pence each.

During the year ended 31 March 2020 the Company issued 48,023,804 (2019: nil) class B commitment shares at a subscription price of £0.88495 each that immediately paired up with the same amount of class A commitment shares, with each pair of class A and class B commitment shares converting into one new ordinary share.

The ordinary and class A commitment shares carry equal voting rights, equal rights to income and distributions of assets on liquidation, or otherwise, and no right to fixed income.

The deferred shares: •

carry no right to participate in the income of the Company;

•

carry no right to receive notice of, or to attend, speak or vote at, any general meeting of the Company;

•

entitle the holders of the deferred shares to £1.00 for the entire class of shares on a return of assets on liquidation or capital reduction or otherwise;

•

are not transferable; and

•

may be purchased by the Company at any time, at its option, for a total of £1.00 for the entire class of deferred shares.

At 31 March 2020 the Cambridge Innovation Capital plc Employee Benefit Trust held 2,754,501 (2019: 2,842,188) ordinary and 12,495,820,312 (2019: 12,495,820,312) deferred shares of £0.0001 each.

18. RELATED PARTY TRANSACTIONS

The Group discloses transactions with related parties which are not wholly owned within the same Group.

Convertible loans to portfolio companies are expected to convert to equity and typically have the potential to be long-term in nature. As a result, they are included within non-current investments (see note 12). Where the Group has a representative on the board of a portfolio company, this is considered a related party and the aggregate balance is shown below:

Loans at 1 April

2020 £

2019 £

3,061,466

2,842,000

247,972

Loans advanced

(1,904,105)

Loans converted or exchanged for equity

–

Loans impaired Loans at 31 March

1,405,333

3,972,296 (2,016,700) (1,736,130) 3,061,466

Income from related parties primarily relates to investment related fees and interest on convertible loans as set out below: INCOME DURING THE YEAR ENDED 31 MARCH

Associates, portfolio companies and fund investments

AMOUNTS DUE FROM AT 31 MARCH

2020 £

2019 £

2020 £

2019 £

393,766

383,760

402,102

303,590

Purchases from related parties primarily relate to the Group’s office and the provision of other services as set out below: PURCHASES DURING THE YEAR ENDED 31 MARCH

University of Cambridge and its subsidiaries

2020 £

2019 £

2020 £

2019 £

49,845

67,986

100

1,284

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AMOUNTS DUE TO AT 31 MARCH

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CAMBRIDGE INNOVATION CAPITAL

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2020

19. FINANCIAL INSTRUMENTS

The Group is entirely equity funded and uses certain financial instruments including cash, trade and other receivables, trade and other payables and equity interests in, and loans to, investments held by the Group. The carrying amounts of assets and liabilities may be categorised as follows: 2020 £

2019 £

292,117,595

186,293,337

Financial assets at fair value through profit or loss Investments Financial assets at amortised cost Trade and other receivables Cash and cash equivalents

479,055

5,705

22,683,388

31,756,200

23,162,443

31,761,905

14,202,104

3,901,065

Financial liabilities at amortised cost Trade and other payables

RISK MANAGEMENT OBJECTIVES

The main risks associated with the Group’s financial instruments relate to market (price and interest rate risk), liquidity and credit risk. The Group does not have any committed borrowing facilities and it is the Group’s policy not to trade in derivative instruments, or to enter into hedging transactions.

The Group’s main objective in using financial instruments is to invest in intellectual property rich companies based in and around Cambridge and/or with a connection to the University of Cambridge from funds raised specifically for this purpose.

Within the context of this objective, the Group seeks to maximise returns from funds held on deposit while maintaining liquidity and credit risk at acceptable levels Balance sheets at 31 March 2020 and 2019 are not necessarily representative of the positions throughout the year, as investments, short-term deposits and cash and cash equivalents vary considerably depending on when equity raisings, investments and placing amounts on short-term deposits have actually occurred.

MARKET (PRICE) RISK

Investments are held for strategic rather than trading purposes and therefore are not actively traded by the Group. The Group is exposed to price risk in respect of equity interests in, and loans to, investments held by the Group and classified on the balance sheet at fair value through profit or loss. The Group seeks to manage this risk by routinely monitoring and reporting to the Board the status, performance and valuation of these investments. Proposed investments are subject to a detailed analysis and approval process and significant investments and disposals require Board approval.

