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2022-12-31-accounts

lifeAr( Annual Report & Accounts 2022

Annual Report & Accounts 2022

Contents

Foreword 04
Objectives & Activities 08
Who We Are & What We Do 08
Strategy & Achievements 08
Translational Challenges 08
Impact with Partners 09
Early Ventures 10
Other Achievements 10
Plans For The Future 10
People Report
Translate Your Potential
Creating A Culture Of Belonging
Engaging Our People
Carbon Report		 11
11
11
12
12
Increasing Our Energy Efciency 13
Future Priorities For Sustainability 13
Strategic Report 14
Charitable Objectives 14
Public Beneft 14
Promoting LifeArc’s Success 14
Risk Report 15
Financial Review 17
Investment Portfolio Review 18
Reserves Policy 18

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Annual Report & Accounts 2022

Structure, Governance & Management 19
Summary Of Governance Structure 19
Decision Making 19
Charity Governance Code 19
Executive Management Team As At 31 December 2022 20
The Board Of Trustees 21
Recruitment & Election 23
Induction & Training 23
Trustees As Members 23
Board Efectiveness
Composition of the Board & Committees in 2022
Committees Of The Board
Conficts Of Interest
Statement Of Trustees’ Responsibilities
2022 Accounts		 23
24
25
26
26
28
Advisers 56

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Annual Report & Accounts 2022

Foreword -

A new approach for even greater impact

The past year has been one of exciting evolution at LifeArc, strengthening our position to drive real advances to address the urgent needs of people living with complex conditions.

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Translational Challenges

LifeArc is focused on translational science, bridging the gap between academic research and clinical development, bringing experts together to create the ecosystem needed to unlock science and accelerate medical progress. LifeArc’s unrivalled, collective know-how and ability to foster innovation has made the organisation a trusted partner to life science and patient communities, bringing together research, advice and investment, and acting as a catalyst to drive more scientific opportunities towards solutions for patients.

The formal launch of our first Translational Challenges – in motor neuron disease (MND) and chronic respiratory infection – signalled a major transition in our approach. Traditionally, LifeArc has been a response-mode funder, very strong scientifically and a catalyst to push great science from the lab towards real world health solutions. However, this has all been done at a distance from the day-to-day realities of patients. Now, through the Translational Challenges, we are working hand-in-hand with experts by experience – those living with diseases and those caring for them.

We have further opened our doors to patient groups and they have opened our minds to the fact that real impact will come from a range of solutions that may be as unique as the patients who need them. Each device, technology or therapy could have a truly life-changing impact on the people who need them.

What better organisation than LifeArc for challenges like this? Our financial model affords us the opportunity and flexibility to shoot for ambitious projects of real unmet need – projects with higher costs and smaller patient populations, where the risk is too great for industry. We believe we can make a major impact in these ‘orphan’ areas, by creating ecosystems that link global scientific excellence, patients, clinicians and industry. We invite organisations and individuals with expertise in these disease areas – from discovery science to healthcare delivery – to join us.

We would like to thank Karen Skinner, Chief Project and Portfolio Officer, and Dave Powell, Chief Scientific Officer, for bringing the organisation together to drive the Translational Challenges, and we look forward to seeing their momentum build during 2023.

Early Ventures

The results we saw in 2022 from our strategy to invest in promising early stage life science ventures has really proven the model. Our Early Ventures team guided two multi–million–dollar exits by young companies in our portfolio. These not only provided income to LifeArc to fuel our charitable funding programmes, but also enabled the novel products being developed to progress towards patient benefit in the hands of larger pharmaceutical and biotech companies.

We are particularly proud of the success of RQ Bio, a company co-founded and sole funded by LifeArc in 2021. In May 2022, AstraZeneca entered into a licence agreement for RQ Bio’s portfolio of early stage monoclonal antibodies targeted against SARS-CoV-2, bringing more treatments for immunocompromised patients with COVID-19 another step closer.

Looking Ahead

Since the launch of our new strategy in 2021 – and under the expert guidance of new Chief Financial Officer, Stéphane Maikovsky – we’ve worked to refine our strategic approach further. From 2023, we’ll foster increasing overlap between our philanthropic spend, Early Ventures and Translational Challenges – investing in our priority healthcare areas – while ensuring we continue to support the best scientific ideas from across the spectrum of human health.

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Annual Report & Accounts 2022

We will be building on the success of our Early Ventures investment programme, our continued scientific outputs and our commercial platform to proactively drive financial sustainability in the future. This will allow us to drive more promising scientific ideas thorugh the translation pipeline for generations to come.

We will also put new emphasis on tracking and reporting on the difference we make. The nature of the scientific research pathway means it’s not always easy to join the dots between the steps on the long road from the laboratory to the patient.

In 2022, we began developing the LifeArc Impact Programme. In this vital piece of work we traced the journeys of some of our past projects to identify their impact for the first time. We also created a planning framework that will ensure the science we support now has the best possible chance of making a difference to patients, and that we can clearly articulate the role we play. In 2023 we will develop the LifeArc Theory of Change to facilitate and embed this new way of working, and publish some of the great impact stories we identified from the past 15 years.

Our People

We would like to acknowledge the hard work and committed service of the Board of Trustees in 2022, and the valuable contribution of our Strategic Advisory Council. Enormous thanks to Dr Les Hughes, who stood down as a Trustee in 2022, and to Ian’s predecessor as Chair of the Board, Dr John Stageman. John deftly led LifeArc through the monetisation of Keytruda[®] and set the organisation up for this next phase of growth and impact.

We also wish to acknowledge the sad loss of Aisling Burnand - a valued LifeArc Trustee since 2017, and a friend. Aisling believed in the power of medical research to improve people’s lives and dedicated her life and career to advancing medical research, always putting the patient voice central to decision-making. In her memory, from 2023, LifeArc will sponsor five, three-year Aisling Burnand Daphne Jackson Research Fellowships for talented scientists returning to research after a career break, in our priority healthcare areas.

Finally, we thank all of our staff for their resilience and dedication during a year of change. Their engagement with the cause is fantastic, and we know that our ever deeper, closer and clearer connection to LifeArc’s purpose over the coming years will fuel even more excellent work across the organisation.

Dr Melanie Lee Chief Executive Officer

Dr Ian Gilham Chair

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Annual Report & Accounts 2022

Objectives & Activities

Who We Are & What We Do

At LifeArc our ambition is to make life science life changing. We turn promising life science ideas into medical advances that can change patients’ lives by:

We are a not-for-profit research organisation, self-funded primarily through the returns from our investment portfolio established as a result of a one-off payment received from monetising a portion of our rights to royalties from the immuno-oncology drug Keytruda[®] in 2019.

Our independent charitable status gives us greater freedom to invest in promising but high-risk science. This means we can respond to areas of high and unmet patient need, when others are reluctant to provide support.

We employ over 200 people across four sites in the UK.

Strategy & Achievements

LifeArc’s strategy, launched in 2021, is built on three pillars. Here we outline some of the achievements made in 2022 under each strategic pillar.

Translational Challenges

Translational Challenges are multi-partner, multi-project programmes, each responding to an urgent unmet need expressed by patients, for which LifeArc believes we can mobilise the life science sector to achieve solutions.

Achievements

We worked with patients, scientific and medical experts to define the unmet needs and goals of our Translational Challenges. We conducted groundwork into two potential Challenges centred on rare diseases and paediatric oncology, and introduced our first three Challenges.

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01

In the Chronic Respiratory Infection Translational Challenge

we will invest up to £100m to catalyse the development of new diagnostics, treatments and technologies for people living with bronchiectasis and cystic fibrosis. This included investing £10m to fund collaborative projects seeking to repurpose existing compounds as potential treatments.

02

Our Motor Neuron Disease Translational Challenge

will see investment of up to £100m. Through this Challenge we aim to disrupt the status quo and develop new diagnostic tests, drug treatments, medical devices and other digital solutions to transform people’s quality of life and save lives.

03

Work commenced in our Global Health Translational Challenges

through which we plan to channel more than £100m to reduce the global burden of communicable diseases, especially in low and middle income countries. In 2022 we refined the strategy and explored opportunities for partnership with global stakeholders. We will launch the Challenges publicly in 2023.

Impact With Partners

We work in partnership with other medical research organisations to more rapidly advance and translate the innovative science and ideas being explored by academia, charities and patient groups. This important activity of LifeArc builds on our years of close association with the strong research base of the UK in particular. It is proven as an important gateway to LifeArc’s networks for our Translational Challenges.

Achievements

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Annual Report & Accounts 2022

Early Ventures

Investing and building early stage companies with the potential to transform patients’ lives.

Achievements

Other Achievements

Plans for the Future

LifeArc will continue to focus on bringing innovative science into healthcare, to have real impact for patients. As an independent charity with significant available funds and strong partnerships with organisations and individuals across the life sciences ecosystem, we are positioned to build and drive a global community in translational science – and to develop platforms and convene expertise.

We are refining our strategy into two main strands – Translational Challenges and Financial Sustainability.

01. Translational Challenges

We will build Challenges to address underserved areas that are ripe for translation within five healthcare themes: neurodegeneration, respiratory health, global health, rare disease, and paediatric oncology. Here, we will continue to work with scientists, industry, charities, patients and healthcare professionals to accelerate healthcare innovation, including by investing in young companies aiming to play a part in addressing unmet needs in these areas.

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02. Financial Sustainability

We must maintain and build our resources and continue to build on our unique capabilities through growing our talent, so that we can keep funding and developing programmes that will save lives. Although we plan to invest £1.3bn by 2030, we are also committed to financial sustainability. We aim to achieve this sustainability through returns from our investment portfolio and Early Ventures investments over this period to generate financial returns, whilst further leveraging our investment in research, and developing deeper and broader commercial relationships.

These two pillars are underpinned by enablers of communications, people and infrastructure, with the entire strategy centred on our working with others to deliver real impact for patients and their families. This will require putting in place a monitoring and evaluation system to capture data to effectively track and demonstrate how our activities contribute to delivering patient benefit in the long term, known as the LifeArc Impact Programme.

Across our strategic pillars, we will continue to collaborate with partners to maximise the impact we can have for patients. This activity includes supporting academic partners in translational science, connecting patients with our Translational Challenges, and assessing the opportunities that could be realised from charity research portfolios. As our scientific data strategy continues to emerge, we will be able to realise even more benefit for patients from these critical partnerships.

