Northern Gritstone Interim Report 2024 by NGInvestmentManager

Interim Report

— For the six months ended 30 September 2024

Our vision

Northern Gritstone was founded with the philosophy of Profit with Purpose, which means we believe that profitable organisations can and should have a wider purpose.

That purpose for us is to support aspiration and ambition in the North of England, and in doing so create positive societal and economic impact. Profit means delivering attractive returns to our shareholders, who have the patient capital to invest into an untapped innovation seam in the North of England and benefit from the returns of the world-class companies of tomorrow.

How do we do that? By creating change.

We invest in and support the commercialisation of science and technology-enabled IP-rich businesses based in the North of England — predominantly originating from the Northern Triangle universities — Leeds, Manchester and Sheffield. We work incredibly closely with these founding universities with whom we have a 15-year partnership framework agreement. We also invest in earlystage companies based in the North of England outside of these universities. Since our inception, investment into

science and technology-enabled earlystage businesses based in the North of England has risen from £28 million1 to more than £318 million2

These investments are in some of the UK’s most exciting emerging sectors such as pioneering life-science, advanced materials, health technology, clean technology, cognitive computation and artificial intelligence.

In doing so, we are helping to create a leading ecosystem of support and funding. Over time this creates a virtuous circle. And that is our belief and our mission — to create a virtuous circle of investee companies, who bring people to the region including other investors and community members, who lean in and help others on their journey. This in turn generates high-skilled jobs in the North of England. That local impact has a regional and ultimately global impact through the creation of world-class innovative businesses.

Region recognised as an innovation leader

Skilled workers & companies relocate to the region

PROFIT WITH PURPOSE

Investee companies launch

Northern Gritstone invests and supports High-paid job creation New funders enter the region

VALUE CREATION AND CAPITAL ‘+++’

Northern Gritstone’s investment strategy focuses on long-term value creation. When we invest in a company, we put in place a clear value creation strategy, complete with milestones and value inflexion points. Working alongside our investee company management teams, the investment team and operating partners execute the strategy.

Capital is one very important piece of the jigsaw. Equally important is support. Understanding the support required by ambitious early-stage companies on the path to success, led us to launch NG Innovation Services.

NG Innovation Services is the ‘+++’ that works alongside the intelligent capital invested by Northern Gritstone.

Its mission is to ensure that founders of early-stage companies in the North of England have the best chance of success when building their businesses by offering an early-stage ‘toolkit’ for scale and growth in three critical areas:

NG Studios

Unique domain-specific accelerator programs developed with industryleading partners in deep technology and life-sciences.

NG Talent Community

Community access connecting early-stage founders with entrepreneurs, operators and c-suite individuals.

NG Business Services

Access to fundamental business support services (including IT and accounting) through best-of-breed service provider panels.

Invested & Committed Co-investment into the North of England

of people employed by investee companies

Gritstone and co-investor funding by location

Chief Executive’s statement

We continue to make great progress in catalysing the science and innovation early-stage tech ecosystem in the North of England. A highlight for me during the period was the Demo Day held in Leeds for the first cohort to graduate from our NG Studios venture building program.

The program has been designed with, and is then delivered by, Deeptech Labs. It aims to get businesses starting the commercialisation journey ‘match fit’. This means a credible team with a credible business plan that is capable of raising initial capital of £3 million to £5 million and a clear pathway to a Series A raise in three years’ time. Whilst time will tell whether the hopes for each cohort member’s

Series A raise plays out as we would like, in the very short-term the first Demo Day, with some 300 attendees both on-line and at the event representing over 120 different investors, was a definite success. Five of the first six cohort members have either received or have term sheets signed raising sufficient capital to allow each business to achieve its aims over the next three years which is a fantastic result.

It is some 2.5 years since Northern Gritstone started deploying capital. Over that period the Company has invested in 28 businesses from pre-seed through to pre-IPO. Our initial investing is now starting to season and we can begin to see the businesses that have star potential. One of these is Silveray, which is a designer and manufacturer of next-generation x-ray film. Northern Gritstone invested £300,000 in a previous funding round in 2023 and we have now led the pre-Series A round investing £2 million at a material uplift to our previous investment. The Company’s second investment into Silveray completed in early October 2024.