Post tax profit for the year may increase or decrease as a result of fair value gains/losses on investments classified at fair value through profit or loss and are allocated to the capital reserve.

MARKET (INTEREST RATE) RISK

The Group has no liabilities that are exposed to interest rate risk.

The Group receives interest from short-term deposits and cash and cash equivalents, all of which is held in sterling, and the level of this interest is dependent upon the prevailing interest rates. The Group seeks to maximise the receipt of interest subject to acceptable levels of credit and liquidity risk. The interest rate risk profile of the Group’s financial assets was as follows:

Floating rate Fixed rate

2020 £

2019 £

22,683,388

31,756,200

–

–

22,683,388

31,756,200

0.00% to 1.50%

0.00% to 1.50%

Fixed rate interest

n/a

0.50% to 0.60%

Fixed rate period

n/a

32 days

Floating rate interest

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OVERVIEW

STRATEGIC REPORT

GOVERNANCE

FINANCIAL STATEMENTS

The following table illustrates the sensitivity of the profit/(loss) for the year and total equity to a reasonably possible change in interest rates to +2% and 0% for all years with effect from the beginning of each year. The changes are considered to be reasonably possible based on observation of current market conditions. The calculations are based on the Group’s financial assets held during the year. All other variables are held constant.

2020 +2% £

2020 0% £

2019 +2% £

2019 0% £

Result for the year

545,887

(386,700)

654,414

(462,201)

Equity

545,887

(386,700)

654,414

(462,201)

LIQUIDITY RISK

Liquidity risk is the risk that the Group may not be able to meet its financial obligations. The Group seeks to manage financial risk by ensuring sufficient liquidity is available to meet forecast cash flows. Net cash requirements are compared to available cash and updated on a monthly basis.

CREDIT RISK

In order to minimise the risk of loss, short-term deposits and cash and cash equivalents are only held with European authorised financial institutions of good credit rating, being those at or above the credit rating of the main UK clearing banks. The credit rating profile, as per Standard & Poor’s rating services, of the Group’s financial assets was as follows:

AAA+ A A-

2020 £

2019 £

26,646

48,921

214

213

22,656,528

179,141

–

31,527,925

22,683,388

31,756,200

FOREIGN EXCHANGE RISK

The Group occasionally enters into transactions in currencies other than sterling. At 31 March 2020 the Group had committed, subject to certain milestone provisions contained in the relevant investment agreements, to make further investments of $1.8 million (2019: $3.5 million). The Group has not hedged this commitment because of its policy not to enter into hedging transactions.

CAPITAL RISK MANAGEMENT

The capital structure of the Group is limited to its equity comprising share capital, reserves and retained losses. The Group manages its capital to ensure that entities within the Group will be able to continue as going concerns while maximising the return to shareholders through the optimisation of any equity balance. The Group’s overall strategy remains unchanged for the years under review.

FAIR VALUES

The fair values of the Group’s financial assets and liabilities are considered a reasonable approximation to the carrying values shown in the statement of financial position. The basis for determining fair values is described in note 3.

ESTIMATION OF FAIR VALUES LEVEL 1 £

LEVEL 3 £

TOTAL £

110,708,908

At 1 April 2018

–

110,708,908

Investments

–

44,874,466

44,874,466

Fair value changes in investments

–

30,709,963

30,709,963

At 31 March 2019

–

186,293,337

186,293,337

Transfers between classications

14,272,101

Investments

3,473,378

32,280,392

35,753,770

Fair value changes in investments

3,427,988

66,105,390

69,533,378

Realisations

–

At 31 March 2020

21,173,467

(14,272,101)

(31,856) 270,375,162

–

(31,856) 291,548,629

The Group’s investment in Bicycle Therapeutics plc, which is listed on Nasdaq, is classified as Level 1. All of the Group’s other investments are in unquoted companies. If one or more of the significant inputs to the fair value is not based on observable market data, the instrument is included as Level 3. As a result, the Group classifies all its unquoted investments as Level 3 and these investments are held at fair value in accordance with the investments policy in note 3.

