Climate Change Data

Environmental Metrics

ESG Focus Areas

• Environmental Responsibility
• Business Ethics and Social Responsibility
• Employee Diversity and Employment Policies

Social Achievements

• Commitment to responsible employer practices and equal opportunity employment.
• Implementation of policies and procedures to counter bribery and corruption.

Governance Achievements

• Successful IPO on the Main Market of the London Stock Exchange.
• Review of Board composition and addition of independent directors.
• Establishment of a formal whistleblower policy.

Climate Goals & Targets

Environmental Challenges

• Potential failure of science and technology being developed or commercialized.
• Substantial expenditure on research and development with uncertain profitability.
• Risk of breakdown in relationships with US universities and federal institutions.
• Limitations inherent in intellectual property licenses.
• Regulatory restrictions on export of certain licensed technologies.
• Competition for highly qualified personnel in the US market.
• Concentration of Group value in a small number of businesses.
• High cost, complexity, and uncertain outcomes of clinical studies.

Mitigation Strategies

• Extensive due diligence before investment, incremental funding based on milestones, capital-efficient approach.
• Significant cash balances, strong investor relationships, pursuit of strategic alliances.
• Diversified partner network, continuous addition of partners, dedicated resource for partner management.
• Development of dual-use technologies, experienced technology transfer experts.
• Obtaining necessary clearances from regulatory bodies, experienced personnel with government agency experience.
• Competitive compensation packages, monitoring of compensation levels, staff development programs.
• Diversified portfolio, pursuit of additional intellectual property, negotiation of IP ownership rights.
• Dedicated internal resources, due diligence on clinical risks, experienced management teams, quality assurance of CRO vendors.

Supply Chain Management

Climate-Related Risks & Opportunities

Environmental Metrics

ESG Focus Areas

• Environmental Responsibility
• Business Ethics and Social Responsibility
• Employee Diversity and Employment Policies

Social Achievements

• Commitment to responsible employer practices and equal opportunity employment.
• Emphasis on staff development through work-based learning and mentorship programs.

Governance Achievements

• Strengthened Board with diverse skills and experience.
• Implemented a new annual bonus attainment process aligning shareholder value creation with employee performance.
• Thorough review of remuneration for Executive Directors and senior management.

Climate Goals & Targets

Environmental Challenges

• Potential failure of science and technology development or commercialization.
• Substantial research and development expenditure with uncertain profitability.
• Risk of breakdown in relationships with US universities and federal government institutions.
• Limitations in intellectual property licenses.
• Regulatory restrictions on export of information and materials.
• Competition for highly qualified personnel.
• Concentration of Group value in a small number of businesses.
• High costs and uncertain outcomes of clinical studies.
• Potential inability to raise capital or generate sufficient revenue.

Mitigation Strategies

• Extensive due diligence before investment, incremental funding based on milestones, capital discipline.
• Significant cash balances, strong investor relationships, strategic partnerships.
• Diversified partner network, continuous strengthening of relationships.
• Negotiation of intellectual property ownership rights, development of dual-use capabilities.
• Obtaining necessary clearances from regulatory bodies, experienced personnel.
• Competitive compensation packages, staff development programs.
• Diversified portfolio, monitoring of concentration risk, pursuit of additional intellectual property.
• Dedicated internal resources, due diligence on clinical risks, experienced management teams.
• Strong financial position, control over investments and expenses, valuable portfolio of subsidiary companies.

Supply Chain Management

Climate-Related Risks & Opportunities

Environmental Metrics

ESG Focus Areas

• Sustainability
• Diversity
• Corporate Social Responsibility

Environmental Achievements

• Reduced GHG emissions per employee and per square foot of office space (target is to maintain or reduce annually)

Social Achievements

• Maintained a policy of equal opportunity in employment
• Implemented policies and procedures to address bribery and corruption laws
• Encouraged staff development through work-based learning and mentoring programs

Governance Achievements

• Compliance with the UK Corporate Governance Code (with some exceptions noted in the report)
• Established procedures for managing conflicts of interest
• Implemented a share ownership policy for Executive Directors

Climate Goals & Targets

Environmental Challenges

• The science and technology being developed may fail to produce commercially viable products.
• Substantial expenditure on R&D with no guarantee of profitability before an exit event.
• Potential breakdown of relationships with US universities and federal institutions.
• Limitations on intellectual property licenses due to the Bayh-Dole Act.
• Regulatory restrictions on the export of certain technologies.
• Risk of losing key personnel in a competitive employment market.
• Concentration of value in a small number of businesses.
• Uncertainty and expense of clinical studies.
• Potential inability to raise capital or generate sufficient revenue.

Mitigation Strategies

• Extensive due diligence before investment, with phased funding.
• Disciplined capital allocation, early termination of unsuccessful projects.
• Dedicated leadership and support for subsidiaries.
• Regular monitoring and quarterly reviews.
• Shared services model for operational efficiency.
• Competitive compensation packages for employees.
• Diversified portfolio of subsidiary businesses.
• Dedicated internal resources to monitor clinical programs.
• Strong financial position and relationships with investors.

