Syncona Limited Publication of 2017 Annual Report & Notice of AGM

 
TIDMSYNC 
 
Syncona Limited 
 
    Publication of 2017 Annual Report and Notice of Annual General Meeting 
 
21 July 2017 
 
Syncona Limited ("Syncona"), a leading healthcare company focused on investing 
in and building global leaders in life science, today announces that it has 
published its Annual Report and Accounts for the year ended 31 March 2017 
("2017 Annual Report"). In addition, Syncona has published its Notice of Annual 
General Meeting 2017 and a circular relating to the 2017 Dividend. 
 
Copies of these documents, together with the Form of Proxy for use in 
connection with the 2017 Annual General Meeting, Charitable Allocation Form and 
Cash Election Form, are available electronically on the Investor Relations 
section of Syncona's website at www.synconaltd.com/investor-relations. Printed 
copies of these documents are also being posted to shareholders where 
requested. 
 
Syncona's Annual General Meeting will be held at 10:30am on 8 September 2017 at 
the offices of Northern Trust International Fund Administration Services 
(Guernsey) Limited, Trafalgar Court, Les Banques, St Peter Port, Guernsey GY1 
3QL. 
 
In compliance with Listing Rule 9.6.1, the following documents have today been 
submitted to the National Storage Mechanism and will shortly be available for 
inspection at www.morningstar.co.uk/uk/nsm: 
 
  * 2017 Annual Report 
  * Notice of Annual General Meeting 2017 
  * Circular relating to 2017 Dividend 
 
Disclosure & Transparency Rule ("DTR") 6.3.5R requires the Company to disclose 
to the media certain information from its 2017 Annual Report if that 
information is of a type that would be required to be disseminated in a 
half-yearly report. The information contained in the Appendix to this 
announcement, together with the Company's Full Year results for the year ended 
March 31 2017, issued on 7:00am on 6 July  2017 (available at https:// 
www.synconaltd.com/results-centre), constitute the materials required by DTR 
6.3.5R to be communicated to the media in unedited full text through a 
Regulatory Information Service. This material is not a substitute for reading 
the full 2017 Annual Report. 
 
The information included in the Appendix is extracted from the 2017 Annual 
Report which was approved by the Board of Directors on 5 July 2017. Defined 
terms used in the Appendix refer to terms as defined in the 2017 Annual Report, 
unless the context otherwise requires. 
 
[S] 
 
Enquiries 
 
Syncona Ltd 
Siobhan Weaver 
Tel: [phone] 
 
Copies of this press release and other corporate information can be found on 
the company website at: www.synconaltd.com 
 
Forward-looking statements - this announcement contains certain forward-looking 
statements with respect to the portfolio of investments of Syncona Ltd. These 
statements and forecasts involve risk and uncertainty because they relate to 
events and depend upon circumstances that may or may not occur in the future. 
There are a number of factors that could cause actual results or developments 
to differ materially from those expressed or implied by these forward-looking 
statements and forecasts. Nothing in this announcement should be construed as a 
profit forecast. 
 
About Syncona: 
 
Syncona is a leading FTSE250 healthcare company focused on investing in and 
building global leaders in life science. Our vision is to deliver 
transformational treatments to patients in truly innovative areas of healthcare 
while generating superior returns for shareholders. Our current investment 
portfolio consists of seven high quality companies in life science and a 
leading range of fund investments. 
 
We seek to partner with the best, brightest and most ambitious minds in science 
to build globally competitive businesses. We are established leaders in gene 
therapy, cell therapy and advanced diagnostics, and focus on delivering 
dramatic efficacy for patients in areas of high unmet need. 
 
Our market leading funds portfolio seeks to generate superior returns by 
investing in long only and alternative investment funds. This represents a 
productively deployed evergreen funding base which enables us to take a long 
term approach to investing in life sciences as we target the best new 
opportunities and support our existing portfolio companies to grow and succeed. 
 
Syncona is aligned with two of the premium charitable funders in UK science, 
the Wellcome Trust, original founder of Syncona, and Cancer Research UK, both 
of which are significant shareholders in our business.  We make a donation of 
0.3% of Net Asset Value to a range of charities each year. 
 
                                   Appendix 
 
Responsibility statement 
 
The Directors' responsibility statement below has been prepared in conjunction 
with, and is extracted from, the 2017 Annual Report, whereas this announcement 
and the announcement of the Company's Full Year results for the year ended 
March 31 2017, issued on 7:00am on 6 July  2017, contain extracts from the 2017 
Annual Report.  The responsibility statement is repeated here solely for the 
purpose of complying with DTR 6.3.5.  These responsibilities are for the full 
2017 Annual Report and not the extracted information presented in this 
announcement or otherwise. 
 