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CAMBRIDGE INNOVATION CAPITAL

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2020

The Audit and Risk Management Committee and Board review the investment valuation process, and resultant fair values, at least twice a year in line with the Group’s reporting dates. The valuation of investments is prepared by the investment team, and reviewed by the Executive Directors, before being submitted to the Audit Committee and Board for approval. The fair value profile of investments is summarised as follows: 2020 £

2019 £

Price of recent investment Adjusted for milestones or impairments Investment completed within one year

1,705,333

1,705,333

176,476,154

161,438,161

Investment completed between one and two years

83,117,425

17,927,144

Investment completed more than two years ago

9,076,250

5,222,698

270,375,162

186,293,336

Listed investments

21,173,467

–

291,548,629

186,293,336

If the fair value of the Group’s investments varied by +/-10%, the profit for the year would change by +/- £29,154,863 (2019: +/- £18,629,334).

20. LEASE COMMITMENTS

The future aggregate minimum lease payments under non-cancellable leases are as follows:

Within one year Later than one year but not later than five years

2020 £

2019 £

1,600

1,600

401

2,001

2,001

3,601

Lease payments primarily relate to amounts payable for the Group’s office. The lease term is five years from 1 July 2016 but the Group has been able to terminate the lease at any time since 1 July 2018.

21. POST BALANCE SHEET EVENTS

Following the year end the Group invested £2.3 million in a new portfolio company.

Following the year end the Company drew down £20 million from shareholders via the issue of 22,596,145 class B commitment shares that immediately paired up with the same amount of class A commitment shares with each pair of class A and class B commitment shares converting into one new ordinary share.

22. CONTROLLING PARTY

There is no ultimate controlling party.

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OVERVIEW

STRATEGIC REPORT

GOVERNANCE

FINANCIAL STATEMENTS

COMPANY BALANCE SHEET AT 31 MARCH 2020

NOTE

2020 £

2019 £

Fixed assets Tangible assets

G

29,217

37,094

Investments

H

196,068,965

145,000,000

196,098,182

145,037,094

Current assets 598,869

118,136

3,161,445

22,749,436

3,760,314

22,867,572

(14,221,820)

(12,070,671)

Net current (liabilities)/assets

(10,461,506)

10,796,901

Total assets less current liabilities

185,636,676

155,833,995

Net assets

185,636,676

155,833,995

50,022,430

50,020,029

76,951,727

34,461,609

3,343,750

3,495,741

67,856,616

68,046,774

Debtors

I

Cash at bank and in hand

Creditors: amounts falling due within one year

J

Capital and reserves Called up share capital

L

Share premium account Share based payment reserve

M

Retained profit

(12,537,847)

Loss for the year Total shareholders' funds

185,636,676

(190,158) 155,833,995

The notes on pages 73 to 78 are an integral part of these financial statements.

The financial statements on pages 71 to 78 of Cambridge Innovation Capital plc, registered number 08243718, were authorised for issue by the Board of Directors on 16 June 2020 and were signed on its behalf by ROB SPRAWSON DIRECTOR AND CFO

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CAMBRIDGE INNOVATION CAPITAL

COMPANY STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 31 MARCH 2020

NOTE

At 1 April 2018 Loss for the year and total comprehensive expense

CALLED UP SHARE CAPITAL £

SHARE PREMIUM ACCOUNT £

SHARE BASED PAYMENT RESERVE £

RETAINED PROFIT £

TOTAL SHAREHOLDERS' FUNDS £

50,009,375

57,200

3,369,044

68,046,774

121,482,393

–

–

–

10,654

34,404,409

–

–

–

–

126,697

–

126,697

50,020,029

34,461,609

3,495,741

67,856,616

155,833,995

–

–

–

2,401

42,490,118

–

–

42,492,519

–

–

54,596

–

54,596

55,318,769

185,636,676

(190,158)

(190,158)

Transactions with owners Share capital issued (net of expenses) Share based payments

M

At 31 March 2019 Loss for the year and total comprehensive expense

(12,537,847)

34,415,063

(12,537,847)

Transactions with owners Share capital issued (net of expenses) Share based payments Transfer to liabilities of cash-settled share based payments At 31 March 2020

M

–

–

50,022,430

76,951,727

(206,587) 3,343,750

(206,587)

The notes on pages 73 to 78 are an integral part of these financial statements.