People Report

Over 80 individuals chose to join LifeArc to contribute to our mission to make life science life changing, bringing our workforce to 242 at the end of December 2022.

Translate Your Potential

Providing opportunities for our people to build their capabilities at LifeArc is a key to our ability to transform to deliver our strategy and longer-term ambition. In 2022, we provided growth development experiences for our people, awarded more than 80 promotions, and worked on our talent pipelines. By creating new science career paths, we provided more clarity about how individuals can grow within their role and through progression. In 2023, we will develop career paths for other teams, providing inclusive opportunities for all our people to translate their potential.

Creating A Culture Of Belonging

We seek diversity in people and believe it benefits LifeArc, creating a more inclusive environment where innovation flourishes. Building on the foundations of our 2021 Equity, Diversity and Inclusion (EDI) commitment, in consultation with representatives from across LifeArc, we developed our EDI Strategy. This sets out our vision and aspirations to embed EDI into every aspect of our organisation, focusing on creating inclusion across our culture, advice and funding, science and research and engagement with our partners. We incorporated contextualised recruitment – taking into account achievements according to each applicant’s unique circumstances – into a refreshed early career hiring programme, to help us hire from a more diverse talent pool. We continued to support and encourage our people to bring their whole selves to work, and to evolve our hybrid working approach to meet the needs of our people and LifeArc. We have signed up to the UK government’s Disability Confident scheme and voluntarily published our first Gender Pay Gap Report and action plan. Find more information on our website.

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Annual Report & Accounts 2022

Engaging Our People

During the year we increased our efforts in employee engagement, exemplified by the ‘One LifeArc’ event in the summer of 2022. This brought together all employees from the four sites (Edinburgh, Stevenage, London and The Francis Crick Institute) for a day of interactive sessions, team building and strategy immersion.

We are developing a new reward strategy to ensure we can continue to attract and retain talent at all levels. Our employee survey in early 2023 will provide us with rich feedback about areas where we are succeeding and where we can focus further to ensure LifeArc is providing what our people need to fully perform and contribute to our strategy.

Carbon Report

We are committed to reducing our energy use and greenhouse gas emissions. Here we summarise LifeArc’s consumption and emissions for 2022, and how we are approaching our responsibility to reduce our environmental impact.

Greenhouse Gas Emissions & Energy Use From LifeArc’s
Activities During 2022 & Previous Year
2021
2022		 Greenhouse Gas Emissions & Energy Use From LifeArc’s
Activities During 2022 & Previous Year
2021
2022		 Greenhouse Gas Emissions & Energy Use From LifeArc’s
Activities During 2022 & Previous Year
2021
2022
Energy consumption used to calculate emissions (kWh)
Energy consumption break down (kWh):
• Gas (Scope 1)
• Electricity (Scope 2)
• Transport Fuel* (Scope 3)		 2,486,291
0
2,471,565
14,726		 2,266,941
0
2,242,612
24,329
Scope 1: Direct emissions from owned or controlled sources (such as fuel
combustion or company vehicles) in metric tonnes C02e
Total		 0 0
Scope 2: Indirect emissions from the generation of purchased electricity,
in metric tonnes C02e**
Total		 525 434
Scope 3: Business travel in employee-owned vehicles, in metric tonnes C02e**
Total		 4 6
Total gross emissions in metric tonnes C02e 528 440
Intensity Ratio: Tonnes C02e per FTE 2 2
Intensity Ratio: Purchased electricity tonnes C02e per 1000 sq m foor area 0.1 0.1

*Relates to LifeArc employee mileage claims for personal vehicle travel. ** Using HMRC UK Government GHG Conversion Factors for Company Reporting.

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Increasing Our Energy Efficiency

In 2022,

9% lower electricity usage

than the previous year, contributing to a

17% emissions reduction

We have identified that our main source of emissions comes from heating and cooling our working environments. This year we reduced our emissions by working with our building managers to identify and power off non-essential systems and equipment whenever buildings are empty, saving energy while maintaining comfortable working conditions.

The second major contributor to our reduction in electricity use was the installation of more efficient air source heat pumps and re-commissioning of existing solar panels at our Stevenage site. We are encouraging all LifeArc’s landlords to investigate their energy efficiency and consider renewable energy generation.

LifeArc labs in Edinburgh have begun a Green Labs certification scheme to reduce plastics use and waste generation, with encouraging initial progress.

Future Priorities For Sustainability

In 2023 we plan to develop a corporate sustainability strategy and integrate it into daily objectives and practice at LifeArc.

We will develop a more granular understanding of electricity consumption across our buildings. This will inform work with our building managers to make further reductions and energy efficiencies. Employee travel surveys will help us to consider ways to reduce emissions from commuting and business travel.

Beyond our owned and controlled sources, we have commissioned analysts to assess the environmental impact of LifeArc’s investments and of our key suppliers. Finally, we will continue to support and make progress on existing sustainability initiatives such as Green Lab certification and reduced waste generation.

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Strategic Report

Charitable Objectives

LifeArc’s Articles of Association set out its charitable objectives:

Public Benefit

The Trustees confirm that they have paid due regard to the public benefit guidance published by the Charity Commission and have referred to the guidance in the Charity Commission’s general guidance on public benefit when reviewing their aims and objectives and in planning future activities. In particular, the Trustees have considered how planned activities will contribute to the organisation’s aims and objectives.

Promoting LifeArc’s Success

The Trustees have a duty to promote LifeArc’s success by advancing its charitable objectives to promote medical research for the benefit of the public. In doing so they are required by section 172(1) of the Companies Act 2006 to take into account a number of factors. These include:

The likely consequences of any decision in the long term

The Board is responsible for setting and keeping under review LifeArc’s strategic direction. All major decisions likely to affect the long-term future of the organisation are discussed at Board meetings or meetings of the relevant committee.

The interests of the company’s employees

The Board recognises that having a talented and diverse workforce, in whom we invest, is key to LifeArc being able to deliver on its strategic ambitions. Further details on what we are doing in this area can be found in the People report on page 11.

The need to foster the organisation’s business relationships with suppliers, customers and others

Our relationships with our suppliers and collaborators are critical to our success. Our business practices promote fairness, openness and integrity, and this is reflected in the way we do business with others. We work closely with our suppliers to ensure that we receive high standards of supplies and services. During the year we introduced a Supplier Code of Conduct. We work closely with a range of academic, charitable and commercial organisations, as well as patient groups, in pursuit of our strategic goals.

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Annual Report & Accounts 2022

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

The Carbon Report on page 12 outlines LifeArc’s greenhouse gas emissions and activities designed to reduce our environmental impact.

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

LifeArc is proud to maintain a high standard of business conduct and our Trustees are alerted to any matters that might cause a reputational risk to the organisation.

The need to act fairly as between members of the company

As a company limited by guarantee, LifeArc does not have any shareholders. Serving Trustees are LifeArc’s only members.

Risk Report

The Board of Trustees is responsible for setting LifeArc’s strategic objectives, risk appetite and the approach to risk management. Throughout 2022, the Board has considered risk in terms of the wider environment in which LifeArc operates, ensuring significant risks and threats are identified and monitored. In addition, significant strategic risks are considered within the strategic planning process to ensure LifeArc’s aims can be successfully achieved.

The Board delegates the arrangements for identifying and monitoring risk and the effectiveness of internal control systems to the Audit and Risk Management Committee (ARMC) with the day-to-day management of risk delegated to the Chief Executive and discharged across the Executive. A Head of Risk and Assurance facilitates and maintains a consistent risk management process across the organisation, ensuring major identified risks are reviewed and assessed.

The following table summarises the principal risks being proactively managed and mitigated across LifeArc.

Nature of Risk Risk Management and Mitigation of Risk
Strategic
Delivery Risk		 Delivering Impact:
There is a risk that LifeArc is unable to achieve
patient impact through a failure to establish/
execute our Translational Challenges (TCs),
Early Ventures and associated Impact with
Partner programmes.		 The Board and Executive have made available
the required resources and expertise to execute
the strategy and the appropriate governance to
control and monitor execution.
Strategic
Delivery Risk		 Third Party and External Partnerships:
As we increase our engagement with, and
reliance on third party suppliers, innovators,
licensees, and collaborations, there is a risk that
we may not optimally, select, deliver, and manage
these partnerships.		 Management have established systems
and processes to undertake fnancial, legal,
reputational and scientifc diligence prior to and
during supplier and partner delivery. Additionally,
we have established business development and
procurement teams to support the organisation
in establishing and managing relationships
and decisions are made based on a risk-based
scheme of delegation to ensure decisions are
taken at the right level.

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Nature of Risk Risk The Board has approved an investment strategy
(including ESG), and investment risk appetite,
which manifests in an ‘Investment Policy
Statement’ and a strategic asset allocation
(SAA) which is designed to deliver our expected
long-term returns within our agreed risk
appetite. Robust oversight and monitoring
are maintained by the Investment Committee
which includes appropriately skilled Co-Opted
members and Trustees.
Our Early Ventures strategy is executed by a
team of professional investors supported by
the translational skills of the wider organisation
with oversight provided by an Early Ventures
Investment Committee which includes
appropriately skilled independent members
and Trustees.
The Science function has re-structured and
re-focused its portfolio to deliver projects to the
TCs and resource technology platform upgrades
to align with the future requirements of the TCs.
Building change capability has been a priority
throughout the year. A Head of Organisation
Development was appointed early in 2022 to
ensure a dedicated focus. A project and change
management programme has been established
and the organisation has received training on
change and a change management toolkit.
Additionally, an organisational efectiveness model
has been applied across several key functions.
LifeArc’s Remuneration Committee oversees
reward practices to both enable appropriate
recruitment, retention, and ensure alignment
to the culture needed to deliver the strategy. A
project to refresh our reward philosophy is due to
complete in 2023. The Board and Executive team
have been engaged with EDI throughout the
year, progressing improvements to make LifeArc
an attractive place to work. The Nominations
Committee has continued to oversee the
appointment of new Trustees.
We have introduced a Supplier Code of
Conduct, risk-focused selection processes,
and a strong supplier risk management process.
We continue to evaluate technological solutions
to provide further robustness across our
supplier-related controls.
Management and Mitigation of Risk
Financial
Risk		 Financial Sustainability:
Investment portfolio and Early Ventures portfolio:
There is a risk that LifeArc may not achieve the
required investment performance over the longer
term. This would impact funds available to deliver
the strategy.
Operational
Risk		 Platform Technology:
There is a risk that we do not develop the right
discovery technology and platforms to support
our TCs and contribute to patient impact in the
longer term.
Operational
Risk		 Management of Change:
There is a threat that we fail to manage the
signifcant amount of change required or do not
make the changes necessary for the LifeArc to
realise our 2030 strategy.
Operational
Risk		 Recruitment and Retention of Employees:
Attracting and retaining the people we need to
deliver the strategy is a signifcant risk which
is exacerbated in the current climate by a tight
labour market especially in life sciences.
Operational
Risk		 Supply Chain Resilience:
LifeArc relies upon suppliers. Due to the volatile
state of international markets and global trading
conditions, there is a risk that LifeArc may lose
access to key supplies without warning.