The Directors of the Company are: 
 
Jeremy Tigue, Chairman 
Ellen Strahlman, Non-Executive Director 
Nicholas Moss, Non-Executive Director 
Nigel Keen, Non-Executive Director 
Peter Hames, Non-Executive Director 
Tom Henderson, Non-Executive Director 
 
The Directors confirm to the best of our knowledge: 
 
1.   The Financial Statements have been prepared in accordance with 
International Financial Reporting Standards, give a true and fair view of the 
assets, liabilities, financial position and profit or loss of the Group as a 
whole; and 
 
2.   The management report in the 2017 Annual Report including information and 
details in the Chairman's Statement, the Strategic Report, the Corporate 
Governance Statements, the Directors' Report and the notes to the Financial 
Statements, provides a fair review of the Company business and a description of 
the principal risks and uncertainties facing the Company. 
 
Principal risks and uncertainties 
 
The execution of the Company's investment strategy is subject to risks and 
uncertainties. During the year, the Company expanded its investment policy to 
include investment in early-stage life science companies. Accordingly, the 
principal risks and uncertainties have been updated to reflect new risks 
associated with the financing of and investment in early-stage companies. 
 
The principal risks that the Board has identified are set out in the table 
below, along with the consequences and mitigation of each risk. Further 
information on risk factors is set out in note 22 to the financial statements. 
 
Life science portfolio 
 
Description                Impact                 Mitigation 
 
Investment risk 
 
The Company sources life   The value of the       The Company's Investment Advisor 
science businesses for     portfolio company      employs highly experienced personnel 
investment. Such           depends on the         who have considerable experience of 
early-stage businesses     performance of its     building and developing early-stage 
typically have limited     future products and    life science businesses. 
products in development    the Company may not    Before making any investment, the 
and, consequently, any     realise its original   Investment Advisor performs extensive 
problems encountered in    cost or any value from due diligence covering all the major 
one product may have a     its investment.        business risks. Once the investment 
particularly damaging      It may take time and   is made, the Investment Advisor's 
effect on the prospects of significant resources  personnel work closely with portfolio 
that portfolio company.    for the Company to     companies, taking non-executive and 
Early-stage life science   realise its investment at times executive roles on portfolio 
businesses will spend a    and the portfolio      company boards, monitoring progress 
considerable proportion of company may not be     and ensuring familiarity with issues 
their resources on         successful or may not  and risks. 
research and development   grow rapidly and the   Within the Investment Advisor's 
into unproven technology,  Company may not        investment process, there is a robust 
which may be unsuccessful  realise its original   and disciplined financing and capital 
or may be commercially     cost or any value from allocation framework, focused on the 
unproductive and may       its investment.        achievement of key strategic and 
require the injection of                          development milestones ahead of any 
further capital by the                            further investment. Initial 
Company to fully exploit                          investments may involve seed funding 
the results of that                               to identify and mitigate early risks 
research.                                         before proceeding with more 
                                                  substantial investments. 
                                                  The Company ensures that it has 
                                                  sufficient liquidity to fund its 
                                                  early-stage investment programme and 
                                                  the Investment Manager and Investment 
                                                  Advisor maintain detailed financing 
                                                  and capital allocation models on an 
                                                  ongoing basis and forecasts are 
                                                  produced for the Board that contain 
                                                  appropriate stress testing. 
 
General, commercial, technological and clinical risks 
 
The Company's life science All of these risks     The Company's Investment Advisor 

investments are exposed to could potentially lead employs highly experienced personnel 
a wide range of general,   to a decline in the    who have considerable experience of 
commercial, technological  value of a portfolio   building and developing early-stage 
and clinical risks. In     company, or in extreme life science businesses. The 
particular:                cases lead to the      Investment Advisor's personnel work 
·  Negative results from   portfolio company      closely with portfolio companies, 
clinical trials            failing.               taking both executive and 
·  Intellectual property                          non-executive roles on portfolio 
may fail to be granted or                         company boards, monitoring progress 
may be infringed or copied                        and ensuring familiarity with issues 
·  Failure of a technology                        and risks. 
platform in an early-stage                        In addition, the Investment Advisor's 
company                                           team can assist the management teams 
·  Failure to obtain                              of the portfolio companies with 
regulatory approval for                           arranging specialist advice, for 
new products developed                            example, communication advice to 
·  Failure to sell                                support them dealing with issues or 
products profitably or in                         any likely issues. 
sufficient volumes 
·  Changes in 
pharmaceutical pricing 
practices 
·  Launch of competing 
products 
·  Reputational damage 
·  Targeted public 
campaigns 
·  Latent product defects 
resulting in claims 
 