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OVERVIEW

STRATEGIC REPORT

GOVERNANCE

FINANCIAL STATEMENTS

NOTES TO THE COMPANY FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2020

A. GENERAL INFORMATION

Cambridge Innovation Capital plc (the “Company”) is incorporated in England and Wales and is domiciled in the UK, the address of its registered office being Hauser Forum, 3 Charles Babbage Road, Cambridge, CB3 0GT.

B. STATEMENT OF COMPLIANCE

The Company meets the definition of a qualifying entity under Financial Reporting Standard (“FRS”) 100 issued by the Financial Reporting Council (“FRC”). The financial statements have therefore been prepared in compliance with UK Accounting Standards including FRS 102, “The Financial Reporting Standard Applicable in the UK and Republic of Ireland” and the Companies Act 2006.

C. SIGNIFICANT ACCOUNTING POLICIES BASIS OF PREPARATION

These financial statements are prepared on a going concern basis, under the historical cost convention, as modified by the revaluation of certain assets and liabilities measured at fair value through profit or loss.

The principal accounting policies adopted in the preparation of these financial statements have been consistently applied to all the years presented, unless otherwise stated.

TANGIBLE FIXED ASSETS

Tangible fixed assets are stated at cost (or deemed cost) less accumulated depreciation and accumulated impairment losses. Cost includes the original purchase price and costs directly attributable to bringing the asset to its working condition for its intended use.

Depreciation on assets is calculated, using the straight-line method, to allocate the cost to their residual values over their estimated useful lives, as follows: •

leasehold improvements, five years;

•

furniture and equipment, three years; and

•

computer equipment, three years.

INVESTMENTS

Investments in subsidiary companies and associate undertakings are held at cost less any accumulated impairment losses. An impairment review is performed to assess the carrying value of those investments with no investment in the year at each reporting date.

FINANCIAL INSTRUMENTS

The Company does not have any financial instruments other than equity investments, cash, debtors and creditors. Cash, debtors and creditors are all measured at cost on the date the transaction was entered into and financial assets are subsequently reviewed for possible impairment.

SHORT-TERM DEPOSITS

Short-term deposits represent bank deposits with an original maturity of over three months.

CASH AT BANK AND IN HAND

Cash and cash equivalents includes cash in hand, deposits held at call with banks, and other short-term highly liquid investments with original maturities of three months or less.

SHARE BASED PAYMENTS

The Company operates a share based payment compensation plan, under which the entity receives services from employees as consideration for equity instruments (options) of the Company.

Given that it is the Directors’ intention that such options will be settled in the form of cash, the options are accounted for as cash-settled. Such options are measured at fair value at the balance sheet date. The Company recognises a liability at the balance sheet date based on these fair values, taking into account the estimated number of options that will actually vest and the current proportion of the vesting period. Changes in the value of this liability are recognised in the consolidated statement of comprehensive income. The social security contributions payable in connection with the grant of options is considered an integral part of the grant itself, and the charge is treated as a cash-settled transaction. The fair value of cash-settled transactions is measured at each balance sheet date and is recognised as an expense over the vesting period.

The Company makes payments for each employee to a defined contribution scheme or a scheme of their choice. The assets of the defined contribution scheme are held separately from the Company in independently administered funds.

Contributions made by the Company are charged to the profit and loss in the period to which they relate.

MANAGEMENT INCENTIVE PLAN

The Company operates a management incentive plan for all employees. Before any payment to a participant becomes due, the Company must first have returned the aggregate capital raised from shareholders, together with a compounded hurdle rate of 8% per annum. At the point at which the hurdle rate has been exceeded, a provision is included for the unrealised gain due to participants. The provision is measured by reference to net assets, with movements in the provision charged/credited to the profit and loss.

OPERATING LEASES

Operating lease payments are expensed in the profit and loss on a straight-line basis over the period of the lease.

TAXATION

Taxation expense comprises current and deferred tax recognised in the reporting period. Tax is recognised in the profit and loss account, except to the extent that it relates to items recognised in other comprehensive income or directly in equity. In this case tax is also recognised in other comprehensive income or directly in equity respectively.

Current or deferred taxation assets and liabilities are not discounted.

CURRENT TAX Current tax is the amount of income tax payable in respect of the taxable profit for the period or prior periods.