The effluxion of time also shows where plans and milestones have been overoptimistic. There are a small number of businesses in the Company’s portfolio where we remain excited by the potential but have reduced our holding value to reflect the respective short funding horizons of those businesses. It is the nature of our valuation process that we err on the side of caution when making these judgements.

"NORTHERN GRITSTONE CONTINUES TO TRAVEL WELL"

It is against this background that I am pleased to report a NAV per share of 97 pence at the half year to 30 September, 2024. The Company has done much to mitigate the J-curve and our comparative performance against other early-stage investment collectives at this time in their development shows that this has been effective to date.

The world remains an uncertain place. The recent political changes in the UK and the USA have potentially compounded this uncertainty. Prior to the US election a number of signs suggested we could hopefully see an uptick in VC, M&A and IPO activity in the short-tomedium term. We see the public markets

as a good lead indicator of private market activity with normally a 18-24 months lag but this needs to be coupled with interest rates

heading on a steady reduction cycle both in UK/Europe and the US to give us medium term cause for optimism. We will now wait to see how this plays out over the next 6-12 months.

Overall Northern Gritstone continues to travel well and is delivering on our ethos of Profit with Purpose for our stakeholders.

Duncan Johnson CHIEF EXECUTIVE OFFICER

27 November 2024

Portfolio update

The Company made four new investments, one follow-on investment and two previously committed tranche investments in the period, deploying a total of:

£3.5 m

The fair value of the portfolio at 30 September 2024 was:

£38.7m

During the period there was a change in the fair value of investments of:

£(6.1)m

This change is largely the result of investment fair value movements of two investments, where the reduction in carrying value reflects the short funding horizons of these businesses. It is the nature of our valuation process that we adopt a prudent approach when making these judgements as required by our Valuation policy, but we remain excited by the potential for these businesses.

With the exception of investments held at nil value, all other investments are making progress executing their respective strategies as set out at the time of investment. We remain pleased with the Companies in which we have invested and their potential to deliver both profit and purpose.

Profiles of new and follow-on investments made in the period appear on pages 14 to 15.

• Cavero Quantum is a spin-out from the Experimental Quantum Information Group (EQIG) at the University of Leeds. The company is founded on 10+ years of research led by Professor Ben Varcoe, a leading quantum expert and EQIG Chair.

• The company is developing a quantum secure, passwordless encryption channel that can protect any device, regardless of size, from current classical and quantum attacks. The solution is planned to be delivered through low-compute software that is compatible with legacy hardware and operating systems.

• Cybersecurity attacks cost the global economy >$7 trillion in 2022. Furthermore, in the future, all of the world's encryption keys will be cracked by quantum computing. Cavero is seeking to address the current vulnerabilities as well as being secure in a quantum environment.

• The company will use the investment to build its team and pilots to launch its MVP.

Marketing & scaling opportunity

• Cavero’s solution has multiple end market applications including Passwordless Authentication, embedded system and quantum cyrptography solutions.

IP & barriers to entry

• The core of Cavero’s technology lies in the key creation module, protected by two patent families, while the authentication module is protected by one patent family.

Productisation & pipeline

• Cavero is building a software only, key creation and authentication solution that will be deployable via an API.

Management team

• 37 years industry experience.

• CEO James Trenholme has previously successfully founded and exited a business in the identity market.

• CTO Dr Frey Wilson is an industry expert.

Job Creation

New skilled jobs based in the North of England will be generated through this Investment.

Industry, Innovation and Infrastructure

A novel solution able to protect from both classical and quantum attacks.

Responsible Production and Consumption

Ensure authentication of users and protect against threats to companies and nations.

• Instruct3D is a spin-out from the School of Chemical, Materials and Biological Engineering at the University of Sheffield.

• The company is developing automated machine instructions for rapid, reliable 3D printing, automatically controlling print parameters, geometry and temperature to improve accuracy, reliability and consistency of 3D printed parts.

Cohort 2

• ReNewFood is a spin-out from the School of Chemical, Materials and Biological Engineering at the University of Sheffield.

• The company is developing sustainable proteinbased flavouring ingredients which are natural, plant-based, and GMO-free.

