CIC Annual Report 2021

Annual Report and Accounts for the year ended 31 March 2021

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CAMBRIDGE INNOVATION CAPITAL

WELCOME TO

WE ENABLE VISIONARIES TO BUILD GLOBAL, CATEGORY-LEADING COMPANIES Cambridge Innovation Capital (CIC) is a leading venture capital investor backing and building category-leading deep tech and life sciences companies in the Cambridge ecosystem.

Our unique relationship with the University of Cambridge, and 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 businesses to create sustainable value for our stakeholders.

During a globally challenging year, CIC has continued to thrive. We have launched our new fund, Fund II, expanded our investment team and completed the first exit from our balance sheet portfolio.

EDWARD BENTHALL CHAIRMAN

ANNUAL REPORT AND ACCOUNTS FOR THE YEAR ENDED 31 MARCH 2021

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OVERVIEW

STRATEGIC REPORT

GOVERNANCE

FINANCIAL STATEMENTS

OVERVIEW Welcome to Cambridge Innovation Capital

IFC

Our value proposition

02

Our responsible approach

04

At a glance

06

STRATEGIC REPORT Our external environment

12

How we create value

16

Our strategic priorities

18

How we measure success

20

Operational report

21

Financial review

40

GOVERNANCE

ݣ300M

SECURED FOR INVESTMENT

£193M

INVESTED/COMMITTED

30

COMPANIES For portfolio companies under management at 31 March 2021

Corporate governance and risk management framework

42

Leadership team and Board of Directors

48

Directors’ report

51

Statement of Directors’ responsibilities

53

FINANCIAL STATEMENTS Independent auditors’ report

54

Consolidated statement of comprehensive income

56

Consolidated statement of financial position

57

Consolidated statement of changes in equity

58

Consolidated statement of cash flows

59

Notes to the consolidated financial statements

60

Company balance sheet

73

Company statement of changes in equity

74

Notes to the Company financial statements Company information

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75 IBC

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CAMBRIDGE INNOVATION 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 EXTERNAL ENVIRONMENT ON PAGES 12 TO 15

READ ABOUT HOW WE CREATE VALUE ON PAGES 16 AND 17

RIGOROUS AND INSIGHTFUL ANALYSIS

A BALANCED AND DIVERSE PORTFOLIO

to identify the best opportunities

of ambitious life science and technology companies

READ MORE IN THE OPERATIONAL REPORT ON PAGES 21 TO 39

READ MORE IN THE OPERATIONAL REPORT ON PAGES 21 TO 39

KNOWLEDGEABLE AND EXPERIENCED TEAM with an extensive global network READ ABOUT OUR LEADERSHIP TEAM ON PAGES 48 TO 50

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OVERVIEW

STRATEGIC REPORT

FINANCIAL STATEMENTS

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GOVERNANCE

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CAMBRIDGE INNOVATION CAPITAL

OUR RESPONSIBLE APPROACH

How we conduct ourselves and how we do business is extremely important to everyone at CIC. We strive to be good citizens and successful business partners whilst achieving the best results.

WE WANT TO ACHIEVE THE EXTRAORDINARY

BUT NOT AT ANY COST

WE HAVE A PASSION FOR LEARNING AND KNOWLEDGE

We think big and believe anything is possible

We are committed to doing the right thing, even when no one else is looking

We are a people business and our success is built on enabling the growth and development of our team

We seek to be the best at what we do We are pioneers, we are bold

We speak with honesty, think with sincerity, act with integrity

We seek to ensure all members of our team are effective and fulfilled in their work

OUR IMPACT REPORT CIC seeks to achieve strong financial returns for its stakeholders by investing in best-inclass companies and supporting the growth of those companies with available resources.

Incorporating the consideration of ESG (environmental, social and governance) factors into our investment practice aligns the investment activities with our core values and broader societal objectives.

By enabling the transition of innovation and entrepreneurship into global businesses, CIC’s investments are expected to deliver a positive impact, both in terms of the goods and services produced and in terms of the businesses themselves.

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As an anchor institution in the Cambridge ecosystem, we seek to demonstrate leadership by working with our partners and co-investors in Cambridge, and the broader innovation ecosystem, to accelerate the consideration of ESG factors in our portfolio companies.

We are delighted to report that later this year we will issue our inaugural Impact Report which will include, inter alia, a summary of our impact strategy, details of our impact KPIs, a description of our approach to responsible investment, selected portfolio company case studies and certain aggregated impact and ESG data collected from our portfolio companies.

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OVERVIEW

STRATEGIC REPORT

GOVERNANCE

FINANCIAL STATEMENTS

We believe our values will help us build a prosperous and sustainable future, enhance financial returns and have a positive impact on our stakeholders. These values were developed by our amazing team and truly characterise what it means to be part of CIC.

AND KNOW WE ARE STRONGER TOGETHER

WE WANT A CULTURE AND TAKE PRIDE WHERE EVERYONE IN GIVING CAN BE THEMSELVES SOMETHING BACK

We use our combined resources, internally and in the Cambridge ecosystem, to get the best results

We celebrate different views and seek to avoid hierarchies

We pride ourselves on our ability to collaborate across sectors and markets

Each person on our team matters and plays an important role in our organisation’s success

We contribute positively to the Cambridge ecosystem, making it a great place to work, live and thrive

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As individuals and an organisation, we can make a real difference to the future, our community and the environment

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CAMBRIDGE INNOVATION CAPITAL

AT A GLANCE

Cambridge Innovation Capital was established as an independent entity 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 more than £300 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.

We have committed £193 million of funds raised and now have 30 deep tech and life science portfolio 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.

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 A MEMBER OF CIC’S ADVISORY PANEL

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

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OVERVIEW

STRATEGIC REPORT

GOVERNANCE

FINANCIAL STATEMENTS

OUR PORTFOLIO

We have a balanced and diverse portfolio of companies.

SOFTWARE PLATFORMS

SOFTWARE APPLICATIONS

HARDWARE APPLICATIONS

THERAPEUTICS

•

Next-generation AI technologies

•

Internet of Things, RFID, NFC

•

Robotics

•

•

Medical devices

Small and large molecules

•

Edge and Cloud computing

•

AI for Audio, speech, business intelligence

•

Liquid biopsy

•

Gene therapies

•

Cell therapies

Quantum computing

•

•

Digital therapeutics and pathology

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CAMBRIDGE INNOVATION CAPITAL

AT A GLANCE CONTINUED

OUR PERFORMANCE

We have continued to make good progress and have grown the value of our portfolio, despite the challenging market conditions.

GROUP FINANCIALS

PORTFOLIO COMPANIES UNDER MANAGEMENT

PROFIT

£65M

CARRYING VALUE

2020: £53m

£399M 2020: £292m

NET ASSETS

£410M

CAPITAL INVESTED IN THE YEAR

2020: £302m

2020: £36m

CASH RESOURCES*

£61M

FAIR VALUE CHANGES IN THE YEAR

2020: £92m

2020: £70m

NET ASSETS PER SHARE

129P

NUMBER OF COMPANIES

2020: 110p

2020: 30

£29M £78M 30

* Comprising cash and deposits of £36 million (2020: £23 million) and capital available for drawdown from shareholders of £25 million (2020: £69 million).

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OVERVIEW

STRATEGIC REPORT

GOVERNANCE

FINANCIAL STATEMENTS

Other

PORTFOLIO COMPANIES UNDER MANAGEMENT HAVE A CARRYING VALUE OF

£399M

Graphic represents carrying value at 31 March 2021

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CAMBRIDGE INNOVATION CAPITAL

AT A GLANCE CONTINUED

KEY COMPONENTS TO OUR SUCCESS

Our business model, our relationship with the University and the Cambridge ecosystem and our people form the foundation of our success which is ultimately measured by the returns from exiting our portfolio companies under management.

OUR BUSINESS MODEL

OUR RELATIONSHIP WITH THE UNIVERSITY AND CAMBRIDGE ECOSYSTEM

Our sole focus on the Cambridge ecosystem and unique position, as a preferred investor for the University of Cambridge and founders and co-owners of two accelerators, 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.

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

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.

The University of Cambridge is the top source of founders of European venture-backed start-ups.

The State of European Tech 2018, Atomico

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OVERVIEW

STRATEGIC REPORT

GOVERNANCE

FINANCIAL STATEMENTS

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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CAMBRIDGE INNOVATION CAPITAL

OUR EXTERNAL ENVIRONMENT

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 68,000 highly skilled employees and generating £18 billion in turnover working alongside a further 37,000 people at university and research organisations in the area. Cambridge has created 20 billiondollar businesses to date and the University of Cambridge is consistently ranked one of the top five universities in the world. Cambridge is also the European location of choice for numerous global technology companies, including Amazon, Aveva, 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, 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, 110 Nobel Prize winners and the research and development departments of over 60 multinational businesses, Cambridge has generated 20 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, 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 earlystage investment ecosystem which includes: •

two accelerators, Start Codon and Deeptech Labs, that we have co-founded to bridge the gap between translational research and Series A ready businesses;

•

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.

This combination of commercial and scientific expertise, working in tandem, has promoted the propagation of a wide range of intellectual property rich businesses.

The growth story of Cambridge is a series of layers but the kernel is indigenous companies. Those companies formed and based here have grown unbelievably fast.

MATTHEW BULLOCK MASTER OF ST EDMUND’S COLLEGE FROM 2014 TO 2019

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OVERVIEW

STRATEGIC REPORT

GOVERNANCE

FINANCIAL STATEMENTS

CAMBRIDGE IS AT THE HEART OF ONE OF THE MOST SUCCESSFUL TECHNOLOGY-BASED BUSINESS COMMUNITIES IN THE WORLD WORLD-CLASS ACADEMIC AND COMMERCIAL RESEARCH

RICH POOL OF EXCEPTIONAL TALENT

SUBSTANTIAL SEED AND EARLY-STAGE CAPITAL

KEY TRENDS AND OPPORTUNITIES

DEEP HERITAGE AND PROVEN ECOSYSTEM TO HELP SCALE KNOWLEDGE INTENSIVE START-UPS

GLOBAL TECH COMPANIES OFFER POTENTIAL FOR STRATEGIC PARTNERSHIPS AND CHANNELS TO MARKET

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.

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.

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

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.

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.

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.

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.

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.

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CAMBRIDGE INNOVATION CAPITAL

OUR EXTERNAL ENVIRONMENT CONTINUED

With our key differentiators, we are ideally positioned to leverage the key trends and opportunities in our market.

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

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 benefit from a long-term partnership with, and permanent link to, the University

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 handson support to bridge the gap between translational research and Series A ready 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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We have unique access to Cambridge Enterprise and its information systems, investment meetings and potential spin-out pipeline We can exercise co-investment and pre-emption rights to existing and future University equity stakes

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

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OVERVIEW

STRATEGIC REPORT

GOVERNANCE

FINANCIAL STATEMENTS

WE ARE A LEADING INVESTOR

WE ARE A VALUEADDING PARTNER

WE ARE SECTOR EXPERTS

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

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

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

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

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CAMBRIDGE INNOVATION CAPITAL

HOW WE CREATE VALUE

WE ENABLE VISIONARIES TO BUILD GLOBAL, CATEGORY-LEADING COMPANIES

1.

Our unique access helps us to source opportunities

4.

We create sustainable value for our stakeholders

2.

We select the businesses with the best potential

3.

We build global, categoryleading companies

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

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OVERVIEW

1.

STRATEGIC REPORT

OUR UNIQUE ACCESS HELPS US TO SOURCE OPPORTUNITIES

AS A PREFERRED INVESTOR FOR THE UNIVERSITY

2.

GOVERNANCE

FINANCIAL STATEMENTS

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

Co-investment rights at inception/seed stage

•

Pre-emption rights of existing and future University equity stakes

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

•

Access to a broad range of academic and industry experts

•

Unparalleled access to opportunities emerging from the University

• •

OUR FOCUS ON CAMBRIDGE •

Co-founder and investor in two Cambridge-based accelerators

OUR PROCESS •

Rigorous and insightful analysis

•

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

•

Diligent and considered approval process

•

Bold and fearless decision making

OUR REPUTATION •

Deep domain and operational expertise

•

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

4.

WE CREATE SUSTAINABLE VALUE FOR OUR STAKEHOLDERS

OUR INVESTORS •

OUR PEOPLE

We create and then realise value for our investors

OUR PORTFOLIO COMPANIES •

3.

WE BUILD GLOBAL, CATEGORYLEADING COMPANIES

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

•

Active involvement in developing and implementing the strategy of the business

•

Monitor progress towards achieving key milestones

OUR PHILOSOPHY •

Think big and believe anything is possible

THE UNIVERSITY OF CAMBRIDGE

•

Collaborate across markets and sectors

•

•

Apply simple, transparent and fair investment structures

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

THE CAMBRIDGE ECOSYSTEM •

We are passionate about positively impacting the community in which we live and work

OUR NETWORK •

Strategic and financial syndicate partners

•

Local and global life science and technology companies

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

We are focused on maintaining our position and reputation as a leading investor in the Cambridge ecosystem, allowing us to select companies with the potential for superior returns for the benefit of our stakeholders.

