Research Software Development Agreement

We have entered into a software development agreement with Aigenpulse Limited, or Aigenpulse, where Aigenpulse agreed to develop scientific computing software designed to assist us in our drug development processes. Nicholas Cross, a beneficial holder of more than 5% of our share capital and a member of our board of directors from October 2008 until August 2019, is affiliated with Aigenpulse. During the years ended December 31, 2018, 2019 and 2020, we incurred costs in the amount of £729,000, £500,000 and £0, respectively. We terminated our agreement with Aigenpulse in 2020.

Agreements with Our Executive Officers and Directors

We have entered into service agreements with our executive officers and a direct services agreement with Dr. Bahija Jallal, our executive director. See “Item 6.B—Compensation of Executive Officers and Directors.” These agreements contain customary provisions and representations, including confidentiality, non-competition, non-solicitation and inventions assignment undertakings by our executive officers. However, the enforceability of the non-competition provisions may be limited under applicable law.

Indemnification Agreements

We have entered into deeds of indemnity with each of our directors and executive officers. These agreements and our articles of association require us to indemnify our directors and executive officers to the fullest extent permitted by applicable law. See “Item 6.B—Insurance and Indemnification.”

Registration Rights Agreement

We have entered into a registration rights agreement with certain of our existing shareholders pursuant to which we have granted them customary registration rights for the resale of the common shares held by certain of our existing shareholders.

C.	Interests of Experts and Counsel

Not applicable.

Item 8.

Financial Information.

A.	Consolidated Statements and Other Financial Information

Consolidated Financial Statements

Our consolidated financial statements are appended at the end of this Annual Report, starting at page F-1.

Dividend Distribution Policy

Since our incorporation, we have not declared or paid any dividends on our issued share capital. We intend to retain any earnings for use in our business and do not currently intend to pay dividends on our ordinary shares or ADSs. The declaration and payment of any future dividends will be at the discretion of our board of directors and will depend upon our results of operations, cash requirements, financial condition, contractual restrictions, any future debt agreements or applicable laws and other factors that our board of directors may deem relevant.

Under the laws of England and Wales, among other things, we may only pay dividends if we have sufficient distributable reserves (on a non-consolidated basis), which are our accumulated realized profits that have not been previously distributed or capitalized less our accumulated realized losses, so far as such losses have not been previously written off in a reduction or reorganization of capital.

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Legal Proceedings

We consider it in the ordinary course of our business that our patents and trademarks may become subject to interference or opposition proceedings. There are currently four patent opposition proceedings ongoing at the European Patent Office regarding patents relating to the non-core aspects of our ImmTAX platform technology and which challenge the validity of those European patents; however, we do not believe the ultimate resolution of any such existing matters would have a material adverse effect on our business or financial condition and will also have no material adverse effect on our development of our product candidates. As a result of the opposition proceedings, the European Patent Office’s Opposition Division, or the Opposition Division, can revoke a patent, maintain the patent as granted, or maintain the patent in an amended form. Decisions made by the Opposition Division can be appealed to the European Patent Office’s Appeal Board. As of the date of this Annual report, we have received a decision in two patent opposition proceeding at the European Patent Office. On January 27, 2021, the Opposition Division decided to revoke EP3112376, which is a defensive patent related to a TCR mimic antibody with N terminal immune effector. We are considering possible grounds of appeal; however, this patent will have no material adverse effect on the development of any of our product candidates. On March 19, 2021, the Opposition Division decided to revoke EP3112377, which is a patent related to TCR cytokine fusions. Pending receipt of the Opposition Division’s detailed reasons for the decision, we are considering filing an appeal; however, this patent will have no material adverse effect on the development of any of our product candidates. It is uncertain how any appeal, or the other two opposition proceedings, will be resolved, and what impact, if any, the decisions we will have on our overall European intellectual property portfolio.

In September 2020, an opposition was filed by Immatics which challenges our ImmTAX U.S. trademark registration application and in November 2020 we filed counterclaims against three of Immatics's U.S. registered trademarks for IMMATICS. We do not believe this trademark is material to our business as a whole.

There can be no assurance that pending patent applications will result in the issuance of patents, that patents issued to or licensed by us will not be challenged or circumvented by competitors, or that these patents will be found to be valid or sufficiently broad to protect our technology or to provide us with a competitive advantage. However, we believe that no single patent, technology, trademark, intellectual property asset or license is material in relation to our business as a whole. For more information on risks associated with the pending European patent opposition proceedings and U.S. trademark opposition proceeding, see “Item 3.D — Risk Factors—Risks Related to Intellectual Property.”

In the summer and fall of 2020, we conducted an internal investigation as a result of receiving a whistleblower complaint alleging employee misconduct and other improper activities related to a kickback scheme involving an employee and two third-party vendors between 2018 and 2020. Our audit committee led the investigation utilizing outside counsel, during which the named employee resigned. The investigation led to the identification of a material weakness in our internal control over financial reporting. See “Item 3.D — Risk Factors—We previously identified a material weakness in our internal control over financial reporting, which has since been remediated. We may identify discover additional material weaknesses in the future or otherwise fail to maintain proper and effective internal controls, which may impair our ability to produce timely and accurate financial statements or prevent fraud. If we are unable to establish and maintain effective internal controls, shareholders could lose confidence in our financial and other public reporting, which would harm our business and the trading price of our ADSs.” After the investigation, we terminated the one remaining open contract with the third-party vendors and issued proceedings in October 2020 against the involved parties. We recovered our estimated losses of £1.8 million from the employee and third-party vendors in December 2020.

From time to time, we may become involved in other legal proceedings arising in the ordinary course of our business. We do not have any pending litigation that, separately or in the aggregate, would, in the opinion of management, have a material adverse effect on our results of operations, financial condition or cash flows.

B.	Significant Changes

Not applicable

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Item 9.

The Offer and Listing.

A.	Offer and Listing Details

Our ADS have been listed on the Nasdaq Global Select Market under the symbol “IMCR” since February 5, 2021. Prior to that date, there was no public trading market for ADSs or ordinary shares. Our ordinary shares are not listed on any exchange.

B.	Plan of Distribution

Not applicable.

Markets

Our ADSs have been listed on the Nasdaq Global Select Market under the symbol “IMCR” since February 5, 2021. Prior to that date, there was no public trading market for ADSs or ordinary shares. Our ordinary shares are not listed on any exchange.

D.	Selling Shareholders

Not applicable.

Dilution

Not applicable.

F.	Expenses of the Issue

Not applicable.

Item 10.

Additional Information.

A.	Share Capital

Not applicable.

B.	Articles of Association

The information set forth under the heading “Description of Share Capital and Articles of Association” is incorporated by reference from our final prospectus dated February 4, 2021 as part of our Registration Statement on Form F-1 (File No. 333-252166), declared effective by the SEC on February 4, 2021.

C.	Material Contracts

In addition to the contracts described elsewhere in this Annual Report, the following are summaries of each material contract to which we are a party for the two years preceding the date of this Annual Report.

Underwriting Agreement

We entered into an underwriting agreement with Goldman Sachs & Co. LLC, J.P. Morgan Securities LLC and Jefferies LLC as representatives of the underwriters, on February 4, 2021, with respect to the ADSs sold in our initial public offering. We have agreed to indemnify the underwriters against certain liabilities, including liabilities under the Securities Act, and to contribute to payments the underwriters may be required to make in respect of such liabilities.

For additional information on our material contracts, please see “Item 4. - Information on the Company,” “Item 6. - Directors, Senior Management and Employees,” and “Item 7.B. - Related Party Transactions” of this Annual Report.

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D.	Exchange Controls

There are no governmental laws, decrees, regulations or other legislation in the United Kingdom that may affect the import or export of capital, including the availability of cash and cash equivalents for use by us, or that may affect the remittance of dividends, interest, or other payments by us to non-resident holders of our ordinary shares or ADSs, other than withholding tax requirements. There is no limitation imposed by the laws of England and Wales or our articles of association on the right of non-residents to hold or vote shares.

Taxation

The following summary contains a description of material U.K. and U.S. federal income tax consequences of the acquisition, ownership and disposition of our ADSs. This summary should not be considered a comprehensive description of all the tax considerations that may be relevant to beneficial owners of ADSs.

Material U.S. Federal Income Tax Considerations for U.S. Holders

The following is a description of the material U.S. federal income tax consequences to the U.S. Holders described below of owning and disposing of our ordinary shares or ADSs. It is not a comprehensive description of all tax considerations that may be relevant to a particular person’s decision to acquire securities. This discussion applies only to a U.S. Holder that holds our ordinary shares or ADSs as a capital asset for tax purposes (generally, property held for investment). In addition, it does not describe all of the tax consequences that may be relevant in light of a U.S. Holder’s particular circumstances, including state, local and non-U.S. tax consequences, estate tax consequences, alternative minimum tax consequences, the potential application of the Medicare contribution tax, and tax consequences applicable to U.S. Holders subject to special rules, such as:

•

banks, insurance companies, and certain other financial institutions;

•

U.S. expatriates and certain former citizens or long-term residents of the United States;

•

dealers or traders in securities who use a mark-to-market method of tax accounting;

•

persons holding ordinary shares or ADSs as part of a hedging transaction, “straddle,” wash sale, conversion transaction or integrated transaction or persons entering into a constructive sale with respect to ordinary shares or ADSs;

•

persons whose “functional currency” for U.S. federal income tax purposes is not the U.S. dollar;

•

brokers, dealers or traders in securities, commodities or currencies;

•

tax-exempt entities or government organizations;

•

S corporations, partnerships, or other entities or arrangements classified as partnerships for U.S. federal income tax purposes (and investors therein);

•

regulated investment companies or real estate investment trusts;

•

persons who acquired our ordinary shares or ADSs pursuant to the exercise of any employee stock option or otherwise as compensation;

•

persons holding shares or ADSs in connection with a trade or business outside the United States;

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•

persons that own or are deemed to own ten percent or more of our shares (by vote or value); and

•

persons holding our ordinary shares or ADSs in connection with a trade or business, permanent establishment, or fixed base outside the United States.

If an entity that is classified as a partnership for U.S. federal income tax purposes holds ordinary shares or ADSs, the U.S. federal income tax treatment of a partner will generally depend on the status of the partner and the activities of the partnership. Partnerships holding ordinary shares or ADSs and partners in such partnerships are encouraged to consult their tax advisors as to the particular U.S. federal income tax consequences of holding and disposing of ordinary shares or ADSs.

The discussion is based on the Code, administrative pronouncements, judicial decisions, final, temporary and proposed Treasury Regulations, and the income tax treaty between the United Kingdom and the United States, the Treaty, all as of the date hereof, changes to any of which may affect the tax consequences described herein — possibly with retroactive effect.

A “U.S. Holder” is a holder who, for U.S. federal income tax purposes, is a beneficial owner of ordinary shares or ADSs who is:

(1) an individual who is a citizen or resident of the United States;

(2) a corporation, or other entity taxable as a corporation for U.S. federal income tax purposes, created or organized in or under the laws of the United States, any state therein or the District of Columbia;

(3) an estate the income of which is subject to U.S. federal income taxation regardless of its source; or

(4) a trust if (1) a U.S. court is able to exercise primary supervision over the administration of the trust and one or more U.S. persons have authority to control all substantial decisions of the trust or (2) the trust has a valid election to be treated as a U.S. person under applicable U.S. Treasury Regulations.

U.S. Holders are encouraged to consult their tax advisors concerning the U.S. federal, state, local and non-U.S. tax consequences of owning and disposing of ordinary shares or ADSs in their particular circumstances.

The discussion below assumes that the representations contained in the deposit agreement are true and that the obligations in the deposit agreement and any related agreement will be complied with in accordance with their terms. Generally, a holder of an ADS should be treated for U.S. federal income tax purposes as holding the ordinary shares represented by the ADS. Accordingly, no gain or loss will be recognized upon an exchange of ADSs for ordinary shares.

Passive Foreign Investment Company rules

Under the Code, we will be a PFIC for any taxable year in which (1) 75% or more of our gross income consists of passive income or (2) 50% or more of the value of our assets (generally determined on the basis of a weighted quarterly average) consists of assets that produce, or are held for the production of, passive income (including cash). For purposes of these tests, passive income includes dividends, interest, gains from the sale or exchange of investment property and certain rents and royalties. Cash and cash-equivalents are passive assets for these purposes. In addition, for purposes of the above calculations, a non-U.S. corporation that directly or indirectly owns at least 25% by value of the shares of another corporation is treated as holding and receiving directly its proportionate share of assets and income of such corporation. If we are a PFIC for any taxable year during which a U.S. Holder holds our shares, the U.S. Holder may be subject to adverse tax consequences regardless of whether we continue to qualify as a PFIC, including ineligibility for any preferred tax rates on capital gains or on actual or deemed dividends, interest charges on certain taxes treated as deferred and additional reporting requirements.

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Based on our analysis of our activities and our income and assets, we believe that we were not a PFIC for our most recently completed taxable year ended December 31, 2020. However, the determination of whether we are a PFIC is a fact-intensive determination made on an annual basis applying principles and methodologies that in some circumstances are unclear and subject to varying interpretation. As a result, there can be no assurance that we will not be treated as a PFIC for the current or any future taxable year. In addition, for our current and future taxable years, the total value of our assets for PFIC testing purposes (including goodwill) may be determined in part by reference to the market price of our ordinary shares or ADSs from time to time, which may fluctuate considerably. Accordingly, if our market capitalization declines while we hold a substantial amount of cash and cash-equivalents for any taxable year we may be a PFIC for that taxable year. Under the income test, our status as a PFIC depends on the composition of our income for the relevant taxable year which will depend on the transactions we enter into in the future and our corporate structure. The composition of our income and assets is also affected by how we spend the cash we raise in any offering. We currently do not generate product revenues and therefore we may be a PFIC for any taxable year in which we do not generate sufficient amounts of active income to offset our passive financing income. Therefore, we cannot express an expectation regarding our PFIC status for the current or any future taxable year. Even if we determine that we are not a PFIC for a taxable year, there can be no assurance that the IRS will agree with our conclusion and that the IRS would not successfully challenge our position. Accordingly, our U.S. counsel expresses no opinion with respect to our PFIC status for any prior, current or future taxable year.

If we are classified as a PFIC in any year with respect to which a U.S. Holder owns the ordinary shares or ADSs, we will continue to be treated as a PFIC with respect to such U.S. Holder in all succeeding years during which the U.S. Holder owns the ordinary shares or ADSs, regardless of whether we continue to meet the tests described above unless we cease to be a PFIC and the U.S. Holder has made a “deemed sale” election under the PFIC rules. If such a deemed sale election is made, a U.S. Holder will be deemed to have sold the ordinary shares or ADSs the U.S. Holder holds at their fair market value and any gain from such deemed sale would be subject to the rules described below. After the deemed sale election, so long as we do not become a PFIC in a subsequent taxable year, the U.S. Holder’s ordinary shares or ADSs with respect to which such election was made will not be treated as shares in a PFIC and the U.S. Holder will not be subject to the rules described below with respect to any “excess distribution” the U.S. Holder receives from us or any gain from an actual sale or other disposition of the ordinary shares or ADSs. U.S. Holders should consult their tax advisors as to the possibility and consequences of making a deemed sale election if we are a PFIC and cease to be a PFIC and such election becomes available.

For each taxable year that we are treated as a PFIC with respect to U.S. Holders, U.S. Holders will be subject to special tax rules with respect to any “excess distribution” such U.S. Holder receives and any gain such U.S. Holder recognizes from a sale or other disposition (including a pledge) of ordinary shares or ADSs, unless (i) such U.S. Holder makes a “qualified electing fund” election, or QEF Election, with respect to all taxable years during such U.S. Holder's holding period in which we are a PFIC, or (ii) our ordinary shares or ADSs constitute “marketable stock” and such U.S. Holder makes a mark-to-market election (as discussed below). Distributions a U.S. Holder receives in a taxable year that are greater than 125% of the average annual distributions a U.S. Holder received during the shorter of the three preceding taxable years or the U.S. Holder’s holding period for the ordinary shares or ADSs will be treated as an excess distribution. Under these special tax rules:

•

the excess distribution or gain will be allocated ratably over a U.S. Holder’s holding period for the ordinary shares or ADSs;

•

the amount allocated to the taxable year of the disposition or distribution (as applicable), and any taxable year prior to the first taxable year in which we became a PFIC, will be treated as ordinary income; and

•

the amount allocated to each other year will be subject to the highest tax rate in effect for that year and the interest charge generally applicable to underpayments of tax will be imposed on the resulting tax attributable to each such year.

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The tax liability for amounts allocated to years prior to the year of disposition or “excess distribution” cannot be offset by any net operating losses for such years, and gains (but not losses) realized on the sale of the ordinary shares or ADSs cannot be treated as capital, even if a U.S. Holder holds the ordinary shares or ADSs as capital assets.

If we are a PFIC, a U.S. Holder will generally be subject to similar rules with respect to distributions we receive from, and our dispositions of the stock of, any of our direct or indirect subsidiaries or any other entities in which we hold equity interests that also are PFICs (“lower-tier PFICs”), as if such distributions were indirectly received by, and/or dispositions were indirectly carried out by, such U.S. Holder. U.S. Holders should consult their tax advisors regarding the application of the PFIC rules to lower-tier PFICs.

If a U.S. Holder makes an effective QEF election, the U.S. Holder will be required to include in gross income for each year in which we are a PFIC, whether or not we make distributions, as capital gains, such U.S. Holder's pro rata share of our net capital gains and, as ordinary income, such U.S. Holder's pro rata share of our earnings in excess of our net capital gains. An electing U.S. Holder's basis in our ordinary shares or ADSs will be increased to reflect the amount of any taxed but undistributed income. Distributions of income that had previously been taxed will result in a corresponding reduction of basis in the ordinary shares or ADSs and generally will not be taxed again as distributions to the U.S. Holder. In addition, a U.S. Holder that makes a QEF election will be taxed on the disposition of ordinary shares or ADSs as described in “Sale or other taxable disposition of ordinary shares and ADSs” below. In order to apply the QEF regime in lieu of the general PFIC rules described above, a U.S. Holder generally must make the QEF election for the first taxable year during a U.S. Holder’s holding period in which we are treated as a PFIC.

A U.S. Holder can only make a QEF election with respect to ordinary shares or ADSs in a PFIC if the Company agrees to furnish such U.S. Holder with certain information annually. If we determine that the Company is a PFIC in any taxable year, we intend to make available to U.S. Holders, upon request and in accordance with applicable procedures and confidentiality requirements, a “PFIC Annual Information Statement” with respect to the Company for such taxable year. The “PFIC Annual Information Statement” may be used by U.S. Holders for purposes of complying with the reporting requirements applicable to a QEF election with respect to the Company.

A QEF election with respect to the Company will not apply to any of our lower-tier PFICs. If we determine that any of our current subsidiaries is a lower-tier PFIC for any taxable year in which the Company is a PFIC, we currently expect that we will provide the information necessary for U.S. Holders to make a QEF election with respect to such lower-tier PFIC, but there can be no assurance that we will be able to provide such information.

U.S. Holders should note that if they make a QEF election with respect to us, they may be required to pay U.S. federal income tax with respect to their ordinary shares or ADSs for any taxable year significantly in excess of any cash distributions (which are currently expected to be zero) received on the ordinary shares or ADSs for such taxable year. U.S. Holders should consult their tax advisors regarding PFIC investments and making QEF elections based on their particular circumstances.

U.S. Holders can avoid the interest charge on excess distributions or gain relating to the ordinary shares or ADSs by making a mark-to-market election with respect to the ordinary shares or ADSs, provided that the ordinary shares or ADSs are “marketable stock.” Ordinary shares or ADSs will be marketable stock if they are “regularly traded” on certain U.S. stock exchanges or on a non-U.S. stock exchange that meets certain conditions. For these purposes, the ordinary shares or ADSs will be considered regularly traded during any calendar year during which they are traded, other than in de minimis quantities, on at least 15 days during each calendar quarter. Any trades that have as their principal purpose meeting this requirement will be disregarded. Our ADSs (but not ordinary shares) will be listed on the Nasdaq, which is a qualified exchange for these purposes. Consequently, if our ADSs remain listed on the Nasdaq and are regularly traded, we expect the mark-to-market election would be available to U.S. Holders of our ADSs if we are a PFIC. Each U.S. Holder should consult its tax advisor as to the whether a mark-to-market election is available or advisable with respect to the ordinary shares or ADSs.