• The company aim to supply a savoury protein that can replicate meaty taste followed by a low-calorie protein sweetener.

• NIQS is a spin-out from Leeds University.

• The company is developing a truly non-invasive, continuous, and accurate glucose sensor which will transform the lives of patients living with diabetes, leading to greater compliance and enabling better management of the condition.

• CCUI is a spin-out from the department of Chemical Engineering and Chemistry at the University of Sheffield.

• The company plans to enable more sustainable carbon capture by enabling reuse of captured CO2. CCUI does this via novel technology that allows for high purity capture with zero toxic chemical processing, opening reuse applications in a broad range of sectors including medical, food & beverage, construction and chemicals.

• PhovIR* is a spin-out from the department of Electrical and Electronic Engineering at the University of Manchester.

• The company is developing a miniaturised optical sensor. The MEMs-based NIR spectroscopy sensor is just 5mm x 5mm meaning it has possible applications in a broad range of existing hardware, ranging from industrial applications to consumer and medical.

Note: Northern Gritstone has invested £200k in each NG Studios Cohort 2 participant.

Subscription agreement

Purpose & Impact

During the period reported Northern Gritstone has continued to develop its Purpose & Impact (‘P&I’) strategy. This report provides an update on developments in the period. The next P&I focused survey of our investee companies will be undertaken in March 2025, with the results of that survey incorporated into the annual report.

Entities backed

During the period the Company invested in an additional 4 companies. In total, the Company has now backed 28 science and innovationbased businesses in the North of England, all enjoying strong intellectual property underpinned by world-class science and an ability if successful to become world-leading businesses.

Capital leveraged

Since inception, an additional £271m of co-investment has been invested or committed by a series of local, European and other international investors into the

North of England alongside the Company’s £47m of committed and invested capital. This represents c.6x the value that Northern Gritstone has invested. Total funding to date made by Northern Gritstone and co-investors now stands at £318m.

Job creation

The 28 investments Northern Gritstone has made to date funded 187 additional jobs, with significantly more to follow as the monies invested are fully deployed by the investee companies. At 30 September 2024 Northern Gritstone’s investee companies employed 693 people in total.

PRIMARY PORTFOLIO UN SUSTAINABLE DEVELOPMENT GOALS ALIGNMENT

The Company’s portfolio continues to align strongly with the same UN sustainable development goals reported at 31 March 2024.

THE COMPANY’S CARBON EMISSIONS 1 AND INTENSITY RATIOS DURING THE PERIOD WERE:

The total level of carbon emissions increased in the period driven by scope 3 emissions from our own operations as a result of an increase in the Company’s average headcount, which rose to 27 during the period ended 30 September 2024 (6 months ended 30 September 2023: 17).

The Company’s two key measures of annualised tCO2e per average invested capital and per average employee both increased in the period due to:

(a) a proportional shift to investment in companies with manufacturing capabilities and thereby generally higher emissions-intensity; and

(b) additional employee travel as the Company’s activity levels have grown.

The Company aims to minimise its carbon footprint in the first instance and then to offset any excess carbon emissions. Carbon offsets are purchased annually following calculation of emissions for the Company’s full financial year.

The Company remains committed to the Net Zero Asset Manager’s initiative and the net zero targets set under the Paris Aligned Asset Owners Net Zero Investment Framework. Progress against these will be reported in the Annual Report.

Equality, diversity and inclusion

THE GENDER AND DIVERSITY MEASURES REPORTED BY THE COMPANY ARE:

In the long-term, the Company aims to reflect the communities in which it operates across all levels of the business and will continue to focus on developing a diverse and inclusive team as it builds out its operations.

During the period the Company continued to adhere to the principles of the Investing in Women Code, of which it is a signatory, engaged positively

on diversity matters with investee companies (including through talent support services provided by Northern Gritstone Innovation Services) and held the Company’s inaugural Equality, Diversity and Inclusion Day, which celebrated the diversity of our workforce and enabled reflection, engagement and consideration of future plans with regards to equality, diversity and inclusion.

Governance

No governance or legal issues arose during the period. The Company focuses on working closely with its investee companies and their Boards. Through this involvement, as well as bringing to bear the Company’s growing operational and supporting resources where appropriate, the Company takes an active role in developing, assisting, supporting and monitoring the strategic development of our investee companies.