OUR AIMS

BE THE FIRST CHOICE FOR ENTREPRENEURS, STARTUPS 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 Continue to recruit and retain a world-class team with a unique set of skills Strive to add value to every interaction

Execute our rigorous screening and approval process Invest in companies that have the potential to disrupt whole markets and sectors Optimise each investment by taking a handson approach and adding value

LINK TO KPIs

LINK TO PRINCIPAL RISKS

Number of companies

Carrying value

Net assets

Capital invested in the year

Realisations

Fair value changes in the year

1

5

7

1

2 5 6 7

READ ABOUT HOW WE MEASURE SUCCESS ON PAGE 20 READ ABOUT OUR PRINCIPAL RISKS ON PAGES 44 TO 47

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OVERVIEW

STRATEGIC REPORT

GOVERNANCE

FINANCIAL STATEMENTS

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

HOW WE MEASURE SUCCESS We use a range of key performance indicators (KPIs) to measure our progress in delivering our strategic priorities.

NET ASSETS

GROWTH IN NET ASSETS

NET ASSETS PER SHARE

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

COMMENTARY

£301.7m

94.2p

£62.4m

£206.4m

2019

129.0p

£108.7m £95.3m

£410.4m

PERFORMANCE

DESCRIPTION

KPIs FOR GROUP FINANCIALS

2020

2021

2019

2020

2019

2021

109.8p

2020

2021

The increase in the year arises from fair value changes of £78.1 million (2020: £69.5 million) and net proceeds from the issue of shares of £43.9 million (2020: £42.5 million), less net operational expenditure which includes a provision of £8.3 million (2020: £12.3 million) 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 £124.9 million (2020: £81.1 million) has been drawn down

KPIs FOR PORTFOLIO COMPANIES UNDER MANAGEMENT

COMMENTARY

PERFORMANCE

DESCRIPTION

CARRYING VALUE The carrying value of portfolio companies under management

£399.1 m

CAPITAL INVESTED IN THE YEAR

FAIR VALUE CHANGES IN THE YEAR

The total capital invested into portfolio companies under management during the year

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

£44.9m

£186.3m

REALISATIONS

The number of portfolio companies managed by the Group

The cumulative cash received in relation to portfolio companies under management

30

£78.1 m £69.5m

£35.7m £29.5m

£291.5m

NUMBER OF COMPANIES

£0.3m £0.3m

30

26 £30.7m

£0.0m

2019

2020

2021

The £107.6 million increase (2020: £105.2 million) is attributable to capital invested and fair value changes during the year

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2019

2020

2021

Funds were deployed into two new and 13 existing portfolio companies, increasing the cumulative amount invested to £192.5 million (2020: £163.0 million) from 297 (2020: 236) opportunities reviewed in the year

2019

2020

2021

Fair value changes in the year increased cumulative changes to £206.6 million (2020: £128.5 million), representing a 107% (2020: 79%) uplift on invested capital

2019

2020

2021

During the year we invested in two new companies, two companies were acquired by a third party in return for equity in the third party and one company was liquidated

2019

2020

2021

During the year the Group did not realise any cash from portfolio companies under management

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OVERVIEW

STRATEGIC REPORT

GOVERNANCE

FINANCIAL STATEMENTS

OPERATIONAL REPORT We are delighted to report that the last year has been transformational for our business, despite the challenges posed by the global coronavirus pandemic. We have completed the first close of our new fund (Fund II) that we will manage alongside our balance sheet investments, and we have already added three companies to Fund II’s portfolio including Seldon Technologies, an Open Source DevOps company, further details of which are provided on pages 38 and 39.

Our balance sheet portfolio goes from strength to strength and now includes one company valued significantly in excess of £1 billion and two more, Bicycle Therapeutics and Centessa Pharmaceuticals, that are publicly traded on Nasdaq. In addition, since the year end we have announced that NeoGenomics, a leading provider of cancer-focused genetic testing services and global oncology contract research services, has acquired Inivata, our liquid biopsy company. The acquisition follows a $25 million investment

by NeoGenomics in Inivata that completed in May 2020, at which time NeoGenomics also secured a fixed price option to purchase the shares it did not own for $390 million.

PUTTING CAPITAL TO WORK

We first invested in Inivata at the seed round and have participated in every round since, validating our differentiated strategy of gaining early access to the most innovative life sciences and technology companies in the Cambridge ecosystem and supporting them through their lifecycles. Inivata’s InVision® platform unlocks essential genomic information from a simple blood draw to guide and personalise cancer treatment, monitor response and detect relapse. We are thrilled that this acquisition will accelerate patients’ access to Inivata’s groundbreaking technology that is based on the pioneering work of Dr Nitzan Rosenfeld from the Cancer Research UK Cambridge Institute.

In May 2020 we invested in PetMedix, a biopharmaceutical company developing antibody-based therapeutics for companion animals, as a direct investment from the Group’s balance sheet. PetMedix has developed an innovative platform for the creation of naturally generated, fully species-specific therapeutic antibodies, enabling the discovery of its own veterinary medicines to target some of the most important clinical areas in animal health.

Our funding will be used to further the development of PetMedix’s unique platform and pipeline, and we are delighted to support the company’s exciting growth transition from biotechnology start-up to clinical-stage animal health company.

IMPACT OF THE CORONAVIRUS PANDEMIC We are pleased to report that the deep technology and life sciences sectors in which we invest have weathered the coronavirus storm well and our portfolio has continued to grow healthily. We have implemented various measures to ensure that our office is COVID-secure but in accordance with government guidance we are working from home when possible. As a result we are conducting a significant proportion of our investment and portfolio support activities remotely.

We have continued to work with our portfolio companies to mitigate the impact of business interruption and other challenges posed by the world’s response to the pandemic.

This has included successfully applying for the government schemes that have been introduced during the current climate, specifically the Coronavirus Job Retention Scheme and the Future Fund for innovative businesses.

Having initially experienced a significant slowdown in venture capital activity as other investors, like us, focused on supporting their existing portfolios, we are pleased to report that several of our portfolio companies are making significant commercial progress and our pipeline for Fund II contains several particularly exciting opportunities.

During the year ended 31 March 2021, the Group has completed 21 transactions (2020: 22) and deployed a total of £25.9 million (2020: £35.7 million) in two new and 13 existing portfolio companies, such that cumulatively £192.5 million (2020: £163.0 million) has been invested by the Group, or funds managed by the Group, since CIC’s incorporation.

EXPANDING THE PORTFOLIO

More recently we co-led a £7.1 million Series A investment in Seldon, an Open Source DevOps company providing enterprises with the tools to manage, serve and optimise their machine learning models at scale, as the first investment by Fund II. Seldon is a cloud agnostic machine learning deployment specialist which works in partnership with industry leaders such as Google, Red Hat, IBM and Amazon Web Services. Seldon’s suite of products enhances machine learning deployment pipelines with best-in-class explainability, governance and monitoring functions. The company’s flagship open-source project, Seldon Core, has over 700,000 models deployed to date, drastically reducing friction for users deploying machine learning models.

Seldon’s technology can help to ensure decisions made by machine learning algorithms are transparent and ethical, enabling customers to regulate the deployment of their models with significant oversight.

We have significant cash resources and are, therefore, in a strong position to maintain our support for portfolio companies under management and enhance their aggregate value.

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CAMBRIDGE INNOVATION CAPITAL

OPERATIONAL REPORT CONTINUED

SUPPORTING THE EXISTING PORTFOLIO Congenica, the digital health company enabling rapid and accurate analysis of complex genomic data to transform people’s lives, in which we participated in a £39.0 million ($50 million) Series C round co-led by Tencent and Legal & General. The new funding is aimed at accelerating international market development and driving further expansion of Congenica’s product platform into somatic cancer, wellness and through partnerships with pharmaceutical companies. Furthermore, Congenica will deliver advanced capabilities including the ability to integrate with existing electronic health systems and deliver fully automated interpretation capability.

GeoSpock, the Cambridge-based pioneer of world-scale data analysis and integration, in which we co-led a $5.4 million Series A investment round alongside nChain, a world-leading provider of enterprise-grade public blockchain solutions, with Global Brain and NTT DOCOMO also participating. This transformational round will underpin GeoSpock’s further international expansion and set the stage for unprecedented opportunity to develop novel blockchain applications for national and world-scale datasets.

Gyroscope, a clinical-stage gene therapy company focused on treating diseases of the eye, completed a £107.8 million ($148 million) Series C financing led by Forbion’s Growth Opportunities Fund. Proceeds from the financing will be used to advance the clinical development of the company’s lead investigational gene therapy, GT005, as well as its early stage pipeline and innovative delivery technology, including its proprietary Orbit™ subretinal delivery system. GT005 is being evaluated for the treatment of geographic atrophy secondary to age-related macular degeneration. GT005 has received Fast Track designation from the US Food and Drug Administration and is currently being evaluated in Phase II clinical trials in two genetically defined patient populations with geographic atrophy.

PragmatIC, a world leader in flexible electronics, raised over £13.0 million to support ongoing production rampup, accelerate manufacturing optimisation and drive continued product innovation. PragmatIC also appointed Erik Langaker, previously Chair of CMR Surgical, as independent Chair to complement its existing strong Board of Directors. Erik has an extensive background of developing and commercialising technology businesses, with 30 years’ international experience in private equity and entrepreneurial ventures. He has been an active investor and chair, or board director, in 25 companies, many of which are operating in sectors complementary to PragmatIC. Riverlane, a quantum computing software developer transforming the discovery of new materials and drugs, in which we participated in a £14.6 million ($20 million) Series A round. The funding will be used to build Deltaflow, Riverlane’s operating system for quantum computers. Quantum computers will change the world by solving problems that are fundamentally impossible to solve on classical computers. This step change in computing power will have an enormous impact on a variety of industries, for example the pharmaceuticals and materials industry. Over the next five years we will continue to see rapid progress in quantum hardware development and, as the quantum industry develops, it’s vital that software is built on a solid foundation.

Sense Biodetection, which is developing a portfolio of instrument-free, point-of-care molecular diagnostic tests, announced that it had raised £35.7 million ($50 million) in a Series B round led by Koch Disruptive Technologies, a subsidiary of Koch Industries, Inc. The funds will be used to advance commercialisation of Sense’s COVID-19 product, Veros™, and continue development of a portfolio of instrument-free, rapid molecular tests that enable improved access, outcomes, and value through patient-focused decentralised healthcare. The Veros™ platform introduces novel and proprietary rapid molecular amplification technology to detect a variety of deadly and costly diseases.

Microbiotica, a leading player in microbiome-based therapeutics and biomarkers, raised £10 million to support its pioneering work on identifying gut bacteria linked to phenotype with unprecedented precision in order to discover and develop live bacterial therapeutics and biomarkers.

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OVERVIEW

STRATEGIC REPORT

GOVERNANCE

FINANCIAL STATEMENTS

Investments directly from the Group’s balance sheet in existing portfolio companies have resulted in a fair value gain of £78.1 million (2020: £69.5 million), which has increased the cumulative net fair value gain to £206.6 million (2020: £128.5 million), representing an 110% (2020: 79%) uplift on the invested capital as set out below.

31 March 2020 £ million

Case study

31 March 2021

Activity during the year

Cost of investment

Fair value changes

Carrying value

Cost of investment

Fair value changes

Carrying value

129.9

Significant investments and activity during the year CMR Surgical

Page 28

24.5

76.8

101.3

–

28.6

Inivata

Page 30

18.5

9.9

28.4

–

21.8

50.2

Bicycle Therapeutics

Page 32

14.5

6.7

21.2

–

16.7

37.9

PragmatIC Semiconductor

Page 34

13.4

7.8

21.2

3.5

–

24.7

Congenica

Page 36

5.5

7.3

12.8

3.0

0.5

16.3

Sense Biodetection

2.5

–

2.5

3.5

5.0

11.0

Riverlane

2.0

–

2.0

1.8

6.4

10.2

Gyroscope Therapeutics

2.6

0.3

2.9

2.7

0.8

6.4

–

–

–

2.3

–

2.3

PetMedix Other investments

79.5

19.7

99.2

8.2

163.0

128.5

291.5

25.0

105.7 394.6

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CAMBRIDGE INNOVATION CAPITAL

OPERATIONAL REPORT CONTINUED

DRIVING COMMERCIAL PROGRESS Bicycle Therapeutics (NASDAQ: BCYC), a biotechnology company pioneering a new and differentiated class of therapeutics based on its proprietary bicyclic peptide (Bicycle®) technology, has made substantial progress across its internal programmes, which consist of Bicycle Toxin Conjugates (BTC) targeting oncological indications as well as novel, fully synthetic, Bicycle tumour-targeted immune cell agonists. Bicycle’s lead BTC programme (BT1718) is actively enrolling patients in its Phase IIa trial which consists of two solid tumour cohorts, one focused on squamous non-small cell lung cancer (NSCLC) and the other in an all-comers “basket” cohort. The company’s next most advanced BTC programme (BT5528) is in the doseescalation stage of the Phase I trial where preliminary signs of anti-tumour activity have been observed. The company has also made progress on its Bicycle-based partnered programmes outside of oncology, demonstrating the broad utility of the platform and its potential to develop novel therapeutics for a broad range of diseases.