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Annual Report & Accounts 2022

Other major managed risks include: Health and Safety, and IT and Cyber Security. These risks are well controlled. Further to these risks, the Board and Executive Team have been assessing threats from: impacts of inflation and recession, business continuity management, litigation threats and data privacy. These continue to receive a strong focus from functional leads and the Head of Risk and Assurance. This is to ensure the principal threats are being appropriately and adequately identified, managed, and controlled. The Trustees have considered the major risks to which the organisation is exposed and satisfied themselves that systems or procedures are established to appropriately manage those risks.

Financial Review 2022
£m		 2021
£m
Total Income 22.9 17.9
Total Expenditure (60.3) (56.5)
Net (Losses)/Gains On Investments & FX Hedges (90.1) 133.6
Net Movement In Funds (127.6) 95
Funds Balance Carried Forward 1,186.4 1,313.9

Income

Total incoming resources of £22.9m (2021: £17.9m) were made up of £3.3m (2021: £2.4m) income from charitable activities and £19.5m (2021: £15.4m) investment income. Income from charitable activities includes £1.7m (2021: £0.7m) of contract and royalty income, and £1.3m (2021: £1.2m) received for intellectual property management and technology transfer services.

Expenditure

Total resources expended during the year was £60.3m, an increase of £3.8m (6.7%) on 2021 £56.6m. Resources expended includes the cost of generating funds, corporate and governance costs and general support costs that are not directly attributable to charitable activities.

Net Losses on Investment & FX Hedges

Net losses for the year of £90.1m was made up of net losses from the Investment portfolio of £115.6m, offset by net gains on FX hedges £0.9m, and net gains of £24.6m from the Early Ventures fund. This is made up of a gain of £27.7m from the disposal of two investments, and £3.1m net loss on revaluation of other investments in the fund.

Early Ventures Investments During 2022

In addition to expenditure, LifeArc made investments into early stage life science companies totalling £17.7m (2021: £5.1m). This includes both direct investments and indirect limited partnership investments.

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Investment Portfolio Review

2022 was a highly turbulent year for financial markets, with the North American equity S&P 500 Index seeing its worst annual performance since 2008, just as global bonds fell into a bear market for the first time in 70 years. The biggest driver of this was inflation, which hit multi-decade highs and led central banks to embark on their most aggressive tightening cycle in a generation.

In parallel, Russia’s invasion of Ukraine led to spikes in energy and food prices that particularly hit emerging market economies. Commodities were among the few assets that ended the year in positive territory.

Against this backdrop, LifeArc’s long term investment portfolio fell £96m (as a result of gains, losses and investment income) to close the year at a value of £1,010m; a decline of 8.7% in 2022. In relative terms, the portfolio performed reasonably well. This is partly due to having little or no exposure to UK Gilts, which are usually considered to be a conservative investment but fell in value by 25% in 2022.

The major asset class for the portfolio continues to be global equities. Our transition away from passive equity funds to active global public equity funds continued into 2022, with the bulk of the activity occurring in Q2. The overall bias of the equity content of the portfolio is to quality growth; an investment style that lagged behind value but met our ESG requirements.

We have continued to diversify the asset base. In our private markets’ allocation – we now have committed to 15 managers across private equity, venture capital, infrastructure, private credit and real estate.

Reserves Policy

LifeArc holds reserves to ensure that, as far as is reasonably possible, our long-term strategic plans can be funded, given certain assumptions about future investment returns and income. All of LifeArc’s reserves are held in pursuance of our charitable objectives. As a not-for-profit organisation that is primarily funded by investment returns, LifeArc necessarily holds significant reserves to generate enough cash to fund our operations and further our mission. In addition, we hope to generate future returns from our work in translational science and translational funding, which involves high risk activities, is subject to high attrition rates and runs over a lifecycle of around 10 years before commercial returns are realised. The LifeArc Board has determined that LifeArc should seek to continue to exist for the long term to support translational science in the UK and beyond. Our policy, reviewed by the Trustees annually, is to hold reserves which, along with anticipated future income, will enable the organisation to be sustainable in the long term to drive patient impact. LifeArc considers impact and financial sustainability to be compatible and critically co-dependent elements of our strategy.

The Board considers two definitions when measuring reserves for the reserves policy:

  1. Total cash and invested reserves

  2. Liquid and readily realisable cash and investments excluding any planned allocation to illiquid private investments.

The level of total cash and invested reserves at 31 December 2022 was £1,177.2m (2021 : £1,296.8m). The liquid element was £839.2m (2021: £954.2m). In setting the reserves policy the Board of Trustees has considered the Charity Commission guidance CC19.

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Structure, Governance & Management

LifeArc is a company limited by guarantee and a registered charity, established in 2000. The organisation’s governing document is its Articles of Association which sets out its charitable objectives (see page 14).

Summary Of Governance Structure

Responsibility for the day-to-day running of LifeArc falls to the Executive Management Team of paid employees, under authority delegated by the Board of Trustees. The team, under the leadership of the Chief Executive Officer (CEO), proposes to the Board where the organisation should invest its time, money and expertise. It considers proposed strategic changes to the organisation’s activities prior to submission to the Board or committees. It is also responsible for developing the financial and operational plans for Board approval and monitoring financial performance.

The Board is responsible for setting strategy and ensuring that there are the necessary financial, human and physical assets to meet the organisation’s strategic aims. It monitors LifeArc’s performance and oversees risk management. It is also responsible for Trustee and executive management succession planning, overseeing any changes to the organisation’s constitution and upholding its culture and values.

The Board delegates oversight and assurance for key business functions to four Board committees: Audit and Risk Management Committee, Investment Committee, Nominations Committee and Remuneration Committee. A new committee – the Board Financial Approvals Committee – with delegated authority to approve certain investments and other financial transactions was established in February 2023.

LifeArc has established a Strategic Advisory Council to provide strategic advice and feedback to the Board from the organisation’s key stakeholders.

Decision Making

There is a clear organisational and control structure and scheme of delegation, which sets out which matters are reserved to the Board for approval and which are delegated to committees of the Board or to the CEO or other executive(s). Matters reserved to the Board include changes to the strategy or budget, approval of significant policies and the organisation’s risk appetite. The Board approves the annual budget and strategic goals and monitors financial performance and progress towards the strategic goals at each meeting.

Charity Governance Code

LifeArc complies with the Charity Governance Code for Larger Charities (‘The Code’), which sets out seven principles of good governance practice for charities in England and Wales, and the Charity Commission’s guidance. The General Counsel and Company Secretary monitors compliance with the Code and advises the Board on any actions required.

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Executive Management Team (EMT) As At 31 December 2022

Dr Melanie Lee

Chief Executive Officer

Stéphane Maikovsky

Chief Financial Officer From Jun 2022

Dr Edward Bliss

General Counsel & Company Secretary

Dr David Powell Chief Scientific Officer From Jan 2022

Graham Duce Chief Investment Officer

Chief Investment

Karen Skinner

Chief Project & Portfolio Officer Promoted to EMT in Apr 2022

Fiona French

Executive Director, Human Resources

Anna Tomlinson Chief Communications Officer From Dec 2022

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LifeArc Trustees

Dr Ian Gilham, Chair

Ian is an experienced leader with an international track record in the research, development and commercialisation of diagnostic and pharmaceutical products. He has proven success in mergers and acquisitions, and strong fund manager, investor relations and advisor networks in the City of London and globally. Ian is currently Executive Chair of Aptamer Group, and non-executive chair of Genedrive plc, Cytox Group and RevoNa Bio. Ian previously held various global management roles at and GlaxoSmithKline and was CEO at diagnostics company Axis-Shield which was sold to Alere (now Abbott Labs)in 2011 and Chair at Horizon Discovery which was sold to Perkin Elmer.

Lynne Robb, Vice Chair

Lynne joined the LifeArc Board as a Trustee in June 2020 and is Vice Chair and brings significant experience as a CFO in both the charities and life sciences sectors. She was CFO at Cancer Research UK for 11 years and oversaw the integration of the merger of the Cancer Research Campaign and Imperial Cancer Research Fund. Her interest in change and organisational development led her to being involved in several important developments, including the establishment of the Francis Crick Institute.

Dr Melanie Lee PhD CBE, CEO

Prior to joining LifeArc, Melanie pursued a 30-year career in healthcare R&D and gained leadership experience from both the biopharmaceutical and medtech industries, including as Chief Scientific Officer at BTG, senior positions at GSK and Celltech and Non-Executive Director roles with Lundbeck, BTG, Sanofi and BIAL. She is also a Trustee of the UK Dementia Research Institute.

Stéphane Maikovsky, CFO

Stéphane joined LifeArc as Chief Financial Officer and Trustee in June 2022. He heads up the Finance, Investment, Early Ventures, Information Technology and Operational Effectiveness teams. Stéphane was previously CFO at the Francis Crick Institute, and has held a number of senior financial, commercial and strategic roles in global biotechnology and business including 16 years at Amgen.

Daniel Morgan, Trustee

Daniel Morgan has over 25 years’ experience of private capital markets, including venture investment in life sciences. He is a Member of the Institute of Chartered Accountants in England and Wales.