Tax is calculated on the basis of tax rates and laws that have been enacted or substantively enacted by the period end.

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PENSION COSTS

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CAMBRIDGE INNOVATION CAPITAL

NOTES TO THE COMPANY FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2020 DEFERRED TAX Deferred tax arises from timing differences that are differences between taxable profits and total comprehensive income as stated in the financial statements. These timing differences arise from the inclusion of income and expenses in tax assessments in periods different from those in which they are recognised in the financial statements.

Deferred tax is recognised on all timing differences at the reporting date except for certain exceptions.

Unrelieved tax losses and other deferred tax assets are only recognised when it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits.

Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities and when the deferred income tax assets and liabilities relate to income taxes levied by the same taxation authority on either the same taxable entity or different taxable entities where there is an intention to settle the balances on a net basis.

CAPITAL AND RESERVES

•

called up share capital represents the nominal value of equity shares;

•

share premium represents the excess over nominal value of the fair value of consideration received for equity;

•

share based payment reserve represents equity-settled share based remuneration until such instruments are exercised; and

where the choice of specific policy, accounting estimate or assumption to be followed could materially affect the reported results or the net asset position of the Company. Management considers that certain accounting estimates and assumptions relating to the carrying value of investments in subsidiaries and associate undertakings are critical accounting estimates. The treatment of investments in subsidiary companies and associated undertakings has been detailed above.

•

retained profit/(accumulated losses) represents retained profits/ (accumulated losses).

E. RESULTS OF THE COMPANY

Capital and reserves comprises the following:

The Company has taken advantage of Section 408 of the Companies Act 2006 and has not included a profit and loss account. The Company’s loss for the year ended 31 March 2020 is £12,537,847 (2019: loss of £190,158).

EXEMPTIONS FOR QUALIFYING ENTITIES UNDER FRS 102

The Company has not provided a statement of cash flows or certain disclosures in relation to key management and related party transactions, as this information is included in the consolidated financial statements.

F. EMPLOYEES AND DIRECTORS

All of the Group’s employees are employed by the Company. Employee numbers and employee benefit expenses are disclosed in note 7 to the consolidated financial statements.

D. CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS In determining and applying accounting policies, judgement is often required in respect of items

G. TANGIBLE ASSETS FURNITURE AND EQUIPMENT

COMPUTER EQUIPMENT

TOTAL

60,840

56,169

50,642

167,651

–

–

1,263

1,263

60,840

56,169

51,905

168,914

Additions

–

3,002

Disposals

–

(1,792)

LEASEHOLD IMPROVEMENTS

Cost At 1 April 2018 Additions At 31 March 2019

At 31 March 2020

12,161 (12,006)

15,163 (13,798)

60,840

57,379

52,060

170,279

20,936

33,401

34,275

88,612

12,168

18,126

12,914

43,208

33,104

51,527

47,189

131,820

12,168

5,144

5,583

22,895

(1,792)

(11,861)

(13,653)

Accumulated depreciation At 1 April 2018 Provided in the year At 31 March 2019 Provided in the year Disposals At 31 March 2020

– 45,272

54,879

40,911

141,062

At 31 March 2020

15,568

2,500

11,149

29,217

At 31 March 2019

27,736

4,642

4,716

37,094

Net book amount

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OVERVIEW

STRATEGIC REPORT

GOVERNANCE

H. INVESTMENTS At 1 April

FINANCIAL STATEMENTS

2020 £

2019 £

145,000,000

120,000,000

Investments

51,068,965

25,000,000

At 31 March

196,068,965

145,000,000

At 31 March 2020 the Company held investments in the following entities:

ENTITY

PRINCIPAL ACTIVITY

REGISTERED ADDRESS

% HELD

Cambridge Innovation Capital (Jersey) Limited

Invest in high growth technology businesses

Gaspé House, 66-72 Esplanade, St Helier, Jersey, Channel Islands, JE2 3QT

100.0%

Cambridge Innovation Capital (Manager) Limited

Dormant

Gaspé House, 66-72 Esplanade, St Helier, Jersey, Channel Islands, JE2 3QT

100.0%

Cambridge Innovation Capital ICC

Dormant

Gaspé House, 66-72 Esplanade, St Helier, Jersey, Channel Islands, JE2 3QT

100.0%

Cambridge Innovation Capital - Cell one IC

Dormant

Gaspé House, 66-72 Esplanade, St Helier, Jersey, Channel Islands, JE2 3QT

100.0%

Cambridge Innovation Capital Manager Limited

Financial Conduct Authority appointed representative

Hauser Forum, 3 Charles Babbage Road, Cambridge, England, CB3 0GT

100.0%

CICSP Limited

Dormant

50 Lothian Road, Festival Square, Edinburgh, Scotland, EH3 9WJ

100.0%

CICGP Limited Liability Partnership

Dormant

Hauser Forum, 3 Charles Babbage Road, Cambridge, England, CB3 0GT

100.0%

Start Codon Limited

Life science accelerator

Cambridge Biomedical Innovation Hub, Clifford Allbutt Building, Hills Road, Cambridge, England, CB2 0AH

26.6%

Start Codon Fund 1 Limited Partnership

Life science accelerator investment fund

Cambridge Biomedical Innovation Hub, Clifford Allbutt Building, Hills Road, Cambridge, England, CB2 0AH

26.7%

Start Codon Carry Limited Partnership

Life science accelerator c/o Brodies LLP, 15 Atholl Crescent, Edinburgh, investment fund carry vehicle EH3 8HA

Accelerator Advisor Limited

Technology accelerator

c/o Mills & Reeve LLP, Botanic House, 100 Hills Road, Cambridge, CB2 1PH

3.1% 27.9%

Cambridge Innovation Capital Manager Limited has claimed the audit exemption under Companies Act 2006 Section 479A with respect to the period ended 31 March 2020. The Company has given a statement of guarantee under Companies Act 2006 Section 479C whereby it has guaranteed all outstanding liabilities to which the subsidiary company is subject as at 31 March 2020.

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CAMBRIDGE INNOVATION CAPITAL

NOTES TO THE COMPANY FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2020

I. DEBTORS Prepayments and accrued income Other debtors

2020 £

2019 £

56,980

101,830

541,889

16,306

598,869

118,136

All amounts are short-term. The carrying values of debtors are considered reasonable approximations to fair value. All of the debtors have been reviewed for indicators of impairment.

J. CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR

2020 £

2019 £

Trade payables

89,381

85,058

Taxation and social security

82,295

58,073

14,050,144

3,752,762

Accruals and deferred income Other creditors

–

8,174,778

14,221,820

12,070,671

All creditors are unsecured, interest free and payable on demand. The carrying values of creditors are all in pounds sterling and are considered reasonable approximations to fair value. Other creditors relates to a subscription received in advance of notice for drawdown being given that was returned to the shareholder concerned immediately following the year end.

K. DEFERRED TAX

There were no deferred tax assets or liabilities recognised by the Company during the year reported on. A deferred tax asset would be recognised only when sufficient taxable profits are expected to be generated to relieve the trading losses.

2020 £

2019 £

304,000

280,500

Deferred tax amounts not provided for are as follows Trade losses unrelieved Other timing differences

2,332,467

–

2,636,467

280,500

The Company may also benefit from a tax deduction when the outstanding call options over ordinary shares of the Company are exercised. Such a benefit would create an additional tax deductible expense.

The Company’s trading tax losses at 31 March 2020 were approximately £1.60 million (2019: £1.65 million).

L. CALLED UP SHARE CAPITAL

2020 £

2019 £

Allotted, called up and fully paid 1 (2019: 1) special share of £0.0001 258,799,586 (2019: 210,775,782) ordinary shares of £0.0001 each 77,879,446 (2019: 125,903,250) class A commitment shares of £0.00005 each 499,926,562,500 (2019: 499,926,562,500) deferred shares of £0.0001 each

–

–

25,880

21,078

3,894

6,295

49,992,656

49,992,656

50,022,430

50,020,029

On 24 April 2018 the Company issued one special share to the University of Cambridge. The special share: •

entitles the University of Cambridge to be issued ordinary shares for no consideration if, on the issue of ordinary or class A commitment shares to third parties, its founding shareholding falls below 5% of the then in issue ordinary and class A commitment shares;

•

carries no right to participate in the income of the Company;

•

carries no right to receive notice of, or to attend, speak or vote at, any general meeting of the Company;

•

entitles the holder to the nominal value of the special share on a return of assets on liquidation or capital reduction or otherwise; and

•

is not transferable.