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A U.S. Holder that makes a mark-to-market election must include in ordinary income for each year an amount equal to the excess, if any, of the fair market value of the ordinary shares or ADSs at the close of the taxable year over the U.S. Holder’s adjusted tax basis in the ordinary shares or ADSs. An electing U.S. Holder may also claim an ordinary loss deduction for the excess, if any, of the U.S. Holder’s adjusted basis in the ordinary shares or ADSs over the fair market value of the ordinary shares or ADSs at the close of the taxable year, but this deduction is allowable only to the extent of any net mark-to-market gains for prior years. Gains from an actual sale or other disposition of the ordinary shares or ADSs in any year in which we are a PFIC will be treated as ordinary income, and any losses incurred on a sale or other disposition of the shares will be treated as an ordinary loss to the extent of any net mark-to-market gains for prior years. Once made, the election cannot be revoked without the consent of the IRS unless the ordinary shares or ADSs cease to be marketable stock.

However, a mark-to-market election generally cannot be made for equity interests in any lower-tier PFICs that we own, unless shares of such lower-tier PFIC are themselves “marketable stock.” As a result, even if a U.S. Holder validly makes a mark-to-market election with respect to our ordinary shares or ADSs, the U.S. Holder may continue to be subject to the PFIC rules (described above) with respect to its indirect interest in any of our investments that are treated as an equity interest in a PFIC for U.S. federal income tax purposes. U.S. Holders should consult their tax advisors as to the availability and desirability of a mark-to-market election, as well as the impact of such election on interests in any lower-tier PFICs.

Unless otherwise provided by the U.S. Treasury, each U.S. shareholder of a PFIC is required to file an annual report containing such information as the U.S. Treasury may require. A U.S. Holder’s failure to file the annual report may result in substantial penalties and extend the statute of limitations with respect to the U.S. Holder’s federal income tax return. U.S. Holders should consult their tax advisors regarding the requirements of filing such information returns under these rules.

WE STRONGLY URGE YOU TO CONSULT YOUR TAX ADVISOR REGARDING THE IMPACT OF OUR PFIC STATUS ON YOUR INVESTMENT IN THE ORDINARY SHARES OR ADSs AS WELL AS THE APPLICATION OF THE PFIC RULES TO YOUR INVESTMENT IN THE ORDINARY SHARES OR ADSs.

Taxation of distributions

Subject to the discussion above under “Passive Foreign Investment Company rules,” distributions paid on ordinary shares or ADSs, other than certain pro rata distributions of ordinary shares or ADSs, will generally be treated as dividends to the extent paid out of our current or accumulated earnings and profits (as determined under U.S. federal income tax principles). Because we may not calculate our earnings and profits under U.S. federal income tax principles, we expect that distributions generally will be reported to U.S. Holders as dividends. Subject to applicable limitations, dividends paid to certain non-corporate U.S. Holders may be taxable at preferential rates applicable to “qualified dividend income.” However, the qualified dividend income treatment will not apply if we are treated as a PFIC with respect to the U.S. Holder for our taxable year of the distribution or the preceding taxable year. The amount of the dividend will be treated as foreign-source dividend income to U.S. Holders and will not be eligible for the dividends-received deduction generally available to U.S. corporations under the Code. Dividends will generally be included in a U.S. Holder’s income on the date of the U.S. Holder’s receipt of the dividend. The amount of any dividend income paid in foreign currency will be the U.S. dollar amount calculated by reference to the exchange rate in effect on the date of actual or constructive receipt, regardless of whether the payment is in fact converted into U.S. dollars. If the dividend is converted into U.S. dollars on the date of receipt, a U.S. Holder should not be required to recognize foreign currency gain or loss in respect of the dividend income. A U.S. Holder may have foreign currency gain or loss if the dividend is converted into U.S. dollars after the date of receipt. Such gain or loss would generally be treated as U.S.-source ordinary income or loss. The amount of any distribution of property other than cash (and other than certain pro rata distributions of ordinary shares or ADSs or rights to acquire ordinary shares or ADSs) will be the fair market value of such property on the date of distribution. For foreign tax credit purposes, our dividends will generally be treated as passive category income.

Sale or other taxable disposition of ordinary shares and ADSs

Subject to the discussion above under “Passive Foreign Investment Company rules,” gain or loss realized on the sale or other taxable disposition of ordinary shares or ADSs will be capital gain or loss, and will be long-term capital gain or loss if the U.S. Holder held the ordinary shares or ADSs for more than one year. The amount of the gain or loss will equal the difference between the U.S. Holder’s tax basis in the ordinary shares or ADSs disposed of and the amount realized on the disposition, in each case as determined in U.S. dollars. This gain or loss will generally be U.S.-source gain or loss for foreign tax credit purposes. The deductibility of capital losses is subject to limitations.

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If the consideration received by a U.S. Holder is not paid in U.S. dollars, the amount realized will be the U.S. dollar value of the payment received determined by reference to the spot rate of exchange on the date of the sale or other disposition. However, if the ordinary shares or ADSs are treated as traded on an “established securities market” and you are either a cash basis taxpayer or an accrual basis taxpayer that has made a special election (which must be applied consistently from year to year and cannot be changed without the consent of the IRS), you will determine the U.S. dollar value of the amount realized in a non-U.S. dollar currency by translating the amount received at the spot rate of exchange on the settlement date of the sale. If you are an accrual basis taxpayer that is not eligible to or does not elect to determine the amount realized using the spot rate on the settlement date, you will recognize foreign currency gain or loss to the extent of any difference between the U.S. dollar amount realized on the date of sale or disposition and the U.S. dollar value of the currency received at the spot rate on the settlement date.

Information reporting and backup withholding

Payments of dividends and sales proceeds that are made within the United States or through certain U.S.-related financial intermediaries generally are subject to information reporting, and may be subject to backup withholding, unless (i) the U.S. Holder is a corporation or other exempt recipient or (ii) in the case of backup withholding, the U.S. Holder provides a correct taxpayer identification number and certifies that it is not subject to backup withholding.

Backup withholding is not an additional tax. The amount of any backup withholding from a payment to a U.S. Holder will be allowed as a credit against the holder’s U.S. federal income tax liability and may entitle it to a refund, provided that the required information is timely furnished to the IRS.

Information with respect to foreign financial assets

Certain U.S. Holders who are individuals and certain closely-held entities may be required to report information relating to the ordinary shares or ADSs, subject to certain exceptions (including an exception for ordinary shares or ADSs held in accounts maintained by financial institutions, in which case the accounts themselves may have to be reported if maintained by non-U.S. financial institutions). U.S. Holders should consult their tax advisors regarding their reporting obligations with respect to their ownership and disposition of the ordinary shares or ADSs.

U.K. Taxation

The following is intended as a general guide to current U.K. tax law and HM Revenue & Customs, or HMRC, practice applying as at the date of this Annual Report (both of which are subject to change at any time, possibly with retrospective effect) relating to the holding of ADSs. It does not constitute legal or tax advice and does not purport to be a complete analysis of all U.K. tax considerations relating to the holding of ADSs, or all of the circumstances in which holders of ADSs may benefit from an exemption or relief from U.K. taxation. It is written on the basis that the company does not (and will not) directly or indirectly derive 75% or more of its qualifying asset value from U.K. land, and that the company is and remains solely resident in the United Kingdom for tax purposes and will therefore be subject to the U.K. tax regime and not the U.S. tax regime save as set out above under “U.S. Federal Income Taxation.”

Except to the extent that the position of non-U.K. resident persons is expressly referred to, this guide relates only to persons who are resident (and, in the case of individuals, domiciled or deemed domiciled) for tax purposes solely in the United Kingdom and do not have a permanent establishment, branch, agency (or equivalent) or fixed base in any other jurisdiction with which the holding of the ADSs is connected, or U.K. Holders, who are absolute beneficial owners of the ADSs (where the ADSs are not held through an Individual Savings Account or a Self-Invested Personal Pension) and who hold the ADSs as investments.

This guide may not relate to certain classes of U.K. Holders, such as (but not limited to):

•

persons who are connected with the company;

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•

financial institutions;

•

insurance companies;

•

charities or tax-exempt organizations;

•

collective investment schemes;

•

pension schemes;

•

market makers, intermediaries, brokers or dealers in securities;

•

persons who have (or are deemed to have) acquired their ADSs by virtue of an office or employment or who are or have been officers or employees of the company or any of its affiliates; and

•

individuals who are subject to U.K. taxation on a remittance basis.

The decision of the First-tier Tribunal (Tax Chamber) in HSBC Holdings PLC and The Bank of New York Mellon Corporation v HMRC (2012) cast some doubt on whether a holder of a depositary receipt is the beneficial owner of the underlying shares. However, based on published HMRC guidance we would expect that HMRC will regard a holder of ADSs as holding the beneficial interest in the underlying shares and therefore these paragraphs assume that a holder of ADSs is the beneficial owner of the underlying ordinary shares and any dividends paid in respect of the underlying ordinary shares (where the dividends are regarded for U.K. purposes as that person’s own income) for U.K. direct tax purposes.

THESE PARAGRAPHS ARE A SUMMARY OF CERTAIN U.K. TAX CONSIDERATIONS AND ARE INTENDED AS A GENERAL GUIDE ONLY. IT IS RECOMMENDED THAT ALL HOLDERS OF ADSs OBTAIN ADVICE AS TO THE CONSEQUENCES OF THE ACQUISITION, OWNERSHIP AND DISPOSAL OF THE ADSs IN THEIR OWN SPECIFIC CIRCUMSTANCES FROM THEIR OWN TAX ADVISORS. IN PARTICULAR, NON-U.K. RESIDENT OR DOMICILED PERSONS ARE ADVISED TO CONSIDER THE POTENTIAL IMPACT OF ANY RELEVANT DOUBLE TAXATION AGREEMENTS.

Dividends

Withholding Tax

Dividends paid by the company will not be subject to any withholding or deduction for or on account of U.K. tax.

Income Tax

An individual U.K. Holder may, depending on his or her particular circumstances, be subject to U.K. tax on dividends received from the company. An individual holder of ADSs who is not resident for tax purposes in the United Kingdom should not be chargeable to U.K. income tax on dividends received from the company unless he or she carries on (whether solely or in partnership) a trade, profession or vocation in the United Kingdom through a branch or agency to which the ADSs are attributable. There are certain exceptions for trading in the UK through independent agents, such as some brokers and investment managers.

All dividends received by an individual U.K. Holder from us or from other sources will form part of that U.K. Holder’s total income for income tax purposes and will constitute the top slice of that income. A nil rate of income tax will apply to the first £2,000 of taxable dividend income received by the individual U.K. Holder in a tax year. Income within the nil rate band will be taken into account in determining whether income in excess of the £2,000 tax-free allowance falls within the basic rate, higher rate or additional rate tax bands. Dividend income in excess of the tax-free allowance will (subject to the availability of any income tax personal allowance) be taxed at 7.5% to the extent that the excess amount falls within the basic rate tax band, 32.5% to the extent that the excess amount falls within the higher rate tax band and 38.1% to the extent that the excess amount falls within the additional rate tax band.

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Corporation Tax

A corporate holder of ADSs who is not resident for tax purposes in the United Kingdom should not be chargeable to U.K. corporation tax on dividends received from the company unless it carries on (whether solely or in partnership) a trade in the United Kingdom through a permanent establishment to which the ADSs are attributable.

Corporate U.K. Holders should not be subject to U.K. corporation tax on any dividend received from the company so long as the dividends qualify for exemption, which should be the case, although certain conditions must be met. If the conditions for the exemption are not satisfied, or such U.K. Holder elects for an otherwise exempt dividend to be taxable, U.K. corporation tax will be chargeable on the amount of any dividends (at the current rate of 19%, but with the main rate announced to increase to 25% with effect from April 1, 2023).

Chargeable Gains

A disposal or deemed disposal of ADSs by a U.K. Holder may, depending on the U.K. Holder’s circumstances and subject to any available exemptions or reliefs (such as the annual exemption), give rise to a chargeable gain or an allowable loss for the purposes of U.K. capital gains tax and corporation tax on chargeable gains.

If an individual U.K. Holder who is subject to U.K. income tax at either the higher or the additional rate is liable to U.K. capital gains tax on the disposal of ADSs, the current applicable rate will be 20%. For an individual U.K. Holder who is subject to U.K. income tax at the basic rate and liable to U.K. capital gains tax on such disposal, the current applicable rate would be 10%, save to the extent that any capital gains when aggregated with the U.K. Holder’s other taxable income and gains in the relevant tax year exceed the unused basic rate tax band. In that case, the rate currently applicable to the excess would be 20%.

If a corporate U.K. Holder becomes liable to U.K. corporation tax on the disposal (or deemed disposal) of ADSs, the main rate of U.K. corporation tax (currently 19%, but announced to increase to 25% with effect from April 1, 2023) would apply.

A holder of ADSs which is not resident for tax purposes in the United Kingdom should not normally be liable to U.K. capital gains tax or corporation tax on chargeable gains on a disposal (or deemed disposal) of ADSs unless the person is carrying on (whether solely or in partnership) a trade, profession or vocation in the United Kingdom through a branch or agency (or, in the case of a corporate holder of ADSs, through a permanent establishment) to which the ADSs are attributable. However, an individual holder of ADSs who has ceased to be resident for tax purposes in the United Kingdom for a period of less than five years and who disposes of ADSs during that period may be liable on his or her return to the United Kingdom to U.K. tax on any capital gain realized (subject to any available exemption or relief).

Stamp Duty and Stamp Duty Reserve Tax

The discussion below relates to the holders of our ordinary shares or ADSs wherever resident; however, it should be noted that special rules may apply to certain persons such as market makers, brokers, dealers or intermediaries.

Issue of Shares

No U.K. stamp duty or stamp duty reserve tax, or SDRT, is generally payable on the issue of the underlying ordinary shares in the company.

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Transfers of Shares

An unconditional agreement to transfer ordinary shares in certificated form will normally give rise to a charge to SDRT at the rate of 0.5% of the amount or value of the consideration payable for the transfer. The purchaser of the shares is liable for the SDRT. Transfers of ordinary shares in certificated form are generally also subject to stamp duty at the rate of 0.5% of the amount or value of the consideration given for the transfer (rounded up to the next £5.00). Stamp duty is normally paid by the purchaser. The charge to SDRT will be canceled or, if already paid, repaid (generally with interest), where a transfer instrument has been duly stamped within six years of the charge arising (either by paying the stamp duty or by claiming an appropriate relief) or if the instrument is otherwise exempt from stamp duty.

An unconditional agreement to transfer ordinary shares to, or to a nominee or agent for, a person whose business is or includes the issue of depositary receipts or the provision of clearance services will generally be subject to SDRT (or, where the transfer is effected by a written instrument, stamp duty) at a higher rate of 1.5% of the amount or value of the consideration given for the transfer unless the clearance service has made and maintained an election under section 97A of the U.K. Finance Act 1986, or a section 97A election. It is understood that HMRC regards the facilities of DTC as a clearance service for these purposes and we are not aware of any section 97A election having been made by DTC. However, no SDRT is generally payable where the transfer of ordinary shares to a clearance service or depositary receipt system is an integral part of an issue of share capital.

Any stamp duty or SDRT payable on a transfer of ordinary shares to a depositary receipt system or clearance service will in practice generally be paid by the transferors or participants in the clearance service or depositary receipt system.

Issue of ADSs

No U.K. stamp duty or SDRT is payable on the issue of our ADSs.

Transfers of ADSs

No SDRT should be required to be paid on a paperless transfer of ADSs through the clearance service facilities of DTC, provided that no section 97A election has been made by DTC, and such ADSs are held through DTC at the time of any agreement for their transfer.

No U.K. stamp duty will in practice be payable on a written instrument transferring an ADS provided that the instrument of transfer is executed and remains at all times outside the United Kingdom. Where these conditions are not met, the transfer of, or agreement to transfer, an ADS could, depending on the circumstances, attract a charge to U.K. stamp duty at the rate of 0.5% of the amount or value of the consideration. If it is necessary to pay stamp duty, it may also be necessary to pay interest and penalties.

F.	Dividends and Paying Agents

Not applicable.

G.	Statement by Experts

Not applicable.

H.	Documents on Display

We are subject to the information reporting requirements of the Exchange Act applicable to foreign private issuers and under those requirements will file reports with the SEC. Those reports may be inspected without charge at the locations described below. As a foreign private issuer, we are exempt from the rules under the Exchange Act related to the furnishing and content of proxy statements, and our officers, directors and principal shareholders are exempt from the reporting and short-swing profit recovery provisions contained in Section 16 of the Exchange Act. In addition, we are not required under the Exchange Act to file periodic reports and financial statements with the SEC as frequently or as promptly as United States companies whose securities are registered under the Exchange Act. Nevertheless, we will file with the SEC an Annual Report on Form 20-F containing financial statements that have been examined and reported on, with and opinion expressed by an independent registered public accounting firm.

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We maintain a corporate website at www.immunocore.com. We intend to post our Annual Report on our website promptly following it being filed with the SEC. Information contained on, or that can be accessed through, our website does not constitute a part of this Annual Report. We have included our website address in this Annual Report solely as an inactive textual reference.

The Securities and Exchange Commission maintains a website (www.sec.gov) that contains reports, proxy and information statements and other information regarding registrants, such as us, that file electronically with the SEC.

With respect to references made in this Annual Report to any contract or other document of our company, such references are not necessarily complete and you should refer to the exhibits attached or incorporated by reference to this Annual Report for copies of the actual contract or document.

I.	Subsidiary Information

Not applicable.

Item 11.

Quantitative and Qualitative Disclosures About Market Risk.

We are exposed to interest rate, currency, credit and liquidity risks. Our executive board oversees the management of these risks supported by a financial risk committee that advises on financial risks and the appropriate financial risk governance framework for us. The financial risk committee provides assurance to our executive board that our financial risk activities are governed by appropriate policies and procedures and that financial risks are identified, measured and managed in accordance with our policies and risk objectives. The most significant financial risks to which we are exposed include the risks discussed below.

Our principal financial assets include trade and other receivables and cash and security deposits that derive directly from our operations. Our principal financial liabilities comprise our Loan Agreement with Oxford Finance, a derivative liability, lease liabilities and trade and other payables. The main purpose of these financial liabilities is to finance our operations. In connection with our entry into a subscription agreement with the Gates Foundation, we terminated the outstanding note purchase agreement by deed of termination as the terms of the subscription agreement provide that the Gates Foundation would instead subscribe for the remaining amount of the loan as part of a concurrent private placement in connection with our initial public offering in February 2021.

Interest Rate Risk

Our exposure to changes in interest rates relates to investments in deposits and to changes in the interest for overnight deposits. Changes in the general level of interest rates may lead to an increase or decrease in the fair value of these investments. As a result of entering into the Loan Agreement with Oxford Finance, we are exposed to interest rate risk as a variable rate of interest are applied within a defined cap and collar over the team of the debt. A hypothetical 10% change in interest rates during any of the periods presented would not have had a material impact on our consolidated financial statements.

We are currently not subject to interest rate risks related to any liabilities shown in the statement of financial position, outside of the Loan Agreement.

Currency Risk

Foreign currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates. Our exposure to the risk of changes in foreign exchange rates relates primarily to our operating activities in the United States and outsourced supplier agreements denominated in currencies other than pound sterling.

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Our cash and cash equivalents were £129.7 million and £74.0 million as of December 31, 2020 and 2019, respectively. As of December 31, 2020, 98% of our cash and cash equivalents were held in United Kingdom, of which 29% were denominated in pounds sterling, 67% were denominated in U.S. dollars and 4% were denominated in euros. The remainder of our cash and cash equivalents (2%) are held in the United States and denominated in U.S. dollars. A hypothetical 10% change in exchange rates during any of the periods presented would not have had a material impact on our consolidated financial statements.

A five percentage point increase in exchange rates would reduce the carrying value of net financial assets and liabilities held in foreign currencies at December 31, 2020 by £2.3 million and as at December 31, 2019 by £0.7 million. A five percentage point decrease in exchange rates would increase the carrying value of net financial assets and liabilities held in foreign currencies at December 31, 2020 by £2.3 million and as at December 31, 2019 by £0.7 million.

Credit Risk

We are exposed to credit risk from our operating activities, primarily trade receivables, and cash, cash equivalents and deposits held with banks and financial institutions. Cash, cash equivalents and deposits are maintained with high-quality financial institutions in the United Kingdom and United States. We are also potentially subject to concentrations of credit risk in our trade receivables. Concentrations of credit risk are with respect to trade receivables owed by a limited number of companies comprising our customer base. Our exposure to credit losses is low, however, owing largely to the credit quality of our collaboration partners which are significantly larger than us.