CMR Surgical, a global surgical robotics business, announced the successful completion of over 1,000 in-human surgeries with the Versius® Surgical Robotic System following the launch of the systemin several healthcare settings across Europe, India and Australia including, inter alia: •

Argenteuil Hospital, a leading public health centre based near Paris, France. This announcement followed a competitive tender with Versius® being selected as a preferred surgical robotic system for minimal access surgery (MAS) by Resah – one of the largest public purchasing centres in the health sector, which collaborates with more than 700 public and private nonprofit hospital, medico-social and social centres;

•

Frimley Health NHS Foundation Trust, a well-established surgical robotics centre, which became the first hospital in the UK to use Versius® in urology, as well as in colorectal surgery;

•

Klinikum Chemnitz, a leading public hospital based in Saxony, which became the first German hospital to install Versius® for a broad range of laparoscopic procedures;

•

several hospitals in India including Swagat Hospital, in Guwahati, Lima Hospital in Chennai and SP Well Forte in Trivandrum; and

•

Macquarie University Hospital in Sydney following approval of Versius® from the Australian Therapeutic Goods Administration for use in general, gynaecological and urologic laparoscopic surgical procedures.

Imagen, the intuitive video management platform, announced a partnership with Newsbridge, the Paris-based AI-powered story production platform, and Broadcast Solutions, the leading broadcast tech solutions company, to facilitate the distribution of media to journalists and media organisations around the world. The combination of best-inclass tools creates one system to provide broadcasters with increased efficiency and faster speed-to-market, which is vital in today’s fast-paced media landscape.

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Microbiotica, a leading player in microbiome-based therapeutics and biomarkers, announced a collaboration with Cancer Research UK and Cambridge University Hospitals NHS Foundation Trust (CUH), to identify and develop microbiome co-therapeutics and biomarkers for cancer patients receiving immune checkpoint inhibitor therapy. The collaboration is based on clinical studies conducted by CUH that evaluate immune checkpoint inhibitor drug response in cancer patients, combined with Microbiotica’s unrivalled microbiome profiling and analysis capability. Two clinical studies are involved: MELRESIST, a completed class-leading melanoma study, and MITRE, a major landmark study in melanoma, lung and renal cancer, involving 1,800 patients, specifically designed for evaluation of microbiome and other biomarker effects.

PetMedix, a biopharmaceutical company developing antibody-based therapeutics for companion animals, announced that it had entered into a multi-year partnership to develop novel and transformative companion animal antibody therapeutics using PetMedix’s proprietary Ky9™ platform. As part of the collaboration, PetMedix will undertake discovery activities against a number of key targets, and Boehringer Ingelheim will work to develop and bring these therapies to market.

PragmatIC Semiconductor, announced that it had partnered with Avery Dennison and Schreiner MediPharm to leverage NFC technology to extend smart packaging to the unit-level for everyday pharma in order to significantly improve patient safety and experiences. State-of-the-art NFC technology has a lot to offer in smart packaging applications, it can be used for tamper evidence, secure authentication, end-to-end traceability and easy re-ordering. In the case of pharmaceutical products it can also connect the patient to, not only easy-to-read instructions, but also video/audio guides, help lines, social media support groups and even to their doctor or clinician.

Riverlane, a quantum software company, publicly released the first version of Deltaflow.

OS; ‘Deltaflow-on-ARTIQ’ just a few months after receiving a grant to develop and install an operating system across the UK’s quantum computers. Deltaflow.OS, created by Riverlane and tested in partnership with Oxford Ionics, could open up a quantum software market and establish the UK’s standing in the technology by creating a single system that can be used across a range of quantum computers. The release of Deltaflow-onARTIQ marks a significant step towards building a quantum operating system that is high performance, portable across all qubit technologies and scalable to millions of qubits.

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OVERVIEW

STRATEGIC REPORT

FINANCIAL STATEMENTS

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GOVERNANCE

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CAMBRIDGE INNOVATION CAPITAL

OPERATIONAL REPORT CONTINUED

SEEDING FUTURE OPPORTUNITIES We have previously reported our role in founding Start Codon and Deeptech Labs, two Cambridge-based accelerators that are focused on accelerating the translation of world-class research into commercially successful companies. Further details are provided on page 27.

During the year we were delighted to announce that, together with Novartis International AG, we had contributed to Start Codon’s first fund which closed at £15 million.

These funds will be used to support Start Codon’s offering to start-ups, which includes a minimum of £0.25 million of seed funding, business support services, expert guidance and access to cutting-edge office and lab facilities. Start Codon plans to invest in and support up to 50 startup companies over the next five years and has recently enrolled its second cohort of start-ups.

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.

AUGMENTING OUR TEAM We have continued to expand our team and are delighted to welcome Ian Jauncey, as an Operating Partner, and Chris Tapper, as an Associate, to our investment team.

Ian is a technology and life sciences investor and entrepreneur. He shares his time between managing his private investment portfolio and assisting our companies through critical growth stages. Following university, Ian was the lead in the world-beating team that invented the first optical fibre amplifier, a key enabler for the internet. He then worked in analysis and consultancy, eventually heading up a business division for Siemens AG, before initiating several tech businesses, acquiring others and expanding them internationally, leading to multiple exits.

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Chris specialises in life science investments. He previously worked at C4X Discovery, an AIM-listed drug discovery biotechnology company, as part of the Corporate Strategy and Development team, where he focused on identifying and sourcing opportunities for in-licensing, collaboration and internal development. Chris also brings a background in strategy consulting and due diligence support, working in L.E.K. Consulting’s Life Sciences practice across the UK and US.

FUTURE OUTLOOK Cambridge Innovation Capital is recognised as a leading provider of capital and expertise in the Cambridge ecosystem and despite the impact of the coronavirus pandemic on our working practices, we have continued to support our portfolio companies and the wider community in which we work. We are delighted that several companies within our portfolio are demonstrating significant commercial traction and we are extremely proud that our businesses are making a material improvement to the world in which we live. We look forward with much anticipation to realising the value being generated by our portfolio and the future development of our business.

MICHAEL ANSTEY PARTNER

ROBERT TANSLEY PARTNER

VIN LINGATHOTI PARTNER

ANDREW WILLIAMSON MANAGING PARTNER

ROB SPRAWSON PARTNER AND CFO

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OVERVIEW

STRATEGIC REPORT

GOVERNANCE

FINANCIAL STATEMENTS

CAMBRIDGE ACCELERATORS OPERATIONAL REPORT CONTINUED

We have worked closely with key stakeholders in the Cambridge ecosystem to establish two 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 structured and intensive programmes, ending in a demo day.

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.

As a limited partner in the accelerator funds, CIC will benefit from pre-emption rights in companies participating in the accelerators.

THE PROGRAMME AND SUPPORT OFFERED TO ENTREPRENEURS The accelerators support early stage businesses in multiple ways, including providing: •

seed funding;

•

state-of-the-art lab and office space;

•

access to expert and hands on practitioners to support business model development and product-directed discovery;

•

integration into the Cambridge ecosystem; and

•

access to a global network of investors and corporate partners.

PROGRESS UPDATE Start Codon achieved its goal of raising a £15 million fund with Novartis International AG and others investing alongside CIC. To date, Start Codon has invested in nine companies across two cohorts.

Deeptech Labs was established in February 2020 and, having appointed Miles Kirby as CEO in November 2020, is now in the process of raising its first fund. Miles has US and European experience in both financial and corporate venture investing having previously managed the €150 million AV8 Ventures fund and Qualcomm’s Venture Capital group in Europe.

KEY PEOPLE

Ian Thomlinson Chairman

Jason Mellad CEO

Ewan Kirk Chairman

Miles Kirby CEO

Formerly SVP Global BD, GSK

Formerly CEO, Cambridge Epigenetics

Co-founder & CEO, Cantab Capital

Formerly Founder, AV8 Ventures

CO-OWNERS AND PARTNERS

GOVERNANCE

CIC is represented on the Board and Investment Committee

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CAMBRIDGE INNOVATION CAPITAL

CMR SURGICAL OPERATIONAL REPORT CONTINUED

TRANSFORMING SURGERY. FOR GOOD. COMPANY DESCRIPTION CMR Surgical (CMR) is on a mission to transform surgery for patients around the world, with innovative technology and extensive data collection that can improve surgical results. In only six years, CMR has gone from initial concept to Versius®, its next-generation surgical robotic system which has been used to perform over 1,000 procedures globally, including in the UK’s NHS. Versius® brings all the benefits of keyhole surgery to the patient while providing surgeons with greater dexterity, precision, and better visualisation than manual keyhole surgery, allowing them to perform more complex procedures. Fitting into virtually any operating room set-up and integrating seamlessly into existing workflows, Versius® enables hospitals to offer higher quality keyhole surgery that is cost-effective across the entire patient episode.

INVESTMENT THESIS Differentiated, novel concept for next generation surgical robotic system protected by significant patent portfolio. Rapidly growing global market for medical robots driven by growing appreciation of the benefits of keyhole surgery.

RECENT DEVELOPMENTS •

Continued flow of Versius® orders with global sales expansion ongoing

•

New adoptions in key hospitals across Europe, India, the Middle East and Australia

•

Strategic partnership formed with Gulf Drug, a medical equipment supplier in the United Arab Emirates, to increase commercial presence across the Middle East

•

Successful completion of 1,000+ procedures

FUTURE GROWTH PLANS CMR’s ambition is to make the benefits of keyhole surgery available to everyone who needs it by building the world’s best medical robotic system and making it available at an affordable price. Building on its incredibly strong technical and corporate foundation, the company is looking to rapidly ramp up manufacturing and deployment in its existing markets while expanding its geographical spread beyond its current core markets in Europe, Asia and the Middle East.

The company will continue to invest heavily in R&D as well as manufacturing and commercial capability to deliver the optimal surgeon experience. In order to achieve these goals, the company will need to continually focus on recruiting new talent across the world and developing its fantastic existing team. The board will need to remain constructive, challenging and supportive and encourage the company never to lose its entrepreneurial spirit that has delivered so much in such a short period of time.

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£129.9M CARRYING VALUE

8.7%

EQUITY HOLDING

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OVERVIEW

STRATEGIC REPORT

GOVERNANCE

FINANCIAL STATEMENTS

CMR Surgical has grown rapidly over the past few years with Versius, our nextgeneration surgical robotic system, now being used in hospitals across the world to transform the way keyhole surgery is performed. Our success is in no small part thanks to CIC, who has always had the long-term vision to support CMR. Since its initial investment, CIC has continued to support our growth and has always shared in our mission to transform surgery, for good.

PER VERGARD NERSETH CEO

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INIVATA OPERATIONAL REPORT CONTINUED

INIVATA IS TRANSFORMING THE LIVES OF CANCER PATIENTS AND THEIR FAMILIES THROUGH THE POWER OF LIQUID BIOPSY

£50.2M CARRYING VALUE

16.4% EQUITY HOLDING

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OVERVIEW

STRATEGIC REPORT

COMPANY DESCRIPTION Inivata develops innovative liquid biopsy technology, which can unlock essential genomic information from a simple blood draw to guide and personalise cancer treatment, monitor response and detect relapse.

Inivata’s InVisionFirst®-Lung product is commercialised in the US by specialist oncology diagnostics company, NeoGenomics to improve the management of patients with lung cancer.

Through the measurement of circulating tumour DNA (ctDNA) in blood, liquid biopsy is an increasingly important tool for optimising the management of cancer patients. The launch of a ctDNA next-generation sequencing liquid biopsy assay testing with results within seven calendar days allows for more rapid intervention.

Inivata’s patent-protected TamSeq technology underpins its product, RaDaR. This groundbreaking product is a highly sensitive, personalised test which will allow for the

FINANCIAL STATEMENTS

detection of residual disease in multiple tumour types, providing uniquely valuable insights into a patient’s disease state and ensuring early intervention with targeted medicines.