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OVERVIEW

STRATEGIC REPORT

GOVERNANCE

FINANCIAL STATEMENTS

During the year ended 31 March 2019: •

the Company secured £150 million of commitments; and

•

in relation to this commitment, the Company issued 43,588,282 ordinary shares at a subscription price of £0.885 each and 125,903,250 class A commitment shares at a subscription price of £0.00005 pence each.

During the year ended 31 March 2020 the Company issued 48,023,804 (2019: nil) class B commitment shares at a subscription price of £0.88495 each that immediately paired up with the same amount of class A commitment shares, with each pair of class A and class B commitment shares converting into one new ordinary share.

The ordinary and class A commitment shares carry equal voting rights, equal rights to income and distributions of assets on liquidation, or otherwise, and no right to fixed income.

The deferred shares: •

carry no right to participate in the income of the Company;

•

carry no right to receive notice of, or to attend, speak or vote at, any general meeting of the Company;

•

entitle the holders of the deferred shares to £1.00 for the entire class of shares on a return of assets on liquidation or capital reduction or otherwise;

•

are not transferable; and

•

may be purchased by the Company at any time, at its option, for a total of £1.00 for the entire class of deferred shares.

At 31 March 2020 the Cambridge Innovation Capital plc Employee Benefit Trust held 2,754,501 (2019: 2,842,188) ordinary and 12,495,820,312 (2019: 12,495,820,312) deferred shares of £0.0001 each.

M. SHARE BASED PAYMENTS OPTIONS OVER SHARES HELD BY THE EMPLOYEE BENEFIT TRUST

Certain employees have been granted call options over ordinary shares of the Company held by the Cambridge Innovation Capital plc Employee Benefit Trust. The terms provide that shares may be acquired at a fixed price in tranches commencing one year from the date of employment and expiring on the earlier of six months after an Initial Public Offering and ten years from the date of the award. If an employee leaves, there is no impact on vested tranches but unvested tranches expire on the leaving date.

Movements in the number of options outstanding and their related weighted average exercise prices are as follows: AT 31 MARCH 2019

GRANTED DURING THE YEAR

EXERCISED DURING THE YEAR

LAPSED DURING THE YEAR

AT 31 MARCH 2020

Number

2,842,188

–

–

2,754,501

Exercisable

2,842,188

n/a

n/a

n/a

2,754,501

0.1711

n/a

0.1711

n/a

0.1711

4.7496

n/a

n/a

n/a

3.7309

4,863

n/a

(150)

n/a

4,713

Exercise price for all options (pence) Weighted average remaining contractual life (years) Proceeds receivable on exercise (£)

(87,687)

The fair value of the options over shares held by the Employee Benefit Trust has been calculated based on the fair value of the shares at the date of grant less the nominal exercise price. During the year a charge of £nil (2019: £nil) has been recorded in relation to options over shares held by the Employee Benefit Trust.

OPTIONS OVER SHARES ISSUED IN ACCORDANCE WITH THE COMPANY’S INCENTIVE SCHEMES

Certain employees have been granted options over ordinary shares of the Company in accordance with the Company’s incentive schemes. The options granted to date provide that shares may be acquired at a fixed price in tranches commencing two years, and expiring after five years, from the date of the award. If an employee leaves and is considered a good leaver, vested tranches expire one year after leaving and unvested tranches expire one year after the future vesting date. If an employee leaves and is considered a bad leaver, vested and unvested tranches lapse on the leaving date.

Movements in the number of options outstanding and their related weighted average exercise prices are as follows: GRANTED DURING THE YEAR

706,314

198,848

–

n/a

n/a

n/a

865

Exercise price for all options (pence)

0.0100

0.0100

0.0100

0.0100

0.0100

Weighted average remaining contractual life (years)

4.0613

n/a

n/a

n/a

3.4426

71

20

Number Exercisable

Proceeds receivable on exercise (£)

(84,082)

(8)

LAPSED DURING THE YEAR

(33,803)

(3)

787,277

79

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EXERCISED DURING THE YEAR

AT 31 MARCH 2020

AT 31 MARCH 2019

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CAMBRIDGE INNOVATION CAPITAL

NOTES TO THE COMPANY FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2020

During the year it was determined that options over shares issued in accordance with the Company’s incentive shemes would be cash, rather than equity, settled based on the net assets per share most recently approved by the Board. As a result the aggregate share based payment charge of £206,587, including the charge in the year to date of £54,596 (2019: £126,697), was transferred from equity to liabilities in the Statement of Financial Position.