We continually monitor our positions with, and the credit quality of, the financial institutions and corporations, which are counterparts to our financial instruments and do not anticipate non-performance. The maximum default risk corresponds to the carrying amount of the financial assets shown in the statement of financial positions. We monitor the risk of a liquidity shortage. The main factors considered here are the maturities of financial assets as well as expected cash flows from equity measures.

Item 12.

Description of Securities Other than Equity Securities.

A.	Debt Securities

Not applicable.

B.	Warrants and Rights

Not applicable.

C.	Other Securities

Not applicable.

D.	American Depositary Shares

Citibank, N.A., as depositary bank, registers and delivers our American Depositary Shares, also referred to as ADSs. Each ADS represents one ordinary share (or a right to receive one ordinary share) deposited with Citibank, N.A., London Branch, or any successor, as custodian for the depositary. Each ADS will also represent any other securities, cash or other property which may be held by the depositary in respect of the depositary facility. The depositary’s corporate office at which the ADSs are administered is located at 388 Greenwich Street, New York, New York 10013. A deposit agreement among us, the depositary and the ADS holders sets out ADS holder rights as well as the rights and obligations of the depositary. A form of the deposit agreement is incorporated by reference as an exhibit to this Annual Report.

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Fees and Charges

As an ADS holder, you will be required to pay the following fees under the terms of the deposit agreement:

Service		Fee
Issuance of ADSs (e.g., an issuance of ADS upon a deposit of ordinary shares or upon a change in the ADS(s)-to-ordinary shares ratio, or for any other reason), excluding ADS issuances as a result of distributions of ordinary shares		Up to $0.05 per ADS issued

Cancellation of ADSs (e.g., a cancellation of ADSs for delivery of deposited property or upon a change in the ADS(s)-to-ordinary shares ratio, or for any other reason)		Up to $0.05 per ADS cancelled

Distribution of cash dividends or other cash distributions (e.g., upon a sale of rights and other entitlements)		Up to $0.05 per ADS held

Distribution of ADSs pursuant to (i) share dividends or other distributions, or (ii) exercise of rights to purchase additional ADSs		Up to $0.05 per ADS held

Distribution of securities other than ADSs or rights to purchase additional ADSs (e.g., upon a spin-off)		Up to $0.05 per ADS held

ADS services		Up to $0.05 per ADS held on the applicable record date(s) established by the depositary

As an ADS holder, you will also be responsible to pay certain charges such as:

•

taxes (including applicable interest and penalties) and other governmental charges;

•

the registration fees as may from time to time be in effect for the registration of ordinary shares on the share register and applicable to transfers of ordinary shares to or from the name of the custodian, the depositary or any nominees upon the making of deposits and withdrawals, respectively;

•

certain cable, telex and facsimile transmission and delivery expenses;

•

the expenses and charges incurred by the depositary in the conversion of foreign currency;

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•

the fees and expenses incurred by the depositary in connection with compliance with exchange control regulations and other regulatory requirements applicable to ordinary shares, ADSs and ADRs; and

•

the fees and expenses incurred by the depositary, the custodian, or any nominee in connection with the servicing or delivery of deposited property.

PART II

Item 13.

Defaults, Dividend Arrearages and Delinquencies.

Not applicable.

Item 14.

Material Modifications to the Rights of Security Holders and Use of Proceeds.

A.	Not applicable.

B.	.Not applicable.

C.	Not applicable.

D.	Not applicable.

E.	Use of Proceeds.

In February 2021, we completed as offering of an aggregate of 11,426,280 ADSs representing 11,426,280 ordinary shares, including the full exercise of the underwriters’ option to purchase an additional 1,490,384 ADSs. The offering was in the form of American Depositary Shares, each representing one ordinary share, at an offering price of $26.00 per ADS for aggregate gross proceeds to us of approximately $297.1 million. The net offering proceeds to us, after deducting underwriting discounts and commissions and offering expenses, were approximately $271.9 million. The offering commenced on February 4, 2021 and did not terminate before all of the securities registered in the registration statement were sold. The effective date of the registration statement, File No. 333-252166, for our offering was February 4, 2021.

Goldman Sachs & Co. LLC, J.P. Morgan Securities LLC and Jefferies LLC acted as joint book-running mangers for the offering.

The net proceeds from our offering have been used, and are expected to continue to be used, as described in the final prospectus for the offering filed with the U.S. Securities and Exchange Commission on February 8, 2021.

None of the net proceeds of our offering were paid directly or indirectly to any director, officer, general partner of ours or to their associates, persons owning ten percent or more of any class of our equity securities, or to any of our affiliates.

Item 15.

Disclosure Controls and Procedures.

A.	Disclosure Controls and Procedures

We maintain “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended, or the Exchange Act, that are designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms, and is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure. Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) as of December 31, 2020. Based on such evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that, as of December 31, 2020, our disclosure controls and procedures were effective.

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B.	Management’s Annual Report on Internal Control Over Financial Reporting

This Annual Report does not include a report of management’s assessment regarding internal control over financial reporting due to a transition period established by rules of the Securities and Exchange Commission for newly public companies.

C.	Attestation Report of the Registered Public Accounting Firm

This Annual Report does not include an attestation report of the company’s registered public accounting firm due to a transition period established by rules of the Securities and Exchange Commission for newly public companies.

D.	Changes in Internal Control Over Financial Reporting

Other than the remediation of our previously disclosed material weakness disclosed below, there were no changes in our internal control over financial reporting (as defined in Rule 13a-15(f) of the Exchange Act) that occurred during the period covered by this Annual Report that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Remediation of Prior Material Weakness

In the summer and fall of 2020, we conducted an internal investigation as a result of receiving a whistleblower complaint alleging employee misconduct and other improper activities related to a kickback scheme involving an employee and two third-party vendors between 2018 and 2020. Our audit committee led the investigation utilizing outside counsel, during which the named employee resigned. After the investigation, we terminated the one remaining open contract with the third-party vendors and issued proceedings in October 2020 against the involved parties. We recovered our estimated losses of £1.8 million from the employee and third-party vendors in December 2020. In the course of auditing our 2019 financial statements for our initial public offering, we and our independent registered public accounting firm identified a material weakness in our internal control over financial reporting relating to our procurement processes and application of delegation of authority approval limits due to insufficient risk assessment procedures. Since then, we enhanced our overall control environment, including adding finance and accounting personnel to drive and implement required additional processed and procurement controls, implementing improvements in software relating to approvals of purchase orders and contracts, adding additional layers of review of contracts and journal entries and delegation of contract authority limits. We also further developed and documented our accounting policies and financial reporting procedures, including ongoing executive management review and audit committee oversight. We remediated the material weakness as of December 31, 2020.

Item 15T. Controls and Procedures.

Not applicable.

Item 16.

[Reserved]

Item 16A.

Audit Committee Financial Expert.

Our Board has determined that Mr. Coy is an “audit committee financial expert” as defined by SEC rules and has the requisite financial sophistication under the applicable rules and regulations of the Nasdaq Stock Market. Mr. Coy is independent as such term is defined in Rule 10A-3 under the Exchange Act and under the listing standards of the Nasdaq Stock Market.

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Item 16B.

Code of Business Conduct and Ethics.

We have adopted a Code of Business Conduct and Ethics that is applicable to all of our employees, officers and directors and is available on our website at https://ir.immunocore.com/corporate-governance/document-charters. Information contained on, or that can be accessed through, our website does not constitute a part of this report and is not incorporated by reference herein. If we make any amendment to the Code of Business Conduct and Ethics or grant any waivers, including any implicit waiver, from a provision of the code of ethics, we will disclose the nature of such amendment or waiver on our website to the extent required by the rules and regulations of the SEC. Under Item 16B of Form 20-F, if a waiver or amendment of the Code of Business Conduct and Ethics applies to our principal executive officer, principal financial officer, principal accounting officer or controller and relates to standards promoting any of the values described in Item 16B(b) of Form 20-F, we are required to disclose such waiver or amendment on our website in accordance with the requirements of Instruction 4 to such Item 16B.

Item 16C.

Principal Accountant Fees and Services.

KPMG LLP has served as our independent registered public accountant since 2009 and has audited our consolidated financial statements for the years ended December 31, 2020 and 2019.

The following table shows the aggregate fees for services rendered by KPMG LLP to us and our subsidiaries, in the fiscal year ended December 31, 2020 and 2019.

	Year Ended December 31,
		2020		2019
		£	000	£	000
Audit fees		£	470	£	183
Audit-related fees			237		—
Total		£	707	£	183

Audit fees. Audit fees consisted of fees for the audit of our annual financial statements and other professional services provided in connection with the statutory and regulatory filings or engagements, including fees for the review of our interim financial information.

Audit-related fees. Audit-related fees included fees for assurance reporting on our current and historical financial information included in our SEC registration statements in connection with our initial public offering, including services that generally only the independent accountant can reasonably provide such as comfort letters.

Audit Committee Pre-Approval Policies and Procedures

Our audit committee reviews and pre-approves the scope and the cost of audit services related to us and permissible non-audit services performed by the independent auditors, other than those for de minimis services which are approved by the audit committee prior to the completion of the audit. All of the services related to us provided by KPMG LLP during the last fiscal year have been pre-approved by the audit committee.

Item 16D.

Exemptions from the Listing Standards for Audit Committees.

Not applicable.

Item 16E.

Purchases of Equity Securities by the Issuer and Affiliated Purchasers.

Not applicable.

Item 16F.

Change in Registrant’s Certifying Accountant.

Not applicable.

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Item 16G.

Corporate Governance.

We are a “foreign private issuer,” as defined by the SEC. As a result, in accordance with Nasdaq rules, we comply with home country governance requirements and certain exemptions thereunder rather than complying with Nasdaq corporate governance standards. We voluntarily follow most Nasdaq corporate governance rules, but choose to take advantage of the following limited exemptions:

• Exemption from filing quarterly reports on Form 10-Q containing unaudited financial and other specified information or current reports on Form 8-K upon the occurrence of specified significant events;

• Exemption from Section 16 rules requiring insiders to file public reports of their securities ownership and trading activities and providing for liability for insiders who profit from trades in a short period of time;

• Exemption from quorum requirements for shareholder meetings. In accordance with usual practice in England and Wales, our articles of association will provide alternative quorum requirements that are generally applicable to shareholder meetings;

• Exemption from the Nasdaq rules applicable to domestic issuers requiring disclosure within four business days of any determination to grant a waiver of the code of business conduct and ethics to directors and officers;

• Exemption from the requirement to obtain shareholder approval for certain issuances of securities, including shareholder approval of share option plans;

• Exemption from the requirement that our audit committee have review and oversight responsibilities over all “related party transactions,” as defined in Item 7.B of Form 20-F;

• Exemption from the requirement that our board have a compensation committee that is composed entirely of independent directors with a written charter addressing the committee’s purpose and responsibilities; and

• Exemption from the requirements that director nominees are selected, or recommended for selection by our board, either by (1) independent directors constituting a majority of our board’s independent directors in a vote in which only independent directors participate, or (2) a committee comprised solely of independent directors, and that a formal written charter or board resolution, as applicable, addressing the nominations process is adopted.

Furthermore, Nasdaq Rule 5615(a)(3) provides that a foreign private issuer, such as we, may rely on home country corporate governance practices in lieu of certain of the rules in the Nasdaq Rule 5600 Series and Rule 5250(d), provided that we nevertheless comply with Nasdaq’s Notification of Noncompliance requirement (Rule 5625), the Voting Rights requirement (Rule 5640) and that we have an audit committee that satisfies Rule 5605(c)(3), consisting of committee members that meet the independence requirements of Rule 5605(c)(2)(A)(ii). Although we are permitted to follow certain corporate governance rules that conform to U.K. requirements in lieu of many of the Nasdaq corporate governance rules, we comply with the Nasdaq corporate governance rules applicable to foreign private issuers.

Accordingly, our shareholders do not have the same protections afforded to shareholders of companies that are subject to all of the corporate governance requirements of Nasdaq. We may utilize these exemptions for as long as we continue to qualify as a foreign private issuer.

Item 16H.

Mine Safety Disclosure.

Not applicable.

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PART III

Item 17.

Financial Statements.

See pages F-1 through F-47 of this Annual Report.

Item 18.

Financial Statements.

Not applicable.

Item 19.

Exhibits.

Exhibit	Description	Incorporation by Reference
Exhibit	Description	Schedule/ Form	File Number	Exhibit	File Date

1.1*	Articles of Association of Immunocore Holdings plc.

2.2*	Deposit Agreement.

2.3*	Form of American Depositary Receipt (included in Exhibit 2.2).

2.4*	Description of Securities.

4.1	Subscription Agreement between the Registrant and the Bill & Melinda Gates Foundation, dated February 3, 2021.	F-1/A	333-252166	4.3	02/03/21

4.2†	Research Collaboration and License Agreement, dated as of June 14, 2013, by and among the Registrant, Genentech, Inc. and F. Hoffman-La Roche Ltd, as amended on September 27, 2016.	F-1	333-252166	10.5	01/15/21

4.3†	Collaboration and License Agreement, dated as of June 29, 2013, between the Registrant and GlaxoSmithKline Intellectual Property Development Ltd.	F-1	333-252166	10.6	01/15/21

4.4†	Development and License Agreement, dated as of July 11, 2014, between the Registrant and Eli Lilly and Company, as amended on December 21, 2016, September 20, 2017 and December 19, 2018.	F-1	333-252166	10.7	01/15/21

4.5†	License Agreement, dated as of September 27, 2016, between the Registrant and Genentech, Inc.	F-1	333-252166	10.8	01/15/21

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4.6†	License and Collaboration Agreement, dated as of November 15, 2018, by and among the Registrant, Genentech, Inc. and F. Hoffman-La Roche Ltd.	F-1	333-252166	10.9	01/15/21

4.7†	Convertible Loan Note Purchase Agreement, dated as of September 13, 2017, between the Registrant and the Bill & Melinda Gates Foundation.	F-1	333-252166	10.10	01/15/21

4.8	Amended and Restated Global Access Commitments Agreement, dated as of March 2, 2020, between the Registrant and the Bill & Melinda Gates Foundation.	F-1	333-252166	10.11	01/15/21

4.9†	First Amendment to the Amended and Restated Global Access Commitments Agreement, dated as of February 3, 2021, between the Registrant and the Bill & Melinda Gates Foundation.	F-1/A	333-252166	10.12	02/03/21

4.10	Lease, dated as of March 28, 2017, between the Registrant and MEPC MILTON PARK NO. 1 LIMITED and MEPC MILTON PARK NO. 2 LIMITED, on behalf of MEPC Milton LP.	F-1	333-252166	10.13	01/15/21

4.11	Lease, dated as of December 28, 2017, between the Registrant and MEPC MILTON PARK NO. 1 LIMITED and MEPC MILTON PARK NO. 2 LIMITED, on behalf of MEPC Milton LP.	F-1	333-252166	10.14	01/15/21

4.12	Lease, dated as of March 28, 2017, between the Registrant and MEPC MILTON PARK NO. 1 LIMITED and MEPC MILTON PARK NO. 2 LIMITED, on behalf of MEPC Milton LP.	F-1	333-252166	10.15	01/15/21

4.13†	Assignment and Exclusive License, dated as of January 28, 2015, between the Registrant and Adaptimmune Limited.	F-1	333-252166	10.16	01/15/21

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4.15	Loan and Security Agreement, dated as of November 6, 2020, among the Registrant, Oxford Finance Luxembourg S.ˆ r.l., and the lenders listed on Schedule 1.1 thereof.	F-1	333-252166	10.17	01/15/21

4.16#	Employment Agreement between the Registrant and Bahija Jallal, Ph.D., dated January 29, 2021.	F-1/A	333-252166	10.18	02/01/21

4.17	Deed of Termination of Convertible Loan Note Purchase Agreement, dated as of February 3, 2021, between the Registrant and the Bill & Melinda Gates Foundation.	F-1/A	333-252166	10.19	02/03/21

4.18	Form of Deed of Indemnity between the Registrant and each of its directors.	F-1	333-252166	10.1	01/15/21

4.19#	Form of Deed of Indemnity between the Registrant and each of its executive officers.	F-1	333-252166	10.2	01/15/21

4.20#*	Immunocore Holdings plc 2021 Equity Incentive Plan. and Non-Employee Sub Plan to the Immunocore Holdings plc 2021 Equity Incentive Plan

8.1*	Subsidiaries of the Registrant.

12.1*	Certification by the Principal Executive Officer pursuant to Securities Exchange Act Rules 13a-14(a) and 15d-14(a) as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

12.2*	Certification by the Principal Financial Officer pursuant to Securities Exchange Act Rules 13a-14(a) and 15d-14(a) as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

13.1**	Certification by the Principal Executive Officer and the Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

215

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101.INS*

XBRL Instance Document


101.SCH*		XBRL Taxonomy Extension Schema Document

101.CAL*		XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF*		XBRL Taxonomy Extension Definition Linkbase Document

101.LAB*		XBRL Taxonomy Extension Label Linkbase Document

101.PRE*		XBRL Taxonomy Extension Presentation Linkbase Document

*	Filed herewith.

**	Furnished herewith.

†	Certain portions of this exhibit (indicated by asterisks) have been redacted in accordance with Regulation S-K, Item 601(b)(10).

#	Indicates a management contract or any compensatory plan, contract or arrangement.

216

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SIGNATURES

The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized the undersigned to sign this annual report on its behalf.

		IMMUNOCORE HOLDINGS PLC

	By:	/s/ Bahija Jallal
		Bahija Jallal, Ph.D.
		Chief Executive Officer (Principal Executive Officer)

Date: March 25, 2021

217

Table of Contents

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

	Page

Report of Independent Registered Public Accounting Firm	F‑2
Consolidated Statements of Loss and Other Comprehensive Income for the Years Ended December 31, 2020, 2019 and 2018	F‑3
Consolidated Statements of Financial Position as at December 31, 2020 and 2019	F‑4
Consolidated Statements of Changes in Equity for the Years Ended December 31, 2020, 2019 and 2018	F‑5
Consolidated Statements of Cash Flows for the Years Ended December 31, 2020, 2019 and 2018	F‑6
Consolidated Notes to the Financial Statements	F‑7

F-1

Table of Contents

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Shareholders and Board of Directors

Immunocore Limited

Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated statement of financial position of Immunocore Limited and subsidiaries (the Company) as of December 31, 2020 and 2019, the related consolidated statements of loss and other comprehensive income, changes in equity, and cash flows for each of the years in the three-year period ended December 31, 2020, and the related notes (collectively, the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2020 and 2019, and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 2020, in conformity with International Financial reporting Standards as issued by the International Accounting Standards Board.

Change in Accounting Principles

As discussed in Note 1 to the consolidated financial statements, the Company changed its method of accounting for leases as of January 1, 2019 due to the adoption of IFRS 16, Leases.

Basis for Opinion

These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud.

Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.

/s/ KPMG LLP

We have served as the Company’s auditor since 2009.