Dominance of portfolio by a few larger investments and/or sector focus 
 
Within its life science    If a portfolio company The Board considers the performance 
portfolio, the Company is  experiences financial  of its largest portfolio companies 
seeking to build a focused or operational         and the portfolio's concentration on 
portfolio of up to 20      difficulties, fails to specific sub-sectors on a quarterly 
leading life science       achieve anticipated    basis. 
companies. Accordingly, a  results or, where      The Company's Investment Advisor 
large proportion of the    relevant, suffers from employs highly experienced personnel 
overall value of the life  poor stock market      who have considerable experience of 
science portfolio may, at  conditions and if, as  building and developing early-stage 
any time, be accounted for a result, its value    life science businesses. The 
by one, or a few,          were to be adversely   Investment Advisor's personnel work 
portfolio companies.       affected, this could   closely with portfolio companies, 
The Company's life science have an adverse impact taking non-executive and at times 
portfolio may also be      on the overall value   executive roles on portfolio 
focused on a small number  of the life science    companies' boards, monitoring 
of sub-sectors within the  investment portfolio.  progress and ensuring familiarity 
life science sector.       Similarly, if the      with issues and risks. 
Accordingly, a material    technology or          At 31 March 2017, the Company's three 
proportion of the overall  technologies utilised  largest investments in its life 
value of the life science  in a specific          science portfolio represented 19.4 
investment portfolio may,  sub-sector prove to be per cent of the net asset value of 
at any time, be invested   commercially           the Company. 
in a specific sub-sector.  unproductive or 
                           unsuccessful, then the 
                           value of the Company's 
                           investments in the 
                           respective sub-sector 
                           (s) could be 
                           negatively impacted. 
 
Market risk - realising investment portfolio companies 
 
Instability in equity and  It may take longer to  The Investment Advisor, alongside the 
debt markets and/or the    realise value from     portfolio company management team, is 
market's appetite for      investments in         focused on ensuring that portfolio 
investment in life science portfolio companies.   company business models appeal to 
companies could result in                         both strategic acquirers as well as 
an inability to access                            public markets. 
capital markets or realise                        In addition, the Company seeks to 
value in portfolio                                ensure that it has sufficient 
companies through sales to                        liquidity to fund its portfolio 
financial or strategic                            companies through the cycle and 
acquirers.                                        should not therefore be dependent on 
                                                  third-party funding or realisations 
                                                  from its life science portfolio to 
                                                  fund further investments into a 
                                                  portfolio company. The Investment 
                                                  Manager and Investment Advisor 
                                                  maintain detailed financing and 
                                                  capital allocation models on an 
                                                  ongoing basis and forecasts are 
                                                  produced for the Board that contain 
                                                  appropriate stress testing. To 
                                                  further mitigate this risk, the 
                                                  Investment Advisor maintains strong 
                                                  relationships with potential 
                                                  strategic acquirers and other leading 
                                                  investors in the sector. 
 
Market risk - political and economic uncertainty may negatively impact the 
Company's ability to achieve its strategic objectives 
 
Political and economic     There could be         The Company's Investment Manager and 
uncertainty, including     potential risks to     Investment Advisor monitor these 
impacts from the EU        research funding and   developments, with the help of 
referendum or similar      to attracting and      professional advisers, as 
scenarios, could have      retaining talent.      appropriate, to ensure it is prepared 
several potential impacts,                        for any potential impacts. 
including changes to the                          The UK government recognises these 
labour market available to                        challenges and we believe will seek 
the Investment Advisor and                        to address them as part of its 
underlying portfolio                              industrial strategy. 
companies, or regulatory 
environment in which the 
Company and its investment 
portfolio companies 
operate. 
 
Funds portfolio 
 
Description                Impact                 Mitigation 
 
Investment risk 
 
The funds portfolio is     Any underperformance   The Company's Investment Manager 
exposed to the risk that   of the funds portfolio employs highly experienced personnel 
its portfolio fails to     will have an impact on who have considerable experience in 
perform in line with its   net asset value of the investing in capital markets. The 
objectives if it is        Company and the        Investment Manager performs due 
inappropriately invested   longer-term liquidity  diligence on potential new 
or markets move adversely. for life science       investments, including an assessment 
The funds portfolio has    investments.           of investment risk and, after the 
significant indirect                              investment is made, post investment 
exposure to risks through                         monitoring of their performance. The 
the underlying portfolios                         Board reviews reports from the 
of the investment                                 Investment Manager at each quarterly 
entities. Due to the lack                         Board meeting, paying particular 
of transparency in many of                        attention to the constitution of the 
the underlying assets, it                         portfolio, the performance and 
is not possible to                                volatility of underlying investments 
quantify or hedge the                             and the liquidity forecast prepared 
impact of these risks on                          by the Investment Manager and 
the portfolio as each                             Investment Advisor. 
investment entity may have 
complex and changing risk 
dynamics that are not 
observable or predictable. 
These risks will include 
extensive interest, 
foreign exchange and other 
market risks which are 
magnified by significant 
gearing in many cases, 
resulting in increased 
liquidity and return risk. 
 