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Annual Report & Accounts 2022

LifeArc Trustees

Ian Nicholson, Trustee

Ian has over 35 years’ international experience in management and transactions within the life sciences sector including as chairman of Bioventix plc, and operating partner at London-based Advent Life Sciences LLP, and eight years as CEO of the privately held anti-fungal drug development company F2G Limited. Ian has worked extensively in licensing, mergers and acquisitions and market development in the UK, Europe and the US.

Jo Pisani, Trustee

Following 30 years in industry and consulting, Jo is a non-executive director of Bioventix plc but is also focused on supporting charities, universities and business start-ups. Jo is on the board of London & Partners, chairs the MedCity advisory board and chairs Birmingham’s Precision Health Technology Accelerator. Prior to this, Jo led PwC’s UK Pharmaceutical and Life Sciences practice. She is a passionate supporter of critical public health issues, such as tackling dementia and addressing anti-microbial resistance.

Susan Wallcraft, Trustee

Sue is an experienced general counsel and company secretary with over 25 years’ experience in the pharmaceutical industry and health charities and brings significant legal and governance knowledge to the Board. She is currently General Counsel and Company Secretary for Vernalis (R&D) Limited, and Chair and trustee of Amnesty International Charity and a non-executive director of Medicines Discovery Catapult.

David Zahn, Trustee

David has more than 25 years’ experience in the investment profession and is currently Head of European Fixed Income at Franklin Templeton. He has also served on a number of charitable boards, including The Health Foundation, Health Data Research UK and the CFA Society of the UK.

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Annual Report & Accounts 2022

The Board Of Trustees

LifeArc’s Board is normally composed of 11 Trustees including the CEO and Chief Financial Officer, who are paid employees of LifeArc. The Trustees fulfil the legally defined roles of members and directors of the charitable company. They have broad and varied backgrounds, bringing to LifeArc not only the requisite governance experience, but also the diverse range of skills the organisation requires, including biomedical sciences, investment fund management, finance and law.

Non-executive Trustees (those who are not paid employees of LifeArc) are not remunerated for their role at LifeArc but are paid expenses. Other expenses incurred in the course of their duties are paid directly by the charity. Trustees benefit from indemnity insurance as allowed by section 234 of the Companies Act 2006.

The Board met four times during 2022.

Recruitment & Election

Non-executive Trustees are recommended by the Nominations Committee and appointed by the Board through an open recruitment process. As recommended under the Charity Governance Code, Trustees are appointed for a renewable term of three years and are eligible to stand for re-election for a maximum of three consecutive terms. No new non-executive Trustees were recruited in 2022, but further recruitment is planned in 2023. The diversity of the Board is considered when appointing non-executive Trustees, and ensures that LifeArc has Trustees with the skills and experience it needs.

Induction & Training

New Trustees have a tailored induction to ensure that they understand the organisation’s objectives and operations as well as their duties and statutory obligations. They are also given relevant Charity Commission guidance. Further training and development opportunities for the Board as a whole, or for individual Trustees, are identified and delivered as needed. During 2022, the Board received training on equity, diversity and inclusion. Trustees meet regularly with members of the Executive Management Team to discuss all areas of the business.

Trustees As Members

As a company limited by guarantee, LifeArc is required by company law to have members who act as nominal guarantors should the company ever be wound up. LifeArc has adopted a foundation model of governance where the membership is restricted to serving Trustees.

Board Effectiveness

Following a skills audit of the Board in 2021, an action plan was agreed to build the range of experience needed to deliver LifeArc’s long-term strategy. In line with this plan, upon retirement of Dr John Stageman as Chair in April 2022 and after an open recruitment exercise, Dr Ian Gilham – who has significant international experience in research commercialisation and was appointed to the Board in 2021 – was chosen as Chair.

During the year, additional opportunities were identified to improve the Board’s effectiveness, leading to some changes being made to membership of committees. The Scientific Committee was disbanded, and its responsibilities divided between the Board and individual Scientific Advisory Boards attached to each of the Translational Challenges.

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Annual Report & Accounts 2022

The Audit and Risk Management Committee carried out an annual self-assessment exercise and agreed an action plan for improvements.

Composition of the Board & Committees in 2022

Board of
Trustees		 Date of
Appointment		 End date Committees Committees Committees Committees
Audit and Risk
Management		 Investment Nominations Remuneration
Dr Ian Gilham
Chair from
4thApr 2022		 Oct 2021 Chair
Lynne Robb
Vice Chair from
25thApr 2022		 Jun 2020 Chair
Dr Melanie Lee CBE
CEO of LifeArc		 Nov 2019
Stéphane Maikovsky
CFO of LifeArc		 Jun 2022
Dan Morgan Nov 2017 Member
Ian Nicholson Oct 2021 Member Member Chair
Jo Pisani Dec 2020 Member
Dr Mike Romanos Mar 2016 Mar 2023
Susan Wallcraft Oct 2021 Member Member Member
David Zahn Aug 2019 Chair
Dr John Stageman Nov 2014 Apr 2022
Aisling Burnand Nov 2017 Nov 2022
Dr Les Hughes Mar 2016 Nov 2022

Co-opted Members

Co-opted Members
Jonathan Marriott Jan 2020 Member
Simon Gibson Oct 2016 Member
Cindy Rose Jul 2020 Member

For further details of our Trustees, please visit our website.

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Annual Report & Accounts 2022

Committees Of The Board

A summary of the responsibilities of each committee can be found below. Membership of the committees at the date of approving this report is shown on page 24. Most Trustees serve on one or more committees. Membership of each committee and its terms of reference are approved by the Board. Committees can co-opt external individuals to provide additional expertise. Following each committee meeting, the committee Chair provides an update at the next Board meeting, and the minutes of the meeting are made available to the Board.

Audit & Risk Management Committee

Advises the Board on the adequacy and effectiveness of LifeArc’s arrangements for the financial reporting process, the integrity of LifeArc’s financial statements, the external and internal audit process, the system of internal controls and the identification and management of risks, and the organisation’s processes for monitoring compliance with legislative and regulatory requirements. It oversees audit tenders and the selection and appointment of the external auditor, setting their remuneration and maintaining oversight of their work.

Investment Committee

Provides appropriate and effective oversight of LifeArc’s investment portfolio. Working within the Investment Policy, which is approved by the Board, the committee is responsible for determining asset allocation, approval of fund managers, hedging arrangements, appointment of Investment Consultants, Custodian and other consultants and their terms of engagement, and overseeing the application of the ESG Policy.

Nominations Committee

Reviews the structure, size and composition of the Board and recommends any changes to the membership of the Board and its committees. It is responsible for succession planning for Trustees and the Executive, identifying and nominating new Trustees to fill vacancies and making recommendations to the Board on the re-appointment of non-executive Trustees. It reviews the membership of the Board committees and of the Strategic Advisory Council. It also oversees LifeArc’s equity, diversity and inclusion approach.

Remuneration Committee

Determines and agrees LifeArc’s reward philosophy and associated strategy, and on an annual basis approves the budget and approach for reward in respect of pay awards and performance-related bonus awards. The committee uses benchmark data provided by Willis Towers Watson and OBN, and sets remuneration levels for members of the Executive Management Team with the aim of attracting, retaining and motivating senior leaders who are able to help deliver the organisation’s ambitious strategy and goals. Bonus payments are linked to performance as assessed by the Chair in the case of the CEO, and by the CEO in the case of the other Executives. All bonus payments are approved by the committee.

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Annual Report & Accounts 2022

Conflicts Of Interest

LifeArc’s policy on conflicts of interest applies to Trustees and employees alike. A register of Trustees’ and executive directors’ interests is reviewed at each Board meeting and all employees complete a conflicts disclosure form annually. Completed forms are reviewed by the Company Secretary in order to identify and manage any areas of potential conflict. The Board of Trustees has elected not to publish the registers of gifts, hospitality and interests owing to potential data privacy implications.

Statement Of Trustees’ Responsibilities

The Trustees (who are also the directors of LifeArc for the purposes of company law) are responsible for preparing the Trustees’ report and the financial statements in accordance with applicable law and United Kingdom accounting standards (United Kingdom Generally Accepted Practice). Company law requires the Trustees to prepare financial statements for each financial year which give a true and fair view of the state of affairs of LifeArc at the balance sheet date and of its incoming resources and application of those resources, including its income and expenditure for the financial year.

In preparing these financial statements the Trustees are required to:

Select suitable
accounting
policies and
then apply them
consistently.		 Observe the
methods and
principles in
the Charities’
Statement of
Recommended
Practice (SORP).		 Make judgements
and estimates that
are reasonable
and prudent.		 State whether
applicable UK
Accounting
Standards have
been followed,
subject to any
material departures
disclosed and
explained in
the fnancial
statements.		 Prepare the
fnancial
statements on
a going concern
basis unless it
is inappropriate
to presume
that LifeArc
will continue in
operation.

The Trustees are responsible for maintaining proper accounting records that are sufficient to show and to explain LifeArc’s transactions and to disclose, with reasonable accuracy, at any time, the financial position of LifeArc and to ensure that the financial statements comply with the Companies Act 2006.

The Trustees are also responsible for safeguarding the assets of LifeArc and for taking reasonable steps for the prevention and detection of fraud or other irregularities.

LifeArc’s financial statements are published on its website in accordance with legislation in the United Kingdom governing the preparation and dissemination of financial statements. The maintenance and integrity of LifeArc’s website is the responsibility of the Trustees. The Trustees’ responsibility also extends to the ongoing integrity of the financial statements published on the website.

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Annual Report & Accounts 2022

Preparation Of Financial Statements

The financial statements have been prepared in accordance with the accounting policies set out in notes to the financial statements and comply with LifeArc’s Articles of Association, applicable law, the Statement of Recommended Practice ‘Accounting & Reporting by Charities’ and Financial Reporting Standard FRS 102.

Disclosure Of Information To Auditors

The Trustees who held office at the date of approval of this Trustees’ report confirm that, so far as each of them is aware:

Auditor

PKF Littlejohn LLP has held office as auditor during the year and has indicated its willingness to continue in office as auditor.