RECENT DEVELOPMENTS •

FDA grants breakthrough device designation for Inivata’s RaDaR assay

•

Company presents data on RaDaR at AACR demonstrating 100% sensitivity and 100% specificity in detecting minimal residual disease in patient cohorts with head and neck cancer and early-stage breast cancer

•

NeoGenomics announces acquisition of Inivata

Inivata is partnering with pharmaceutical, biotechnology companies and commercial partners in a range of early and late stage cancer development programmes.

INVESTMENT THESIS

GOVERNANCE

FUTURE GROWTH PLANS Inivata will be focused on the continued development of leading liquid biopsy tests including RaDaR. The combined resources of Inivata and NeoGenomics are expected to accelerate RaDaR’s adoption by biopharma partners, and then drive a successful launch into the clinical setting.

The use of liquid biopsy has the potential to transform cancer care by providing clinicians with timely, accurate information about whether the disease may have recurred, allowing a window for intervention and the prospect of better outcomes.

CLIVE MORRIS CEO

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CAMBRIDGE INNOVATION CAPITAL

BICYCLE THERAPEUTICS OPERATIONAL REPORT CONTINUED

WE DIDN’T WAIT FOR THE NEXT ADVANCE AGAINST CANCER. WE CREATED IT COMPANY DESCRIPTION Bicycle Therapeutics was founded in 2009 to convert innovative Bicycles into transformative medicines for life-altering diseases.

The proprietary phage display screening platform is based on novel science first conceived in the laboratory of Sir Greg Winter, winner of the Nobel Prize in Chemistry in 2018 for pioneering work in phage display. Bicycle Therapeutics is a transatlantic company, headquartered in the vibrant life science cluster of Cambridge, UK, with key oncology functions and members of our leadership team located in the biotech hub of Boston, Massachusetts, USA.

INVESTMENT THESIS The company is pioneering the development of bicyclic peptides, or Bicycles® – a unique therapeutic class, combining the pharmacological properties normally associated with a biologic with the manufacturing and pharmacokinetic advantages of a small molecule.

RECENT DEVELOPMENTS •

Clinical progress across internal oncology pipeline − BT1718 progressing in Cancer Research UK sponsored Phase IIa clinical trial − Phase I trial of BT5528 dosing within predicted therapeutic range; preliminary signs of anti-tumor activity observed, including a partial response − Enrolment in BT8009 is progressing in line with expectations as clinical sites outside the US continue to open − BT7480, a novel tumour-targeted immune cell agonist (TICA) is on track to be submitted for IND to the FDA in the second half of 2021

•

Strong progress beyond oncology, including first patient dosed in Oxurion’s Phase II trial using a novel Bicycle®–based plasma kallikrein Inhibitor for the treatment of diabetic macular edema

•

The company had $195.9 million in cash at 31 March 2021 which is expected to provide financial runway through multiple clinical milestones and into 2024

FUTURE GROWTH PLANS Bicycle Therapeutics aims to redefine what’s possible for people with cancer and other serious diseases by pioneering a new and differentiated class of innovative treatments.

The company has a robust proprietary pipeline focused on developing novel oncology therapeutics and has multiple partnerships in place to pursue indications beyond oncology.

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OVERVIEW

STRATEGIC REPORT

GOVERNANCE

FINANCIAL STATEMENTS

£37.9M CARRYING VALUE

7.5%

EQUITY HOLDING

Despite the challenges presented by 2020, we made significant progress against our objectives. We remain confident in our ability to achieve our near-term milestones, which should help enable our vision of pioneering the development of novel therapies for patients suffering from cancer and other serious diseases.

KEVIN LEE CEO

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CAMBRIDGE INNOVATION CAPITAL

PRAGMATIC SEMICONDUCTOR OPERATIONAL REPORT CONTINUED

CREATE MORE CIC has been a vital partner for our business during the development, installation and commissioning of our first FlexLogIC system and launch of our first commercial products. Their understanding of deep tech companies has allowed them to support us effectively on this journey. Now our technology is creating electronic solutions that would never have been considered using traditional silicon paradigms, enabling innovators around the world to rapidly take creative ideas from concept to reality.

SCOTT WHITE CEO

£24.7M CARRYING VALUE

32.3% EQUITY HOLDING

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OVERVIEW

STRATEGIC REPORT

GOVERNANCE

FINANCIAL STATEMENTS

COMPANY DESCRIPTION PragmatIC Semiconductor is a world leader in ultra-low-cost flexible electronics. Its flexible integrated circuits (FlexICs) are thinner than a human hair and can be invisibly embedded in objects, enabling innovators to create novel solutions to everyday problems that are not practical with conventional electronics.

Designers can create their own application-specific flexible devices using FlexIC Foundry® service at a fraction of the cost and time required for traditional silicon circuits, opening up multiple new markets. FlexICs are manufactured on a revolutionary FlexLogIC® production system, a highly scalable manufacturing model for cost-effective high-volume production, achieved with orders of magnitude lower capital investment and operating cost compared to a traditional silicon IC fab.

INVESTMENT THESIS Proven technology based on extensive fundamental research.

A series of markets where the technology is a good fit. Substantial potential for RFID where a lower cost product could expand the market by an order of magnitude, addressing diverse verticals such as healthcare, logistics, retail and gaming.

FlexIC Foundry® opens up the potential for a wide range of market applications beyond RFID and will create multiple new markets that would never have been considered with conventional electronics.

RECENT DEVELOPMENTS •

Secured a £1.3 million contract from UK Government Sustainable Innovation Fund for a state-of-the-art recycling scheme based on PragmatIC’s ultra-low-cost NFC technology

•

Raised £13 million of additional funding to accelerate manufacturing optimisation and new product development

•

Appointed Erik Langaker as independent chair to complement its existing strong board of directors

FUTURE GROWTH PLANS PragmatIC’s vision is to embed its technology in a trillion smart objects over the coming decade. This could be achieved just within the RFID market – it is already projected to reach 100 billion items annually by 2028, with customers and analysts alike anticipating the potential for over 10x this scale with PragmatIC’s technology. FlexIC-based RFID is already being adopted in multiple market segments addressing key worldwide challenges, for example in healthcare (NHS), pharma (Schreiner MediPharm), waste management (UK Government) and sustainability (major consumer goods brands).

Beyond RFID, customised functionality from the FlexIC Foundry® has even greater potential. Supporting this vision, PragmatIC is planning to deploy a global network of over 100 FlexLogIC® lines, for efficient just-in-time manufacturing close to where their products are being used. FlexLogIC® democratises semiconductor production, making innovative electronic solutions readily accessible to businesses of all sizes across a diverse range of industries.

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CAMBRIDGE INNOVATION CAPITAL

CONGENICA OPERATIONAL REPORT CONTINUED

ENABLING GENOMIC MEDICINE COMPANY DESCRIPTION

RECENT DEVELOPMENTS

Congenica is a global digital health company revolutionising the way diseases are characterised and diagnosed with world leading software that enables the rapid analysis and interpretation of complex genomic data to improve wellbeing and disease management and empower health professionals to provide lifechanging answers for patients and their families. Based in Cambridge, UK and born out of pioneering research from the Wellcome Sanger Institute and the NHS, Congenica has a global footprint supporting leading diagnostic laboratories, academic medical centres and biopharmaceutical companies and is the exclusive Clinical Decision Support partner for the NHS Genomic Medicine Service.

•

Multiple commercial partnerships established, including − Sanford Health, one of the largest health systems in the US − Kaiserslautern Institute of Immunology and Genetics, Germany

•

Collaboration initiated with Gabriel Precision Oncology to develop an automated somatic cancer clinical interpretation software platform

•

Executive team strengthened with appointments of new CFO and CCO

•

Successful raise of a $53 million Series C round

INVESTMENT THESIS

FUTURE GROWTH PLANS

The clinical and economic evidence for the use of genomic medicine to characterise disease and diagnose patients is very compelling, reducing diagnostic odysseys to improve health outcomes and generating value for health systems.

Congenica will continue to focus on enabling genomic medicine by transforming complex genomic data into actionable information through its software platforms and data systems, delivering a future where clinical genomics is fully integrated into healthcare.

Congenica is able to reduce the working time for interpretation of complex genomic data by >95%, enabling reporting in as little as five minutes, increasing case throughput and diagnostic accuracy to improve outcomes for patients and their families.

The company’s software platform has been focused on rare disease to date, and the business is seeking to leverage its expertise and reputation to expand into all major clinical genomics markets, starting with somatic cancer.

£16.3M CARRYING VALUE

17.6%

EQUITY HOLDING

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OVERVIEW

STRATEGIC REPORT

GOVERNANCE

FINANCIAL STATEMENTS

Congenica is delivering a future where clinical genomics is fully integrated into healthcare. Without the support of CIC, we would not have been able to accelerate the development of our market leading software for rapid and accurate analysis of complex genomic data to enable rare genetic diagnostics at scale. Their long-term vision to support Congenica has helped us establish ourselves in over 20 countries worldwide and provide life-changing answers for patients and their families and generate significant value for healthcare services internationally.

DAVID ATKINS CEO

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CAMBRIDGE INNOVATION CAPITAL

SELDON TECHNOLOGIES OPERATIONAL REPORT CONTINUED

BRINGING THE POWER OF DEVOPS TO MACHINE LEARNING

COMPANY DESCRIPTION Seldon Technologies was founded in 2014 with a simple yet ambitious aim: accelerate the adoption of machine learning to solve some of the world’s most challenging problems. Since then, the company has raised over £10 million, deployed more than 1.5 million models, and partnered with industry leaders including Google, Red Hat, IBM, NVIDIA and AWS. Seldon democratises technologies that were previously the preserve of tech giants – and puts them in everyone’s hands through its popular open source repositories.

INVESTMENT THESIS The market for MLOps is fairly nascent but is becoming increasingly relevant as more enterprises are including AI in their operations. COVID-19 has accelerated AI adoption and as a result MLOps has become a core building block of AI strategy in enterprises.

Seldon provides innovative solutions to better manage, serve and scale ML models built on popular ML frameworks, either onpremises or in public cloud infrastructure as a service (IaaS).

RECENT DEVELOPMENTS •

£7.1 million Series A fundraise in 2020 co-led by CIC and AlbionVC

•

Over 1.5 million machine learning models deployed to date

•

Named one of Gartner’s ‘Cool Vendors’ in AI technologies and one of the AI100 ranking that showcases 100 of the most promising AI companies worldwide

•

Now deployed at four large pharmaceutical companies including AstraZeneca and Johnson & Johnson

•

Partnered with industry leaders such as Red Hat, Hewlett Packard Enterprise and Data Reply

FUTURE GROWTH PLANS Seldon has recently appointed its first CFO, Head of People and VP Product and is building out the leadership team with VPs of Marketing, Inside Sales, Customer Success and Alliances. These strategic hires will drive forward ambitious growth plans to double the company’s headcount by the end of the year, while helping to maintain and strengthen the firm’s first-class company culture. More specifically, the company is expanding its technical team and establishing a Cambridge R&D office to tap into the ecosystem and attract talented ML engineers and data scientists.

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OVERVIEW

STRATEGIC REPORT

GOVERNANCE

FINANCIAL STATEMENTS

£2.6M CARRYING VALUE*

13.6% EQUITY HOLDING*

We’re enabling the rapid deployment of machine learning models so that organisations can tackle their most important challenges.

Essentially, whatever AI means to you – we work to make it possible. CIC’s deep tech expertise and commercial acumen is the ideal support for our mission.

ALEX HOUSLEY FOUNDER AND CEO

* Fund II interest

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CAMBRIDGE INNOVATION CAPITAL

FINANCIAL REVIEW

STATEMENT OF COMPREHENSIVE INCOME During the year ended 31 March 2021, the Group made a profit of £64.82 million (2020: £53.01 million). The principal components of the profit are fair value changes on investments and administrative expenses as summarised below.

2021 £ million

Fair value changes in investments

2020 £ million

78.08

69.53

Administrative expenses

(14.86)

(16.94)

Other operating income

1.00

0.16

Finance income

0.48

0.39

Net profits/(losses) of associates

0.12

(0.13)

–

Tax Profit and total comprehensive income for the year

–

64.82

53.01

The Group measures the fair value of its 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 entities, 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

PROFIT/(LOSS) ATTRIBUTABLE TO EQUITY HOLDERS £53.01m

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.

During the year the Group recorded a fair value gain of £78.08 million (2020: £69.53 million), which predominantly arose on the Group’s investments in CMR Surgical, Inivata, Bicycle Therapeutics, River Lane Research and Sense Biodetection. Further details are provided in the Operational Report on pages 21 to 39.

ADMINISTRATIVE EXPENSES 2021 £ million

2020 £ million

Core administrative expenses

6.19

4.27

Provision for management incentives

8.32

12.28

Share based payments, including employer’s NIC

0.35

0.39

14.86

16.94

13

11

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 2021 include a provision for management incentives of £8.32 million (2020: £12.28 million). The provision arises because net assets plus outstanding commitments from shareholders exceeds the preferred return on capital provided by shareholders at the relevant balance sheet date.