In the period the Company expanded the Purpose & Impact related clauses in its standard investment terms, with the intention that this will continue to strengthen the alignment of the portfolio with Northern Gritstone’s aims.

In October 2024 Northern Gritstone Investment Manager Limited (a wholly owned subsidiary of Northern Gritstone Limited) received authorisation from the FCA to operate as a small UK authorised AIFM and, going forwards, will manage the investments of Northern Gritstone Limited. Further details are provided in note 8 to these financial statements. The Investment Committee and Valuation Committee will both move to be subcommittees of Northern Gritstone Investment Manager Limited, but there is no other material impact to the governance of the group.

Wider purpose and impact

The Company is focused on ensuring that it works closely with other businesses in the North of England along with supporting the local communities in which we operate. This is alongside being a strong advocate for the Northern innovation economy and supporting this with commercial initiatives wherever possible.

We were delighted to collaborate with Cambridge Innovation Capital and Oxford Science Enterprises to host an event at the Mansion House promoting the benefits of investing in UK university spin-outs attended by over 300 institutional investors.

The Company also supported the Manchesterbased Royce Tata Materials MedTech Catalyst, the Sheffield-based National Centre for Children’s Health Technology and sponsored the Northern Triangle Therapeutics Accelerator Programme, which supports the commercialisation of therapeutics discoveries emerging from the Founding Universities.

The Company continued its outreach programme, expanding student interaction to local schools in Leeds, Manchester and Sheffield. The Company also continued its engagement with charities Young Enterprise and SHINE, as well as volunteering time to assist South Yorkshire Community Foundation with its grant allocation process, with the aim of maximising local impact.

Directors’ report on interim financial statements

GENERAL INFORMATION

These interim financial statements are prepared for the six months ended 30 September 2024. The comparative financial information presented herein for the period ended 31 March 2024 does not constitute full statutory accounts within the meaning of the Companies Act 2006. The Company’s Annual Report and Accounts for the period ended 31 March 2024 have been delivered to the Registrar of Companies. The Company’s independent auditor’s report on those accounts was unqualified, did not include references to any matters to which the auditor drew attention by way of emphasis without qualifying their report and did not contain a statement under Section 498(2) or 498(3) of the Companies Act 2006.

BASIS OF PREPARATION

This condensed set of interim financial statements has been prepared in accordance with IAS 34 Interim Financial Reporting as adopted for use in the UK.

The annual financial statements of the Company for the year ended 31 March 2025 will be prepared in accordance with UK-adopted international accounting standards. This condensed set of interim financial statements has been prepared applying the accounting policies and presentation that were applied in the preparation of the company’s published financial statements for the period ended 31 March 2024.

ACCOUNTING ESTIMATES AND JUDGEMENTS

The preparation of the interim financial statements requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expenses. Estimates and judgements are continually evaluated and are based on historical experience and other factors, such as expectations of future events, and are believed to be reasonable under the circumstances. Actual results may differ from these estimates. In preparing these interim financial statements, the significant judgements made by management in applying the Company’s accounting policies and the key sources of estimation uncertainty were the same as those applied to the audited financial statements for the period ended 31 March 2024.

GOING CONCERN

The Directors are required to satisfy themselves that it is reasonable to presume that the Company is a going concern. The Directors have prepared a medium-term financial plan, including cash flow forecasts for a period of 12 months from the date of approval of these interim financial statements which indicate that, taking account of severe

but plausible downsides, the Company will have sufficient funds to meet its liabilities as they fall due for a period of 12 months from the date of approval of the interim financial statements.

The Directors therefore continue to adopt the going concern basis in preparing the interim financial statements.

STATEMENT OF DIRECTORS’ RESPONSIBILITIES

The Directors confirm to the best of their knowledge that the interim financial statements have been prepared in accordance with IAS 34 as adopted for use in the UK.

On behalf of the Board

Lord Jim O’Neill CHAIRPERSON

27 November 2024

Independent review report

to Northern Gritstone Limited

CONCLUSION

Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the six months ended 30 September 2024 is not prepared, in all material respects, in accordance with UK adopted International Accounting Standard 34: Interim Financial Reporting.