Approval

The Trustees’ Report incorporating the Strategic Report & Directors’ Report was:

Approved by the Board of Trustees of LifeArc on: 27 June 2023

Signature:

Signed on its behalf by: Dr Ian Gilham, Chairman

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lifeArc 2022 Accounts

Annual Report & Accounts 2022

Independent Auditor’s Report To The Trustees & Members Of LifeArc

Opinion

We have audited the financial statements of LifeArc (the ‘charitable company’) for the year ended 31 December 2022 which comprise the Statement of Financial Activities, the Balance Sheet, the Cash Flow Statement and notes to the financial statements, including significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including FRS 102, The Financial Reporting Standard applicable in the UK and Republic of Ireland (United Kingdom Generally Accepted Accounting Practice).

In our opinion the financial statements:

Basis For Opinion

We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the financial statements section of our report. We are independent of the charitable company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Conclusions Relating To Going Concern

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

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 charitable company’s ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.

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

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Annual Report & Accounts 2022

Other Information

The other information comprises the information included in the Trustees’ annual report, other than the financial statements and our auditor’s report thereon. The Trustees are responsible for the other information contained within the Trustees’ annual report. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. 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 course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether there is a material misstatement in the financial statements themselves. 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 in this regard.

Opinions On Other Matters Prescribed By The Companies Act 2006

In our opinion, based on the work undertaken in the course of the audit:

Matters On Which We Are Required To Report By Exception

In the light of our knowledge and understanding of the charitable company and its environment obtained in the course of the audit, we have not identified material misstatements in the strategic report and the directors’ report included within the Trustees’ annual report.

We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 and the Charities Accounts (Scotland) Regulations 2006 require us to report to you if, in our opinion:

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Annual Report & Accounts 2022

Responsibilities Of Trustees

As explained more fully in the Trustees’ responsibilities statement, the Trustees (who are also the directors of the charitable company for the purposes of company law) are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the Trustees determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, the Trustees are responsible for assessing the charitable 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 Trustees either intend to liquidate the charitable company or to cease operations, or have no realistic alternative but to do so.

Auditor’s Responsibilities For The Audit Of The Financial Statements

We have been appointed as auditor under section 44(1)(c) of the Charities and Trustee Investment (Scotland) Act 2005 and under the Companies Act 2006 and report in accordance with the Acts and relevant regulations made or having effect thereunder.

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 auditor’s 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 non-compliance 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:

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Annual Report & Accounts 2022

We also identified potential for management bias in the depreciation rate applied to tangible fixed assets, and we addressed this by considering the useful economic life applied for the types of asset held, and re-performing the calculation to ensure it had been performed accurately in line with the stated accounting policy.

Because of the inherent limitations of an audit, there is a risk that we will not detect all irregularities, including those leading to a material misstatement in the financial statements or non-compliance with regulation. This risk increases the more that compliance with a law or regulation is removed from the events and transactions reflected in the financial statements, as we will be less likely to become aware of instances of non-compliance. The risk is also greater regarding irregularities occurring due to fraud rather than error, as fraud involves intentional concealment, forgery, collusion, omission or misrepresentation.

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

Use Of Our Report

This report is made solely to the charitable company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006, and to the charitable company’s Trustees, as a body, in accordance with Regulation 10 of the Charities Accounts (Scotland) Regulations 2006. Our audit work has been undertaken so that we might state to the charitable company’s members and Trustees those matters we are required to state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the charitable company, the charitable company’s members as a body and the charitable company’s Trustees as a body, for our audit work, for this report, or for the opinions we have formed.

Alastair Duke - Senior Statutory Auditor

For and on behalf of PKF Littlejohn LLP Statutory Auditor 15 Westferry Circus, Canary Wharf, London E14 4HD

Date: 13 July 2023

PKF Littlejohn LLP is eligible for appointment as auditor of LifeArc by virtue of its eligibility for appointment as auditor of a company under section 1212 of the Companies Act 2006.

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Annual Report & Accounts 2022

Financial Statements

Statement Of Financial Activities

(Incorporating An Income & Expenditure Account)

For The Year Ended 31 December 2022

Unrestricted
funds £000s		 Notes Unrestricted
funds £000s		 Restricted
£000s		 Total Funds
Dec 22 £000s		 Total Funds
Dec 21 £000s
Income and Endowments from:
Charitable Activities 1 2,920 401 3,321 2,343
Trading Activities – – – – –
Investments 2 19,536 – 19,536 15,448
Other Income 3 22 – 22 86
Total Income and Endowments – 22,478 401 22,879 17,877
Expenditure On:
Raising Funds 4 1,526 – 1,526 1,911
Charitable Activities 5 58,364 401 58,765 54,599
Provisions 19 11 – 11 –
Total Expenditure – 59,901 401 60,302 56,510
Net (Losses)/Gains on Investments 14/15 (90,991) – (90,991) 133,614
Net Gains on FX Hedges – 851 – 851 –
Net (Expenditure)/Income – (127,563) – (127,563) 94,981
Net Movement in Funds 21 (127,563) – (127,563) 94,981
Reconciliation of Funds:
Total Funds Brought Forward 21 1,313,922 – 1,313,922 1,218,941
Total Funds Carried Forward 21 1,186,359 – 1,186,359 1,313,922

All income and expenditure derives from continuing activities.

The Statement of Financial Activities includes all gains and losses recognised during the year. Full comparative figures are presented in note 31.

The accounting policies and notes on pages 36 to 55 form part of the financial statements.

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Annual Report & Accounts 2022

Balance Sheet

For The Year Ended 31 December 2022

Company Number: 2698321

Unrestricted
Funds £000s		 Notes
£000s		 LifeArc 2022
£000s		 LifeArc 2021
£000s
Fixed Assets
Tangible Fixed Assets 12 8,743 10,797
Intangible Assets 13 11,248 13,890
Investments 14 1,053,688 1,129,078
– 1,073,679 1,153,765
Current Assets
Investments 15 110,016 162,984
Debtors 16 5,288 2,764
Cash At Bank & In Hand – 13,472 4,703
– 128,776 170,451
Creditors: Amounts Falling (Due Within One Year) 17 (15,350) (9,559)
Net Current Assets – 113,426 160,892
Total Assets (Less Current Liabilities) – 1,187,105 1,314,657
Provision For Liabilities 19 (746) (735)
Net Assets – 1,186,359 1,313,922
Charity Funds
Unrestricted Funds 21 1,186,359 1,073,878
Designated Funds 21 – 240,044
Restricted Funds 21 – –
Total Charity Funds 1,186,359 1,313,922

The accounting policies and notes on pages 36 to 55 form part of the financial statements. The financial statements were approved and authorised for issue by the Board on 27 June 2023. Signed on behalf of the Board of Trustees.

Dr Ian Gilham Chairman

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Annual Report & Accounts 2022

Statement Of Cash Flows

For The Year Ended 31 December 2022

For The Year Ended 31 December 2022
Unrestricted
funds £000s		 Notes
£000s		 LifeArc 2022
£000s		 LifeArc 2021
£000s
Cash Flow From Operating Activities 23 (54,146) (49,300)
Net Cash Flow Provided By/(Used In) Operating Activities – (54,146) (49,300)
Cash Flow From Investing Activities
Payments To Acquire Tangible Fixed Assets – (963) (1,363)
Payments To Acquire Intangible Assets – (5) (203)
Payments To Acquire Investments – (35,725) (712,556)
Receipts From Sale Of Investments – 49,852 163,776
Dividends, Interest & Rents Received From Investments – 19,536 15,448
Reclassifcation From Fixed Asset To Current Asset Investment – – 2,032
Decrease In Current Asset Investments – 52,968 577,426
Increase In Cash Held For Investment – (22,748) (3,116)
Net Cash Flow Provided By/(Used In) Investing Activities – 62,916 41,444
Change In Cash & Cash Equivalents In The Year – 8,769 (7,856)
Cash & Cash Equivalents At 1 January – 4,703 12,559
Cash & Cash Equivalents At 31 December – 13,472 4,703
Cash & Cash Equivalents Consist Of:
Cash At Bank And In Hand – 13,472 4,703
Short-Term Deposits – – –
Cash & Cash Equivalents At 31 December – 13,472 4,703

The accounting policies and notes on pages 36 to 55 form part of the financial statements.

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Annual Report & Accounts 2022

Accounting Policies

For The Year Ended 31 December 2022

General Information & Basis Of Preparation

LifeArc is a charitable company limited by guarantee in the United Kingdom. In the event of the organisation being wound up, the liability in respect of the guarantee is limited to £1 per member of the organisation. The address of the registered office is given on the back cover of these financial statements. The nature of LifeArc’s operations and principal activities are progressing early stage science from academic research towards clinical benefit, working with industry and academia to accelerate the delivery of diagnostic tests to patients and providing intellectual property (IP) management and commercialisation services to medical research charities and organisations.

LifeArc constitutes a public benefit entity as defined by FRS 102. The financial statements have been prepared in accordance with Accounting and Reporting by Charities: Statement of Recommended Practice (SORP) applicable to charities preparing their accounts in accordance with the financial reporting standard applicable in the United Kingdom and Republic of Ireland (FRS 102), the Charities Act 2011, the Companies Act 2006 and UK generally accepted practice as it applies from 1 January 2019.

The financial statements are prepared on a going concern basis under the historical cost convention. The financial statements are prepared in sterling, which is the functional currency of the organisation, and rounded to the nearest £000.

The subsidiary undertaking LifeArc Innovations Limited has been excluded from consolidation on the basis of it not being material, in line with FRS 102 paragraph 9.9A.

The significant accounting policies applied in the preparation of these financial statements are set out below. These policies have been consistently applied to all periods presented unless otherwise stated.

Going Concern

The Trustees consider that the use of the going concern basis is appropriate because there are no material uncertainties relating to events or conditions that may cast significant doubt about LifeArc’s ability to continue as a going concern, and there is reasonable expectation that the organisation has adequate reserves to continue in operational existence for the foreseeable future.

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Annual Report & Accounts 2022

Incoming Resources

Income is recognised when LifeArc is entitled to the income, the value can be reasonably measured and it is probable that the income will be received. Incoming resources from charitable activities comprise the following:

Incoming resources from investments comprise the following:

Resources Expended

All expenditure is accounted for on an accruals basis and has been classified under headings that aggregate all costs related to the category. Where costs cannot be directly attributed to particular headings, they have been allocated to activities on a basis consistent with the use of resources.