Core administrative expenses have increased during the year primarily due to the expanded team and certain legal, regulatory and other fees incurred in relation to establishing Fund II, a significant proportion of which has been recharged to Fund II thus explaining the increase in other operating income.

NET ASSETS

CASH AND SHORT-TERM DEPOSITS

450 80

350

70

300

60

50

250

50

40

200

40

30 20 10

150 100

40

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2018

2019

2020

2021

20

0

0 2017

30

10

50

0 -10

£ million

70 60

£ million

£ million

400

2017

2018

2019

2020

2021

2017

2018

2019

2020

2021

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OVERVIEW

GOVERNANCE

STRATEGIC REPORT

FINANCIAL STATEMENTS

STATEMENT OF FINANCIAL POSITION At 31 March 2021 the Group had: •

net assets attributable to shareholders of £410.41 million (2020: £301.74 million);

•

additional committed capital of £25.07 million (2020: £68.92 million); and

•

fully diluted total issued shares of 337.54 million (2020: 337.47 million).

As a result, the adjusted net assets per fully diluted share was 129.0 pence (2020: 109.8 pence), a rise of 19.2 pence and 17.5% (2020: 15.6 pence and 16.6%) over the prior year.

Investments held at fair value

2021 £ million

2020 £ million

396.14

292.12

35.53

22.68

Other net liabilities

(21.26)

(13.06)

Net assets

410.41

301.74

Share capital and premium account

120.84

126.98

Cash and cash equivalents

49.99

–

3.34

3.34

Capital reserve

206.62

128.54

Retained profit

29.62

42.88

410.41

301.74

Capital redemption reserve Share based payments reserve

Total equity

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 2021, £124.93 million had been drawn down with the balance, £25.07 million, to be drawn down in the next six months.

At 31 March 2021 cash and cash equivalents amounted to £35.53 million (2020: £22.68 million). The Group continues to place cash, which is surplus to near-term 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 liabilities at 31 March 2021 includes a provision of £20.60 million (2020: £12.28 million) for management incentives.

During the year ended 31 March 2021 the Company: •

re-registered as a private limited company; and

•

bought back and cancelled the entire class of deferred shares, which were non-voting shares and did not carry any rights to dividends or distributions, for £1 thereby creating the capital redemption reserve.

CARRYING VALUE OF INVESTMENTS AT 31 MARCH 400 350

250

30

30

2020

2021

26

300

£ million

The value of the Group’s investments held at fair value increased to £396.14 million at 31 March 2021 (2020: £292.12 million) after net fair value gains of £78.08 million (2020: £69.53 million) and investments of £25.94 million (2020: £35.75 million). In addition, the Group had committed a further £0.23 million (2020: £5.91 million and $1.77 million) in portfolio companies and £6.49 million (2020: £2.43 million) as fund investments at the end of the year. The Operational Report on pages 21 to 39 contains further details on portfolio companies under management, including key developments during the year.

22 19

200 150 100 50 0 2017

2018

2019

Cash invested Fair value changes Number of companies in portfolio

TAXATION The Group’s business model seeks to deliver long-term value to its stakeholders by supporting category-leading 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 28 June 2021

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£

CAMBRIDGE INNOVATION CAPITAL

CORPORATE GOVERNANCE AND RISK MANAGEMENT FRAMEWORK

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.

BOARD

Audit and Risk Management Committee

Nomination Committee

Investment activities

Operational matters

Investment Committee

Executive Directors and other Partners

Advisory Panel Legal advisers Technical consultants

Legal advisers Financial advisers Independent assurance

Key

THE BOARD The Board consists of the Chairman, the Managing Partner and the Chief Financial Officer (together the Executive Directors), and four Nonexecutive Directors. The biographies of members of the Board are provided on pages 48 to 50.

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

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Remuneration Committee

Strategic

Operational

External

decision-making framework while ensuring that the necessary financial and human resources are in place to implement its strategy and regularly 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

Schedule of matters reserved for the Board

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 Chairman and 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 Chairman and Nonexecutive Directors must also satisfy themselves as to 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; and

•

operational matters to the Executive Directors and other Partners.

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OVERVIEW

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.

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. 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. 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.

STRATEGIC REPORT

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

FINANCIAL STATEMENTS

CONTROL ENVIRONMENT AND PROCEDURES 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 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 44 to 47. 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.

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

RISK

1 If the Group, or funds managed by the Group, cease 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: NO CHANGE

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 quantity and quality 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 consolidated its position within the Cambridge ecosystem and deployed £25.94 million (2020: £35.75 million) into two new and 13 existing portfolio companies (2020: four new, 12 existing) following review of 297 (2020: 236) investment opportunities

The Group may not be included in funding rounds because the academics, entrepreneurs and companies concerned may seek and 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

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The Group has co-founded two Cambridge-based accelerators and will benefit from pre-emption rights in companies participating therein The University of Cambridge is represented on the Group’s Board and Advisory Panel. In addition, employees work, live and socialise in the Cambridge ecosystem amongst the resident academics and entrepreneurs

STRATEGIC PRIORITIES READ MORE ON PAGES 18 AND 19 Be the first choice for entrepreneurs, start-ups and investors who want to build a business in Cambridge

KPIs READ MORE ON PAGE 20 Number of 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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OVERVIEW

RISK

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

STRATEGIC REPORT

FINANCIAL STATEMENTS

GOVERNANCE

DESCRIPTION

IMPACT

MITIGATION

RISK TREND: NO CHANGE

The Group may not identify and support appropriate investments

The Group may pass on credible investment opportunities and portfolio companies under management 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

There are currently 30 portfolio companies under management (2020: 30) with a carrying value of £399.11 million (2020: £291.55 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 18 AND 19 Select and nurture companies that have the potential to deliver superior returns

KPIs READ MORE ON PAGE 20 Carrying value Number of companies

RISK

3 Portfolio companies under management may not fulfil their potential

DESCRIPTION

IMPACT

MITIGATION

RISK TREND: INCREASE

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

Portfolio companies under management 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 early-stage technology companies to significant value

Although the Group invested £29.49 million (2020: £35.75 million) in portfolio companies under management, and aggregate fair value changes increased to £206.62 million (2020: £128.54 million), the impact of the coronavirus pandemic on the global economy continues to have the potential to adversely affect the ability of these businesses 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

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

The Group usually requires, as a condition of investment, 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 exposure to loss The Group maintains close relationships with a variety of strategic and financial syndicate investors who focus on differing stages of development and horizon periods

STRATEGIC PRIORITIES READ MORE ON PAGES 18 AND 19 Select and nurture companies that have the potential to deliver superior returns Drive growth and realise value for our stakeholders

KPIs READ MORE ON PAGE 20 Growth in net assets Capital invested in the year Fair value changes in the year

Portfolio companies may not be able to attract sufficient additional capital to achieve their business objectives

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

RISK

4 The Group may not be able to realise value from portfolio companies under management

DESCRIPTION

IMPACT

MITIGATION

RISK TREND: DECREASE

There is no guarantee that portfolio companies under management will generate gains or income for the Group

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

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

Following a downturn in the M&A and IPO markets in 2020, primarily due to the coronavirus pandemic, there has been a significant increase in activity during 2021, which augurs well for future realisations

The Group typically manages minority stakes so may not be able to exercise its influence over portfolio companies, including in the sale or transfer of such holdings The Group may not be able to realise value from portfolio companies under management for a number of years

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 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 18 AND 19 Drive growth and realise value for our stakeholders

KPIs READ MORE ON PAGE 20 Growth in net assets Net assets per share Realisations

RISK

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

DESCRIPTION

IMPACT

MITIGATION

RISK TREND: NO CHANGE

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 portfolio companies under management, to relevant peer groups

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

The Group seeks, and encourages portfolio companies to seek, to offer balanced incentive packages comprising an appropriate mix of salary, benefits and performance-based incentives

STRATEGIC PRIORITIES

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 encourages staff development through internal coaching and external training and performs regular objective setting and appraisal

READ MORE ON PAGES 18 AND 19 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 Drive growth and realise value for our stakeholders

KPIs READ MORE ON PAGE 20 Growth in net assets Carrying value Capital invested in the year

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STRATEGIC REPORT

OVERVIEW

RISK

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

FINANCIAL STATEMENTS

GOVERNANCE

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 under management 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 which it deploys diligently to mitigate portfolio risk

Interests in portfolio companies may be diluted if there is an inability to participate in funding rounds

The aggregate commitment to any portfolio company is limited by certain commitments made to investors. In addition, the Group considers portfolio risk when considering new opportunities

The Group manages significant cash resources and the ten largest portfolio companies under management, by carrying value, account for 78% (2020: 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 portfolio companies at any one time

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 may not manage its liquidity requirements sufficiently

The Group monitors the future funding requirements of portfolio companies under management to ensure that sufficient capital is available in a timely manner

STRATEGIC PRIORITIES READ MORE ON PAGES 18 AND 19 Select and nurture companies that have the potential to deliver superior returns Drive growth and realise value for our stakeholders

KPIs READ MORE ON PAGE 20 Net assets Carrying value Capital invested in the year

RISK

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

DESCRIPTION

IMPACT

MITIGATION

RISK TREND: NO CHANGE

Such changes may impact:

The quantity and quality of opportunities may diminish and the portfolio companies under management 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

Brexit and the impact of the coronavirus pandemic on the global economy continue to have the potential to adversely affect the ability of the Group and portfolio companies under management to fulfil their ambitions

The Group prepares a budget on an annual basis and monitors actual performance against this budget

STRATEGIC PRIORITIES

•

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 earlystage 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

The Group monitors the future funding requirements, trading performance and development progress of portfolio companies under management

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 Drive growth and realise value for our stakeholders

KPIs READ MORE ON PAGE 20 Net assets Carrying value Capital invested in the year Number of companies

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READ MORE ON PAGES 18 AND 19

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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 CHIEF FINANCIAL OFFICER

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 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 Consulting Group (BCG), where he advised multinational healthcare businesses across North America, Europe, and Asia on a broad range of topics including corporate development, sales and marketing, market access, R&D, and operational effectiveness. 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. Mike is a member of Class 22 of the Kauffman Fellows Program.

KEY:

B

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Officer of the Board

A

Audit and Risk Management Committee

N

Nomination Committee

R

Remuneration Committee

ANNUAL REPORT AND ACCOUNTS FOR THE YEAR ENDED 31 MARCH 2021

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OVERVIEW

STRATEGIC REPORT

GOVERNANCE

FINANCIAL STATEMENTS

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.

NICK RICHARDS GENERAL COUNSEL AND COMPANY SECRETARY

B

Nick has over 15 years’ experience advising institutional, corporate and individual investors and the companies they invest into, especially in the technology and life sciences sectors. Nick qualified into the private equity team of a Magic Circle law firm and has been seconded to the legal department of Goldman Sachs. Prior to joining CIC, Nick was a senior associate at an international law firm. Nick attended the College of Law and BPP Law School in London and holds an MA in Modern Languages from the University of Oxford. He is a solicitor admitted to practise in England and Wales.

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 malaria-focused 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 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.

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CAMBRIDGE INNOVATION CAPITAL

LEADERSHIP TEAM AND BOARD OF DIRECTORS CONTINUED

CLIVE BIRCH 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

KEY:

B

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30022 CIC AR2021.indd 50

Officer of the Board

A

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.

Audit and Risk Management Committee

N

Nomination Committee

R

Remuneration Committee

ANNUAL REPORT AND ACCOUNTS FOR THE YEAR ENDED 31 MARCH 2021

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OVERVIEW

STRATEGIC REPORT

GOVERNANCE

FINANCIAL STATEMENTS

DIRECTORS’ REPORT

REPORT OF THE DIRECTORS The Directors present their report together with the audited consolidated financial statements for the year ended 31 March 2021. 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 42 to 47.

RESULTS AND DIVIDENDS During the year, the Group made a profit after tax for the year ended 31 March 2021 of £64.82 million (2020: £53.01 million).

The Directors do not recommend the payment of a dividend (2020: £nil).

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

Chairman

Andrew Williamson

Managing Partner

Rob Sprawson

Partner and Chief Financial Officer

Humphrey Battcock

Non-executive Director

Clive Birch

Non-executive Director

Ian Leslie

Non-executive Director

Andy Neely

Non-executive Director

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 2021 had the following beneficial interests in the shares of the Company: At 31 March 2021

At 31 March 2020

Number of ordinary shares

Number of class A commitment shares

% of voting share capital

Number of ordinary shares

Number of class A commitment shares

% of voting share capital

Humphrey Battcock

227,992

54,494

0.08%

152,624

129,862

0.08%

Edward Benthall

589,242

54,494

0.19%

513,874

129,862

0.19%

39,215

9,373

0.01%

26,251

22,337

0.01%

Clive Birch

The Directors who held office during the year ended 31 March 2021 had the following beneficial interests in options over the ordinary shares of the Company: Granted during the year

Exercised during the year

29,228

–

80,527

37,898

180,388

56,334

At 31 March 2020

Rob Sprawson

Andrew Williamson

Exercise price (pence)

–

29,228

0.17

–

118,425

0.01

–

236,722

0.01

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At 31 March 2021

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CAMBRIDGE INNOVATION CAPITAL

DIRECTORS’ REPORT CONTINUED

DIRECTORS’ INDEMNITIES

POLITICAL DONATIONS

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.