London, United Kingdom

March 25, 2021

F-2

Table of Contents

Immunocore Limited

Annual report and consolidated financial statements

December 31, 2020

Consolidated Statements of Loss and Other Comprehensive Income

for the years ended December 31,

			2020			2019			2018
	Notes		£	’000		£	’000		£	’000
Revenue		2		30,114			25,669			23,654
Total revenue				30,114			25,669			23,654

Net other operating income		5		4,242			185			622
Research and development costs		3		(74,809	)		(99,991	)		(83,575	)
Administrative expenses		3		(45,740	)		(44,183	)		(34,156	)
Operating loss				(86,193	)		(118,320	)		(93,455	)

Other income				—			—			4,979
Finance income		6		2,208			1,510			1,140
Finance costs		7		(3,375	)		(9,379	)		(842	)
Non-operating (expense) / income				(1,167	)		(7,869	)		5,277

Loss before taxation				(87,360	)		(126,189	)		(88,178	)
Income tax credit		8		13,267			22,258			16,548
Loss for the year				(74,093	)		(103,931	)		(71,630	)

Other comprehensive (expense) / income
Other comprehensive (expense) / income that are or may be reclassified to profit or loss in subsequent periods (net of tax):
Exchange differences on translation of foreign operations				195			(99	)		72
Income tax effect relating to the components of other comprehensive income		8		—			—			3,634
Total other comprehensive (expense) / income for the year, net of tax				195			(99	)		3,706

Total comprehensive loss for the year, net of tax				(73,898	)		(104,030	)		(67,924	)
Basic and diluted loss per share - £		9		(2.79	)		(4.66	)		(3.32	)

F-3

Table of Contents

Immunocore Limited

Annual report and consolidated financial statements

December 31, 2020

Consolidated Statements of Financial Position as at December 31,

	Notes		2020 £’000			2019 £’000
Non-current assets
Property, plant and equipment		11		13,754			18,302
Right of use assets		12		23,093			36,578
Investment in sub-lease		12		776			591
Other non-current financial assets		13		4,410			4,390
Deferred tax asset		8		2,230			1,507
Total non-current assets				44,263			61,368
Current assets
Trade and other receivables		15		10,280			9,639
Tax receivable		8		12,935			40,410
Embedded derivative assets		7		-			266
Cash and cash equivalents		16		129,716			73,966
Total current assets				152,931			124,281
Total assets				197,194			185,649
Equity
Share capital		17		1			-
Share premium		17		386,230			283,250
Foreign currency translation reserve		17		163			(32	)
Share-based payment reserve		17, 25		18,821			10,659
Accumulated deficit				(349,869	)		(279,106	)
Total equity				55,346			14,771
Non-current liabilities
Interest-bearing loans and borrowings		18		36,654			-
Deferred liabilities		19		24,868			47,961
Lease liabilities		12		25,190			38,299
Provisions		20		138			105
Total non-current liabilities				86,850			86,365
Current liabilities
Interest-bearing loans and borrowings		21		-			19,157
Trade and other payables		22		25,728			29,501
Deferred liabilities		23		27,118			28,522
Tax payable		24		-			72
Lease liabilities		12		2,043			1,951
Derivative liabilities		7		-			5,127
Provisions		20		109			183
Total current liabilities				54,998			84,513
Total liabilities				141,848			170,878
Total equity and liabilities				197,194			185,649

F-4

Table of Contents

Immunocore Limited

Annual report and consolidated financial statements

December 31, 2020

Consolidated Statements of Changes in Equity for the years ending December 31,

	Share capital		Share premium		Foreign currency translation reserve			Available- for-sale- reserve			Share- Based Payment reserve		Accumulated deficit			Total equity

	£	’000	£	’000	£	’000		£	’000		£	’000	£	’000		£	’000
At January 1, 2018		—		223,986		(5	)		14,962			6,812		(122,016	)		123,739
Loss for the year		—		—		—			—			—		(71,630	)		(71,630	)
Reclassification on sale of asset held for sale		—		—		—			(18,471	)		—		18,471			—
Other comprehensive income		—		—		72			3,509			125		—			3,706
Total comprehensive loss for the year		—		—		72			(14,962	)		125		(53,159	)		(67,924	)
Issue of share capital		—		101		—			—			—		—			101
Equity-settled share-based payment transactions		—		—		—			—			666		—			666
At December 31, 2018		—		224,087		67			—			7,603		(175,175	)		56,582
Loss for the year		—		—		—			—			—		(103,931	)		(103,931	)
Other comprehensive loss		—		—		(99	)		—			—		—			(99	)
Total comprehensive loss for the year		—		—		(99	)		—			—		(103,931	)		(104,030	)
Issue of share capital		—		59,163		—			—			—		—			59,163
Equity-settled share-based payment transactions		—				—			—			3,056		—			3,056
At December 31, 2019		—		283,250		(32	)		—			10,659		(279,106	)		14,771
Loss for the year		—		—		—			—			—		(74,093	)		(74,093	)
Other comprehensive income		—		—		195			—			—		—			195
Total comprehensive loss for the year		—		—		195			—			—		(74,093	)		(73,898	)
Conversion of interest-bearing loan		—		—		—			—			—		(510	)		(510	)
Derecognition of derivative liability		—		—		—			—			—		3,840			3,840
Issue of share capital		1		102,980		—			—			—		—			102,981
Equity-settled share-based payment transactions		—		—		—			—			8,162		—			8,162
At December 31, 2020		1		386,230		163			—			18,821		(349,869	)		55,346

F-5

Table of Contents

Immunocore Limited

Annual report and consolidated financial statements

December 31, 2020

Consolidated Statements of Cash Flows for the years ended December 31,

	Notes		2020 £’000			2019 £’000			2018 £’000
Cash flows from operating activities
Loss for the year				(74,093	)		(103,931	)		(71,630	)
Adjustments for:
Depreciation of property, plant and equipment		11		6,446			6,549			6,410
Depreciation of right of use assets		12		2,530			2,454			-
Amortization of intangible assets		10		-			210			297
Write-off of intangible assets				-			306			170
Loss on disposal of property, plant and equipment		11		1,064			3			135
Gross gain from sale of equity investment				-			-			(5,204	)
Profit on derecognition of leases		12		(3,700	)		-			-
Remeasurement of leases		12		(227	)		-			-
Net finance costs/(income)				1,167			7,867			(298	)
Movement in provisions and other charges		20		(41	)		71			(50	)
Foreign exchange translation differences				(787)			(618	)		1,157
Equity settled share-based payment expenses		25		8,162			3,056			666
Taxation charge		8		(13,267	)		(22,258	)		(16,548	)
Working capital adjustments:
(Increase) / decrease in trade and other receivables		15		(532	)		1,828			(1,522	)
(Decrease) / increase in trade and other payables		22		(3,774	)		9,946			5,300
(Decrease)/increase in deferred liabilities		19, 23		(24,497	)		(21,866	)		63,797
Cash used in operations				(101,549	)		(116,383	)		(17,320	)
Bank interest received on cash and cash equivalents		6		676			1,525			760
Net taxation received		8		40,299			13,482			(66	)
Net cash used in operating activities				(60,574	)		(101,376	)		(16,626	)
Cash flows from investing activities
Proceeds from sale of property, plant and equipment		11		675			82			-
Gross proceeds from disposal of equity investment		14		-			-			27,451
Purchase of property, plant and equipment		11		(3,074	)		(4,078	)		(3,486	)
Purchase of intangible assets		10		-			(198	)		(51	)
Proceeds from sub-leases		12		378			57			-
Leasehold incentive		13		2,488			-			34,100
Net cash flows from / (used) in investing activities				467			(4,137	)		58,014
Cash flows from financing activities
Proceeds from exercise of share options		25		73			27			101
Gross proceeds from issue of share capital		17		83,218			59,874			-
Costs from issue of share capital		17		(176	)		(738	)		-
Non-current interest-bearing loan received		18		37,543			-			-
Interest paid on non-current interest-bearing loan		18		(291	)		-			-
Repayment of lease liabilities		12		(4,426	)		(4,036	)		-
Net cash flows from financing activities				115,941			55,127			101
Increase / (decrease) in net cash and cash equivalents				55,834			(50,386	)		41,489
Net foreign exchange difference on cash held				(84	)		(33	)		13
Cash and cash equivalents at beginning of the year				73,966			124,385			82,883
Cash and cash equivalents at end of the year				129,716			73,966			124,385

F-6

Table of Content

Under these collaboration agreements, depending on the terms, the Group may also receive commercialization milestones upon the first commercial sale of a product, the amount of which is based on the territory the sale occurs in, and royalties based on worldwide net sales. These amounts have not been included within the transaction price as of December 31, 2020, 2019 and 2018 because they are sales-based royalties which will be recognized when the subsequent sale occurs.

Revenue is recognized as the programs progress through the various stages of research and development using an estimate of percentage completion which takes into consideration the estimated timelines required to satisfy the performance obligation and the time taken since program nomination. The determination of the percentage of completion requires the estimation of when the performance obligation will be completed, and this is reviewed and re-assessed quarterly, typically by the joint steering committee for the contract, based on the latest project plan and discussions with project teams and will consider progress achieved to date, historical experience on similar programs and other internal factors as may be available. If a change in facts or circumstances occurs, the estimate of percentage completion is adjusted, and revenue recognized based on the revised estimate.

The difference between the cumulative revenue recognized based on the previous estimate and the revenue recognized based on the revised estimate is recognized as an adjustment to revenue in the period in which the change in estimate occurs.

The Group recognizes deferred revenue when the amount of unconditional consideration is in excess of the value of satisfied, or part satisfied, performance obligations. Once a right to receive consideration is unconditional, that amount is presented as a receivable.

Changes in deferred revenue typically arise due to:

•

adjustments arising from a change in the estimate of when the performance obligation will have been completed.

•

adjustment to revenue that affects deferred revenue;

•

a change in the estimate of the transaction price due to changes in the assessment of whether variable consideration is constrained because it is not considered probable of being received; and

•

the recognition of revenue.

Under certain collaboration agreements, research and development costs incurred either in excess of a defined amount, or in accordance with a cost sharing agreement, are reimbursed. These amounts are considered variable consideration and are assessed at contract inception and each subsequent reporting period and not recognized in the transaction price until it is highly probable that the recognition of such revenue will not be reversed. The Group determines the variable consideration to be included in the transaction price by estimating the expected value that will be received and then applying a constraint to reduce the consideration to the amount which is not probable of being reversed. The determination of whether reimbursed costs are highly probable to not be reversed includes the following:

•

past history and experience with similar contracts.

•

unexpected fluctuations in planned spend.

•

changes to project timelines.

Research and development costs

Research and development expenditure is expensed as incurred. In preparing the financial statements, the Group may be required to estimate accrued research and development expenditure incurred, the most significant of which is that relating to ongoing clinical trials. These estimates are based on reviews of open contracts, reports provided by the contract research organizations (CROs) and internal reviews to estimate the level of service performed and the associated cost incurred for those services when the Group has not yet been invoiced or otherwise notified of the actual

F-11

Table of Content

Immunocore Limited

Annual report and consolidated financial statements

December 31, 2020

Consolidated Notes to the Financial Statements (continued)

Accounting policies (continued)

cost. The majority of CROs invoice the Group monthly in arrears for services performed or when contractual milestones are met. The Group makes estimates of accrued expenses as of each statement of financial position date in

our financial statements based on facts and circumstances known at that time. The Group periodically confirms the accuracy of estimates with the CROs and adjust if necessary.

The financial terms agreed with the CROs are subject to negotiation, vary from contract to contract and may result in uneven payment flows. There may be instances in which payments made to the CROs will exceed the level of services provided and result in either a prepayment of the research and development expenses or, where the payments are repaid back to the Group at the end of the clinical trial, a non-current financial asset. In accruing clinical trial expenses,

the Group estimates the time period over which services will be performed and the level of effort to be expended in each period. If the actual timing of the performance of services or the level of effort varies from the estimate made, the accrual or prepayment expense is adjusted accordingly.

Share-based payments

The Group operates equity-settled, share-based compensation plans whereby certain employees of the Group are granted equity awards in the Company. The grant date fair value of these employee share plan awards are calculated using both the Black Scholes valuation model and the Back Solve valuation model. The resulting cost is recognized in the profit and loss account over the vesting period of the awards, in line with the vesting schedule of the awards, being the period in which the services are received. The value of the charge is adjusted to reflect actual levels of awards vesting, except where the failure to vest is as a result of not meeting a market condition.

The valuations models used require the input of subjective assumptions, including assumptions about the expected life of share-based awards, share price volatility and as a privately held company the estimated fair value of the Company’s ordinary shares. These assumptions used represent the Group’s best estimates at the time of grant, but the estimates involve inherent uncertainties and the application of its judgment.

Valuation of ordinary shares

As there has been no public market for the Group’s ordinary shares to date, the estimated fair value of the ordinary shares has been determined by the board of directors as of the date of each grant, with input from management, considering the most recently available third-party valuations of the Group’s ordinary shares, and the assessment of additional objective and subjective factors that it believed were relevant and which may have changed from the date of the most recent valuation through the date of the grant. The ordinary share valuations were prepared using a probability weighting expected return and a current value method. The probability weighted expected return method estimates the fair value of the common stock based on an analysis of future values for the enterprise assuming various future outcomes. Share value is based on the probability-weighted present value of the expected future investment returns, considering each of the possible outcomes available to the enterprise, as well as the rights of each share class. Common future outcomes considered in the analysis include an IPO, merger or sale, continued operation as a private company, and liquidation. The current-value method is based on the assumption that each class of preferred shareholders will exercise its rights and achieve its return based on the enterprise value as of the valuation date and not at some future date. Accordingly, preferred shareholders will participate in enterprise value allocation either as preferred shareholders or, if conversion would provide them with better economic results, as common shareholders. Common shares are assigned a value equal to their pro rata share of the residual amount (if any) that remains after consideration of the liquidation preference of debt and preferred stock. Likewise, any outstanding options will share in the enterprise value only if the implied value of the fully-diluted common share resulting from the analysis indicates that the options are in-the-money.

In addition to considering the results of these third-party valuations, the Board and the remuneration committee considered various objective and subjective factors to determine the fair value of our ordinary shares as of each grant date, including

•

the data generated from the Group’s research and development programs;

•

the future operating performance, prospects and business strategy;

F-12

Table of Content

Immunocore Limited

Annual report and consolidated financial statements

December 31, 2020

Consolidated Notes to the Financial Statements (continued)

Accounting policies (continued)

•

the material risks related to the Group’s business and industry

•

the lack of an active public market for the Group’s ordinary and convertible preferred shares;

•

the market performance of publicly traded companies in the life science and biotechnology sectors;

•

the prices at which the Group issued ordinary and preferred shares and the superior rights and preferences of the preferred shares relative to the ordinary shares at the time of each grant; and

•

the likelihood of achieving a liquidity events for the holders of our ordinary shares, series A and B shares and Growth Shares, such as an IPO, given prevailing market conditions.

If different judgements and estimates had been made, the share-based payment expense, loss for the year and total comprehensive loss, on both an absolute and per-share basis, could have been significantly different.

Estimates by the Group’s management board will not be necessary to determine the fair value of ordinary shares awarded subsequent to the initial public offering that closed on February 9, 2021.

The various assumptions used in determining the grant date fair value of the awards and the resulting cost recognized in the profit and loss account are set out in the Note 25.

Taxation

Uncertainties exist with respect to the interpretation of complex tax regulations, changes in tax laws, and the amount and timing of future taxable income. Given the wide range and complexity of existing contractual agreements, differences arising between the actual results and the assumptions made, or future changes to such assumptions, could necessitate future adjustments to tax income and expense already recorded. The U.K. Research and Development Tax Credit calculation incorporates an estimate of employee time spent on qualifying research and development activities which are reviewed and updated annually.

Tax on the loss for the year comprises current and deferred tax. Tax is recognized in the profit and loss account except to the extent that it relates to items recognized directly in equity, in which case it is recognized directly in equity.

Current tax is provided at the amounts expected to be paid applying tax rates that have been enacted or substantively enacted by the statement of financial position date. Current tax includes tax credits, which are accrued for the period based on calculations that conform to the U.K. Research and Development Tax Credit scheme applicable to small and medium sized companies. Research and development costs which are not eligible for reimbursement under this scheme, such as expenditure incurred on research projects for which we receive income, are considered for reimbursement under the U.K. R&D expenditure credit (“RDEC”) scheme.

Deferred tax is provided in full, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. Deferred tax assets are recognized to the extent that it is probable that future taxable profits will be available against which the temporary differences can be utilized. Deferred tax is provided on temporary differences arising on investment in subsidiaries, associates and joint ventures, except where the timing of the reversal of the temporary difference can be controlled and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred tax is provided using rates of tax that have been enacted or substantively enacted by the statement of financial position date.

Leases – after the adoption of IFRS 16 “Leases”

The Group adopted IFRS 16 using the modified transition approach with the date of initial application of January 1, 2019. The Group’s right of use assets and lease liabilities associated with leases for leasehold properties are recognized at lease commencement date based on the present value of minimum lease payments over the lease term.

F-13

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Immunocore Limited

Annual report and consolidated financial statements

December 31, 2020

Consolidated Notes to the Financial Statements (continued)

Accounting policies (continued)

The Group assesses whether a contract is or contains a lease at inception of the contract. The Group recognizes a right of use asset and a corresponding lease liability with respect to all lease arrangements in which it is the lessee, except for short-term leases (defined as leases with a lease term of 12 months or less) and leases of low value assets. For these leases, the Group recognizes the lease payments as an operating expense on a straight-line basis over the term of the lease.

The right-of-use assets comprise leasehold property and reflect the initial measurement of the corresponding lease liability, lease payments made at or before the commencement day and any initial direct costs less lease incentives that may have been received. They are subsequently measured at cost less accumulated depreciation, impairment losses and remeasurements of the underlying lease liability. Depreciation is charged to the profit and loss account on a straight-line basis over the expected life of each lease agreement. The Group assesses at each reporting date whether the right-of-use asset is impaired.

The lease liability is initially measured at the present value of the lease payments that are not paid at commencement date. Where the terms of the lease agreement include increases to the rent charge, the minimum guaranteed increase is included in the lease liability. They are subsequently measured by increasing the carrying amount to reflect interest of the lease liability (using the effective interest method) and by reducing the carrying amount to reflect the lease payments made. The lease liability will also be remeasured to reflect changes in the underlying lease agreement such as the expected lease length.

Since the rate implicit in the lease is not readily determinable the Group uses incremental borrowing rates based on indicative borrowing rates that would be available based on the value, currency and borrowing term provided by financial institutions, adjusted for company and market specific factors. This incremental borrowing rate is the rate of interest that would have to be paid to borrow on a collateralized basis on an amount equal to the lease payments over a similar term in a similar economic environment, based on the information available at commencement date in determining the discount rate used to calculate the present value of lease payments.

The Group on occasion enters into sub-lease arrangements which are assessed at inception. For operating leases, the associated income is recognized in the profit and loss account on a straight-line basis over the term of the lease.

Leases – before the adoption of IFRS 16 “Leases”

Under IAS 17 ‘Leases’ (IAS 17), the Group classified leases as finance leases if they transferred substantially all the risks and rewards incidental to ownership, otherwise they were classified as operating leases.

Operating lease payments, under IAS 17, were recognized as an operating expense in the profit and loss account on a Straight-line basis over the lease term. Lease incentives received were recognized in the profit and loss account over the term of the lease as part of the lease expense. Where the terms of the lease agreement include increases to the rent charge, the minimum guaranteed increase was recognized in the profit and loss account over the term of the lease. Where such increases are variable in nature these were recognized in the profit and loss account as incurred. Where the Group enters into sub-lease arrangements, the risks and rewards incidental to ownership of the asset are not substantially transferred and such operating lease income was recognized in the profit and loss account over the term of the lease.

At December 31, 2020 and 2019, there were no assets held under finance leases.

Cash and cash equivalents

Cash and cash equivalents comprise cash balances and call deposits with original maturities of three months or less.

Loans and borrowings

All loans and borrowings are classified as financial liabilities and are initially recorded at fair value less the value attributable to any separately accounted for embedded derivative. After initial recognition, any such loans and borrowings are measured at amortized cost using the effective interest method, with the amortization recognized in finance costs.

The Group has a convertible loan, evidenced by loan notes, which is classified as a current liability, as at December 31, 2019, and accounted for under the amortized cost method and the embedded derivative, the conversion features, is accounted for separately. The convertible loan was initially recognized at fair value less the value attributable to the separated embedded derivative. The fair value of the embedded derivative is updated at each reporting period, with any changes in fair value recognized in finance income or finance costs as appropriate.

The fair value of the convertible loan is calculated based on the present value of the future principal and interest cash flows, discounted at the market rate at the statement of financial position date. The loan notes are subsequently measured at amortized cost, with the unwinding of the discount recorded in finance costs over the life of the loan. The initial difference between proceeds received, net of transaction costs, and fair value was recognized in finance income.

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Table of Content

Immunocore Limited

Annual report and consolidated financial statements

December 31, 2020

Consolidated Notes to the Financial Statements (continued)

Accounting policies (continued)

The Group has a long-term loan, drawn down under the Oxford Finance agreement entered into on November 6, 2020, which is classified as a non-current liability, as at December 31, 2020, and accounted for under the amortized cost method. The loan is subsequently measured at amortized cost, with the unwinding of the discount recorded in finance costs over the life of the loan.

Derivatives

Derivatives are initially measured at fair value and are subsequently remeasured to fair value at each reporting date. Changes in fair value are recognized in finance income or finance costs as appropriate.

Equity conversion features within host instruments that meet the definition of a derivative and have economic and risk characteristics that are not closely related to the host are considered embedded derivatives and are separated from the host instrument and accounted for separately.

The Group had a recognized embedded derivative asset related to the conversion features within the $40 million convertible loan it received from the Bill and Melinda Gates Foundation (the ‘‘Gates Foundation’’). This derivative financial asset was initially recorded at fair value and re-measured to fair value at each reporting period, while the convertible loan is outstanding, with gains and losses arising from changes in the fair value recognized in finance income or finance costs as appropriate. The initial tranche of the Gates Foundation convertible loan in the amount of $25 million was converted into equity as part of the Group’s series B preferred share financing in March 2020 and the embedded derivative asset derecognized.