We have been engaged by the company to review the condensed set of financial statements in the half-yearly financial report for the six months ended 30 September 2024 which comprises Statement of Comprehensive Income, Statement of Financial Position, Statement of Cashflows, Statement of Changes in Equity and Notes to the Financial Statements.

BASIS FOR CONCLUSION

We conducted our review in accordance with Revised International Standard

on Review Engagements (UK) 2410, ‘Review of Interim Financial Information Performed by the Independent Auditor of the Entity’ (‘ISRE (UK) 2410 (Revised)’). A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

As disclosed in the directors’ report, the annual financial statements of the company are prepared in accordance with UK adopted international accounting standards. The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with UK adopted

International Accounting Standard 34: Interim Financial Reporting.

CONCLUSIONS RELATING TO GOING CONCERN

Based on our review procedures, which are less extensive than those performed in an audit as described in the Basis for Conclusion section of this report, nothing has come to our attention to suggest that the directors have inappropriately adopted the going concern basis of accounting or that the directors have identified material uncertainties relating to going concern that are not appropriately disclosed.

This conclusion is based on the review procedures performed in accordance with ISRE (UK) 2410 (Revised), however future events or conditions may cause the company to cease to continue as a going concern.

RESPONSIBILITIES OF DIRECTORS

The directors are responsible for preparing the half-yearly financial report in accordance with UK adopted International Accounting Standard 34: Interim Financial Reporting. In preparing the half-yearly financial report, the directors are responsible for assessing 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 company or to cease operations, or have no realistic alternative but to do so.

AUDITOR’S RESPONSIBILITIES FOR THE REVIEW OF THE FINANCIAL INFORMATION

In reviewing the half-yearly report, we are responsible for expressing to the Company a conclusion on the condensed set of financial statements in the halfyearly financial report. Our conclusion, including our Conclusions Relating to Going Concern, are based on procedures that are less extensive than audit procedures, as described in the Basis for Conclusion paragraph of this report.

USE OF OUR REPORT

Our report has been prepared in accordance with the terms of our engagement to assist the Company and for no other purpose. No person is entitled to rely on this report unless such a person is a person entitled to rely upon this report by virtue of and for the purpose of our terms of engagement or has been expressly authorised to do so by our prior written consent. Save as above, we do not accept responsibility for this report to any other person or for any other purpose and we hereby expressly disclaim any and all such liability.

Paul Davies BDO LLP CHARTERED ACCOUNTANTS,

LEEDS, UK 28 November 2024

Independent Auditors' disclaimer letter

To the Directors of Northern Gritstone Limited

Request for access to our Interim Report dated 28 November 2024

You have asked us to agree to you providing to external recipients (the ‘recipient’) a copy of our report dated on 28 November 2024 (the ‘Report’) prepared in connection with our review of the interim financial information of the company for the period ended 30 September 2024.

To ensure that the recipient has a clear understanding of the terms under which the Report is being provided to them, a copy of this letter should be attached to the Report.

We confirm that we give our consent to you doing so on the clear understanding that the Report was addressed to the company and was prepared on your instructions as set out in our agreement dated 3 September 2024 and therefore the Report will not address or reflect the interests or circumstances of the recipient or any other third party. Furthermore, we accept no duty or responsibility and deny any liability to the recipient and to any other third party, whether or not the Report influences the decision or action of the recipient or any other party.

If our Report is given to the recipient, it should be made clear that receipt of the Report should not be a substitute for enquiries the recipient should undertake for its own purposes and any independent advice it should obtain. You should also point out to the recipient that it will be bound by a duty of confidentiality to BDO LLP, as well as to you, and that in respect of any Personal Data in the Report, they are required to comply with the Data Protection Act 1998. Consequently, the Report, and information obtained from it, must not be made available or copied, in whole or in part to any other person without our prior written permission which we may, at our discretion, grant, withhold or grant subject to conditions (including conditions as to legal responsibility or absence thereof).

Where disclosure of the Report or information contained in the Report is required by law or regulation, the recipient should i) ensure that a copy of this letter is disclosed with such information so that the other party receiving the information is on written notice of the terms on which the recipient itself had access to it; and ii) where legally permissible inform us promptly of the specific requirement to disclose and before making any disclosure.