Fund Accounting

The unrestricted fund is a general unrestricted fund which is available for use at the discretion of the Trustees in furtherance of the general objectives of LifeArc and which has not been designated for other purposes.

Designated funds are amounts set aside by the Trustees for specific purposes.

The restricted funds represent grants received in the year which are subject to specific restrictions imposed by the donor.

Support Cost Allocation

Support costs are those that assist the work of LifeArc but do not directly represent charitable activities and constitute corporate resource and governance costs. They are incurred directly in support of expenditure on the activities of the organisation and have been allocated to activities on an employee headcount basis.

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Annual Report & Accounts 2022

Accounting For Tangible Fixed Assets

Fixed assets or groups of fixed assets with a cost in excess of £5,000 are capitalised at cost and depreciated according to the disclosed policy.

Depreciation For Tangible Fixed Assets

Depreciation is provided on a straight-line basis so as to write off the cost or valuation of tangible fixed assets less estimated residual value over their estimated useful economic lives, which are as follows:

Long Leasehold Land and Buildings Over the period of the lease or useful economic life,
whichever is the shorter
Plant and Machinery 10 Years
Laboratory Equipment 5 - 10 Years
Furniture, Fixtures and Fittings and Ofce Equipment 5 Years
Computers 3 - 5 Years
Leasehold Improvements Over the period of the lease or useful economic life,
whichever is the shorter
IT Infrastructure 10 Years

Accounting For Intangible Fixed Assets

Intangible assets are capitalised at cost and amortised according to the policy below.

Amortisation For Intangible Fixed Assets

Amortisation is provided on a reducing-balance basis or straight-line basis with the most appropriate basis for each asset chosen so as to write off the cost of intangible fixed assets less estimated residual value over their estimated useful economic lives, which are as follows:

Fixed Asset Investments

Investments are recorded at cost and are stated at fair value at the balance sheet date. The unrealised gains and losses arising as a result are included in the Statement of Financial Activities (SOFA) together with any realised gains and losses on any investments disposed of in the year.

Financial assets, including investments in equity instruments which are not subsidiaries, are initially measured at fair value, which is normally the transaction price. Such assets are subsequently carried, where possible, at fair value and the changes in value are recognised in the SOFA. Assets are considered for indications of impairment, with any impairment then recognised in the SOFA.

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Annual Report & Accounts 2022

Impairment Reviews

A review of the impairment of fixed asset investments is carried out if events or changes in circumstances indicate that the carrying amount will not be recoverable.

Current Asset Investments

Investments are stated at market value at the balance sheet date. The unrealised gains and losses arising as a result are included in the SOFA together with any realised gains and losses on any disposals in the year.

Operating Leases

Rentals paid under operating leases are charged to the SOFA on a straight-line basis over the terms of the lease. Where there is a rent-free period the total cost of the lease is recognised over the term on a straightline basis.

Foreign Currencies

Monetary assets and liabilities in foreign currencies are translated into sterling at the rate of exchange ruling at the balance sheet date.

Transactions which have been concluded prior to the balance sheet date are translated into sterling at the monthly rate of exchange ruling at the date of the transaction. Exchange gains and losses arising in the normal course of operations are included in the SOFA.

Financial Instruments & Hedging Activities

LifeArc uses forward foreign currency contracts to manage its exposure to fluctuations in foreign exchange rates. These instruments are initially recognised at fair value on the trade date and are subsequently remeasured at their fair value at the end of the reporting date.

All hedging instruments will be recognised on the balance sheet at fair value, and all changes in value of the hedging instrument will be recognised in the SOFA.

Employee Benefits

When employees have rendered service to the organisation, short-term employee benefits to which the employees are entitled are recognised at the undiscounted amount expected to be paid in exchange for that service.

Pension Costs

LifeArc operates a defined contributions pension scheme which is open to all employees. The funds of the scheme are administered by a third party and are separate from LifeArc. The pension charge represents contributions payable by LifeArc for the year. LifeArc’s liability is limited to the amount of the contributions.

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Annual Report & Accounts 2022

Termination Benefits

Redundancy and termination costs are recognised when there is a legal or constructive obligation which can be measured reliably, and it is probable that a payment will be made.

Material Items

Material items are items which derive from events or transactions that fall within the ordinary activities of LifeArc and which individually need to be disclosed by virtue of their size or incidence if the financial statements are to give a true and fair view. The separate reporting of material items helps to provide a better indication of LifeArc’s underlying business performance.

Taxation

LifeArc is a registered charity and is generally exempt from corporation tax but not from value added tax (VAT). Irrecoverable VAT is included with the cost of those items to which it relates.

Provisions

A provision is made for a liability in the financial statements where LifeArc has a present obligation as a result of a past event, it is probable that a transfer of economic benefits will be required to settle the liability and a reliable estimate can be made of the obligation.

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Annual Report & Accounts 2022

Unrestricted
01. Income From Charitable Activities		 Dec 2022 Dec 2021
funds £000s £000s £000s
Research Contracts & Royalty Income 1,665 709
IP Management & Technology Transfer Services 1,255 1,261
Grants 401 373
Total 3,321 2,343
UnrestricteF
02. Income From Investments		 Dec 2022 Dec 2021
funds £000s £000s £000s
Dividends – Equities 944 2,226
Interest – Fixed Interest Securities 17,221 12,527
Interest – Deposits 82 4
Income From Alternative Investments 1,289 691
Total 19,536 15,448
Unrestricted
03. Other Income		 Dec 2022 Dec 2021
funds £000s £000s £000s
Miscellaneous 22 86
Total 22 86
Unrestricted
04. Raising Funds		 Dec 2022 Dec 2021
funds £000s £000s £000s
Investment Ofce Costs 381 300
Investment Manager & Consultancy Fees 1,145 1,611
Total 1,526 1,911

05. Analysis Of Expenditure On Charitable Activities

2022 2022 2022 2021
Unrestricted
funds £000s		 Activities Undertaken
Directly £000s		 Support
Costs £000s		 Total Dec
£000s		 Total Dec
£000s
Respiratory Health 1,751 1,140 2,891 1,959
Neurodegeneration Healthcare 911 576 1,487 97
Global Health Infection 2,410 1,690 4,100 970
Rare Disease 8,366 5,873 14,239 4,306
Other Translational Challenges 752 388 1,140 284
Early Ventures 1,860 1,162 3,022 1,807
COVID-19 1,467 1,030 2,497 14,096
IWP 2,468 1,639 4,107 3,695
Scientifc Portfolio 15,088 10,194 25,282 27,385
Total 35,073 23,692 58,765 54,599

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Annual Report & Accounts 2022

LifeArc has updated how we summarise our charitable activities to be more representative of the way LifeArc delivers our activities. Impact With Partners (IWP) activities have started to be allocated to specific healthcare themes where relevant e.g. rare disease. Support costs are then allocated across charitable activities based on FTE.

LifeArc has awarded grants to the following institutions during the year:

Institution 2022 £000s
Medical Research Council 2,507
University College London 1,395
Shefeld University 1,078
Birmingham University 627
Department Of Health And Social Care 570
Francis Crick Institute 533
Glasgow University 532
Manchester University 500
Newcastle University 500
Edinburgh University 496
Kings College London 447
Great Ormond Street Hospital 369
Action Medical Research 258
Trozon X17 220
Oxford University 187
Cambridge University 134
University Health Network 123
Dundee University 80
Queen Mary University London 49
Beacon for Rare Diseases 47
Royal Holloway University London 42
AUTM Foundation 40
Intelligent Lab On Fiber Limited 20
Genomics England Limited –
Ashford & St. Peter’s Hospitals NHS Foundation Trust –
Chelsea & Westminster Hospitals NHS –
Post Era Inc –
University Hospitals Coventry & Warwickshire NHS Trust –

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Annual Report & Accounts 2022

Unrestricted
funds £000s
 Governance
£000s		 Corporate
Resources £000s		 Dec 2022
£000s		 Dec 2021
£000s
Respiratory Health 45 1,095 1,140 606
Neurodegeneration Healthcare 22 554 576 32
Global Health Infection 64 1,626 1,690 320
Rare Disease 229 5,644 5,873 1,422
Other Translational Challenges 15 373 388 42
Early Ventures 45 1,117 1,162 597
COVID-19 40 990 1,030 4,654
IWP 64 1,575 1,639 1,179
Scientifc Portfolio 394 9,800 10,194 8,866
Total 918 22,774 23,692 17,718

Governance costs are detailed further in note 7.

IWP activities have started to be allocated to specific healthcare themes where relevant e.g. rare disease.

07. Governance Costs

07. Governance Costs
Unrestricted
funds £000s		 Dec 2022
£000s		 Dec 2021
£000s
Staf Costs 553 332
Direct Costs
Other Legal & Professional Charges 38 33
Audit Fees 38 36
Other Fees 53 70
Bank Charges 7 9
Insurance 177 156
Other Governance Costs 52 85
Total 918 721

08. Net Income for the Year

08. Net Income for the Year
Unrestricted
funds £000s
Net income is stated after charging/(crediting):		 Dec 2022
£000s		 Dec 2021
£000s
Depreciation Of Tangible Fixed Assets 2,607 2,792
Amortisation Of Intangible Fixed Assets 2,812 2,827
Operating Leases – Property 1,349 1,337
Auditor’s Remuneration 38 36
Fees Payable To Internal Auditor 69 70
Net Losses/(Gains) On Foreign Exchange (225) (556)

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Annual Report & Accounts 2022

09. Auditor’s Remuneration

09. Auditor’s Remuneration
Unrestricted
funds £000s		 Dec 2022
£000s		 Dec 2021
£000s
Fees Payable To The Charity’s Auditor For The Audit Of The Charity’s Annual Accounts 38 36
Fees Payable To The Charity’s Auditor For Other Services:
Other Services 8 5
Total 46 41

10. Trustees’ & Key Management Personnel Remuneration & Expenses

Remuneration and benefits were paid to Melanie Lee (CEO) and Stéphane Maikovsky (CFO) for their roles as employees of the organisation, not for their positions as Trustees. The aggregate amounts due during the year to Melanie Lee includes basic pay £288,375 (2021 – £282,000), 5% flex allowance of £14,419 (2021 – £14,100), bonus of £104,580 (2021 – £112,800), Pension contributions £28,837 (2021 – £28,200), and Other benefits £9,054 (2021 – £3,191). Stéphane Maikovsky was appointed as Trustee of LifeArc on 17 June 2022. From 17 June 2022 remuneration and benefits were due for his role as an employee of the organisation, not for his position as Trustee. The aggregate amounts paid during the year to Stéphane Maikovsky includes basic pay £125,481 (2021 – £Nil), 5% flex allowance of £6,274 (2021 – £Nil), bonus of £39,000 (2021 – £Nil); Pension contributions £10,904 (2021 – £Nil), and Other benefits £5,493 (2021 – £Nil).