Operational 
 
Description                Impact                 Mitigation 
 
Failure to attract or retain key personnel 
 
The expertise, due         If the Investment      The Investment Advisor carries out 
diligence, risk management Manager and/or         regular market comparisons for staff 
skills and integrity of    Investment Advisor do  and executive remuneration. Senior 
the staff at the Company's not succeed in         executives are shareholders in the 
Investment Manager and     retaining skilled      Company and executives of the 
Investment Advisor are key personnel or are       Investment Advisor participate in the 
to the success of the      unable to continue to  Syncona Long Term Incentive Plan. In 
Company.                   attract all personnel  addition the Investment Advisor 

The industries in which    necessary for the      encourages staff development and 
the Investment Manager and development and        inclusion through coaching and 
Investment Advisor operate operation of their     mentoring and carries out regular 
are specialised and        business, they may not objective setting and appraisals. 
require highly qualified   be able to execute the The Investment Manager's personnel 
and experienced management Company's investment   are shareholders in the Company and 
and personnel.             strategy successfully. they are incentivised by the BACIT UK 
Given the relatively small                        Agreement, details of which are on 
size of the team, the                             page 65. 
execution of the Company's 
investment strategy is 
dependent on a small 
number of key individuals. 
There is a risk that 
employees could be 
approached by other 
organisations or could 
otherwise choose to leave 
the Investment Manager or 
Investment Advisor. 
 
Financing risk 
 
The financial risks, including market, credit and liquidity risk, faced by the 
Company, where relevant, are set out in note 22 of the financial statements. 
These risks and the controls in place to mitigate them are reviewed at each 
quarterly Board meeting. 
 
Financing risk and the     Lack of funding may    The Company has a strong liquidity 
inability to match funding restrict the ability   position and ensures that it has 
to the timing of           of a portfolio company sufficient liquidity to fund its 
investments by the         in the Company's life  early-stage investment programme. The 
Investment Advisor,        science portfolio to   Investment Manager and Investment 
including delayed          fund ongoing research  Advisor maintain detailed financing 
distributions from the     and development and    and capital allocation models on an 
funds portfolio, or        commercialisation      ongoing basis and forecasts are 
holdings in the funds      programmes and the     produced for each Board meeting that 
portfolio not being sold,  ability of the Company contain appropriate stress testing. 
or being sold for less     to invest in new, 
than expected.             attractive investment 
                           opportunities. 
                           This could, in some 
                           cases, result in the 
                           Investment Advisor 
                           having to seek funding 
                           from third-party 
                           investors, thereby 
                           diluting the Company's 
                           ownership of the 
                           portfolio company. In 
                           extreme cases, it may 
                           result in the 
                           portfolio company 
                           being forced to sell 
                           off its assets or 
                           cease its development, 
                           thereby impacting the 
                           value of 
                           the investment. 
 
Systems and controls 
 
The potential loss of      Disruption of the      Systems and control procedures are 
operation of core systems  business of the        developed and reviewed regularly and 
or sensitive data leading  Investment Manager and the Board receives reports annually 
to damage and disruption   /or Investment Advisor from the Investment Manager, 
to the Investment Manager  or Administrator.      Investment Advisor and Administrator 
and/or Investment Advisor                         on their internal controls. 
or Administrator's 
business. 
 
Legal and regulatory 
 
Description                Impact                 Mitigation 
 
Changes in law and regulations may adversely affect the Company 
 
The Company is subject to  Any material changes   The Company, its Investment Manager 
laws and regulations of    to laws or regulations and Investment Advisor utilise 
national and local         could adversely affect professional advisers, as 
governments. In            the Company, its       appropriate, to support its 
particular, the Company is Investment Manager and monitoring of, and response to, 
subject to, and is         Investment Advisor, in changes in law and regulation, 
required to comply with,   the ability to operate including any changes in tax or other 
regulation of the UKLA and in accordance with any legislation. 
certain regulatory         such changed 
requirements that are      requirements. This 
applicable to registered   could in turn 
closed-ended collective    adversely affect the 
investment schemes which   returns that 
are domiciled in Guernsey. shareholders may 
In addition, changes in    receive from the 
legislation and government Company. 
policy may occur that 
could adversely impact the 
ability of the Investment 
Manager and Investment 
Advisor to execute the 
investment strategy of the 
Company. Changes to tax 
laws may impact the 
Company's returns or the 
returns that shareholders 
may receive from the 
Company. 
 
 
 
END 
 

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July 21, 2017 05:14 ET (09:14 GMT)