Supply Chain Management

Climate-Related Risks & Opportunities

Reporting Standards

Frameworks Used: Greenhouse Gas Protocol

Third-party Assurance: Verco

Environmental Metrics

ESG Focus Areas

• Environmental
• Social
• Governance

Environmental Achievements

• Reduced total GHG emissions from 1013.3 tonnes of CO2e in 2016 to 912.4 tonnes of CO2e in 2017 (using market-based emission factor methodology for Scope 2 emissions).

Social Achievements

• Made a charitable contribution of $25,000 to the American Red Cross to assist victims of Hurricane Harvey.
• Maintained a policy of equal opportunity in employment.

Governance Achievements

• Appointed Jill Smith as President and Chief Executive Officer.
• Appointed Harry Rein as an Independent Non-Executive Director.
• Strengthened leadership, governance, and accountability at subsidiary businesses.

Climate Goals & Targets

Environmental Challenges

• The science and technology being developed or commercialised by the Group’s businesses may fail.
• The Group expects to continue to incur substantial expenditure in further research and development.
• If a significant number of the Group’s relationships with US universities and federal government institutions were to break down, then the Group would lose any rights that it has to act as a private sector partner in the commercialisation of intellectual property.
• A majority of the Group’s intellectual property relates to technologies originated in the course of research conducted in, and initially funded by, US universities or other federally-funded research institutions.
• The Group, including certain of the subsidiary businesses, currently has in place cooperative research and development agreements with certain US Department of Defense laboratories and other federally funded government institutions.
• The Group operates in complex and specialised business domains and requires highly qualified and experienced management to implement its strategy successfully.
• A large proportion of the overall value of the Group’s businesses may be concentrated in a small proportion of the Group’s businesses.
• Clinical studies and other trials to assess the commercial viability of a product are typically expensive, complex and time-consuming, and have uncertain outcomes.
• The US Investment Company Act of 1940 regulates companies which are engaged primarily in the business of investing, reinvesting, owning, holding or trading in securities.
• Brexit may impact the Group’s ability to raise capital.

Mitigation Strategies

• Extensive due diligence is carried out before making any investment.
• A disciplined approach to capital allocation is pursued.
• Dedicated leadership is recruited.
• The Group retains significant cash balances.
• The Group has close relationships with a wide group of investors.
• The Group continues to strengthen its partner network.
• The Group seeks to develop dual use capabilities for the technology it licenses.
• The Board annually seeks external expertise to assess the competitiveness of the compensation packages of its senior management.
• In each subsidiary, the management is specifically directed to pursue a policy of generating and patenting additional intellectual property.
• The Group maintains close relationships with its shareholder base, strategic partners, and a wide group of investors.

Supply Chain Management

Climate-Related Risks & Opportunities

Reporting Standards

Frameworks Used: Greenhouse Gas Protocol

Third-party Assurance: Verco

Environmental Metrics

ESG Focus Areas

• Environmental
• Social
• Governance

Environmental Achievements

• Reduced total GHG emissions across Scopes 1 and 2 from 939.0 tonnes CO2e in 2016 to 68.9 tonnes CO2e (location-based) and 69.4 tonnes CO2e (market-based) in 2019.

Social Achievements

• Maintained a commitment to equal opportunity in employment and career development.
• Implemented policies and procedures to counter bribery and corruption.
• Engaged with employees through regular all-staff update meetings.

Governance Achievements

• Implemented a significant cost reduction in annual central costs, reducing recurring annualized HQ operating expenses to approximately $6.0 million (2019: $11.4 million).
• Paid a special dividend of 12.62 pence per ordinary share totaling £30.49 million.

Climate Goals & Targets

Environmental Challenges

• Potential failure of science and technology being developed by portfolio companies.
• Substantial expenditure on research and development, product development, sales, and marketing.
• Uncertainty in attracting co-investors and monetizing ownership interests in portfolio companies.
• Limitations inherent in licenses for intellectual property originating from US universities or federally funded research institutions.
• Regulatory measures restricting the export of information and material from cooperative research and development agreements with US Department of Defense laboratories.
• Risk of losing key personnel or failing to attract and retain new personnel.
• Concentration of Group’s value in a small proportion of its businesses.
• Potential for being deemed an ‘investment company’ under the US Investment Company Act of 1940.
• Uncertainty in generating sufficient revenue and liquidity events before December 2023.
• Uncertainty caused by Brexit.
• Potential disruption from COVID-19.