The fair value of the embedded derivative asset was determined using the Back Solve model, discounted and probability weighted for the conversion features within the underlying convertible loan, which includes unobservable inputs supported by little or no market activity. The conversion features within the convertible loan were activated under different circumstances and the resulting fair value may have varied based on factors including the date of conversion or the event triggering conversion, such as an IPO or the Gates Foundation electing to convert its loan to the Group into equity, under specified circumstances. The option pricing model incorporated input assumptions reflecting the varied circumstances under which the conversion from debt to equity may occur. Significant unobservable inputs used in the fair value measurement of the embedded derivative asset were predominantly regarding the probability of each of the conversion features occurring. The probabilities were determined based on all relevant internal and external information available and were reviewed and reassessed at each reporting date. The Group de-recognized the embedded derivative asset when the convertible loan converted.

The Group also has a derivative liability that is marked to fair valued at each reporting period. The derivative liability represents a foreign exchange call option over certain series B shares which was settled in full in March 2020.

The fair value of the derivative liability was determined using an option pricing model using a range of inputs both observable and unobservable in nature. The unobservable input was the expected final close date of the series B private finance round which was determined based on all relevant internal and external information available and was reviewed and reassessed at each reporting date. The resulting fair value of the derivative liability was not sensitive to changes in the expected close date.

Fair value measurements

Where financial and non-financial assets and liabilities are measured at fair value, the Group uses appropriate valuation techniques for which sufficient data are available to measure fair value, maximizing the use of relevant observable inputs and minimizing the use of unobservable inputs.

Fair values are categorized into different levels in a fair value hierarchy based on the inputs used in the valuation techniques as follows:

•

Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities.

•

Level 2: inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).

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Table of Content

Immunocore Limited

Annual report and consolidated financial statements

December 31, 2020

Consolidated Notes to the Financial Statements (continued)

Accounting policies (continued)

•

Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs).

The Group recognizes transfers between levels of the fair value hierarchy at the end of the reporting period during which the changes have occurred.

The carrying amount of cash and cash equivalents, trade receivables, short and long-term deposits, trade payables, accruals and other current liabilities in the Group’s consolidated statement of financial position approximates their fair value because of the short maturities of these instruments.

Revenue & segmental reporting

Revenue recognized during 2020, 2019 & 2018 was from collaboration agreements with GlaxoSmithKline Intellectual Property Development Ltd (“GlaxoSmithKline”), Eli Lilly and Company (“Eli Lilly”), Genentech, Inc. (“Genentech”) and MedImmune LLC, a wholly owned subsidiary of AstraZeneca plc (“MedImmune”).

	2020 £’000		2019 £’000		2018 £’000
GlaxoSmithKline		6,356		5,753		6,079
Eli Lilly		3,522		819		8,561
Genentech		20,236		19,097		1,461
MedImmune		-		-		7,553
		30,114		25,669		23,654

United Kingdom	6,356	5,753	6,079
United States	23,758	19,916	17,575
	30,114	25,669	23,654

Genentech Collaboration

Under the Genentech agreement signed in November 2018 (the “2018 Genentech Agreement”), the Group received an aggregate non-refundable payment totaling $100 million consisting of an initial upfront payment of $50 million and $50 million paid upon an investigational new drug filing for the first clinical trial of the product candidate compound, in exchange for granting Genentech rights to co-develop/co-promote the Group’s IMC-C103C program and the co-exclusive worldwide license to the Group’s intellectual property rights in MAGE A4 soluble TCR bispecific therapeutic candidate compounds. The Group is responsible for development of the IMC-C103C program over the period of time to estimated completion of the Phase 1 clinical trial, with costs being shared equally with Genentech. After completion of the Phase 1 clinical trial, the Group has a limited time period in which to decide to either continue co-development (including co-funding) of the IMC-C103C program or withdraw from the co-funding commitment and convert the co-exclusive license to a full out-license to Genentech of the IMC-C103C program, in exchange for future milestone and royalty payments to the Group.

The total payments of $100 million (£77.4 million) upfront payment was recorded as deferred revenue on receipt in November 2018 and allocated to a single combined performance obligation covering the granting of the co-exclusive worldwide license, the provision of development services and participation on a joint steering committee. This deferred revenue is recognized as the Group satisfies the combined performance obligation over the estimated period of time to when the Group may decide to withdraw from the co-funding commitments and convert the co-exclusive license to a full out-license to Genentech. This occurs after completion of the Phase I clinical trial and should the Group withdraw from the co-funding commitment, the Group has no further contractual obligations relating to the performance obligation and accordingly the performance obligation is deemed satisfied and complete at this point in time. Research and development costs reimbursed under the 2018 Genentech Agreement are considered variable consideration and are assessed at contract inception and each subsequent reporting period and not recognized in the transaction price until it is highly probable that the recognition of such revenue will not be reversed.

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Table of Content

Immunocore Limited

Annual report and consolidated financial statements

December 31, 2020

During the year ended December 31, 2020, the Group recognized £20,236,000 revenue relating to the 2018 Genentech Agreement (2019: £19,097,000; 2018: £1,461,000). Of this, £2,785,000 represented research and development cost reimbursements (2019: £1,696,000; 2018: £nil). Such reimbursements arise in order to ensure that research and development costs are shared equally in-line with the collaboration agreement. As at December 31, 2020, it was estimated that the performance obligation would be satisfied within two to three years.

GlaxoSmithKline Collaboration

In June 2013, the Group entered into a collaboration and license agreement with GlaxoSmithKline pursuant to which the Group and GlaxoSmithKline (“GSK”) agreed to collaborate in the development of soluble TCR bispecific therapeutic compounds (the “GSK Agreement”). Under the GSK Agreement, the Group granted GSK the right to nominate up to four targets as being exclusive to GSK under the GSK Agreement. The first target, GSK01/NY-ESO, was nominated at the time of execution of the GSK Agreement. A second target was nominated in July 2017. GlaxoSmithKline has no further ability to nominate additional targets under the GSK Agreement.

Under the GSK Agreement, for NY-ESO, the Group is responsible for the development of the soluble TCR bispecific therapeutic candidate compounds over the period of time to estimated completion of the initial Phase 1 clinical trials. GlaxoSmithKline has the option until a certain period following completion of such development work to obtain an exclusive worldwide license to NY-ESO. For the second collaboration target, GlaxoSmithKline has an option to obtain an exclusive worldwide license for the therapeutic candidate compounds until a certain period following the identification of at least one development candidate or the earlier termination of the applicable development work.

The Group received non-refundable upfront payments upon execution of the agreement and nomination of the second collaboration target. Further non-refundable milestone payments have been received based on the achievement of specified development milestones. These development milestone payments are considered variable consideration and are assessed at contract inception and each subsequent reporting period and not recognised in the transaction price until it is highly probable that the recognition of such revenue will not be reversed. In respect of the first target, development costs incurred over a specified amount are reimbursed to the Group.

As at December 31, 2020, the Group has received a total of £22,900,000 in non-refundable payments of which £nil were received during the years ended December 31, 2020 and 2019. These payments have been recorded as deferred revenue on receipt and allocated to a single combined performance obligation for each target covering the provision of research and development services and participation on a joint steering committee. This deferred revenue is recognized as the Group satisfies the combined performance obligation over the estimated period of time to when GlaxoSmithKline can exercise the option to obtain an exclusive worldwide license for the therapeutic candidate compounds. Should GlaxoSmithKline exercise the option to obtain an exclusive worldwide license, the Group has no further contractual obligations relating to the associated performance obligation and accordingly the associated performance obligation is deemed satisfied and complete at this point in time. Research and development costs reimbursed under the GSK Agreement are considered variable consideration and are assessed at contract inception and each subsequent reporting period and not recognized in the transaction price until it is highly probable that the recognition of such revenue will not be reversed.

During the year ended December 31, 2020, the Group recognized £6,356,000 revenue relating to the GSK Agreement (2019: £5,753,000; 2018: £6,079,000). Under the terms of the GSK Agreement, GlaxoSmithKline elected not to progress a pre-clinical target and the balance of deferred revenue of £1,955,000 was recognized in full. Of the total revenue recognized during the year, £2,897,000 represented research and development cost reimbursements (2019: £2,159,000; 2018: £nil). Such reimbursements arise where research and development costs in excess of a defined amount are incurred on one specified program. As at December 31, 2020, it was estimated that the performance conditions across the two remaining targets would be satisfied in timeframes ranging from one to two years. In March 2021, following a portfolio review, GlaxoSmithKline and the Group have jointly elected not to initiate the efficacy determining expansion stage of the current phase I trial for GSK-01 targeting NY-ESO. Consequently, GlaxoSmithKline have forgone their option to acquire an exclusive license to this program and ownership of the program and NY-ESO target will remain with the Group. The Group will continue to evaluate future opportunities for GSK-01 as part of annual portfolio reviews. The balance of deferred income associated with this target of £3,208,000 will be released in full in the period ending March 31, 2021.

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Immunocore Limited

Annual report and consolidated financial statements

December 31, 2020

Lilly Collaboration

In July 2014, the Group entered into a development and license agreement with Eli Lilly pursuant to which the Group and Eli Lilly, or the Lilly Agreement, agreed to collaborate in the development, manufacture and commercialization of soluble TCR bispecific therapeutic compounds. Under the Lilly Agreement, Eli Lilly paid an initial non-refundable upfront fee payment of $45 million in exchange for options to three targets. Eli Lilly no longer has the ability to nominate any further targets under the initial agreement with Lilly. In December 2016, the Group and Eli Lilly agreed to swap an existing antigen target, selected by Eli Lilly, for a new, well known neo-antigen target. Lilly has no further obligations with respect to the initial target that was replaced. In September 2017, the Group and Eli Lilly agreed to swap a second antigen target, selected by Eli Lilly, for a second neo-antigen target. Similarly, Eli Lilly has no further obligations with respect to the initial target that was replaced.

Under the Lilly Agreement, the Group is responsible for developing soluble TCR bispecific therapeutic pre-clinical candidates to each target with Eli Lilly responsible for GMP manufacture of Phase 1 material at its expense. On a collaboration target-by collaboration target basis, at the point of clinical candidate nomination, Eli Lilly has the right to opt in to gain exclusive co-development/co-promotion rights to the target program. Upon receipt of the proposed development plan and Phase 1 budget, the Group has a limited time period in which to elect to contribute either 25% or 50% costs to reach the next clinical phase or to opt-out of further development. Similar provisions are available at the start of Phase 2 clinical trials and registrational clinical trials. Should the Group opt-out of co-development on a collaboration target-by-collaboration target basis, Eli Lilly would obtain an exclusive worldwide license to develop and commercialize the compound at its sole expense.

The $45 million upfront payment was recorded as deferred revenue on receipt and allocated to a single combined performance obligation for each target covering the provision of research and development services and participation on a joint steering committee. This deferred revenue is recognized as the Group satisfies the combined performance obligations over the estimated period of time to when Eli Lilly can exercise the option to obtain exclusive co-development/co-promotion rights to the target and the Group can opt-out of the co-development of the target. Should this occur, the Group has no further contractual obligations relating to the associated performance obligation and accordingly the associated performance obligation is deemed satisfied and complete at this point in time.

During the year ended December 31, 2020, the Group recognized £3,522,000 revenue relating to the Lilly Agreement (2019: £819,000; 2018: £8,561,000). Following termination of one of the programs under the Eli Lilly collaboration during 2019, a balance of £3,132,000 was held as deferred revenue at December 31, 2019 whilst a change in program focus was considered and subsequently released in full during the year ended December 31, 2020. No further revenue was recognized during the year ended December 31, 2020, for a second program under the Eli Lilly collaboration whilst the lead program was prioritized. Whilst the program focus is reviewed, a deferred revenue balance of £7,361,000 is held under current liabilities in respect of both the second and third programs.

During the year ended December 31, 2018 the Group recognized £7,553,000 revenue upon the termination of the last program under our prior collaboration with MedImmune.

During the period, the Group has reviewed and revised the estimated completion of each of the programs under the collaboration agreements, arising from the availability of additional historical data as programs progress through research and development activities within the Group. The impact of this revision is on current and future reporting periods only and increased revenue recognized in the year ended December 31, 2020 by £705,000.

The following tables presents changes in the Group’s trade receivables, contract assets and contract liabilities during the year ended December 31, 2020 and 2019.

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Table of Content

Immunocore Limited

Annual report and consolidated financial statements

December 31, 2020

	At 1 January 2020 £’000		Additions £’000		Deductions £’000			At December 31, 2020 £’000
Trade receivables:
Trade receivables		1,186		4,023		(5,209	)		-
Total receivables		1,186		4,023		(5,209	)		-
Contract assets:
Contract assets		424		1,658		-			2,082
Total contract assets		424		1,658		-			2,082
Contract liabilities:
Deferred revenue		76,418		-		(24,432	)		51,986
Total contract liabilities		76,418		-		(24,432	)		51,986

	At 1 January 2019 £’000		Additions £’000		Deductions £’000			At December 31, 2019 £’000
Trade receivables:
Trade receivables		3,600		3,431		(5,845	)		1,186
Total receivables		3,600		3,431		(5,845	)		1,186
Contract assets:
Contract assets		-		424		-			424
Total contract assets		-		424		-			424
Contract liabilities:
Deferred revenue		98,232		-		(21,814	)		76,418
Total contract liabilities		98,232		-		(21,814	)		76,418

For the year ended December 31, 2020 deductions from deferred revenue represent revenue recognized during the year. The total deductions recognized of £24,432,000 was included in deferred revenue at January 1, 2020. For the year ended December 31, 2019 deductions from deferred revenue represent revenue recognized during the year. The total deductions recognized of £21,814,000 was included in deferred revenue at January 1, 2019. No revenue was recognized in 2020, 2019 or 2018 relating to performance obligations satisfied in previous years.

	2020 £’000		2019 £’000
Current deferred revenue (Note 23)		27,118		28,457
Non-current deferred revenue (Note 19)		24,868		47,961
		51,986		76,418

Deferred revenue is in respect of the upfront fee and development milestone consideration received from the various collaboration agreements in advance of services performed by the Group. Included in the current deferred revenue balance of £27,118,000 as at December 31, 2020 is £7,361,000 of deferred revenue held whilst program focus is reviewed. Included in the current deferred revenue balance of £28,457,000 at December 31, 2019 is £3,132,000 of deferred revenue held whilst a further program is nominated into an existing collaboration in accordance with the underlying collaboration agreement.

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Table of Content

Immunocore Limited

Annual report and consolidated financial statements

December 31, 2020

Consolidated Notes to the Financial Statements (continued)

3.	Operating loss is stated after charging:

The following items have been included in operating loss:

	2020 £’000			2019 £’000		2018 £’000
Research and development costs		74,809			99,991		83,575
Loss on disposal of property, plant and equipment		1,064			3		135
Profit on derecognition of leases (Note 12)		(3,700	)		-		-
Remeasurement of leases (Note 12)		(227	)		-		-
Loss on write-offs of intangible fixed assets		-			306		170
Depreciation of property, plant and equipment (Note 11)		6,446			9,003		6,410
Amortization of intangible assets (Note 10)		-			210		297
Operating lease expense (Note 12)		296			486		4,205
Operating lease income (Note 5)		460			185		(622	)
Realized foreign exchange (gains)/loss		477			189		(1,341	)

Research and development costs are stated net of the Research and Development Expenditure Credit, totaling £227,000 for 2020 (2019: £396,000; 2018: £237,000).

4.	Staff numbers and costs

The average number of persons employed by the Group (including the Board) during the year, analyzed by category, was as follows:

	2020 No. of employees		2019 No. of employees		2018 No. of employees
Research		177		284		299
Development		96		108		95
Corporate		56		67		67
Total		329		459		461

The aggregate staff costs of these persons were as follows:	2020 £’000		2019 £’000		2018 £’000
Wages and salaries		29,038		31,920		29,501
Social security costs		2,131		2,767		2,731
Share-based payments (Note 25)		8,162		3,056		666
Contributions to defined contribution plans (Note 27)		1,035		1,213		981
		40,366		38,956		33,879

During the year ended December 31, 2020, the Group undertook a corporate restructure incurring costs of £1.2 million. The restructure was completed in the second quarter of 2020 and reduced the overall headcount, at that time, by 78 employees

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Table of Content

Immunocore Limited

Annual report and consolidated financial statements

December 31, 2020

Consolidated Notes to the Financial Statements (continued)

5.	Net other operating income

	2020 £’000			2019 £’000		2018 £’000
Profit on derecognition of leases		3,700			-
Loss on disposal of property, plant and equipment		(1,064	)		-
Settlement agreement		810			-
Sub-lease income		460			185		622
Remeasurement of leases		227
Other		109			-
		4,242			185		622

During the year ended December 31,2020, the Group terminated the lease term for two leasehold properties giving rise to a profit on disposal of £3,700,000 which includes £1,400,000 received as an incentive for exiting one of the leasehold agreements.

During the year ended December 31, 2020 the management of the Group conducted an internal investigation as a result of receiving a whistleblower complaint alleging employee misconduct and other improper activities related to a kickback scheme involving an employee and two third-party vendors. After the investigation, the one remaining open contract with the third-party vendors was terminated and the Group has undertaken proceedings against the involved parties. The Group estimated the amount in question to be in the range of £1.1 million to £1.8 million and recovered £1.8 million from the employee and third-party vendors in December 2020 of which £810,000 is reflected within other operating income.

Sub-lease income comprises income from sub-lease arrangements on operating leases on certain leasehold properties.

6.	Finance income

	2020 £’000		2019 £’000		2018 £’000
Bank interest on cash and cash equivalents		668		1,386		550
Interest on short-term deposits		-		-		272
Gain on entering into sub-leases on leasehold properties		215		115		-
Interest on investment in sub-lease		38		9		-
Gain from change in fair value of derivative liability		1,287		-		-
Gain from change in fair value of derivative asset		-		-		318
		2,208		1,510		1,140

The derivative liability represents a foreign exchange call option over certain series B shares which was settled in full in March 2020, resulting in a gain of £1,287,000 based on the fair value as at derecognition, and a credit to equity of £3,840,000.

The Group received a convertible loan in September 2017 from the Gates Foundation which contains conversion features which are accounted for as an embedded derivative and separated from the convertible loan. The gain from the change in fair value of the embedded derivative asset represents the movement in fair value of this embedded derivative during 2018 (see Note 23). During 2019, a loss of £454,000 arose from the change in fair value of the embedded derivative asset (see Note 7).

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Immunocore Limited

Annual report and consolidated financial statements

December 31, 2020

7.	Finance costs

	2020 £’000		2019 £’000		2018 £’000
Interest on lease liabilities		2,401		2,947		-
Interest expenses on financial liabilities measured at amortized cost		708		849		842
Loss from change in fair value of embedded derivative asset		266		454		-
Loss from change in fair value of derivative liability		-		5,127		-
Other finance costs		-		2		-
		3,375		9,379		842

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Table of Content

Immunocore Limited

Annual report and consolidated financial statements

December 31, 2020

Consolidated Notes to the Financial Statements (continued)

7.	Finance costs (continued)

Included within interest expenses for the year ended December 31, 2020, are £159,000 related to the Bill & Melinda Gates Foundation (the “Gates Foundation”) convertible loan, which was partially converted into series B shares in March 2020 (see Note 17) and the £549,000 arising on the $50m drawn down under the Oxford Finance debt agreement signed on November 6, 2020 (see Note 18). Interest expenses for the year ended December 31, 2019 relate to the convertible loan received from the Gates Foundation.

The convertible loan received from the Gates Foundation contains conversion features which are accounted for as an embedded derivative and separated from the convertible loan. During the year ended December 31, 2020, the loss from the change in fair value of the embedded derivative asset represents the movement in fair value of this embedded derivative asset on derecognition arising from the conversion of the loan into series B shares and during the year ended December 31, 2019, this also represents the movement in fair value of this embedded derivative asset.

The derivative liability represents a foreign exchange call option over certain series B shares. The loss of £5,127,000 from the change in fair value of the derivative liability represents the movement in fair value of this derivative from inception, during 2019, to December 31, 2019.