Notwithstanding our consent to the release of the Report to the recipient, the Report remains addressed to you and it is a matter for you to decide whether the release of the Report is appropriate in the circumstances.

In consideration for BDO LLP consenting to you providing the Report to the recipient, you agree that you will not hold BDO LLP responsible for the consequences of us doing so; accordingly BDO LLP, its members, partners, staff and agents shall have no liability to you, whether in contract or in tort (including without limitation negligence or breach of statutory duty) or in any way whatsoever, for any loss, damage, cost or expense suffered by you as a result of the provision of the Report to the recipient. Without conferring any greater rights than you would otherwise have at law, we accept that this does not exclude any liability we may have for death or personal injury or for the consequences of our own fraud.

This letter shall be governed and construed in accordance with the laws of England. The Courts of England and Wales will have exclusive jurisdiction to settle any claim, dispute or difference which may arise out of or in connection with this letter.

Yours faithfully

BDO LLP

PROFIT WITH PURPOSE

Financial statements and notes

The financial statements on pages 26-35 were approved by the Board of Directors of Northern Gritstone Limited (registered number: 12982592) and were signed on its behalf by:

James Hadley CHIEF FINANCIAL OFFICER

STATEMENT OF FINANCIAL POSITION

STATEMENT OF CASHFLOWS

CASH

STATEMENT OF CHANGES IN EQUITY

i) Called up share capital — The nominal value of subscribed capital which has been called by the Company. See note 5 for additional information.

ii) Share premium — The amount of subscribed share capital which has been called in excess of nominal value net of directly attributable issue costs.

iii) Accumulated deficit — Cumulative net gains and losses recognised in the statement of comprehensive income.

NOTES TO THE FINANCIAL STATEMENTS

Note 1

Basis of preparation

This condensed set of interim financial statements has been prepared in accordance with IAS 34 Interim Financial Reporting as adopted for use in the UK. The annual financial statements of the Company for the year ended 31 March 2025 will be prepared in accordance with UK-adopted international accounting standards.

This condensed set of interim financial statements has been prepared applying the accounting policies and presentation that were applied in the preparation of the company’s published financial statements for the period ended 31 March 2024.

Note 2

Equity investments

The fair value of the level 2 investments are supported by recent market transactions that have occurred within 12 months of the reporting date. The fair value of all investments is established using appropriate valuation techniques in line with International Private Equity and Venture Capital Valuation guidelines and the Company's policy on financial asset valuation detailed in note 1 to the financial statements for the year ended 31 March 2024.

The founder equity received during the period relates to the receipt of equity from the University of Leeds in Cavero Quantum Limited under the Framework agreement at nil cost.

The reasons for the change in fair value during the period are detailed in the Portfolio update which appears on page 12 of this Interim Report. The transfers between hierarchy levels in the period were the result of a market transaction ceasing to have occurred within the last twelve months.

At 30 September 2024 the Company had committed, subject to certain milestone provisions contained in the relevant legal documentation, to make further investments of £2,660k (At 30 September 2023: nil, At 31 March 2024: £4,333k) in investee companies. As these relate to future investments, they have not been included in the financial statements.

Note 3

Equity rights

Equity rights represent the present value of the founders’ equity of spin-out companies that the Company will receive, at no cost, from the Universities of Leeds, Manchester and Sheffield, under the Framework Agreement signed with these universities on 20 April 2021 subject to the Company investing a minimum of £200,000. The Company has received these rights for the period to 20 April 2036 in return for each of the Universities of Leeds, Manchester and Sheffield receiving a 2% non-dilutable shareholding in Northern Gritstone Limited.

The founder equity received during the period is recognised within equity investments.

The change in fair value during the period relates to the need to assess the present value as at 30 September 2024 of the founders’ equity of spin-out companies that the Company will receive. This assessment of fair value includes updating assumptions for the latest market data.

The key variables which the Directors consider are relevant in determining a fair value for this financial asset are set out below. These variables are informed by market data.

30 Sep 2024

At 30 Sep 2023

At 31 Mar 2024

The fair value of this financial asset is sensitive to a range of variables, the most significant of which are:

• A change in the discount rate. Were this reduced to 15%, the fair value of the financial asset at 30 September 2024 would be £37.3m. Were the discount rate increased to 25%, the fair value of the financial asset at 30 September 2024 would be £18.8m.