The Group did not make any political donations during the year (2020: £nil).

SUBSTANTIAL SHAREHOLDERS As at 15 June 2021, 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.

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 Co. Limited

6.7%

Private Equity Solutions SCSp

5.0%

Legal & General Assurance Society Limited

3.7%

Oman Investment Authority

3.7%

Bluesky Partnership II LP

3.7%

Lisbet Rausing

3.3%

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POST BALANCE SHEET EVENTS Material events occurring since the balance sheet date are disclosed in the Strategic Report and in note 20 to the consolidated financial statements.

INDEPENDENT AUDITORS PricewaterhouseCoopers LLP, having expressed their willingness to continue in office, will be deemed reappointed for the next financial year in accordance with section 487 (2) of the Companies Act 2006 unless the Company receives notice under section 488(1) of the Companies Act 2006.

GOING CONCERN The Group’s cash and cash equivalents, 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 28 June 2021

ANNUAL REPORT AND ACCOUNTS FOR THE YEAR ENDED 31 MARCH 2021

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OVERVIEW

STRATEGIC REPORT

GOVERNANCE

FINANCIAL STATEMENTS

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 accounting standards in conformity with the requirements of the Companies Act 2006 and the 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 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 international accounting standards in conformity with the requirements of the Companies Act 2006 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.

DIRECTORS’ CONFIRMATIONS 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 28 June 2021

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 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 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.

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CAMBRIDGE INNOVATION CAPITAL

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

REPORT ON THE AUDIT OF THE FINANCIAL STATEMENTS OPINION In our opinion: •

Cambridge Innovation Capital Limited’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 2021 and of the Group’s profit, the Company’s loss and the Group’s cash flows for the year then ended;

•

the Group financial statements have been properly prepared in accordance with international accounting standards in conformity with the requirements of the Companies Act 2006;

•

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 2021; 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 Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the Group’s and the Company’s ability to continue as a going concern for a period of at least 12 months from when the financial statements are authorised for issue.

In auditing the financial statements, we have concluded that the Directors’ use of the going concern basis of accounting in the preparation of the financial statements is appropriate.

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

Our responsibilities and the responsibilities of the Directors with respect to going concern are described in the relevant sections of this report.

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 our work undertaken in the course of the audit, the Companies Act 2006 requires 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 2021 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.

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, 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.

ANNUAL REPORT AND ACCOUNTS FOR THE YEAR ENDED 31 MARCH 2021

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OVERVIEW

STRATEGIC REPORT

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.

Irregularities, including fraud, are instances of noncompliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud, is detailed below.

Based on our understanding of the Group and industry, we identified that the principal risks of non-compliance with laws and regulations related to taxation and breaches of UK regulatory principles, such as those governed by the Financial Conduct Authority, and we considered the extent to which non-compliance might have a material effect on the financial statements. We evaluated management’s incentives and opportunities for fraudulent manipulation of the financial statements (including the risk of override of controls), and determined that the principal risks were related to estimation uncertainty in the valuation of investments. Audit procedures performed by the engagement team included: •

we performed procedures to ensure the financial statements are appropriately prepared and disclosed in line with the Companies Act 2006;

•

we performed detailed testing procedures to ensure appropriate calculation, recognition and declaration of payroll tax;

•

we performed inquiries of management as to whether the entity is in compliance with all relevant laws and regulations;

•

•

GOVERNANCE

FINANCIAL STATEMENTS

•

we have identified and tested journal entries, in particular any journal entries posted with unusual account combinations;

•

we designed audit procedures to incorporate unpredictability around the nature, timing or extent of our testing; and

•

we read key correspondence with the Financial Conduct Authority in relation to compliance with laws and regulations.

There are inherent limitations in the audit procedures described above. We are less likely to become aware of instances of non-compliance with laws and regulations that are not closely related to events and transactions reflected in the financial statements. Also, the risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve deliberate concealment by, for example, forgery or intentional misrepresentations, or through collusion.

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.

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 obtained 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)

we inspected the company’s minutes to ensure we have identified any possible non-compliance reported internally;

for and on behalf of PricewaterhouseCoopers LLP

we assessed the estimates made by management in determining the fair values of investments and considered whether there were any indications of systematic bias, particularly where price at last transaction was no longer considered an appropriate basis for estimating fair value;

28 June 2021

Chartered Accountants and Statutory Auditors Cambridge

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CAMBRIDGE INNOVATION CAPITAL

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 MARCH 2021

Note

Fair value changes in investments

2021 £

2020 £

78,079,702

69,533,378

(14,865,776) (16,935,927)

Administrative expenses

999,897

162,489

6

64,213,823

52,759,940

9

478,577

386,700

13

124,467

(130,667)

Other operating income Operating profit Finance income Share of net profit/(losses) of associates accounted for using the equity method Profit on ordinary activities before taxation

64,816,867

Tax on profit on ordinary activities

10

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

– 64,816,867

53,015,973 (2,869) 53,013,104

All activities derive from continuing operations.

The notes on pages 60 to 72 are an integral part of these financial statements.

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ANNUAL REPORT AND ACCOUNTS FOR THE YEAR ENDED 31 MARCH 2021

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OVERVIEW

STRATEGIC REPORT

GOVERNANCE

FINANCIAL STATEMENTS

CONSOLIDATED STATEMENT OF FINANCIAL POSITION AT 31 MARCH 2021

Note

2021 £

2020 £

Assets Non-current assets Property, plant and equipment

11

16,585

29,217

Investments held at fair value

12

396,136,943

292,117,595

Investments accounted for using the equity method

13

493,800

369,332

396,647,328

292,516,144

Current assets Trade and other receivables

14

Cash and cash equivalents

Total assets

847,111

824,236

35,529,532

22,683,388

36,376,643

23,507,624

433,023,971

316,023,768

Liabilities Current liabilities Trade and other payables

15

Net assets

(22,616,714) (14,287,399) 410,407,257

301,736,369

32,252

50,022,430

120,803,271

76,951,727

Equity Issued share capital

17

Share premium account Capital redemption reserve Share based payment reserve Capital reserve Retained earnings Total equity

49,992,656

–

3,343,750

3,343,750

206,620,171

128,540,469

29,615,157

42,877,993

410,407,257

301,736,369

The notes on pages 60 to 72 are an integral part of these financial statements.

The consolidated financial statements on pages 56 to 72 of Cambridge Innovation Capital Limited, registered number 08243718, were authorised for issue by the Board of Directors on 28 June 2021 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 2021

Issued share capital £

Share premium account £

Capital Share based redemption payment reserve reserve £ £

50,020,029

34,461,609

– 3,495,741

–

–

–

–

–

–

–

–

2,401

42,490,118

–

–

–

–

42,492,519

–

–

–

54,596

–

–

54,596

–

–

–

(206,587)

–

–

(206,587)

50,022,430

76,951,727

128,540,469

42,877,993

301,736,369

–

–

–

–

–

64,816,867

64,816,867

12

–

–

–

–

Share capital issued (net of expenses)

17

2,478

43,851,544

–

–

–

–

Buyback of deferred shares

17 (49,992,656)

– 49,992,656

–

–

(1)

120,803,271 49,992,656 3,343,750

206,620,171

Note

At 1 April 2019 Profit for the year and total comprehensive income Fair value changes in investments

12

Capital reserve £

Retained earnings £

Total equity £

59,007,091

59,398,267

206,382,737

–

53,013,104

53,013,104

69,533,378 (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 At 31 March 2020 Profit for the year and total comprehensive income Fair value changes in investments

– 3,343,750

78,079,702 (78,079,702)

–

Transactions with owners

At 31 March 2021

32,252

29,615,157

43,854,022 (1) 410,407,257

The notes on pages 60 to 72 are an integral part of these financial statements.

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ANNUAL REPORT AND ACCOUNTS FOR THE YEAR ENDED 31 MARCH 2021

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OVERVIEW

STRATEGIC REPORT

GOVERNANCE

FINANCIAL STATEMENTS

CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 31 MARCH 2021

Note

2021 £

2020 £

64,213,823

52,759,940

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

12

Share based payments Depreciation

(78,079,702) (69,533,378) (47,999)

Non-cash items included in other operating income

–

8

–

54,596

11

19,404

22,895

Gain on sale of property, plant and equipment Decrease/(increase) in trade and other receivables Increase in trade and other payables Cash used in operating activities

–

(347)

275,342

(479,535)

8,329,315

12,954,366

(5,289,817)

(4,221,463)

–

Income tax paid Net cash used in operations

(2,869)

(5,289,817)

(4,224,332)

(6,772)

(15,163)

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

11

–

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

12

2,287

Repayment of loans by portfolio companies

(1)

Purchase of investments accounted for using the equity method

178,073

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

492

(25,891,647) (36,276,208) 19,897 (499,999) 440,451

(25,718,060) (36,330,530)

Cash flows from financing activities Proceeds from issue of shares

17

43,854,022 –

Share issue costs Buyback of deferred shares

17

Funds returned in advance of notice of drawdown being given Net cash generated from financing activities

(1) – 43,854,021

42,498,665 (2,841,837) – (8,174,778) 31,482,050

Net change in cash and cash equivalents

12,846,144

(9,072,812)

Cash and cash equivalents at beginning of the year

22,683,388

31,756,200

Cash and cash equivalents at end of the year

35,529,532

22,683,388

The notes on pages 60 to 72 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 2021

1. GENERAL INFORMATION

SEGMENTAL REPORTING

Cambridge Innovation Capital Limited 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 Limited 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 backs world-leading life sciences and technology companies with an affiliation to Cambridge, Europe’s leading capital for innovation.

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 backing world-leading life sciences and technology companies with an affiliation to Cambridge, Europe’s leading capital for innovation. 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.

2. BASIS OF PREPARATION

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.

The Group’s cash and commitments to invest by certain shareholders 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 2021 have been prepared:

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:

•

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

•

leasehold improvements, five years;

•

furniture and equipment, three years; and

•

computer equipment, three years.

in accordance with international accounting standards in conformity with the requirements of the Companies Act 2006 (“IFRS”).

INVESTMENTS

•

The preparation of the financial statements in conformity with IFRS 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. Intra-group 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.

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The Group classifies all its investments (equity and loans) 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 investments in line with International Private Equity and Venture Capital (“IPEV”) Valuation 2018 Guidelines endorsed by the British Venture Capital Association.

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 entities, 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.

ANNUAL REPORT AND ACCOUNTS FOR THE YEAR ENDED 31 MARCH 2021

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OVERVIEW

STRATEGIC REPORT

Where the Group considers that the price of recent investment, unadjusted, is no longer relevant and there are limited or no comparable entities 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 entity in which the investment was made.

When applying the milestone analysis approach to investments in entities 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 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.

FINANCIAL STATEMENTS

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.

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 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 interestrelated 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 In prior periods the Group operated a share based payment compensation plan, under which the entity received 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 CONTINUED FOR THE YEAR ENDED 31 MARCH 2021

MANAGEMENT INCENTIVE PLAN

EQUITY

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.

Equity comprises the following:

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 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.

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•

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;

•

capital redemption reserve reflects the buyback of share capital;

•

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.

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 investments has been detailed above.

In the current financial year Cambridge Innovation Capital II LP and Cambridge Innovation Capital II (US) LP have been established. Cambridge Innovation Capital Limited’s investment in these funds and its exposure to variable returns are deemed below the judgemental threshold to consider non-consolidation of the Fund II entities being appropriate.

5. SEGMENTAL REPORTING The Group’s property, plant and equipment (note 11) are held in the UK. The Group’s investments in portfolio companies (note 12) are held in Jersey whereas fund investments (note 12) and investments accounted for using the equity method (note 13) are held in the UK. The Group’s cash and cash equivalents are held in the UK (2021: £10.8 million; 2020: £3.2 million) and Jersey (2021: £24.7 million; 2020: £19.5 million).