8.	Income tax

The major components of the income tax expenses for the years ended December 31, 2020, 2019 and 2018 are:

	2020 £’000			2019 £’000			2018 £’000
Profit or loss
Current tax:
R&D tax credit for the year		(12,432	)		(21,767	)		(18,486	)
Tax related to share-based compensation plans		-			-			125
Foreign corporation tax on profits for the year		84			152			139
Adjustments in respect of prior years		(100	)		43			-
Total current tax		(12,448	)		(21,572	)		(18,222	)
Deferred tax:
Current year		(790	)		-			-
Effect of changes in tax rates		(1	)		-			-
Movement in unrecognized deferred tax asset		351			-			-
Originating and reversal of timing differences, including adjustments in respect of prior years		(379	)		(686	)		1,674
Total deferred tax		(819	)		(686	)		1,674
Total income tax credit		(13,267	)		(22,258	)		(16,548	)
Tax related to items recognized in other comprehensive income during the year:
Current tax related to share-based compensation plans		-			-			(125	)
Deferred tax on fair value movements of available-for-sale financial assets		-			-			(3,509	)
Tax charged to other comprehensive income		-			-			(3,634	)

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Table of Content

Immunocore Limited

Annual report and consolidated financial statements

December 31, 2020

Consolidated Notes to the Financial Statements (continued)

8.	Income tax (continued)

Reconciliation of tax expense and accounting profit for 2020, 2019 and 2018:	2020			2019			2018
	£	’000		£	’000		£	’000
Loss before tax		(87,360	)		(126,189	)		(88,178	)
Tax credit using the UK Corporation tax rate of 19% (2019: 19% and 2018: 19%)		(16,598	)		(23,976	)		(16,754	)
Effect of:
Non-deductible expenses		9,120			13,148			629
Income not taxable for tax purposes		-			-			(954	)
Chargeable gain on sale of assets held for sale		-			-			4,359
Other permanent differences		-			(1	)		(38	)
Additional deduction for R&D expenditure		(16,286	)		(29,365	)		(13,691	)
Surrender of tax losses for R&D tax credit refund		16,286			28,523			24,223
R&D expenditure credits		(13,424	)		(22,602	)		(19,215	)
Credit to other comprehensive income for share-based compensation plans		-			-			125
Movement in deferred tax not recognized		8,084			12,413			4,746
Adjustments to tax charge in respect of previous periods - deferred tax		(379	)		(500	)		-
Adjustments to tax charge in respect of previous periods		(100	)		43			-
State taxes		7			-			-
Effects of overseas tax rates		24			-			-
Effects of tax rates in foreign jurisdictions		(1	)		59			22
Total tax credit included in loss for the year		(13,267	)		(22,258	)		(16,548	)

The components of income tax are as follows:

	2020 £’000			2019 £’000			2018 £’000
Current tax:
United States:
Federal		(16	)		100			137
State		(-	)		15			2
United Kingdom		(12,432	)		(21,687	)		(18,361	)
Total current tax		(12,448	)		(21,572	)		(18,222	)
Deferred tax:
United States:
Federal		(819	)		(644	)		(516	)
State		-			(42	)		(1	)
United Kingdom		-			-			2,191
Total deferred tax		(819	)		(686	)		1,674
Total income tax credit		(13,267	))		(22,258	)		(16,548	)

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Table of Content

Immunocore Limited

Annual report and consolidated financial statements

December 31, 2020

Consolidated Notes to the Financial Statements (continued)

8.	Income tax (continued)

Tax related to items recognized in other comprehensive income during the year:

	2020 £’000		2019 £’000		2018 £’000
United States		—		—		—
United Kingdom – current tax		—		—		(125	)
United Kingdom – deferred tax		—		—		(3,509	)
Tax charged to other comprehensive income		—		—		(3,634	)

In September 2016, the U.K. substantively enacted legislation to reduce the main rate of corporation tax from 20% to 19% effective April 1, 2017 and then a further reduction to 17% effective April 1, 2020. On March 11, 2020, the Chancellor of the Exchequer announced that the rate would not reduce on April 1, 2020 and would remain at 19%.

A deferred tax asset of £2,230,000 has been recognized in 2020 (2019: £1,507,000) representing unused tax credits carried forward for Immunocore LLC following an assessment of all available and applicable information, including its forecasts of costs and future profitability and the resulting ability to reverse the recognized deferred tax assets over a short period of time.

In addition to the deferred tax asset above, the Group has unrecognized deferred tax assets on tax losses of £30,827,000 (2019: 20,820,000) which do not expire. Deferred tax assets have not been recognized in respect of these losses as they may not be used to offset taxable profits elsewhere in the Group and there are no other tax planning opportunities or other evidence of recoverability in the near future. If the Group were able to recognize all unrecognized deferred tax assets, the income tax credit would increase by £33,852,000 (2019: £23,007,000).

9. Basic and diluted loss per share

	2020			2019			2018
Loss for the year (£000's)		(74,093	)		(103,931	)		(71,630	)
Basic and diluted weighted average number of shares		26,523,411			22,297,935			21,558,890
Basic and diluted loss per share (£) (1)		(2.79	)		(4.66	)		(3.32	)

(1)

The basic and diluted loss per share are adjusted for the (i) the exchange of shares of Immunocore Limited for shares of Immunocore Holdings Limited on a 1 for 100 basis, and (ii) the reorganization of the share capital of Immunocore Holdings plc, resulting in a consolidation with the effect of a 20 to 1 reverse stock split on the Company’s ordinary shares and non-voting ordinary shares, all of which took place in connection with the Company’s initial public offering which closed on February 9, 2021. No other adjustments have been made to the consolidated financial statements of the Group in regard to the corporate reorganization. Refer to Note 30 for further information.

Basic loss per share is calculated by dividing the loss for the period attributable to the equity holders of the Group by the weighted average number of shares outstanding during the period. The dilutive effect of potential shares through share options are considered to be anti-dilutive as they would decrease the loss per share and are therefore excluded from the calculation of diluted loss per share.

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Table of Content

Immunocore Limited

Annual report and consolidated financial statements

December 31, 2020

Consolidated Notes to the Financial Statements (continued)

10.	Intangible assets

	Patents £'000		Computer software £’000			Assets under construction £’000			Total £’000
Cost:
At January 1, 2019		516		867			13			1,396
Additions		-		76			122			198
Transferred		-		24			(24	)		-
Write-offs		-		(967	)		(111	)		(1,078	)
At December 31, 2019		516		-			-			516
Additions		-		-			-			-
Transferred		-		-			-			-
Write-offs		-		-			-			-
At December 31, 2020		516		-			-			516
Amortization and impairment:
At January 1, 2019		516		562			-			1,078
Write-offs		-		(772	)		-			(772	)
Amortization for the year		-		210			-			210
At December 31, 2019		516		-			-			516

Write-offs		-		-			-			-
Amortization for the year		-		-			-			-
At December 31, 2020		516		-			-			516
Carrying value:
At December 31, 2020		-		-			-			-
At December 31, 2019		-		-			-			-
At January 1, 2019		-		305			13			318

There were no movements on intangible assets for the year ended December 31, 2020 and a nil net book value remains.

Patent and trademarks comprise the purchase of intellectual property from the Company’s predecessor on January 1, 2016. Assets under construction represents the development of bespoke software.

Following a review undertaken during the year ended December 31, 2019, intangible assets with an aggregate value of £306,000 were written-off comprised of £195,000 of computer software and £111,000 of assets under construction.

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Table of Content

Immunocore Limited

Annual report and consolidated financial statements

December 31, 2020

Consolidated Notes to the Financial Statements (continued)

11.	Property, plant and equipment

	Leasehold properties and improvements £’000			Plant and equipment £’000			Assets under construction £’000			Total £’000
Cost:
At January 1, 2019		11,137			25,639			989			37,765
Additions		215			1,150			2,713			4,078
Transfers		1,090			41			(1,131	)		-
Effect of foreign currency translation		(17	)		(4	)		-			(21	)
Disposals		(185	)		(500	)		-			(685	)
At December 31, 2019		12,240			26,326			2,571			41,137
Additions		564			775			1,735			3,074
Transfers		4,123			2			(4,125	)		-
Effect of foreign currency translation		(27	)		(2	)		-			(29	)
Disposals		(1,090	)		(1,118	)		(61	)		(2,269	)
At December 31, 2020		15,810			25,983			120			41,913
Depreciation and impairment:
At January 1, 2019		3,752			13,139			-			16,891
Depreciation charge for the year		2,047			4,502			-			6,549
Effect of foreign currency translation		(2	)		(3	)		-			(5	)
Disposals		(155	)		(445	)		-			(600	)
At December 31, 2019		5,642			17,193			-			22,835

Depreciation charge for the year		2,356			4,090			-			6,446
Effect of foreign currency translation		(7	)		(67	)		-			(74	)
Disposals		(156	)		(892	)		-			(1,048	)
At December 31, 2020		7,835			20,324			-			28,159
Carrying value:
At December 31, 2020		7,975			5,659			120			13,754
At December 31, 2019		6,698			9,133			2,571			18,302
At January 1, 2019		7,385			12,500			989			20,874

At December 31, 2020 and 2019, none of the Group’s property, plant and equipment was held under finance leases or similar hire purchase agreements.

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Table of Content

Immunocore Limited

Annual report and consolidated financial statements

December 31, 2020

Consolidated Notes to the Financial Statements (continued)

12.

Leases

The Group leases leasehold properties, some of which are subject to sub-lease arrangements. Information about leases for which the Group is a lessee and a lessor is presented below. The lease payments for short-term leases and leases of low value assets are recognized in the profit and loss account on a straight-line basis over the term of the lease.

These leases have terms that may include,

•

Options to terminate the lease early at the right of the tenant

•

Variable lease payments with a guaranteed minimum increase and capped maximum increase

In addition, there are leasehold properties to which the Group is committed to assume the leases should the properties become vacant. The future contingent liabilities associated with these leases are set out in Note 28.

Leases in which the Group is a Lessee

Right-of-use assets

	2020			2019
	£	’000		£	’000
Balance at 1 January		36,578			-
Effect of adopting new accounting standards		(31	)		44,984
Additions		453			897
Remeasurements		(2,269	)		(6,849	)
Derecognition		(9,108	)		-
Depreciation charge for the year		(2,530	)		(2,454	)
		23,093			36,578

Following a review of the Group’s lease commitments under leasehold agreements during the year ended December 31, 2020, the Group identified leasehold agreements in excess of the Group’s future requirements. As a result of this review the Group terminated the lease term for two leasehold properties reducing right-of-use assets by £9,108,000.

The profit on derecognition arising from these lease terminations was £3,700,000 which includes £1,400,000 received as an incentive for exiting one of the leasehold agreements. The Group also received a leasehold incentive in respect of a further leasehold property for £1,088,000 and remeasured the right of use assets associated with five leasehold properties for £1,181,000 which both reduced the carrying value of the right of use assets as remeasurements.

The Group entered into two guarantee agreements on December 23, 2020, associated with the termination of the lease term for one of the leasehold properties. These agreements indemnify the lessor for certain costs in the event of the new lessee defaulting under their lease agreement for the leasehold property. As at December 31, 2020, the Group does not expect to make future payments as a result of these agreements.

The remeasurement during the year ended December 31, 2019 of £6,849,000 relates to the reduction to the lease term for a leasehold property. Upon implementation of IFRS 16, current deferred liabilities of £187,000 and non-current deferred liabilities of £1,870,000 were reclassified to right of use assets reflecting primarily lease incentives previously recognized under IAS 17.

Lease liabilities

Maturity analysis – contractual undiscounted cash flows

	2020 £’000		2019 £’000
Less than one year		3,560		4,469
One to five years		9,607		16,834
More than five years		32,600		45,288
Total undiscounted lease liabilities		45,767		66,591

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Table of Content

Immunocore Limited

Annual report and consolidated financial statements

December 31, 2020

Consolidated Notes to the Financial Statements (continued)

12.	Leases (continued)

All operating leases, excepting those of small value, terminate within one year.

Lease liabilities included in the Consolidated Statements of Financial Position

	2020 £’000		2019 £’000
Current		2,043		1,951
Non-current		25,190		38,299
Total lease liabilities		27,233		40,250

During the year ended December 31, 2020, the lease term for two leasehold properties was terminated and the lease liability for four leasehold properties were remeasured reducing the associated lease liability by £10,414,000 and £1,075,000 respectively. The Group also entered into a new lease for a leasehold property with an associated lease liability of £405,000 as at December 31, 2020. The maturity of undiscounted lease commitments is set out in Note 28.

Amounts recognized in the Consolidated Statements of Loss	2020 £’000			2019 £’000
Interest on lease liabilities		2,401			2,947
Expenses relating to short-term leases		296			486
Expenses relating to leases of low-value assets		19			33
Interest on investment in sub-lease		(38	)		(9	)

Operating lease rentals payable

The Group has operating leases on leasehold properties. All such operating leases are for less than fifty years. Future minimum rentals payable under non-cancellable operating leases as at December 31, are, as follows:

	2020 £’000		2019 £000’s		2018 £’000’s
Within one year		-		73		4,329
After one year but not more than five years		-		-		16,566
More than five years		-		-		60,691
		-		73		81,586

During the year, £296,000 was recognized as an expense in the income statement in respect of operating leases (2019: £486,000, 2018: £4,205,000). During the year ended December 31, 2020 the Group terminated the remaining operating leases on shorthold properties.

Amounts recognized in the Consolidated Statement of Cash Flows		2020 £’000s				2019 £’000
Total cash outflow for leases			4,426				4,036

Leases in which the Group is a Lessor

Lease income	2020 £’000		2019 £’000
Operating lease income		460		185
Finance lease income on the net investment in the lease		38		9

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Table of Content

Immunocore Limited

Annual report and consolidated financial statements

December 31, 2020

Consolidated Notes to the Financial Statements (continued)

12.	Leases (continued)

Maturity analysis – undiscounted finance lease income	2020 £’000			2019 £’000
Less than one year		720			318
One to two years		96			300
Two to three years		-			12
Three to four years		-			-
Four to five years		-			-
More than five years		-			-
Total undiscounted finance lease income		816			630
Unearned finance income		(40	)		(39	)
Net investment in the lease		776			591

Maturity analysis – undiscounted operating lease income	2020 £’000		2019 £’000		2018 £’000
Less than one year		-		96		176
One to two years		-		50		11
Two to three years		-		12		11
Three to four years		-		-		11
Four to five years		-		-		11
More than five years		-		-		-
Total undiscounted operating lease income		-		158		220

13.	Other non-current financial assets

	2020 £’000		2019 £’000
Long-term security deposits		786		2,532
Prepayments		3,427		1,858
Other		197		-
		4,410		4,390

The long-term security deposits represent lease security deposits for buildings. Following the termination of a leasehold property during the year ended December 31, 2020, the Group was repaid the security deposit of £1,800,000 associated with that property.

Included within Other is £146,000 due under the settlement agreement reached on December 23, 2020 (see Note 5) and £51,000 representing the facilities fee associated with the remaining $50 million available that may be drawn down in the future under the debt agreement entered into with Oxford Finance on November 6, 2020.

Prepayments are those amounts paid in advance for clinical trials that will be repaid at the end of the associated clinical trials which is expected to occur more than twelve months.

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Table of Content

Immunocore Limited

Annual report and consolidated financial statements

December 31, 2020

Consolidated Notes to the Financial Statements (continued)

14.	Available for sale assets

The Group previously held an investment in Adaptimmune Therapeutics plc which was classified as available for sale as at the year ended December 31, 2017. The investment was sold during the year ended December 31, 2018 for cash consideration of £27,451,000, giving rise to a gain on disposal of £4,979,000 recognized in Other income. Prior to disposal, unrealized gains and losses relating to prior financial reporting periods were recognized in other comprehensive income, as reflected in the available for sale reserve in the consolidated statement of equity, totalling £18,471,000.

15.	Trade and other receivables

	2020 £’000		2019 £’000
Trade receivables		2,051		1,471
Other receivables		1,722		3,667
Interest receivable		-		28
Prepayments and accrued income		6,507		4,473
		10,280		9,639

Included within prepayments and accrued income are amounts paid in advance for clinical trials that are expected to be repaid within 12 months.

16.	Cash and cash equivalents

	2020 £’000		2019 £000’s

Cash at bank and in hand		129,716		73,966
		129,716		73,966

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Table of Content

Immunocore Limited

Annual report and consolidated financial statements

December 31, 2020

Consolidated Notes to the Financial Statements (continued)

17.	Capital and reserves

	Growth shares			Series A shares		Series B shares		Series C shares		Ordinary shares
Issued share capital (0.01p per share)
At January 1, 2018		155,246			1,699,576		-		-		2,459,363
New shares issued for cash		-			-						10,950
Repurchased and cancelled		(36,800	)		-		-		-		-
At January 1, 2019		118,446			1,699,576		-		-		2,470,313
New shares issued for cash		-			-		621,556		-		45,581
Repurchased and cancelled		(60,240	)		-		-		-		-
At December 31, 2019		58,206			1,699,576		621,556		-		2,515,894
New shares issued for cash		34,260			-		323,450		823,719		163,870
New shares issued for non-cash consideration		-			-		203,697		-		-
Repurchased and cancelled		(29,575	)		-		-		-		-
At December 31, 2020		62,891			1,699,576		1,148,703		823,719		2,679,764

	2020 £		2019 £		2018 £
Allotted, called up and fully paid
Ordinary shares		268		252		247
Series A shares		170		170		170
Series B shares		115		62		-
Series C shares		82		-		-
Growth shares		6		6		12
		641		490		429

On March 2, 2020, the Group completed the second and final closing of the series B preferred share financing. A total of 527,147 series B shares were issued, of which 280,418 series B shares were issued to new and existing investors for net cash consideration totaling £27,230,000.

The initial tranche of the Gates Foundation loan in the amount of $25 million was converted into 203,697 series B shares as part of the Group’s second closing of the series B preferred share financing in March 2020 and 43,032 series B shares were issued at nominal value to certain series B investors on derecognition of the derivative liability of £3,184,000 represented by a foreign exchange call option over series B shares.

The agreement with the Gates Foundation requires the Group to complete agreed upon research plans for tuberculosis and HIV. In the event of default by the Group, under certain conditions, the Gates Foundation has the right to sell or require the Group to buy-back its shareholdings in the Group whereby should the Group experience a change in control or undertake an initial public offering at a valuation of more than 150% more than the valuation used for the sale of their series B shares, then the Group is required to pay the Gates Foundation an amount equal to the excess of what it would have received had it still held the series B shares at the time of the initial public offering or the change of control.

On December 21, 2020, the Group completed the closing of the series C preferred share financing. A total of 823,719 series C shares were issued for net cash consideration totaling £55,812,000.

During the year ended December 31, 2020, a total of 163,870 ordinary shares of 0.01p each with a total nominal value of £16 were issued for cash consideration of £73,000, of which 161,094 were issued as anti-dilution shares at nominal value. Growth shares of 0.01p each totaling 34,260 were issued during the year ended December 31, 2020

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Table of Content

Immunocore Limited

Annual report and consolidated financial statements

December 31, 2020

Consolidated Notes to the Financial Statements (continued)

17.	Capital and reserves (continued)

for cash consideration totaling £3 and 29,575 Growth shares with a total nominal value of £3 were repurchased and cancelled.

On August 13, 2019 the Group completed the first closing of the series B preferred share private financing. A total of 621,556 series B shares were issued to new and existing investors totaling proceeds of $72.25 million.

During the period to December 31, 2019, 45,581 ordinary shares of 0.01p each with a nominal value of £5 were issued fully paid for cash consideration of £27,000 of which 37,007 were issued as anti-dilution shares at nominal value. Growth shares of 0.01p each totaling 60,240 with a nominal value of £6 repurchased and cancelled.

The Growth shares were issued in respect of the Growth Share Plan (Note 25) and the awards granted to certain employees and members of the Board during 2017. These Growth shares are held by Immunocore Nominees Limited on behalf of the individuals who received these awards. In accordance with the Growth Share Plan rules, the shares held by Immunocore Nominees Limited are considered treasury shares until all vesting conditions have been achieved and the awards vested.

Share premium
	£	’000
At January 1, 2018		223,986
New shares issued for cash		101
At December 31, 2018		224,087
New shares issued for cash		59,163
At December 31, 2019		283,250
New shares issued for cash		83,115
New shares issued for non-cash consideration		19,865
At December 31, 2020		386,230

No adjustments have been made to the amounts shown above in regards to the corporate reorganization described in Note 30.

Nature and purpose of reserves

The share-based payments reserve is used to recognize the value of equity-settled share-based payments provided to employees. All other reserves are as stated in the consolidated statement of changes in equity.

The treasury reserve represents those unvested awards granted to certain employees and members of the Board under the Growth Share Plan (Note 25). As at 2020 the treasury reserve totaled £2.80 (2019: £4.42;2018: £10.19).

No dividends were paid or declared in the years ended December 31, 2020 and 2019.