• The long-term number of spin-out companies financed per annum. Were this reduced to 8, the fair value of the financial asset at 30 September 2024 would be £23.5m. Were this increased to 10, the fair value of the financial asset at 30 September 2024 would be £28.3m.

• The average equity stake acquired by the Company. Were this reduced to 10%, the fair value of the financial asset at 30 September 2024 would be £17.3m. Were this increased to 20%, the fair value of the financial asset at 30 September 2024 would be £34.5m.

• The proportion of spin-out companies failing. Were this reduced to 60%, the fair value of the

at 30 September 2024 would be £34.5m. Were this increased to 80%, the fair value of the financial asset at 30 September 2024 would be £17.3m.

Note

Provision for liabilities and charges

Long-term incentive plan liability:

An overview of the long-term incentive plan scheme is given in note 1 to the financial statements for the period ended 31 March 2024. Based on the current fair value estimates for the relevant portfolio investments, the hurdle rate of the two vintages in existence has not been exceeded as at 30 September 2024. Consequently, no potential unrealised gain due to participants has been recognised. Upon maturity, the LTIP will be wholly cash settled.

Provision for other liabilities and charges:

Note 5

Share capital

The Company employed the services of a placement agent to assist with the raising of capital. Fees are payable to this agent as ordinary share capital is paid up. The Company estimates that all of the ordinary share capital will be paid up in the future and recognises a provision for the fees payable to the placement agent in relation to the uncalled share capital. At 30 Sep 2024 At 30 Sep 2023 At 31 Mar 2024

The Company is limited by shares. The ordinary shares carry equal voting rights, equal rights to income and distributions of assets on liquidation, or otherwise, and no right to fixed income.

The special shares are held by the Universities of Leeds, Manchester and Sheffield. These special shares:

• Entitle each of the Universities of Leeds, Manchester and Sheffield to be issued ordinary shares for no consideration if, on the issue of ordinary shares to third parties, their individual shareholding falls below 2.0% of the then in issue ordinary shares;

• Carry no right to participate in the income of the Company;

• Carry no right to attend, speak or vote at, any general meeting of the Company;

• Entitle the holder to the nominal value of the special shares on a return of capital on liquidation or otherwise; and

• Are not transferable.

During the six months ended 30 September 2024 the Company called up an additional 5% of share capital from ordinary shareholders. Of these 10,652,084 ordinary shares called up in the period all had been fully paid as at 30 September 2024.

The Company has previously received a commitment to subscribe for up to 100,000,000 preference shares of £1.00 each at a subscription price of £1.00. As at 30 September 2024 these preference shares were not allotted.

Note 6 Related party transactions

The Company provided business support services to its associates in the period, chargeable on an arm’s length basis. The following amounts have been included in respect of these fees:

The Company makes investments in the equity of unquoted investments in which it is possible to exert significant influence. The Company holds investments in associates at fair value through profit or loss in accordance with IFRS 9, but they are related parties. The total amounts included for investments where the Company has significant influence are as follows:

Vero HR Limited, where Andrew Graham serves as Chairperson, charged the Company with fees of £3.8k during the six months ended 30 September 2024 in relation to HR services, all at arm’s length (six months ended 30 September 2023: £2.5k, twelve months ended 31 March 2024: £5.7k). As at 30 September 2024 £1.1k was outstanding, but not overdue.

SUEL Limited, which is a wholly-owned subsidiary of the University of Sheffield, charged the Company with fees of £3.0k during the six months ended 30 September 2024 in relation to accounting services, all at arm’s length (six months ended 30 September 2023: £6.0k, twelve months ended 31 March 2024: £12.0k). As at 30 September 2024 there were no fees outstanding or overdue.

Bruntwood Circle Square 4 Limited, which is a wholly-owned subsidiary of the Bruntwood Group Limited (a shareholder of the Company), charged the Company with fees of £31.0k during the six months ended 30 September 2024 in relation to property services, all at arm’s length (six months ended 30 September 2023: £25.9k, twelve months ended 31 March 2024: £59.2k). As at 30 September 2024 £8.5k was outstanding, but not overdue.