ANNUAL REPORT AND ACCOUNTS FOR THE YEAR ENDED 31 MARCH 2021

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OVERVIEW

STRATEGIC REPORT

GOVERNANCE

FINANCIAL STATEMENTS

6. OPERATING PROFIT 2021 £

2020 £

Operating profit is stated after charging/(crediting) 19,404

Depreciation

(999,897)

Other operating income

22,895 (162,489)

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

49,740

35,000

– Tax compliance services

31,600

7,500

– Other assurance services

5,500

–

86,840

42,500

Fees payable to the Group's auditors for other services

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: 2021 Number

2020 Number

Investment staff

7

6

Support staff

6

5

13

11

2021 £

2020 £

By primary activity

Employee benefit expenses for the above persons 2,510,834

1,882,874

Social security costs

374,145

282,419

Other pension costs

182,397

164,582

Wages and salaries

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

–

54,596

306,661

294,355

3,374,037

2,678,826

936,820

862,466

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

47,386

51,012

124,016

110,227

–

18,482

94,975

54,831

1,203,197

1,097,018

420,125

287,698

Emoluments of the highest paid Director Emoluments Other pension costs

27,386

24,645

447,511

312,343

None of the Directors exercised options during the year ended 31 March 2021 (2020: two Directors exercised options).

At 31 March 2021 there were two Directors (2020: 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 CONTINUED FOR THE YEAR ENDED 31 MARCH 2021

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 Limited 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 1 April 2020

Granted during the year

Exercised during the year

Lapsed during the year

At 31 March 2021

Number

2,754,501

–

–

–

2,754,501

Exercisable

2,754,501

n/a

n/a

n/a

2,754,501

Exercise price for all options (pence)

0.17

n/a

n/a

n/a

0.17

Weighted average remaining contractual life (years)

3.73

n/a

n/a

n/a

2.73

4,713

n/a

n/a

n/a

4,713

Proceeds receivable on exercise (£)

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 (2020: £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 provide that shares may be acquired at a fixed price in two equal tranches two and three years after the date of the award and expire five years after the vesting date. 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: At 1 April 2020

Granted during the year

Exercised during the year

Lapsed during the year

At 31 March 2021

787,277

256,834

–

863,848

Exercisable

865

n/a

n/a

n/a

28,757

Exercise price for all options (pence)

0.01

0.01

0.01

n/a

0.01

Weighted average remaining contractual life (years)

6.00

n/a

n/a

n/a

5.65

79

26

(18)

n/a

86

Number

Proceeds receivable on exercise (£)

(180,263)

It has been determined that options over shares issued in accordance with the Company’s incentive schemes would be cash, rather than equity, settled based on the net assets per share most recently approved by the Board. The liability for cashsettled options assumes an annual leavers rate of 10% and is prorated for the extent to which each option has vested. At 31 March 2021 the aggregate liability, including employer’s National Insurance contributions, for these options was £598,219 (2020: £474,462) and during the year a charge of £348,979 (2020: £387,745) has been recorded.

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ANNUAL REPORT AND ACCOUNTS FOR THE YEAR ENDED 31 MARCH 2021

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OVERVIEW

STRATEGIC REPORT

GOVERNANCE

FINANCIAL STATEMENTS

9. FINANCE INCOME

Bank and other interest

2021 £

2020 £

478,577

386,700

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 Standard corporation tax rate Expected tax expense

2021 £

2020 £

64,816,867

53,015,973

19%

19%

12,315,205

10,073,035

(14,835,143) (13,211,342)

Income not subject to tax (fair value changes) Expenses not tax deductible Tax loss carried forward not recognised Tax on profit on ordinary activities

2,428,357

3,084,785

91,581

50,653

–

(2,869)

The standard rate of UK Corporation Tax is currently 19% (2020: 19%). In the Spring Budget 2021, the Government announced that from 1 April 2023 the corporation tax rate will be increased to 25%. Since the proposal to increase the rate to 25% had not been substantively enacted at the balance sheet date, its effects are not included in these financial statements.

If it had been substantively enacted at the balance sheet date, there would be no change to the tax expense for the year and the unrecognised deferred tax asset (see note 16) would increase by £1,348,170.

11. PROPERTY, PLANT AND EQUIPMENT Leasehold improvements £

Furniture and equipment £

Computer equipment £

Total £

168,914

Cost At 1 April 2019

60,840

56,169

51,905

Additions

–

3,002

12,161

15,163

Disposals

–

(1,792)

(12,006)

(13,798) 170,279

At 31 March 2020

60,840

57,379

52,060

Additions

–

–

6,772

6,772

Disposals

–

–

(31,921)

(31,921)

60,840

57,379

26,911

145,130

At 1 April 2019

33,104

51,527

47,189

131,820

Provided in the year

12,168

5,144

5,583

22,895

(1,792)

(11,861)

(13,653) 141,062

At 31 March 2021 Accumulated depreciation

Disposals

–

At 31 March 2020

45,272

54,879

40,911

Provided in the year

12,168

835

6,401

19,404

–

–

(31,921)

(31,921)

57,440

55,714

15,391

128,545

At 31 March 2021

3,400

1,665

11,520

16,585

At 31 March 2020

15,568

2,500

11,149

29,217

Disposals At 31 March 2021 Net book amount

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CAMBRIDGE INNOVATION CAPITAL

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED FOR THE YEAR ENDED 31 MARCH 2021

12. INVESTMENTS HELD AT FAIR VALUE Portfolio companies £

At 1 April 2019

Fund investments £

Total £

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

–

(31,856)

291,548,629

568,966

Investments

24,996,481

943,165

25,939,646

Fair value changes in investments

78,079,702

–

78,079,702

394,624,812

1,512,131

396,136,943

At 31 March 2021

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 2021 the Group held investments in the following entities: Country of registration

Portfolio companies Abcodia Limited Audio Analytic Limited AudioTelligence Limited Bicycle Therapeutics plc Carrick Therapeutics Limited Centessa Pharmaceuticals Limited CMR Surgical Limited Congenica Limited Cytora Limited Exvastat Limited Fluidic Analytics Limited Geospock Limited Gyroscope Therapeutics Limited Imagen Limited Immutrin Limited Inivata Limited Microbiotica Limited Origami Energy Limited PervasID Limited PetMedix Limited Polyprox Limited PragmatIC Semiconductor Limited Predictimmune Limited River Lane Research Limited Secondmind Limited Sense Biodetection Limited Storm Therapeutics Limited Swim.ai Incorporated Undo Limited Fund investments CICFP Limited Partnership Start Codon Fund I Limited Partnership Start Codon Carry Limited Partnership

Primary instrument

% held

and Wales and Wales and Wales and Wales Ireland England and Wales England and Wales England and Wales England and Wales England and Wales England and Wales England and Wales England and Wales England and Wales England and Wales England and Wales England and Wales England and Wales England and Wales England and Wales England and Wales England and Wales England and Wales England and Wales England and Wales England and Wales England and Wales Delaware, United States England and Wales

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

19.1% 18.6% 31.4% 7.5% 8.6% 0.9% 8.7% 17.6% 4.4% 50.7% 1.1% 22.7% 2.6% 42.6% 20.8% 16.4% 27.6% 14.9% 11.1% 12.5% 16.5% 32.3% 4.0% 22.5% 12.2% 17.4% 17.3% 13.9% 24.3%

Scotland England and Wales Scotland

Loan Loan Capital

65.8% 16.0% 3.1%

England England England England

All of the Group’s investments are in unquoted entities, other than Bicycle Therapeutics plc which is listed on Nasdaq.

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OVERVIEW

STRATEGIC REPORT

GOVERNANCE

FINANCIAL STATEMENTS

At 31 March 2021 the Group had committed, subject to certain milestone provisions contained in the relevant legal documentation, to make further investments of £0.2 million (2020: £5.9 million and $1.8 million) in portfolio companies and £6.5 million (2020: £2.4 million) 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 20.

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

2021

2020

Start Codon Limited

Life science accelerator

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

26.6%

26.6%

Accelerator Advisory Limited (trading as Deeptech Labs)

Technology accelerator

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

27.9%

27.9%

2021 £

2020 £

Summarised financial information in respect of the associated undertakings is set out below:

Summarised statement of financial position (100%) Non-current assets Cash and cash equivalents Other current assets Other current liabilities Net assets Group's share of net assets

8,404

4,063

1,594,987

1,193,613

377,673

117,335

(356,297)

(157,000)

1,624,767

1,158,011

493,800

369,332

2021 £

2020 £

Summarised statement of comprehensive income (100%) 466,746

Operating profit/(loss)

–

Taxation

(491,989) –

Profit/(loss) and total comprehensive income/(expense) for the year

466,746

(491,989)

Group's share of profit/(loss) for the year

124,467

(130,667)

The following table reconciles the summary information above to the carrying amount of the Group’s interests in associated undertakings: 2021 £

At 1 April Investments

2020 £

369,332

–

1

499,999

Profit/(loss) from continuing operations

124,467

(130,667)

At 31 March

493,800

369,332

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CAMBRIDGE INNOVATION CAPITAL

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED FOR THE YEAR ENDED 31 MARCH 2021

14. TRADE AND OTHER RECEIVABLES 2021 £

2020 £

Prepayments and accrued income

604,090

282,347

Other receivables

243,021

541,889

847,111

824,236

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 2021 £

2020 £

Trade payables

69,154

89,381

Social security and other taxes

91,891

82,295

22,455,669

14,115,723

22,616,714

14,287,399

Accruals and deferred income

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.

16. DEFERRED TAX There were no deferred tax assets or liabilities recognised by the Group during the year reported on (2020: £nil). A deferred tax asset would be recognised only when sufficient taxable profits are expected to be generated to relieve the trading losses.

2021 £

2020 £

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

355,300

304,000

3,913,905

2,332,467

4,269,205

2,636,467

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. ISSUED SHARE CAPITAL 2021 Number

2020 Number

2021 £

2020 £

Allotted, called up and fully paid 1

1

–

–

308,354,953

258,799,586

30,836

25,880

28,324,079

77,879,446

1,416

3,894

–

499,926,562,500

–

49,992,656

336,679,033

500,263,241,533

32,252

50,022,430

Special share of £0.0001 Ordinary shares of £0.0001 each Class A commitment shares of £0.00005 each Deferred shares of £0.0001 each

The Company has issued one special share to the University of Cambridge that: •

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

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.

During the year ended 31 March 2021 the Company: •

issued 49,555,367 (2020: 48,023,804) class B commitment shares at a subscription price of £0.88495 (2020: £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;

•

re-registered as a private limited company; and

•

bought back and cancelled the entire class of deferred shares, which were non-voting shares and did not carry any rights to dividends or distributions, for £1.

At 31 March 2021 the Cambridge Innovation Capital Limited Employee Benefit Trust held 2,754,501 ordinary shares of £0.0001 each (2020: 2,754,501 ordinary and 12,495,820,312 deferred shares).

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

Convertible loans to related parties typically have the potential to be long-term in nature. As a result, they are included within non-current investments (see note 12) and the aggregate balance is shown below: 2021 £

2020 £

Loans at 1 April

1,973,968

3,061,466

Loans advanced

13,278,434

Loans converted or exchanged for equity

(2,218,721)

Loss allowance

(1,405,333)

Loans at 31 March

11,628,348 Income during the year ended 31 March

Income from related parties which primarily relates to management fees, interest on convertible loans and recharged expenses

Amounts due at 31 March

2020 £

2021 £

2020 £

1,676,016

393,766

683,579

402,102

Amounts due at 31 March

2021 £

2020 £

2021 £

2020 £

55,354

49,845

540

100

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– 1,973,968

2021 £

Purchases during the year ended 31 March

Purchases from related parties which primarily relate to the Group's office and the provision of other services

816,607 (1,904,105)

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED FOR THE YEAR ENDED 31 MARCH 2021

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: 2021 £

2020 £

396,136,943

292,117,595

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

685,393

479,055

35,529,532

22,683,388

36,214,925

23,162,443

22,521,823

14,202,104

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 back world-leading life sciences and technology companies with an affiliation to Cambridge, Europe’s leading capital for innovation, 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 2021 and 2020 are not necessarily representative of the positions throughout the year, as investments and cash and cash equivalents vary considerably depending on when equity raisings and investments 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 cash and cash equivalents which are primarily 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. All of the Group’s cash and cash equivalents were subject to floating rates in the range of 0.00% to 1.50% (2020: 0.00% to 1.50%).

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.