The liability for cash-settled options is based on the net assets per share most recently approved by the Board, assumes an annual leavers rate of 10% and is prorated for the extent to which each option has vested. At 31 March 2020 the aggregate liability, including employer’s National Insurance contributions, for these options was £474,462 (2019: £nil) and during the year a charge of £387,745 (2019: £nil) has been recorded.

Previously the fair value of the options over ordinary shares issued in accordance with the Company’s incentive schemes has been calculated using the Black–Scholes valuation model. The fair value of options granted during the prior year was £0.8612 and the inputs into the model for those awards were as follows: 2019

Share price at date of grant

£0.8613

Expected volatility

100%

Expected life

4 years

Expected dividend yield

0%

Risk free rate

1%

N. OPERATING LEASE COMMITMENTS

The future aggregate minimum lease payments under non-cancellable operating leases are as follows:

Within one year Later than one year but not later than five years

2020 £

2019 £

1,600

1,600

401

2,001

2,001

3,601

Lease payments primarily relate to amounts payable for the Group’s office. The lease term is five years from 1 July 2016 but the Group has been able to terminate the lease at any time since 1 July 2018.

O. RELATED PARTY TRANSACTIONS

The Company’s related party transactions are limited to transactions with: the University of Cambridge and its subsidiaries; its subsidiary companies and associate undertakings; and portfolio companies of its wholly owned subsidiary. Related party transactions for the Group are disclosed in note 18 to the consolidated financial statements. The exemption from disclosing transactions and balances with wholly owned subsidiaries has been taken.

P. POST BALANCE SHEET EVENTS

Following the year end the Company drew down £20 million from shareholders via the issue of 22,596,145 class B commitment shares that immediately paired up with the same amount of class A commitment shares with each pair of class A and class B commitment shares converting into one new ordinary share.

Q. CONTROLLING PARTY

There is no ultimate controlling party.

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COMPANY INFORMATION

COMPANY REGISTRATION NUMBER 08243718

REGISTERED OFFICE

SWISS REPRESENTATIVE

First Independent Fund Services Limited Klausstrasse 33 CH-8008 Zurich Swiss paying agent Helvetische Bank AG Seefeldstrasse 215 CH-8008 Zurich

Hauser Forum 3 Charles Babbage Road Cambridge CB3 0GT

DIRECTORS

Edward Benthall Chairman Andrew Williamson Managing Partner Rob Sprawson Partner and Chief Financial Officer Humphrey Battcock Independent Non-executive Director Clive Birch Independent Non-executive Director Ian Leslie Non-executive Director Andy Neely Non-executive Director

LOCATION WHERE THE RELEVANT DOCUMENTS MAY BE OBTAINED

The Information Memorandum, the Articles of Association as well as the annual and half year reports of the Company may be obtained free of charge from the Swiss representative.

PLACE OF PERFORMANCE AND JURISDICTION

In respect of the Shares distributed in or from Switzerland to Qualified Investors, the place of performance and the place of jurisdiction is at the registered office of the Swiss representative.

COMPANY SECRETARY Rob Sprawson

BANKERS

Barclays Bank PLC 9-11 St Andrew’s Street Cambridge CB2 3AA

LEGAL ADVISERS Taylor Wessing LLP 5 New Street Square London EC4A 3TW

Fried, Frank, Harris, Shriver & Jacobson LLP 41 Lothbury London EC2R 7HF

INDEPENDENT AUDITORS PricewaterhouseCoopers LLP The Maurice Wilkes Building St John’s Innovation Park Cowley Road Cambridge CB4 0DS

FINANCIAL PR

Consilium Strategic Communications Limited 41 Lothbury London EC2R 7HG

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Cambridge Innovation Capital Hauser Forum 3 Charles Babbage Road Cambridge CB3 0GT www.cic.vc +44 (0)1223 764875

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