Nexus Limited, which is a wholly-owned subsidiary of the University of Leeds, charged the Company with fees of £28.5k during the six months ended 30 September 2024 in relation to property services, all at arm’s length (six months ended

30 September 2023: £15.7k, twelve months ended 31 March 2024: £44.7k). As at 30 September 2024 £4.2k was outstanding, but not overdue.

Accelerator Advisory Limited (trading as Deeptech Labs), where Alex Macpherson serves as an advisor and is a participant in a group carry scheme, collaborated with the Company during the six months ended 30 September 2024 to run the NG Studios accelerator program. No fees were charged to the Company during the six months ended 30 September 2024 (six months ended 30 September 2023: nil, twelve months ended 31 March 2024: nil).

Compensation to key management comprises costs relating to Executive Directors, Non-Executive Directors and the Senior Leadership Team of the Company that held positions during the period. Compensation to key management comprise:

Note 7

Contingent liabilities

At 30 September 2024 the Company had committed to make further investments in investee companies subject to certain milestone provisions contained in the relevant legal documentation. Further details are disclosed in note 2.

The Company has entered into an agreement with Lazard & Co. Limited (‘Lazard’), which reduced the placement fees due to Lazard in respect of the recent capital raise by £488k. However, this amount will become payable to Lazard if the Company raises additional capital of at least £75 million in the future. At 30 September 2024 the Company had no reliable estimate of the timing or value of any future capital raise and, as such, this amount is disclosed as a contingent liability and has not been recognised in the financial statements.

Note 8

Post-balance sheet events

Subsequent to the period end, but before these interim accounts were signed, the Company invested as follows:

• £200k into PhovIR Technologies Limited

• £1,825k into MicroLub Limited

• £2,000k into Silveray Limited

• £2,300k into Exciting Instruments Limited

• £2,500k into SamsonVTi UK Limited (t/a Partful)

On 16 October 2024, Northern Gritstone Investment Manager Limited (a wholly owned subsidiary of Northern Gritstone Limited) received authorisation from the FCA to operate as a small UK authorised AIFM and, going forwards, will manage the investments of Northern Gritstone Limited. On 17 October 2024 the employees of Northern Gritstone Limited transferred to either Northern Gritstone Investment Manager Limited or Northern Gritstone Innovation Services Limited (a wholly owned subsidiary of Northern Gritstone Limited). It is the intention for the group to prepare consolidated financial statements for the year ended 31 March 2025.

In November 2024, having failed to attract the funds necessary to continue operations, C-Capture Limited ceased trading. The carrying value of Northern Gritstone’s investment in C-Capture Limited at the period end was £800k.

Appendix

ALTERNATIVE PERFORMANCE MEASURES

The Company assesses performance using Alternative Performance Measures (‘APMs’) which are not defined under IFRS. The Directors believe that these APMs assist in providing additional useful information on the underlying trends, performance and position of the Company. Consequently, APMs are used by the Directors and management for performance analysis, planning, reporting and incentive-setting purposes.

Definitions of the measures presented in the Interim Report and accounts are set out below.

The value of capital invested by Northern Gritstone in equity investments since the inception of the Company

& Committed Capital

Invested & Committed Co-investment

Gross Portfolio MoM

The value of capital invested and committed by Northern Gritstone in equity investments since the inception of the Company

Since the inception of Northern Gritstone to the reporting date, the value of capital invested and committed by third party investors in funding rounds in which Northern Gritstone has participated and subsequently

The internal rate of return calculated using total equity investment valuations and realisations compared to the total capital invested into the portfolio companies, over the period from inception to reporting date

The multiple of money calculated using total equity investment valuations and realisations compared to the total capital invested into the portfolio companies, over the period from inception to reporting date

No. of Jobs Created The change in the number of people employed by companies in which Northern Gritstone has invested from the point of Northern Gritstone’s first investment to the reporting date

Valuation

The total value of equity investments at the reporting period date

Scope 1 Direct carbon dioxide equivalent emissions produced by the Company during the period reported - - -

Scope 2 Indirect carbon dioxide equivalent emissions from the Company’s consumption of purchased energy during the period reported