Capital management

The capital structure of the Group consists of shareholders’ equity, debt, cash and investments in money market funds. For the foreseeable future, the Board will maintain a capital structure that supports the Group’s strategic objectives through:

•

managing the budgeting process;

•

managing funding and liquidity risk; and

•

maintaining strong investor relations

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Table of Content

Immunocore Limited

Annual report and consolidated financial statements

December 31, 2020

Consolidated Notes to the Financial Statements (continued)

18.	Non-current interest-bearing loans and borrowings

	2020 £’000		2019 £’000
Long-term borrowings		36,654		-
		36,654		-

On November 6, 2020, the Group entered into a loan and security agreement with Oxford Finance for the provision of up to $100 million debt financing to be provided under three tranches, of which the first tranche of $50 million was received on signing the agreement. The second tranche of $25 million can be drawn down upon tebentafusp receiving Biologics License Application approval prior to June 30, 2022 and the third and final tranche of $25 million can be drawn down at the sole discretion of Oxford Finance.

19.	Non-Current Deferred liabilities

	2020 £’000		2019 £’000
Deferred revenue		24,868		47,961
		24,868		47,961

Deferred revenue is in respect of the upfront fee and development milestones payments received from collaboration agreements in advance of services performed by the Group (see Note 2).

20.	Provisions

	Total £’000
At January 1, 2019		217
Arising during the year		150
Utilized		(79	)
At December 31, 2019		288
Arising during the year		299
Utilized		(340	)
At December 31, 2020		247
Current		109
Non-current		138

The provision represents the contractual liability that will arise on termination of lease agreements on leasehold properties.

21.	Current interest-bearing loans and borrowings

	2020 £’000		2019 £000’s
Short-term convertible loan (Note 26)		-		19,157
		-		19,157

In September 2017, the Company entered into a $40 million convertible loan agreement and a global access agreement with the Gates Foundation, pursuant to which the Company agreed to develop, manufacture and commercialize soluble TCR bispecific therapeutic candidates targeted to neglected diseases, primarily tuberculosis and human immunodeficiency virus (“HIV”), with the potential to treat people at an affordable price in developing countries.

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Table of Content

Immunocore Limited

Annual report and consolidated financial statements

December 31, 2020

Consolidated Notes to the Financial Statements (continued)

21.	Current interest-bearing loans and borrowings (continued)

The initial tranche of the convertible loan, in the amount of $25 million, was directed to the development of product candidates for the treatment of tuberculosis or HIV and converted into 203,697 series B shares as part of the Group’s second closing of the series B preferred share financing in March 2020. Following conversion of the loan, the associated embedded derivative asset of £266,000 as at December 31, 2019 was derecognized and £510,000 recognized in the accumulated deficit representing the difference between the amortized cost carrying value of the loan of £19,356,000 and the outstanding loan value of $25.5 million as at the date of conversion.

22.	Trade and other payables

	2020 £’000		2019 £’000
Trade payables		5,783		15,729
Other taxation and social security		620		522
Pension Liability		2		1
Accruals		19,323		13,249
		25,728		29,501

23.	Current deferred liabilities

	2020 £’000		2019 £’000
Deferred revenue		27,118		28,457
Deferred rent		-		65
		27,118		28,522

Deferred revenue is in respect of the upfront fee and development milestones payments received from collaboration agreements in advance of services performed by the Group (Note 2).

On implementation of IFRS16, previously recognized deferred rent balances were reclassified to right-of-use assets (see Note 13). As at December 31, 2019, the remaining deferred rent balances represent lease incentives granted on certain short-term leasehold property agreements which terminated during the year ended December 31, 2020.

24.	Tax payable

	2020 £’000		2019 £’000
Tax payable		-		72
		-		72

25.	Share-based payments

The Group operates various employee share schemes that grant awards to certain employees and members of the Board. The Share Option Plan, whereby options are granted to acquire shares in the Company at a specified exercise price and the Growth Share Plan, whereby Growth shares of the Company are awarded with an associated hurdle rate as set at the time of award. For defined employees, awards made under the Growth Share Plan are subject to the achievement by the Group of additional specified performance targets.

Grants under both plans are normally exercisable over a four-year period with 25% vesting at the end of the first year and the remaining award vesting quarterly over the following three years. For defined employees, awards made under the Growth Share Plan are normally exercisable over an eight-year period with 12.5% vesting at the end of the first year and the remaining award vesting quarterly over the following seven years. All awards lapse on the tenth anniversary from the date of grant and are not entitled to dividends.

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Table of Content

Immunocore Limited

Annual report and consolidated financial statements

December 31, 2020

Consolidated Notes to the Financial Statements (continued)

25.	Share-based payments (continued)

The total charge for such share-based payment plans in 2020 was £8,162,000 (2019 – £3,056,000; 2018 – £666,000), all of which relate to equity settled awards.

Share Option Plan

Under the Share Option Plan, awards are granted to certain employees and members of the Board to acquire shares in the Company at a specified exercise price. Those awards granted from 2017 normally vest over a four-year period with 25% of the award vesting at the end of the first year and the remaining award vesting quarterly over the following three years. Awards granted prior to 2017 normally vest over a four-year period with 25% of the award vesting after each complete year.

A total of 224,536 share options were awarded during the year ended December 31, 2020 (2019: 582,252 share options ;2018: nil share options) which will vest over a four-year period from the date of grant and are not entitled to dividends. Those share options awarded in 2019 were modified during the year ended December 31, 2020 through a reduction in the associated exercise price from £150 to £64 per share. The incremental fair value granted was valued on a consistent basis to other awards made within the Group and was valued at £14.06 per share and has been applied to those unvested awards as at the date of modification.

The number and weighted average exercise prices of share options are as follows:

Number of shares issuable	Number of share options (#)			Weighted average exercise price (£)
Outstanding at January 1, 2018		227,608			54.01
Awards granted		-			-
Awards exercised		(10,950	)		9.26
Awards forfeited		(67,935	)		53.57
Outstanding at December 31, 2018		148,723			57.50
Awards granted		582,252			150.00
Awards exercised		(8,574	)		2.71
Awards forfeited		(6,578	)		103.17
Outstanding at December 31, 2019		715,823			132.89
Awards granted		224,536			64.00
Awards exercised		(2,776	)		21.91
Awards forfeited		(27,311	)		81.67
Outstanding at December 31, 2020		910,272			62.90
Exercisable at December 31, 2020		194,106			91.92

The weighted average fair value of options granted in 2020 was £33.40 (2019: £11.95; 2018: £nil). The weighted average share price at the date of exercise of the options during the year was £64.00 (2019: £64.00; 2018: £144.14).

Growth Share Plan

Under the Growth Share Plan, awards are granted to certain employees and members of the Board to acquire shares in the Company at the nominal value provided the share price exceeds a hurdle rate, as set at the time of award. Awards vest over a four-year period with 25% of the award vesting at the end of the first year and the remaining award vesting quarterly over the following three years. For a defined number of employees, their awards vest over an eight-year period with 12.5% vesting at the end of the first year and the remaining vesting quarterly over the following seven years. These awards are also subject to the achievement by the Group of additional specified performance targets. These performance targets are based primarily on the progression of the Company’s pipeline. A total of 34,260 Growth Shares were awarded during the year ended December 31, 2020 (2019: nil Growth Shares; 2018: nil Growth Shares) which will vest over a four-year period from the date of grant and are not entitled to dividends.

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Table of Content

Immunocore Limited

Annual report and consolidated financial statements

December 31, 2020

Consolidated Notes to the Financial Statements (continued)

25.	Share-based payments (continued)

The number and weighted average hurdle rate of growth shares are as follows:

Number of shares issuable	Number of growth shares			Weighted average hurdle rate £
Outstanding at January 1, 2018		155,246			170.00
Awards granted		-			-
Awards exercised		-			-
Awards forfeited		(36,800	)		170.00
Outstanding at December 31, 2018		118,446			170.00
Awards granted		-			-
Awards exercised		-			-
Awards forfeited		(60,240	)		170.00
Outstanding at December 31, 2019		58,206			170.00
Awards granted		34,260			110.41
Awards exercised		-			-
Awards forfeited		(29,575	)		170.00
Outstanding at December 31, 2020		62,891			137.54
Exercisable at December 31, 2020		34,857			157.83

For share options and growth share awards outstanding at the end of the year, the range of exercise prices and weighted average remaining contractual life are as follows:

Growth Shares						Share options
Hurdle rate £		Number of options		Weighted average remaining contractual life		Exercise price £		Number of options		Weighted average remaining contractual life
	170.00		43,631		7.3		43.37		91,994		4.7
	64.00		19,260		9.4		120.87		3,309		5.0
	-		-		-		150.00		11,481		6.3
	-		-		-		64.00		803,488		9.5

Awards granted under the Share Option Plan have been valued using the Black-Scholes option pricing model, those awards granted under the Growth Share Plan have been valued using the Back Solve model, reflecting the different rights available to holders of Growth Shares. The assumptions used in the models for awards granted are as follows:

	Growth shares						Share options
	Apr-20			Jun-20			Nov- 20			Oct- 20			Jun-20			Apr- 20
Share price at grant date	£	64.00		£	64.00		£	64.00		£	64.00		£	64.00		£	64.00
Exercise price		-			-		£	64.00		£	64.00		£	64.00		£	64.00
Hurdle rate	£	64.00 - £170.00		£	64.00			-			-			-			-
Expected volatility		91	%		102	%		87	%		87	%		85	%		79	%
Expected life (years)	1 yr			1 yr			3 yrs			3 yrs			3 yrs			3 yrs
Risk free rate		0.03	%		(0.02	)%		(0.01	)%		(0.07	)%		(0.03)%–0.02	%		0.03	%
Fair value	£	2.12 - £7.05		£	7.05		£	35.00		£	35.16		£	34.32 - £34.30		£	32.394

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Immunocore Limited

Annual report and consolidated financial statements

December 31, 2020

Consolidated Notes to the Financial Statements (continued)

25.	Share-based payments (continued)

	Growth shares			Share options			Share options			Share options
	Apr-17			May-19			Apr-17			2016
Share price at grant date	£	150.00		£	64.00		£	150.00		£	140.00
Exercise price		—		£	150.00		£	150.00		£	43.37 - £150.00
Hurdle rate	£	170.00			—			—			—
Expected volatility		65	%		67	%		65	%		60	%
Expected life (years)	2.7 yrs			1.9 yrs - 3 yrs			5 yrs			5 yrs
Risk free rate		0.15	%		0.69% - 0.71	%		0.42	%		0.62% - 1.41	%
Fair value	£	58.55		£	11.95		£	80.63		£	77.16 - £107.94

Share options and growth shares are not entitled to dividends.

The expected volatility reflects the assumption that the historical volatility over a period similar to the life of the awards is indicative of future trends, which may not necessarily be the actual outcome. The expected life of the share options is based on historical data and current expectations and is not necessarily indicative of exercise patterns that may occur. The risk-free rate is based on the Bank of England’s estimates of gilt yield curve as at the respective grant dates.

No adjustments have been made to the amounts shown above in regards to the corporate reorganization described in Note 30.

26.	Financial instruments

Financial instruments risk management objectives and policies

The Group’s principal financial assets include trade and other receivables and cash and security deposits that derive directly from its operations. The Group’s principal financial liabilities comprise the drawn down debt under the loan agreement with Oxford Finance, lease liabilities, trade and other payables and previously the convertible loan from the Gates Foundation and a derivative liability. The main purpose of these financial liabilities is to finance the Group’s operations.

The Group is exposed to interest rate, currency, credit and liquidity risks. The Group’s Board oversees the management of these risks supported by a financial risk committee that advises on financial risks and the appropriate financial risk governance framework. The financial risk committee provides assurance to the Board that the Group’s financial risk activities are governed by appropriate policies and procedures and that financial risks are identified, measured and managed in accordance with its policies and risk objectives. The most significant financial risks to which the Group is exposed are set out below.

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Immunocore Limited

Annual report and consolidated financial statements

December 31, 2020

Consolidated Notes to the Financial Statements (continued)

26.	Financial instruments (continued)

Liquidity risk

The Group continuously monitors its risk from a shortage of funds. The Group’s objective is to maintain a balance between continuity of funding and flexibility through the use of capital increases.

The following are the contractual maturities of financial assets and liabilities, including estimated interest payments in respect of the interest-bearing loans and borrowings:

At December 31, 2020	Carrying amount £’000		Contractual cash flows £’000		One year or less £’000
Financial assets
Trade receivables		1,797		1,797		1,797
Clinical trial deposits in current assets		1,221		1,221		1,221
Non-current financial assets		3.573		3,573		-
Cash and cash equivalents		129,716		129,716		129,716
Total financial assets		136,307		136,307		132,734
Financial liabilities
Trade payables		25,084		25,084		25,084
Interest-bearing loans and borrowings (Note 18)		36,654		51,421		3,354
Total financial liabilities		61,738		76,505		28,438

At December 31, 2019	Carrying amount £’000		Contractual cash flows £’000		One year or less £’000
Financial assets
Trade receivables		1,471		1,471		1,471
Interest receivable		28		28		28
Prepayments and accrued income		2,282		2,282		424
Long-term security deposit		2,532		2,532		-
Cash and cash equivalents		73,966		73,966		73,966
Total financial assets		80,279		80,279		75,889
Financial liabilities
Trade payables		15,579		15,579		15,579
Interest-bearing loans and borrowings (Note 21)		19,157		19,426		19,157
Derivative liability		5,127		-		5,127
Total financial liabilities		39,863		35,005		39,863

The maturity of contractual cashflows for the majority of financial assets and liabilities is one year or less in except for the following balances. Other non-current financial assets include £3,426,000 paid in advance for clinical trials to be repaid at the end of the associated clinical trials and are estimated to be received in one to five years as at December 31, 2020. Long-term security deposits are estimated to be received in more than four years, as at December 31, 2020.

The carrying amount of interest-bearing loans and borrowings has been calculated in accordance with the Group’s loans and borrowings accounting policy which states that all such balances are classified as financial liabilities and are initially recorded at the amount of proceeds received, net of transaction costs. Loans and borrowings are subsequently measured at amortized cost, with the difference between the proceeds, net of transaction costs, and the amount due on redemption being recognized as an expense to the profit and loss account over the period of the relevant loan and borrowings.

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Immunocore Limited

Annual report and consolidated financial statements

December 31, 2020

Financial Statements (continued)

26.	Financial instruments (continued)

The contractual cash flows represent the cash contractually due to Oxford Finance in accordance with the agreement. The contractual maturity for the initial traches of $50 million drawn down under the agreement is interest-only payments through to November 2023 followed by equal monthly payments of principal and interest through to the maturity date in November 2025.

Credit risk

Credit risk is the risk that a counterparty will not meet its obligations under a financial instrument or customer contract, leading to a financial loss. The Group is exposed to credit risk from its operating activities (primarily trade receivables), including deposits with banks and financial institutions. The Group has assessed the expected credit loss by considering a number of factors including the credit quality of the Group’s counter-parties and the short-term nature of the receivables and based on these factors the expected credit loss is not significant. The Group’s material receivables are from large pharmaceutical companies and sub-tenants. Appropriate due diligence is performed on these organizations before agreements are entered into. There are no significant amounts which are past due at December 31, 2020 or December 31, 2019.

The Group held cash and cash equivalents of £129,716,000 at December 31, 2020 (2019: £73,966,000) which are held with multiple highly rated banks. The Group monitors the credit rating of those banks.

An impairment analysis is performed at each reporting date on an individual basis for major clients. In addition, minor receivables are grouped into homogenous groups and assessed for impairment collectively. The calculation is based on actual incurred historical data. The maximum exposure to credit risk at the reporting date is the carrying value of each class of financial assets disclosed in this Note 26.

Market risk

Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk comprises three types of risk: interest rate risk, currency risk and other price risk, such as equity price risk and commodity risk.

Interest rate risk

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Group’s interest-bearing assets include cash balances, which earn interest at variable rates. The Group’s interest-bearing liabilities is the debt drawn down under the Oxford Finance agreement.

Financial assets subject to variable interest rates are as follows:

	2020 Carrying amount £’000		2019 Carrying amount £’000
Cash and cash equivalents		129,716		73,966
		129,716		73,966

An increase in Bank of England base rates by 0.5 percentage points would increase the net annual interest income to all the deposit accounts as of December 31, 2020 by £649,000 (2019: £370,000). A decrease in Bank of England base rates by 0.5 percentage points would reduce the net annual interest income to all the deposit accounts as of December 31, 2020 by £649,000 (2019: £370,000).

Financial liabilities subject to variable interest rates are as follows:

	2020 Carrying amount £’000		2019 Carrying amount £’000
Interest-bearing loans and borrowings		36,654		19,157
		36,654		19,157-

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Immunocore Limited

Annual report and consolidated financial statements

December 31, 2020

Consolidated Notes to the Financial Statements (continued)

26.	Financial instruments (continued)

Interest-bearing loans and borrowings as at December 31, 2020 represent borrowings under the Oxford Finance agreement bear interest at an annual rate equal to LIBOR plus 8.85%, with a minimum rate of 9.01% and a maximum rate of 12.01%. An increase in LIBOR by 0.5 percentage points would increase the finance cost as of

December 31, 2020 by £183,000 (2019: nil). A decrease in LIBOR by 0.5 percentage points would reduce the finance cost as of December 31, 2020 by £183,000 (2019: £nil).

Interest-bearing loans and borrowings as at December 31, 2019 represent the $40 million convertible loan with the Gates Foundation in which the first tranche of $25 million was received on September 13, 2017. This first tranche bears interest at an annual rate of 2% for the first year and subsequently interest free.

Foreign currency risk

Foreign currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates. The Group’s exposure to the risk of changes in foreign exchange rates relates primarily to the Group’s operating activities in the United States and outsourced supplier agreements denominated in currencies other than pound sterling.

Financial assets and liabilities in foreign currencies are as follows:

	2020 Carrying amount £’000		2019 Carrying amount £’000
Financial assets at amortized cost:
Interest receivable		-		15
Clinical trial deposits and other debtors		4,036		1,858
Cash and cash equivalents		92,844		12,518
		96,880		14,391
Financial liabilities at amortized cost:
Trade payables		13,779		4,374
Interest-bearing loans and borrowings (Notes 18 and 21)		36,654		19,157
		50,433		23,531

A five percentage point increase in exchange rates would reduce the carrying value of net financial assets and liabilities held in foreign currencies at December 31,2020 by £2,869,000 (2019: £655,000 increase). A five percentage point decrease in exchange rates would increase the carrying value of net financial assets and liabilities held in foreign currencies at December 31, 2020 by £2,8589,000 (2019: £655,000 decrease).

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Immunocore Limited

Annual report and consolidated financial statements

December 31, 2020

Consolidated Notes to the Financial Statements (continued)

26.	Financial instruments (continued)

Disclosure of financial assets and liabilities

Fair value of financial assets

	2020				2019
	Carrying amount £’000		Fair value £’000		Carrying amount £’000		Fair value £’000
Financial assets at amortized cost:
Trade receivables		1,797		1,797		1,471		1,471
Interest receivable				-		28		28
Current clinical trial deposits and accrued income		1,221		1,221		424		424
Non-current financial assets		3,573		3,573		4,390		4,390
Embedded derivative asset		-		-		266		266
Cash and cash equivalents		129,716		129,716		73,966		73,966
Total financial assets at amortized cost		136,307		136,307		80,545		80,545

Fair value of financial liabilities	2020				2019
	Carrying				Carrying
	amount		Fair value		amount		Fair value
	£	’000	£	’000	£	’000	£	’000
Financial liabilities at amortized cost
Trade payables		25,084		25,084		15,579		15,579
Interest-bearing loans and borrowings (Notes 18 and 21)		36,654		36,654		19,157		19,157
Derivative liability		-		-		5,127		5,127
Total financial liabilities		61,738		61,738		39,863		39,863

The carrying amount of all financial assets and financial liabilities, excluding the embedded derivative asset and the derivative liability, approximates their fair value because of the short maturities of these instruments.

The embedded derivative associated with the conversion features within the Gates Foundation convertible loan are accounted for as an asset and are marked to fair value at each reporting period. The fair value of this embedded derivative asset was determined using an option pricing model, discounted and probability weighted for the conversion features within the underlying convertible loan, which includes unobservable (Level 3) inputs supported by little or no market activity.

The initial tranche of the convertible loan, in the amount of $25 million converted into 203,697 series B shares as part of the Group’s second closing of the series B preferred share financing in March 2020. Following conversion of the loan, the associated embedded derivative asset of £266,000, measured at fair value using significant Level 3 inputs, as at December 31, 2019 was derecognized.

The conversion features within the convertible loan are activated under different circumstances and the resulting equity value may vary based on factors including the date of conversion or the event triggering conversion, such as an IPO or the Gates Foundation electing to convert the loan into equity. The option pricing model incorporates input assumptions reflecting the varied circumstances under which the conversion from debt to equity may occur.