Mitigation Strategies

• Extensive due diligence before follow-on investments, including co-investment by other parties.
• Disciplined approach to capital allocation, terminating investments if insufficient progress is made.
• Dedicated leadership with deep industry knowledge recruited to management positions.
• Quarterly board meetings with participation from Group’s management and independent directors.
• Shared services model providing administrative support and financial controls.
• Meaningful operating and investment expertise providing hands-on support to portfolio companies.
• Use of third-party advisors and consultants.
• Significant cash balances to support cash flow requirements.
• Close relationships with investors to facilitate co-investing.
• Continuous efforts to build and maintain strategic and financial relationships.
• Pursuit of dual-use capabilities for licensed technology and avoidance of government-use cases.
• Experienced technology transfer experts and legal team to assess risks.
• Obtaining necessary clearances from regulatory bodies to ensure compliance with export regulations.
• Annual assessment of senior management compensation packages to ensure competitiveness and retention.
• Continuous monitoring and assessment of compensation levels to remain competitive.
• Policy of generating and patenting additional intellectual property in portfolio companies.
• Negotiation of intellectual property ownership rights in research and development agreements.
• Monitoring operations to avoid being deemed an investment company under the Investment Company Act.
• Focus on building value through majority-owned or primarily controlled subsidiary companies.
• Maintaining majority ownership or primary control over portfolio companies.
• Continuous review of portfolio company progress against pre-set milestones.
• Close monitoring of the health, safety, and security of the workforce and compliance with regulatory requirements.
• Implementation of temporary travel restrictions and accommodations for remote work.
• Close communication with customers, suppliers, and partners.

Supply Chain Management

Climate-Related Risks & Opportunities

Environmental Metrics

ESG Focus Areas

• Environmental Responsibility
• Employee Well-being
• Ethical Business Conduct

Environmental Achievements

• Reduced GHG emissions to 18.7 tonnes of CO2e (location-based) and 18.9 tonnes of CO2e (market-based) in 2020.

Social Achievements

• Implemented remote working environments and virtual meeting platforms to ensure employee safety and security during the COVID-19 pandemic.
• Maintained strong operational support for portfolio companies, including accounting, cash management, and HR.

Governance Achievements

• Implemented significant cost reduction in annual central costs, reducing recurring annualised HQ operating expenses to approximately $5.7 million in 2021 (from $7.1 million in 2020).
• Implemented a new form of governance better suited to achieving value creation from its venture-like portfolio.

Climate Goals & Targets

Environmental Challenges

• COVID-19 pandemic negatively impacted several portfolio companies (Federated, Spin Memory, Spark Insights).
• Spin Memory and Spark Insights faced commercial and financing challenges.
• Some portfolio companies experienced delays in fundraising.

Mitigation Strategies

• Implemented remote working, virtual meetings, and reduced travel to mitigate COVID-19 impact.
• NEDs worked closely with management teams at Spin and Spark to address challenges and explore alternatives.
• Portfolio companies achieved milestone funding events and delivered strong progress in technology development.

Supply Chain Management

Climate-Related Risks & Opportunities

Reporting Standards

Frameworks Used: Streamlined Energy & Carbon Reporting

Environmental Metrics

ESG Focus Areas

• Environmental
• Social
• Governance

Environmental Achievements

• Decreased total Scope 1 and 2 GHG emissions by 28% (location-based) and 27% (market-based) due to decreased electricity consumption.

Social Achievements

• Maintained a dynamic culture focused on bringing value to shareholders by taking a hands-on approach in supporting its portfolio companies.
• Implemented a staff retention plan with retention bonuses of 50% of base salaries in 2021 and 100% in 2022.

Governance Achievements

• Continued to hold NED roles on the board of each significant portfolio investment.
• Provided strategic, operational, and financing support to portfolio companies through board representation.

Climate Goals & Targets

Environmental Challenges

• The science and technology being developed or commercialised by the Group’s businesses may fail.
• Portfolio companies may fail or not succeed as anticipated.
• Portfolio companies expect to incur substantial expenditure in further research and development.
• The Group may not be able to attract other co-investors or monetise its ownership interests in portfolio companies on desirable terms.
• A large proportion of the overall value of the Group’s businesses may be concentrated in a small proportion of the Group’s businesses.
• The US Investment Company Act of 1940 regulates companies which are engaged primarily in the business of investing, reinvesting, owning, holding or trading in securities.
• The Group’s overall success is dependent on a limited, finite portfolio of businesses.
• The Group may not remain operational beyond three years if it is unable to generate sufficient revenue, appropriately manage expenses, attract co-investors, or generate a sale or other liquidity event.

Mitigation Strategies

• Extensive due diligence is carried out before making any follow-on investment in the current portfolio.
• A disciplined approach to capital allocation is pursued.
• Dedicated leadership with deep industry or sector knowledge is recruited.
• Each portfolio company holds board of director meetings at least quarterly.
• The Group actively uses third-party advisors and consultants.
• The Group retains sufficient cash balances to support its cash flow requirements.
• The Group has close relationships with a wide group of investors and continues to identify and develop strategic and financial relationships for co-investing.
• Non-Executive Directors seek to build and maintain strategic and financial relationships for the Group.
• In each portfolio company, management is specifically directed to pursue a policy of generating and patenting additional intellectual property.
• Where possible, the Group seeks to negotiate intellectual property ownership rights in any research and development agreement.
• The Company intends to monitor and conduct its operations so that it will not be deemed to be an investment company under the Investment Company Act.
• The Company strives to maintain majority ownership and/or primary control over all of the portfolio companies.
• The Board is committed to engaging and working closely with the remaining portfolio companies.
• The Board continues to monitor performance, progress, and development of each portfolio company.

Supply Chain Management

Climate-Related Risks & Opportunities

Reporting Standards

Frameworks Used: TCFD (partially)