In respect of services provided to LifeArc for the Early Ventures Fund Ian Nicholson invoiced LifeArc £7,000 for consultancy through Casewell Consulting Limited (2021 £Nil).

All other Trustees neither received nor waived any remuneration during the year (Dec 2021 – £Nil).

The total amount of employee benefits received by key management personnel during the year (made up of basic pay, bonus, pension allowance, employer’s pension contribution, employer’s NI, and other benefits) was £3,033k (2021 – £2,864k). The Trustees consider its key management personnel to comprise the Chief Executive Officer and Executive Management Team.

The following Trustees’ expenses were reimbursed or paid directly on their behalf during the year for their services as Trustees:

Unrestricted
funds £000s		 2022
No. Trustees		 2021
No. Trustees		 Dec 2022
£000s		 Dec 2021
£000s
Travel & Subsistence 10 3 6 1
Total 10 3 6 1

Included above is £1,588 (2021 – £Nil) which has been paid directly to third parties.

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Annual Report & Accounts 2022

11. Staff Costs & Employee Benefits

The average number of employees, analysed by function, was: Unrestricted

Unrestricted
The average number of employees, analysed by function, was:
funds £000s Dec 2022
Executive 8
Translational Science 110
Translational Advice 20
Early Ventures 6
Scientifc Enablers 31
Enabling Functions 59
Agency/Contract Staf 13
Total 247

Scientific enablers includes Business Development, Diligence, and Project Management.

Unrestricted
funds £000s
 Dec 2022
£000s		 Dec 2021
£000s
Wages & Salaries 18,201 15,391
Social Security 2,143 1,683
Defned Contribution Pension Costs 1,326 1,284
Agency/Contract Staf 1,753 1,347
Redundancy Payments 588 659
Total 25,011 20,364

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Annual Report & Accounts 2022

The number of employees who received total employee benefits (made up of basic pay, bonus, and other allowances) of more than £60,000 is as follows:

funds £000s Dec 2022 Dec 2021
£60,001 – £70,000 33 12
£70,001 – £80,000 11 16
£80,001 – £90,000 13 11
£90,001 – £100,000 16 9
£100,001 – £110,000 8 4
£110,001 – £120,000 5 2
£120,001 – £130,000 3 7
£130,001 – £140,000 2 –
£140,001 – £150,000 3 2
£150,001 – £160,000 0 2
£160,001 – £170,000 1 –
£170,001 – £180,000 1 –
£180,001 – £190,000 – –
£190,001 – £200,000 1 1
£200,001 – £210,000 2 2
£210,001 – £220,000 1 1
£220,001 - £230,000 1 –
£230,001 - £240,000 1 –
£240,001 – £250,000 1 –
£250,001 – £260,000 – 1
£280,001 – £290,000 – 1
£290,001 -- £300,000 1 –
£300,001 – £310,000 – 1
£330,001 – £340,000 1 –
£430,001 – £440,000 1 1
Total 106 73

PILON totalling £268,000 was included in calculating the number of employees who received total employee benefits of more than £60,000.

The pension contributions to the defined contribution scheme payable on behalf of 105 (December 2021 – 73) members of staff amounted to £840,387 (2021 – £623,316).

The redundancy and termination payments in the year totalled £588,422 (2021 – £658,920), of which £588,422 (2021 – £529,377) had been paid during the year with £Nil (2021 - £129,584) accrued at the year end.

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Annual Report & Accounts 2022

12. Tangible Fixed Assets

12. Tangible Fixed Assets
Unrestricted
funds £000s		 Assets Under
Construction
£000s		 Leasehold
Improvements
£000s		 Laboratory
Equipment
& Plant £000s		 Fixtures, Fittings
& Computers
£000s		 Total
£000s
Cost
At 1 January 2022 573 9,848 11,042 3,210 24,673
Additions 54 12 497 400 963
Disposals – – (48) (53) (101)
Reclassifcation (211) – 31 180 –
Transfer To Intangibles (410) – – – (410)
At 31 December 2022 6 9,860 11,522 3,737 25,125
Accumulated Depreciation
At 1 January 2022		 – 4,440 7,111 2,325 13,876
Charge For Year – 915 1,228 464 2,607
Disposals – – (48) (53) (101)
At 31 December 2022 – 5,355 8,291 2,736 16,382
Net Book Value
At 31 December 2022 6 4,505 3,231 1,001 8,743
At 31 December 2021 573 5,408 3,931 885 10,797

LifeArc had capital commitments of £2.1m at 31 December 2022 (December 2021 – £Nil).

13. Intangible Assets

13. Intangible Assets
Unrestricted
funds £000s		 Synergy Antibody
Platform £000s		 Software &
Licences £000s		 Total
£000s
Cost
At 1 January 2022 16,149 598 16,747
Additions – 5 5
Disposal/Write Ofs – (447) (447)
Transfer From Tangibles – 410 410
At 31 December 2022 16,149 566 16,715
Accumulated Depreciation
At 1 January 2022 2,706 151 2,857
Charge For Year 2,689 123 2,812
Disposal/Write Ofs – (202) (202)
Reclassifcation – – –
At 31 December 2022 5,395 72 5,467
Net Book Value
At 31 December 2022 10,754 494 11,248
At 31 December 2021 13,443 447 13,890

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Annual Report & Accounts 2022

Unrestricted
funds £000s
14. Fixed Asset Investments		 Dec 2022
£000s		 Dec 2021
£000s
Investments At Cost 54 54
Unlisted Investments In Early Ventures Fund Held At Fair Value 44,675 19,679
Listed Investments 977,243 1,100,377
Cash Held For Investment Purposes 31,716 8,968
Total 1,053,688 1,129,078

Included within investments at cost is £10k in relation to 100% of the shares in LifeArc Innovations Limited.

Listed investments includes investments held by LifeArc where there is an available market for the investments to be bought and sold, including private equity investments managed and valued by the third party investment managers.

funds £000s 2022 £000s 2021 £000s
Fair Value At 1 January 19,679 18,591
Investments In The Year 17,546 9,126
Disposals In The Year (26,084) –
Realised Gain During The Year 23,327 –
Unrealised Gain During The Year 9,225 18,725
Reclassifcation To Fixed Asset Listed Investment – (27,270)
Interest Accrued 390 339
Foreign Exchange Gains 572 168
Fair Value At 31 December 44,675 19,679

At the year end LifeArc was committed to investing £51.3m (2021 £26.9m) through LifeArc Ventures and as a Limited Partner, and £72.3m (2021 £13.8m) from other unrestricted funds.

Unrestricted
Funds £000s
Listed Investments Held At Fair Value		 Dec 2022
£000s		 Dec 2021
£000s
Market Value At 1 January 1,100,377 419,966
Acquisitions 18,179 703,430
Sale Proceeds (23,768) (163,776)
Unrealised Gain (Loss) (138,759) 83,548
Realised Gain 21,214 31,380
Reclassifcation From Fixed Asset Unlisted Investments – 27,270
Reclassifcation From Current Asset Investments – 9,282
Reclassifcation To Current Asset Investments – (11,314)
Foreign Exchange Gains – 591
Market Value At 31 December 977,243 1,100,377
Historical Cost At 31 December 1,061,591 1,023,492

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Annual Report & Accounts 2022

Unrestricted
funds £000s
Portfolio Analysis		 Unrestricted
funds £000s		 Dec 2022
£000s		 Dec 2021
£000s
Equities within the UK 45,414 –
Overseas 677,908 803,362
Fixed Interest Securities within the UK – –
Overseas 121,189 195,865
Alternative Investment Inc Private Equity 132,732 101,150
977,243 1,100,377
Cash 31,716 8,968
Total 1,008,959 1,109,345
Unrestricted
funds £000s
Portfolio Analysis		 Dec 2022
£000s		 Dec 2021
£000s
Equities Overseas 4,434 11,314
Fixed Interest Securities Within The Uk – –
Fixed Interest Securities Overseas 101,749 151,668
Alternative Investment – –
106,183 162,982
Cash 3,833 2
Total 110,016 162,984

The fair value of listed investments is determined by reference to the quoted price for identical assets in an active market at the balance sheet date.

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Annual Report & Accounts 2022

16. Debtors

16. Debtors
Unrestricted
funds £000s		 Dec 2022
£000s		 Dec 2021
£000s
Trade Debtors 507 –
Prepayments & Accrued Income 1,938 1,801
Tax Debtor – VAT 979 835
Other Debtors 295 128
Hedge/Derivative Asset 1,569 –
Total 5,288 2,764

17. Creditors: Amounts Falling Due Within One Year

17. Creditors: Amounts Falling Due Within One Year
Unrestricte
funds £000s
 Dec 2022
£000s		 Dec 2021
£000s
Trade Creditors 2,039 1,228
Grant Creditors 385 734
Accruals & Deferred Income 7,739 6,233
Other Creditors 4,430 652
PAYE & NI Creditor 757 712
Total 15,350 9,559

18. Leases

18. Leases
Unrestricted
funds £000s
 Dec 2022
£000s		 Dec 2021
£000s
Operating Leases – Lessee
Total Future Minimum Lease Payments Under Non-Cancellable
Operating Leases Are As Follows:
Not Later Than 1 Year 1,404 1,404
Later Than 1 And Not Later Than 5 Years 2,109 3,487
Later Than 5 Years – –
Total 3,513 4,891

19. Provisions For Liabilities & Charges

19. Provisions For Liabilities & Charges
FUnrestricted
Funds £000s
 Provision for
Dilapidations £000s		 Total
£000s





At 31 December 2021 735 735
Additions During The Year 11 –
Amounts Charged Against The Provision – –
Unused Amounts Reversed – –
At 31 December 2022 746 735

The provision relates to dilapidations for the Edinburgh site, the Lynton House site, and the Stevenage site.