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Immunocore Limited

Annual report and consolidated financial statements

December 31, 2020

Consolidated Notes to the Financial Statements (continued)

26.	Financial instruments (continued)

Significant unobservable inputs used in the fair value measurement of the embedded derivative asset are predominantly regarding the probability of each of the conversion features occurring.

The resulting embedded derivative asset was sensitive to changes in this significant unobservable input used in the fair value measurement. In respect of the probabilities ascribed to each of the conversion events, should any one of the conversion events be considered an absolute certainty the resulting embedded derivative fair value would range from £nil to an embedded derivative asset of £8,855,000 as at December 31, 2019. The valuation of the embedded derivative was not sensitive to changes in other inputs including the expected date of conversion and share price used in the valuation.

The derivative liability comprises a foreign exchange call option over series B shares which was settled in full in March 2020. It is a financial liability not designated as an accounting hedge marked to fair value at each reporting period. This derivative liability has the effect of issuing additional series B shares to certain series B investors in the event of the U.S. dollar exchange rate weakening relative to the pound sterling over the period of time from the first closing of the series B preferred share financing in August 2019 through to the second and final closing in March 2020. The fair value of this derivative liability, measured at December 31, 2019, was determined using an option pricing model using a range of inputs both quoted, observable and unobservable in nature. The unobservable input is the expected final closing of the series B preferred share financing. The resulting derivative liability is not sensitive to changes in the expected close date nor in changes to other underlying input assumptions.

Interest bearing loans and borrowings

On November 6, 2020, the Group entered into a loan and security agreement, or the Oxford Finance Agreement for the provision of up to $100 million debt financing to fund the Group’s working capital and other general corporate needs. The loan is subject to funding in three tranches, of which the first tranche of $50 million was received on

signing the Loan Agreement. The second tranche of $25 million can be drawn down upon tebentafusp receiving Biologics License Application approval from the FDA prior to June 30, 2022 and the third and final tranche of $25 million can be drawn down at the sole discretion of Oxford Finance.

Borrowings under the Oxford Finance Agreement bear interest at an annual rate equal to LIBOR plus 8.85%, with a minimum rate of 9.01% and a maximum rate of 12.01%. Borrowings under the Loan Agreement are repayable in monthly interest-only payments through November 2023. The interest only period may be extended for an additional twelve months upon tebentafusp receiving BLA approval from the FDA. The ultimate interest-only period will be followed by equal monthly payments of principal and interest to the maturity date in November 2025. The Group’s obligations under the Oxford Finance Agreement may be prepaid in part or part at any time; provided that the Group may prepay in full or in part a minimum of $10 million of the Group’s obligations together with accrued interest and a prepayment fee. The Group’s obligations under the Oxford Finance Agreement are secured by substantially all the Group’s current and future assets, including the Group’s intellectual property.

The Oxford Finance Agreement contains customary representations and warranties and customary affirmative and negative covenants applicable to the Group, including limitations on the Group’s ability to dispose of assets, enter into merger, consolidation or acquisition transactions and incur additional debt. The Oxford Finance Agreement includes customary events of default, including but not limited to the non-payment of principal or interest, violations of covenants and material adverse changes. Upon an event of default, the lender may, among other things, accelerate the loans and foreclose on the collateral.

The Group had a convertible loan agreement with the Gates Foundation in which the Foundation agreed to lend the Group an amount not to exceed $40 million in two tranches, of which the first tranche of $25 million was received on September 13, 2017. Interest is payable at a rate of 2% per annum for the first year and 0% thereafter until either

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Immunocore Limited

Annual report and consolidated financial statements

December 31, 2020

Consolidated Notes to the Financial Statements (continued)

26.	Financial instruments (continued)

repayment or conversion of the loan. The loans are evidenced by convertible loan notes. Each loan note is convertible into ordinary shares of the Group based on a series of specific conversion criteria. The first tranche of $25 million converted into Series B shares on March 2, 2020.

Trade and other receivables, cash and cash equivalents and trade and other payables

For trade and other receivables, cash and cash equivalents and trade and other payables with a remaining life of less than one year, the nominal amount is deemed to reflect fair value.

Other non-current financial assets

Included within other non-current financial assets are long-term deposits representing lease security deposits for buildings, the balance at December 31, 2020 is £786,000 (2019: £2,532,000) and £145,000 for a legal settlement and £51,000 relating to a good faith deposit. Prepayments representing amounts paid in advance for clinical trials.

Changes in liabilities arising from financing activities

	At January 1, 2020 £’000		Cash flows £’000			Foreign exchange movement £’000			Net finance (income) / costs £’000			Leases £’000			Other £’000			At December 31, 2020 £’000
Interest-bearing loans and borrowings		19,157		37,252			(1,306	)		708						(19,157	)		36,654
Derivative liability		5,127		-			-			(1,287	)		-			(3,840	)		-
Lease liabilities		40,250		(4,426	)		-						(8,591	)					27,233
Total liabilities from financing activities		64,534		32,826			(1,306	)		(579	)		(8,591	)		(22,997	)		63,887

	At January 1, 2019 £’000		Cash flows £’000			Foreign exchange movement £’000			Net finance (income) / costs £’000		Leases £’000			At December 31, 2019 £’000
Interest-bearing loans and borrowings		18,878		-			(563	)		842		-			19,157
Derivative liability		-		-			-			5,127		-			5,127
Lease liabilities		46,555		(4,036	)		9			2,938		(5,216	)		40,250
Total liabilities from financing activities		65,433		(4,036	)		(554	)		8,907		(5,216	)		64,534

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Immunocore Limited

Annual report and consolidated financial statements

December 31, 2020

Consolidated Notes to the Financial Statements (continued)

26.	Financial instruments (continued)

Movements relating to finance income and costs are set out in Note 6 and Note 7. The movement in interest-bearing loans and borrowings reflects the draw-down of $50 million under the Oxford Finance Agreement and the

conversion of the Foundation Loan to Series B shares during the year ended December 31, 2020 as set out in Note 17. The derivative liability was derecognized during the year ended December 31, 2020 as set out in Note 7. Lease

movements during the year ended December 31, 2020 reflect the termination of the lease term for two leasehold properties of £10,414,000 (2019: £nil), lease remeasurements of £1,093,000 (2019: £6,113,000) partially offset by

the addition of a new lease of £422,000 (2019: £897,000). Balances as at January 1, 2019 for lease liabilities reflect the adoption of IFRS 16 ‘Leases’.

27.	Post-employment benefit plans

The Group operates a defined contribution pension scheme for its Directors and employees. The assets of the scheme are held separately from those of the Group in an independently administered fund.

The unpaid contributions outstanding at December 31, 2020 were £2,000 (2019: £1,000). The total expense relating to these plans in the current period was £1,035,000 (2019: £1,213,000;2018: £981,000).

28.	Commitments and contingencies

As at December 31, 2020	Less than 1 year		1-3 years		3-5 years		More than 5 years		Total
Lease liabilities – existing		3,529		5,322		4,286		32,600		45,737
Lease liabilities – contingent		-		2,254		2,471		1,841		6,566
Manufacturing		2,824		500		-		-		3,324
Capital commitments		77		-		-		-		77
Total contractual obligations		6,430		8,076		6,757		34,441		55,704

As at December 31, 2019	Less than 1 year		1-3 years		3-5 years		More than 5 years		Total
Lease liabilities – existing		4,469		8,958		7,876		45,288		66,591
Lease liabilities - contingent		68		1,604		2,685		2,688		7,045
Manufacturing		3,669		642		-		-		4,311
Capital commitments		1,460		-		-		-		1,460
Total contractual obligations		9,666		11,204		10,561		47,976		79,407

The Group has contractual obligations for two leasehold properties under which it is obligated to take on the leases should the properties become vacant at specified dates in the future. For both properties the Group has assessed these contingent events as at December 31, 2020 and has recognized an additional contingent commitment totaling £6,566,000 (2019: £7,045,000).

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Immunocore Limited

Annual report and consolidated financial statements

December 31, 2020

Consolidated Notes to the Financial Statements (continued)

29.	Related party disclosures

The Group entered into transactions, in the ordinary course of business, with other related parties. Transactions entered into and trading balances outstanding at December 31 are as follows:

	2020				2019				2018
	Sales to related party £000’s		Purchases from related party £000’s		Sales to related party £000’s		Purchases from related party £000’s		Sales to related party £000’s		Purchases from related party £000’s
Aigenpulse Limited		-		-		-		500		-		729
Adaptimmune Limited		-		-		-		-		69		-
Malin Life Sciences Holdings Limited		-		-		-		-		-		2
Oxford Nanosystems Limited		-		-		-		-		2		-
Oxford Innovation Ltd		-		-		-		30		-		13
		-		-		-		530		71		744

There were no outstanding balances due to or from related parties as at December 31, 2020 and 2019.

Remuneration of key management personnel

The remuneration of the directors and executive officers (excluding non-executive directors), who are the key management personnel of the Group, is set out below in aggregate for each of the categories specified in IAS 24, ‘Related Party Disclosures

	2020 £000’s		2019 £000’s		2018 £’000’s
Short-term employee benefits		3,421		6,502		4,435
Share-based payments		5,602		3,667		270
		9,023		10,169		4,705

30.	Events after the reporting period

On January 7, 2021 Immunocore Holdings Limited was incorporated as a private limited company under the laws of England and Wales with nominal assets and liabilities for the purpose of becoming the holding company of Immunocore Limited.

On January 22, 2021, each holder of series A preferred shares, series B preferred shares, series C preferred shares, Growth Shares and ordinary shares in Immunocore Limited, exchanged each of their shares to Immunocore Holdings Limited for 100 shares of the same class in Immunocore Holdings Limited. Following this share exchange, Immunocore Limited became a wholly owned subsidiary of Immunocore Holdings Limited.

All Immunocore Limited share options granted to directors and employees under share option plans that were in existence immediately prior to the reorganization were exchanged for share options in Immunocore Holdings plc on a one-for-100 basis with no change in any of the terms or conditions.

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Immunocore Limited

Annual report and consolidated financial statements

December 31, 2020

Consolidated Notes to the Financial Statements (continued)

30.	Events after the reporting period (continued)

Following the share exchange, Immunocore Limited undertook a reorganization of its share capital to re-designate its series A preferred shares, series B preferred shares, series C preferred shares and Growth shares into a single class of ordinary shares and subsequently undertook a share capital reduction, cancelling 6,414,412 ordinary shares and creating distributable reserves.

On February 1, 2021, Immunocore Holdings Limited was re-registered as a public limited company (“plc”) with the name Immunocore Holdings plc. Immunocore Holdings plc’s Board, management and corporate governance arrangements, and consolidated assets and liabilities immediately following the reorganization were the same as Immunocore Limited immediately before the reorganization.

Immediately prior to completion of the initial public offering, Immunocore Holdings plc re-organized its share capital whereby all of the outstanding series A preferred shares, series B preferred shares and series C preferred shares were re-designated as ordinary shares of Immunocore Holdings plc on a one for one basis. A total of 831,627 series C preferred shares were converted to a separate class of non-voting ordinary shares. A total of 4,349,000 of the Growth Shares were re-designated as deferred shares of Immunocore Holdings plc. The remaining 1,926,000 Growth Shares were re-designated into one ordinary share and three deferred shares. Immediately following these re-designations referred to above every 20 ordinary shares of £0.0001 and every 20 non-voting ordinary shares of £0.0001 in Immunocore Holdings plc was consolidated into one ordinary share and one non-voting ordinary share of £0.002.

On February 9, 2021, Immunocore Holdings plc completed an initial public offering on Nasdaq, issuing 11,426,280 American Depositary Shares (“ADSs”) representing 11,426,280 ordinary shares with nominal value of £23,000 for proceeds before expenses of $297,083,000. Funding costs of $25,196,000, including underwriter fees were incurred.

In addition to the ADSs sold in the initial public offering, Immunocore Holdings plc completed the concurrent sale of an additional 576,923 ADSs at the initial offering price of $26.00 per ADS, for gross proceeds of approximately $15.0 million, in a private placement to the Bill & Melinda Gates Foundation (“Gates Foundation”).

In March 2021, following an annual portfolio review GlaxoSmithKline and the Group have elected not to to plan for or initiate the efficacy determining expansion stage of the current phase I trial for GSK-01 targeting NY-ESO. Consequently, GlaxoSmithKline have forgone their option to acquire an exclusive license to this program and ownership of the program and NY-ESO target will remain with the Group. The Group will continue to evaluate future opportunities for GSK-01 as part of annual portfolio reviews. The balance of deferred income associated with this target of £3,208,000 will be released in full in the period ending March 31, 2021.

F-47

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
American Depositary Shares, each representing one ordinary share, nominal value £0.002 per share	IMCR	The Nasdaq Stock Market LLC
Ordinary share, nominal value £0.002 per share*	*	The Nasdaq Stock Market LLC*

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PART I

ITEM 1.	IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS.		5
ITEM 2.	OFFER STATISTICS AND EXPECTED TIMETABLE.		5
ITEM 3.	KEY INFORMATION.		5
	A.	Selected financial data.	5
	B.	Capitalization and indebtedness.	5
	C.	Reasons for the offer and use of proceeds.	5
	D.	Risk factors.	5
ITEM 4.	INFORMATION ON THE COMPANY.		89
	A.	History and development of the company.	89
	B.	Business overview.	90
	C.	Organizational structure.	148
	D.	Property, plant and equipment.	148
ITEM 4A.	UNRESOLVED STAFF COMMENTS.		148
ITEM 5.	OPERATING AND FINANCIAL REVIEW AND PROSPECTS.		149
	A.	Operating results.	149
	B.	Liquidity and Capital Resources	161
ITEM 6.	DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES		171
	A.	Directors and senior management.	171
	B.	Employees	190
ITEM 7.	MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS		190
	A.	Major Shareholders	190
ITEM 9.	THE OFFER AND LISTING.		196
	A.	Offer and listing details.	196
	B.	Plan of distribution.	196
	C.	Markets.	196
	D.	Selling shareholders.	196
	E.	Dilution.	196
	F.	Expenses of the issue.	196

	Year ended December 31,
	2020				2019
	$	000	£	000	£	000
External research and development expenses:
Tebentafusp		42,862		31,373		52,406
IMC-F106C (PRAME)		3,262		2,388		2,825
IMC-C103C (MAGE-A4)		6,174		4,519		3,182
Other programs		14,375		10,522		8,870
Research expenses		663		485		795
Total external research and development expenses		67,336		49,287		68,078
Internal research and development expenses:
Headcount related expenses		26,694		19,539		23,320
Laboratory consumables		5,917		4,331		6,704
Laboratory equipment expenses		2,171		1,589		1,411
Other		86		63		478
Total internal research and development expenses		34,868		25,522		31,913
Total research and development expenses		102,204		74,809		99,991

	Year ended December 31,
	2019		2018
	£	000	£	000
External research and development expenses:
Tebentafusp		52,406		34,493
IMC-F106C (PRAME)		2,825		1,179
IMC-C103C (MAGE-A4)		3,182		2,315
Other programs		8,870		9,710
Research expenses		795		1,025
Total external research and development expenses		68,078		48,722
Internal research and development expenses:
Headcount related expenses		23,320		23,475
Laboratory consumables		6,704		8,146
Laboratory equipment expenses		1,411		1,589
Other		478		1,643
Total internal research and development expenses		31,913		34,853
Total research and development expenses		99,991		83,575

Name	Ordinary Share Underlying Option		Exercise Price		Grant Date		Expiration Date
Executive Director
Bahija Jallal, Ph.D.		5,669	$	17.4643	October 30, 2020		October 29, 2030
Non-Executive Directors
Professor Sir John Bell		18,215	$	17.4643	November 16, 2020		November 15, 2030
Travis Coy		-		-		-		-
Roy Herbst, M.D., Ph.D.		-		-		-		-
Robert Perez		-		-		-		-
Kristine Peterson		11,520	$	17.4643	November 16, 2020		November 15, 2030
Professor Sir Peter Ratcliffe		-		-		-		-

ITEM 10.	ADDITIONAL INFORMATION		196
	A.	Share capital	196
	B.	Memorandum and articles of association	196
	C.	Material contracts	196
	D.	Exchange controls	197
	E.	Taxation	197
	F.	Dividends and paying agents	205
	G.	Statement by experts	205
	H.	Documents on display	205
	I.	Subsidiary information	206

ITEM 11.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK		206
ITEM 12.	DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES		207
	A.	Debt securities	207
	B.	Warrants and rights	207
	C.	Other securities	207
	D.	American Depositary Shares	207
PART II			209
ITEM 13.	DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES		209
ITEM 14.	MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS		209
ITEM 15.	CONTROLS AND PROCEDURES		209
	A.	Disclosure Controls and Procedures	209
	B.	Management’s Annual Report on Internal Control Over Financial Reporting	210
	C.	Attestation Report of the Registered Public Accounting Firm	210
	D.	Changes in Internal Control Over Financial Reporting	210
ITEM 16	[Reserved].		210
	A.	Audit committee financial expert	210
	B.	Code of ethics	211
	C.	Principal accountant fees and services	211
	D.	Exemptions from the listing standards for audit committees	211
	E.	Purchases of equity securities by the issuer and affiliated purchasers	211
	F.	Changes in registrant’s certifying accountant	211
	G.	Corporate governance	212
	H.	Mine safety disclosure	212
PART III			213
ITEM 17.	FINANCIAL STATEMENTS		213
ITEM 18.	FINANCIAL STATEMENTS		213
ITEM 19.	EXHIBITS		213

As at December 31, 2020	Less than 1 year		1-3 years		3-5 years		More than 5 years		Total
Lease liabilities – existing		3,529		5,322		4,286		32,600		45,737
Lease liabilities – contingent		-		2,254		2,471		1,841		6,566
Manufacturing		2,824		500		-		-		3,324
Capital Commitments		77		-		-		-		77
Total contractual obligations (in thousands, pounds)		6,430		8,076		6,757		34,441		55,704
Total contractual obligations (in thousands, U.S. Dollars)		8,785		11,033		9,231		47,053		76,103

Name	Age	Position(s)
Executive Officers:
Bahija Jallal, Ph.D.	59	Chief Executive Officer and Director
Brian Di Donato	54	Chief Financial Officer and Head of Strategy
David Berman, M.D., Ph.D.	50	Head of Research and Development
Non-Executive Directors:
Professor Sir John Bell	68	Chairman of the Board of Directors
Travis Coy	40	Director
Roy S. Herbst, M.D., Ph.D	58	Director
Robert Perez	56	Director
Kristine Peterson	61	Director
Professor Sir Peter Ratcliffe	66	Director

	At December 31,
	2018		2019		2020⁽¹⁾
Function:
Administrative		67		67		55
Research and development		394		392		236
Total		461		459		291
Geography:
United Kingdom		422		409		242
European Union		2		3		2
United States		37		47		47
Total		461		459		291

Name of Beneficial Owner	Number of Ordinary Shares Beneficially Owned (#)		Percent of Ordinary Shares Beneficially Owned (%)
5% or Greater Shareholders:
Entities affiliated with General Atlantic⁽¹⁾		4,922,575		11.2	%
Entities affiliated with Baker Brothers⁽²⁾		3,352,357		7.7	%
Eli Lilly S.A.⁽³⁾		2,548,145		5.8	%
Entities affiliated with Fidelity⁽⁴⁾		2,511,530		5.7	%
Nicholas John Cross⁽⁵⁾		2,369,610		5.4	%
Ian Laing⁽⁶⁾		2,364,420		5.4	%
Malin Life Sciences Holdings Limited⁽⁷⁾		2,359,425		5.4	%
Executive Officers and Directors:
Bahija Jallal, Ph.D.⁽⁸⁾		519,867		1.2	%
Brian Di Donato⁽⁹⁾		19,230		*
David Berman, M.D., Ph.D.⁽¹⁰⁾		519,865		1.2	%
Professor Sir John Bell⁽¹¹⁾		75,237		*
Travis Coy		—		—
Roy Herbst⁽¹²⁾		10,620		*
Robert Perez		—		—
Kristine Peterson⁽¹³⁾		25,298		*
All current directors and executive officers as a group (8 persons)⁽¹⁴⁾		1,170,117		2.7	%

Purchaser	Number of ADSs
Entities affiliated with General Atlantic		950,000
Entities affiliated with Baker Brothers		1,689,102
Entities affiliated with Fidelity		1,350,000

Participants	Series C Preferred Shares (#)		Ordinary Shares (#)
Entities affiliated with Baker Brothers		274,574		4,965
Entities affiliated with General Atlantic		219,659		18,963
Eli Lilly S.A.		—		23,238

Participants	Series B Preferred Shares (#)
Entities affiliated with General Atlantic⁽¹⁾		555,893
Eli Lilly S.A.		71,588