2021 +2% £

2021 0% £

2020 +2% £

2020 0% £

Result for the year

582,129

(478,577)

545,887

(386,700)

Equity

582,129

(478,577)

545,887

(386,700)

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OVERVIEW

STRATEGIC REPORT

GOVERNANCE

FINANCIAL STATEMENTS

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: 2021 £

2020 £

AA-

22,008,927

26,646

A+

13,520,605

214

–

22,656,528

35,529,532

22,683,388

A

FOREIGN EXCHANGE RISK The Group occasionally enters into transactions in currencies other than sterling. However, at 31 March 2021 the Group had not made any commitments to investments in a foreign currency (2020: $1.8 million). The Group does not hedge its foreign currency commitments 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

At 1 April 2019 Transfers between classifications

Level 1 £

Level 3 £

Total £

–

186,293,337

186,293,337

14,272,101

(14,272,101)

Investments

3,473,378

32,849,358

36,322,736

Fair value changes in investments

3,427,988

66,105,390

69,533,378

Realisations

–

At 31 March 2020 Investments

(31,856)

–

(31,856)

21,173,467

270,944,128

292,117,595 25,939,646

–

25,939,646

Fair value changes in investments

16,744,503

61,335,199

78,079,702

At 31 March 2021

37,917,970

358,218,973

396,136,943

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 or partnerships. 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 CONTINUED FOR THE YEAR ENDED 31 MARCH 2021

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: 2021 £

2020 £

Price of recent investment 11,350,030

1,705,333

Investment completed within one year

113,520,782

177,045,120

Investment completed between one and two years

171,593,958

83,117,425

Adjusted for milestones or impairments

Investment completed more than two years ago Listed investments

61,754,203

9,076,250

358,218,973

270,944,128

37,917,970

21,173,467

396,136,943

292,117,595

If the fair value of the Group’s investments varied by +/-10%, the profit for the year would change by +/- £39.6 million (2020: +/- £29.2 million).

20. POST BALANCE SHEET EVENTS Following the year end: •

the Group invested a further £2.7 million in investments held at fair value;

•

Inivata announced that it has been acquired by NeoGenomics, a leading provider of cancer-focused genetic testing services and global oncology contract research services; and

•

Centessa Pharmaceuticals announced its initial public offering on Nasdaq.

21. CONTROLLING PARTY There is no ultimate controlling party.

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OVERVIEW

STRATEGIC REPORT

GOVERNANCE

FINANCIAL STATEMENTS

COMPANY BALANCE SHEET AT 31 MARCH 2021

Note

2021 £

2020 £

Fixed assets Tangible assets

G

16,585

29,217

Investments

H

234,012,233

196,068,965

234,028,818

196,098,182

Current assets Debtors

I

Cash at bank and in hand

Creditors: amounts falling due within one year

J

392,737

598,869

9,483,699

3,161,445

9,876,436

3,760,314

(22,475,429) (14,221,820)

Net current liabilities

(12,598,993) (10,461,506)

Total assets less current liabilities

221,429,825

185,636,676

Net assets

221,429,825

185,636,676

32,252

50,022,430

120,803,271

76,951,727

Capital and reserves Called up share capital

L

Share premium account

49,992,656

–

3,343,750

3,343,750

Retained earnings at the start of the year

55,318,768

67,856,616

Loss for the year

(8,060,872) (12,537,847)

Capital redemption reserve Share based payment reserve

M

Total shareholders' funds

221,429,825

185,636,676

The notes on pages 75 to 80 are an integral part of these financial statements.

The financial statements on pages 73 to 80 of Cambridge Innovation Capital Limited, registered number 08243718, were authorised for issue by the Board of Directors on 28 June 2021 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 2021

Note

At 1 April 2019 Loss for the year and total comprehensive expense

Called up share capital £

Share premium account £

Capital redemption reserve £

Share based payment reserve £

Retained earnings £

Total shareholders’ funds £

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

–

–

–

(206,587)

–

(206,587)

50,022,430

76,951,727

–

3,343,750

–

–

–

–

2,478

43,851,544

–

–

–

–

49,992,656

–

(1)

120,803,271

49,992,656

3,343,750

(12,537,847) (12,537,847)

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

M

Transfer to liabilities of cash-settled share based payments At 31 March 2020 Loss for the year and total comprehensive expense

55,318,769

(8,060,872)

185,636,676

(8,060,872)

Transactions with owners Share capital issued (net of expenses) Buyback of deferred shares At 31 March 2021

L

(49,992,656) 32,252

47,257,896

43,854,022 (1) 221,429,825

The notes on pages 75 to 80 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 2021

A. GENERAL INFORMATION

SHARE BASED PAYMENTS

Cambridge Innovation Capital Limited (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 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 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.

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.

In prior periods the Company operated a share based payment compensation plan, under which the entity received 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 cashsettled. 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.

PENSION COSTS 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.

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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NOTES TO THE COMPANY FINANCIAL STATEMENTS CONTINUED FOR THE YEAR ENDED 31 MARCH 2021

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 Capital and reserves comprises the following: •

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;

•

capital redemption reserve reflects the buyback of share capital;

•

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

•

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

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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.

D. 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 Company. Management considers that certain accounting estimates and assumptions relating to the carrying value of the Company’s investments are critical accounting estimates. The treatment of investments has been detailed above.

E. RESULTS OF THE COMPANY 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 2021 is £8,060,872 (2020: £12,537,847).

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.

ANNUAL REPORT AND ACCOUNTS FOR THE YEAR ENDED 31 MARCH 2021

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OVERVIEW

STRATEGIC REPORT

GOVERNANCE

FINANCIAL STATEMENTS

G. TANGIBLE ASSETS Leasehold improvements £

Furniture and equipment £

Computer equipment £

Total £

168,914

Cost At 1 April 2019

60,840

56,169

51,905

Additions

–

3,002

12,161

15,163

Disposals

–

(1,792)

(12,006)

(13,798) 170,279

At 31 March 2020

60,840

57,379

52,060

Additions

–

–

6,772

6,772

Disposals

–

–

(31,921)

(31,921)

60,840

57,379

26,911

145,130

At 1 April 2019

33,104

51,527

47,189

131,820

Provided in the year

12,168

5,144

5,583

22,895

(1,792)

(11,861)

(13,653) 141,062

At 31 March 2021 Accumulated depreciation

Disposals

–

At 31 March 2020

45,272

54,879

40,911

Provided in the year

12,168

835

6,401

19,404

–

–

(31,921)

(31,921)

57,440

55,714

15,391

128,545

At 31 March 2021

3,400

1,665

11,520

16,585

At 31 March 2020

15,568

2,500

11,149

29,217

Disposals At 31 March 2021 Net book amount

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NOTES TO THE COMPANY FINANCIAL STATEMENTS CONTINUED FOR THE YEAR ENDED 31 MARCH 2021

H. INVESTMENTS

At 1 April

2021 £

2020 £

196,068,965

145,000,000

Investments

37,943,268

51,068,965

At 31 March

234,012,233

196,068,965

At 31 March 2021 the Company held investments in the following entities: Entity

Principal activity

Registered address

Cambridge Innovation Capital (Jersey) Limited

Invests in high growth technology businesses

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

100.0%

% held

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

FCA Authorised AIFM

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

100.0%

CICSP Limited

Member of CICGP Limited Liability Partnership

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

100.0%

CICGP Limited Liability Partnership

General partner of funds managed

by Cambridge Innovation Capital Manager Limited

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

100.0%

CICFP Limited Partnership Carry/co-invest vehicle for the 50 Lothian Road, Festival Square, Company and its directors, employees Edinburgh, Scotland, EH3 9WJ and other associated individuals for funds managed by Cambridge Innovation Capital Manager Limited

65.8%

Start Codon Limited

Life science accelerator

Milner Therapeutics Institute, Puddicombe Way, Cambridge, CB2 0AW

26.6%

Start Codon Fund I Limited Partnership

Life science accelerator investment fund

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

16.0%

Start Codon Carry Limited Partnership

Life science accelerator investment fund carry vehicle

c/o Brodies LLP, 15 Atholl Crescent, Edinburgh, EH3 8HA

Accelerator Advisory Limited (trading as Deeptech Labs)

Technology accelerator

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

3.1% 27.9%

At 31 March 2021 the Company had committed, subject to certain provisions contained in the relevant legal documentation, to make further investments of £6.5 million (2020: £2.4 million) in the limited partnerships listed above. As these relate to future investments they have not been included in the financial statements.

I. DEBTORS 2021 £

Amounts owed by group undertakings Other debtors Prepayments and accrued income

2020 £

231,019

–

61,466

541,889

100,252

56,980

392,737

598,869

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.

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ANNUAL REPORT AND ACCOUNTS FOR THE YEAR ENDED 31 MARCH 2021

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OVERVIEW

STRATEGIC REPORT

GOVERNANCE

FINANCIAL STATEMENTS

J. CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR 2021 £

2020 £

Trade payables

65,805

89,381

Taxation and social security

91,891

82,295

22,317,733

14,050,144

22,475,429

14,221,820

Accruals and deferred income

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.

K. DEFERRED TAX There were no deferred tax assets or liabilities recognised by the Company during the year reported on (2020: £nil).

A deferred tax asset would be recognised only when sufficient taxable profits are expected to be generated to relieve the trading losses.

2021 £

2020 £

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

355,300

304,000

3,913,905

2,332,467

4,269,205

2,636,467

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 2021 were approximately £1.87 million (2020: £1.60 million).

L. CALLED UP SHARE CAPITAL 2021 Number

2020 Number

2021 £

2020 £

Allotted, called up and fully paid 1

1

–

–

308,354,953

258,799,586

30,836

25,880

28,324,079

77,879,446

1,416

3,894

–

499,926,562,500

–

49,992,656

336,679,033

500,263,241,533

32,252

50,022,430

Special share of £0.0001 Ordinary shares of £0.0001 each Class A commitment shares of £0.00005 each Deferred shares of £0.0001 each

The Company has issued one special share to the University of Cambridge that: •

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.

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.

During the year ended 31 March 2021 the Company: •

issued 49,555,367 (2020: 48,023,804) class B commitment shares at a subscription price of £0.88495 (2020: £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;

•

re-registered as a private limited company; and

•

bought back and cancelled the entire class of deferred shares, which were non-voting shares and did not carry any rights to dividends or distributions, for £1.

At 31 March 2021 the Cambridge Innovation Capital Limited Employee Benefit Trust held 2,754,501 ordinary shares of £0.0001 each (2020: 2,754,501 ordinary and 12,495,820,312 deferred shares).

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CAMBRIDGE INNOVATION CAPITAL

NOTES TO THE COMPANY FINANCIAL STATEMENTS CONTINUED FOR THE YEAR ENDED 31 MARCH 2021

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 Limited 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 1 April 2020

Granted during the year

Exercised during the year

Lapsed during the year

At 31 March 2021

Number

2,754,501

–

–

–

2,754,501

Exercisable

2,754,501

n/a

n/a

n/a

2,754,501

Exercise price for all options (pence)

0.17

n/a

n/a

n/a

0.17

Weighted average remaining contractual life (years)

3.73

n/a

n/a

n/a

2.73

4,713

n/a

n/a

n/a

4,713

Proceeds receivable on exercise (£)

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 (2020: £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 provide that shares may be acquired at a fixed price in two equal tranches two and three years after the date of the award and expire five years after the vesting date. 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: At 1 April 2020

Granted during the year

Exercised during the year

Lapsed during the year

At 31 March 2021

787,277

256,834

–

863,848

Exercisable

865

n/a

n/a

n/a

28,757

Exercise price for all options (pence)

0.01

0.01

0.01

n/a

0.01

Weighted average remaining contractual life (years)

6.00

n/a

n/a

n/a

5.65

79

26

(18)

n/a

86

Number

Proceeds receivable on exercise (£)

(180,263)

It has been determined that options over shares issued in accordance with the Company’s incentive schemes would be cash, rather than equity, settled based on the net assets per share most recently approved by the Board. The liability for cashsettled options assumes an annual leavers rate of 10% and is prorated for the extent to which each option has vested. At 31 March 2021 the aggregate liability, including employer’s National Insurance contributions, for these options was £598,219 (2020: £474,462) and during the year a charge of £348,979 (2020: £387,745) has been recorded.

N. RELATED PARTY TRANSACTIONS The Company’s related party transactions include transactions with: the University of Cambridge and its subsidiaries; its subsidiary companies and associate undertakings; and entities in which the Company, or one of its wholly owned subsidiaries, has made an investment. 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.

O. POST BALANCE SHEET EVENTS Following the year end the Company purchased a further £0.9 million of investments.

P. CONTROLLING PARTY There is no ultimate controlling party.

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COMPANY INFORMATION

COMPANY REGISTRATION NUMBER

SWISS REPRESENTATIVE

08243718

First Independent Fund Services Limited Klausstrasse 33 CH-8008 Zurich

REGISTERED OFFICE Hauser Forum 3 Charles Babbage Road Cambridge CB3 0GT

SWISS PAYING AGENT Helvetische Bank AG Seefeldstrasse 215 CH-8008 Zurich

DIRECTORS Edward Benthall Andrew Williamson Rob Sprawson Humphrey Battcock Clive Birch Ian Leslie Andy Neely

Chairman Managing Partner Partner and Chief Financial Officer Non-executive Director Non-executive Director Non-executive Director Non-executive Director

COMPANY SECRETARY

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

Nick Richards

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.

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 100 Bishopsgate London EC2N 4AG

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

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Cambridge Innovation Capital – Annual Report and Accounts for the year ended 31 March 2021

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

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