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Annual Report & Accounts 2022

20. Grant Commitments

20. Grant Commitments
Unrestricted
funds £000s		 Expected to be Paid
Within 1 Year £000		 Expected to be Paid
After 1 Year £000		 Total
£000s
Rare Disease 6,673 4,849 11,532
IWP 3,804 3,257 7,061
COVID 1,034 864 1,898
Neurodegeneration Healthcare 878 820 1,697
Respiratory Health 819 629 1,447
Total 13,207 10,428 23,635

21. Fund Reconciliation
Unrestricted
funds £000s		 1 Jan 2022
£000s		 £000s £000s £000s (losses)
£000s		 31 Dec 2022
£000s
Unrestricted 1,073,878 21,634 (55,703) 236,690 (90,140) 1,186,359
Early Ventures Fund 216,233 844 – (217,077) – –
Philanthropic Fund 11,389 – (2,639) (8,750) – –
Crick Fund 4,315 – (533) (3,782) – –
COVID Fund 8,107 – (1,026) (7,081) – –
Total Designated Funds 240,044 844 (4,198) (236,690) – –
Total Unrestricted 1,313,922 22,478 (59,901) – (90,140) 1,186,359
Restricted – 401 (401) – – –
Total 1,313,922 22,879 (60,302) – (90,140) 1,186,359

In 2022 the Trustees approved the transfer of all designated funds to unrestricted funds. We have developed effective alternative ways of tracking and communicating the use of LifeArc’s funds. As a result, the presentation of designated funds in the accounts is no longer required and is discontinued.

Unrestricted
funds £000s		 1 Jan 2021
£000s		 £000s £000s £000s (losses)
£000s		 31 Dec 2021
£000s
Unrestricted 1,165,127 17,172 (44,416) (197,000) 132,995 1,073,878
Early Ventures Fund 23,282 332 – 192,000 619 216,233
Philanthropic Fund 7,800 – (1,411) 5,000 – 11,389
Crick Fund 4,702 – (387) – – 4,315
COVID Fund 18,030 – (9,923) – – 8,107
Total Designated Funds 53,814 332 (11,721) 197,000 619 240,044
Total Unrestricted 1,218,941 17,504 (56,137) – 133,614 1,313,922
Restricted – 373 (373) – – –
Total 1,218,941 17,877 (56,510) – 133,614 1,313,922

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Annual Report & Accounts 2022

Fund Descriptions

01. Unrestricted Funds

The unrestricted fund is a general unrestricted fund which is available for use at the discretion of the Trustees in furtherance of the general objectives of LifeArc and which has not been designated for other purposes.

02. Restricted Funds

The restricted funds are grants received in the year which are subject to specific restrictions imposed by the donor. Grant income includes £401k (December 2021 – £373k) from GSK Services and the Royal Commission for the Exhibition of 1851.

03. Designated Funds

The designated funds were specifically allocated for the COVID Fund, Early Ventures Fund, Philanthropic Fund, and Crick Fund. The Trustees have approved the transfer of designated funds to unrestricted funds.

22. Analysis of Net Assets Between Funds

22. Analysis of Net Assets Between Funds
Unrestricted
funds £000s		 Unrestricted
Funds £000s		 Designated
Funds £000s		 Total Dec
2022 £000s
Fixed Assets 1,073,679 – 1,073,679
Cash & Current Investments 123,488 – 123,488
Other Current Assets/Liabilities (10,062) – (10,062)
Provisions (746) – (746)
Total 1,186,359 – 1,186,359
Unrestricted
funds £000s		 Unrestricted
Funds £000s		 Designated
Funds £000s		 Total Dec
2021 £000s
Fixed Assets 937,532 216,233 1,153,765
Cash & Current Investments 143,142 24,545 167,687
Other Current Assets/Liabilities (6,061) (734) (6,795)
Provisions (735) – (735)
Total 1,073,878 240,044 1,313,922

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Annual Report & Accounts 2022

23. Reconciliation Of Net Income To Net Cash Flow From Operating Activities

Unrestricted
funds £000s		 Dec 2022
£000s		 Dec 2021
£000s











Net Income For Year (127,563) 94,981
Dividends, Interest & Rents From Investments (19,536) (15,448)
Movement In Deferred Income On Early Ventures Investments (390) (339)
Revaluation (Gain)/Loss On Investments (572) (760)
Depreciation And Impairment Of Tangible Fixed Assets 2,607 2,792
Amortisation Of Intangible Fixed Assets 2,812 2,827
(Gains) Losses On Investments 84,973 (133,653)
Loss On Disposal Of Tangible Fixed Assets – 8
Loss On Disposal Of Intangible Fixed Assets 245 –
(Increase)/Decrease In Debtors (2,524) (211)
Increase/(Decrease)In Creditors 5,802 503
Net Cash Flow From OperatingActivities (54,146) (49,300)

24. Pensions & Other Post-Retirement Benefits

Defined Contribution Pension Plans

LifeArc operates a defined contribution pension plan for its employees.

The amount of contributions recognised as an expense during the year was £1,326k (12 months to December 2021 – £1,284k).

25. Related Party Transactions

The non-executive Trustees of the Board received no remuneration from LifeArc for their services as Trustees during the year.

Reimbursements for travel expenses with an aggregate value of £6,399 (December 2021 – £606) were made to 10 non-executive Trustees (December 2021 – three non-executive Trustees). These transactions were carried out on normal commercial terms.

Trustee indemnity insurance was purchased in the year at a cost of £16,692 including insurance premium tax (2021 – £21,882).

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Annual Report & Accounts 2022

Information about related party transactions and outstanding balances is outlined below:

Unrestricted
funds £000s		 Income
£000s		 Expenditure
£000s		 Creditor
£000s
Medicine Discovery Catapult
At End Date 31 December 2022 – 177 –
At End Date 31 December 2021 – 389 –
Dementia Research Institute
At End Date 31 December 2022 55 – –
At End Date 31 December 2021 61 – –
Sanof S.a (Kymab Ltd)
At End Date 31 December 2022 – – –
At End Date 31 December 2021 – 19 –
Association Of Medical Research Charities
At End Date 31 December 2022 – 90 –
At End Date 31 December 2021 – 68 –
Rq Biotechnology Limited
At End Date 31 December 2022 21 – –
At End Date 31 December 2021 85 – –
Bioindustry Association
At End Date 31 December 2022 – 36 –
At End Date 31 December 2021 – 26 –
Casewell Consulting
At End Date 31 December 2022 7
At End Date 31 December 2021 – – –
Beacon For Rare Diseases
At End Date 31 December 2022 47 – –
At End Date 31 December 2021 8 – –

26. Post Balance Sheet Events

Since 31[st] December 2022 the value of LifeArc’s investment portfolio (excluding Early Ventures) has increased by £27m as at 31[st] May 2023 as a result of £45.4m gains and income, offset by £18.4m of disposals.

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Annual Report & Accounts 2022

27. Limited Liability

LifeArc is a company limited by guarantee (Company number 02698321) and thus has no share capital.

In the event of LifeArc being wound up, every member of LifeArc undertakes to contribute no more than £1 to the assets of LifeArc while they are a member, or within one year after they cease to be a member, for the debts and liabilities of LifeArc contracted before they cease to be a member. The number of members at 31 December 2022 was 10 (31 December 2021 – 13).

28. Charitable Status

LifeArc is a charity registered with the Charity Commissioners for England and Wales, number 1015243 and a charity registered in Scotland (number SC037861) with the Office of the Scottish Charity Regulator.

29. Trading Subsidiary

LifeArc holds 100% of the shares in LifeArc Innovations Limited. Consolidated accounts have not been prepared as its inclusion is not material for the purpose of giving a true and fair view.

30. Ultimate Controlling Party

LifeArc is controlled by its members.

31. Comparative Statement of Financial Activities

Unrestricted
funds £000s		 Notes Unrestricted
Funds £000s		 Restricted
£000s		 Total Funds Dec
2021 £000s
Income & Endowments From:
Charitable Activities 1 1,970 373 2,343
Trading Activities
Investments 2 15,448 – 15,448
Other Income 3 86 – 86
Total Income & Endowments 17,504 373 17,877
Expenditure On:
Raising Funds 4 1,911 – 1,911
Charitable Activities 5 54,226 373 54,599
Provisions 19 – – –
Total Expenditure – 56,137 373 56,510
Net Gains On Investments 14/15 133,614 – 133,614
Net Income – 94,981 – 94,981
Net Movement In Funds 21 94,981 – 94,981
Reconciliation Of Funds:
Total Funds Brought Forward 21 1,218,941 – 1,218,941
Cash Flow Hedge Reserve 21 – – –
Total Funds Carried Forward 21 1,313,922 – 1,313,922

55

Annual Report & Accounts 2022

Advisers

Statutory Auditors PKF Littlejohn LLP 15 Westferry Circus, Canary Wharf, London E14 4HD
Bankers Lloyds Bank Plc 3rdFloor, 25 Gresham Street, London EC2V 7HN
Charity Law Advisors Bates Wells 10 Queen Street Place, London EC4R 1BE
Internal Auditor BDO 55 Baker Street, London W1U 1EU
Grant Thornton UK LLP 30 Finsbury Square, London EC2A 1AG
(from Jan 2023)
Investment Advisors Cambridge Associates Ltd 80 Victoria Street, Cardinal Place, London SW1E 5JL
Investment Custodian Northern Trust 50 Bank Street, Canary Wharf, London E14 5NT

Company And Charity Numbers

Company Limited by Guarantee Incorporated in England & Wales No. 2698321

Charity Registered with the Charity Commission for England & Wales No. 1015243

Charity Registered in Scotland with the Office of the Scottish Charity Regulator No. SC037861

Registered Address And Principal Place of Business

Lynton House, 7 - 12 Tavistock Square, London WC1H 9LT

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Annual Report & Accounts 2022

Lynton House 7-12 Tavistock Square London WC1H 9LT UK +44 (0)20 7391 2700 I www.lifearc.org

57