IP Group Plc (IPO) Earnings Call Transcript & Summary

Good morning, ladies and gentlemen, and welcome to the IP Group Annual General Meeting. [Operator Instructions] The company's AGM will commence shortly, and we will unmute the venue's microphones at the appropriate time. Thank you.

Ladies and gentlemen, it's now 11:00. Therefore, I declare the 2024 Annual General Meeting of IP Group open. There's been a fire alarm test this morning. So if it goes off, it's real. So pleased to follow the instructions. And if you have a mobile phone, if you could put it on silent please, so that we're not disturbed. For those of you who don't know me, I'm Douglas Flint, the Non-Executive Chair of IP Group, and it's my pleasure to welcome you here today. With me are, on my left, Greg Smith, the Chief Executive; David Baynes, the Chief Financial and Operating Officer; and our five nonexecutive -- other nonexecutive directors are in the front row, I'll get them to stand up. So, you have over there Dr. Caroline Brown; Heejae Chae, he's the chair of our Remuneration Committee; Aedhmar Hynes, who is our Senior Independent Director; Elaine Sullivan; and Anita Kidgell. And finally, Angela Leach, the company secretary, anything tricky, she's the person to go to. We have a quorum. Therefore, the meeting is open. The format of the meeting, I'm going to say a few words, and then I'll hand over to Greg. There'll be an opportunity after that to ask questions, and then we'll do the formal business of the meeting. At this stage, I want to do something that's very important, which is recognize and thank our nonexecutive colleague, Dr. Elaine Sullivan, who have completed her third term of 3 years. Extraordinarily 9 years. It seems like yesterday. Is not standing for reelection, and therefore, will step down from the Board of Directors effective at the close of this AGM. On behalf of all my colleagues, indeed, everyone in IP Group and actually on behalf of shareholders, I want to thank you, Elaine, for the enormous contribution that you've made and the real expertise that you brought to the Board over time. We're going to miss you. Thank you. As noted in my statement in the Annual Report and Account, the phrase, "May you live in interesting times" seem apposite, both in 1923, given the prevailing geopolitical, economic and market backdrop. And clearly, that sentiment on the backdrop has continued into the current year. In such times, balance sheet strength is important. And by virtue of the long-term debt that we raised advantageously in 2022, we ended last year with GBP 227 million of gross cash, having invested GBP 73 million into the portfolio. That was GBP 73 million out of the total that the portfolio raise of GBP 667 million. So we were about 10%. And cash from disposals was GBP 38.6 million, and we ended the year with only 13% of our companies at the end of the year needing -- or expecting to have to raise more funding in this current year. 2023 was not a good year for venture investing as risk appetite was muted. And as a consequence, we had a loss in the year of GBP 174.4 million, which, although lower than the loss in the previous year, was clearly extremely disappointing. Our net asset value stood at just under GBP 1.2 billion, which compares with just under GBP 1.4 billion in the prior year, and our share price closed the year at close to 50% of our net asset value, evidencing what we believe is an unjustified discount that the Board remains committed to do everything it can to narrow. That was one reason why we took the decision to pause paying a dividend and return money to shareholders through buyback of shares, a policy that we intend to continue to follow as long as the shares trade at a substantial discount. To date, within the GBP 20 million program of buyback that we announced last December, we bought approximately 12 million shares at an average price of around about 50p. Happily, there are now some encouraging signs that sentiment to our sector is improving, particularly given announced public policy support for science and innovation, reflecting U.K.'s strengths in these areas. It's good to see that the major political parties both embrace that statement. And as you know, IP Group exists to develop world-changing science and technology businesses, and the Group's purpose of accelerating the impact of science for a better future remains highly relevant. We've therefore been publicly and privately highly supportive of the initiatives announced by the Chancellor in the Spring Budget and the Autumn Statement, and in the Mansion House reforms, which were designed to increase investment through U.K. retirement saving schemes into unlisted equities. The U.K. has an enviable, indeed, leading position in academic led innovation, and the various reforms have highlighted the opportunities available, both for start-up and scale-up investment support for such businesses and thereby increase returns to retirees over the investment horizon with the 1 year kind of anniversary of the Mansion House reforms, and we're encouraged to believe that we may see progress in those who signed up to them beginning to take action. Having been active in the U.K. for over 20 years, IP Group has a recognized pedigree in this area and an acknowledged expertise in investing in science innovation. And therefore, we believe that once the various reforms are implemented, we stand to gain from the resulting investment flows and can be and hope to be a key player in helping the U.K. deliver its science and technology agenda. Our objectives remain to increase the investment in science and technology and through that investment, to deliver returns for shareholders as well as making an impact to those who are benefited by the science and technology that we support. So we continue to concentrate our effort and funding on working with a priority portfolio of companies given the many critical events and milestones that we expect to see over the coming year which have potential to deliver strong returns. Because we developed that concentration, that resulted last year in our scaling back in some of our international activities to conserve cash and to reduce costs. As Greg will note in his remarks, the environment for our business has remained challenging since the year-end, and that's focused attention on ensuring that the Group's cost base is appropriate for delivering our strategy in this environment. And mindful of this challenging environment and the somewhat static nature of the share price, the Board recently agreed to waive the pay rises for this year that were set out in the Directors' remuneration report, and our reporting and future stock exchange disclosures will reflect this revision. We expect to see portfolio realization opportunities during the rest of this year and remain committed to return a good proportion of such realizations after taking into account the funding needs of the portfolio. And this will build on the GBP 80 million of cash that the -- of the cash returns the Group has delivered to shareholders via dividend and share back since 2021. So let me, at this point, hand over to Greg. Greg?

Thank you. Thank you, Douglas. Thanks to all our shareholders in the room and to the shareholders online, we very much appreciate your engagement and support over this sort of reasonably challenging period. I guess I'd like to start, though, by saying that as the U.K.'s most active investor in university spinouts, we see a huge opportunity ahead for the group to benefit from increasing public interest and policy support for science and innovation. We benefit from a number of very long-term tailwinds as a business. That said, as Douglas noted earlier, we have seen a tricky overall market environment for private growth companies, and early stage investing in general has remained challenging during 2023 and indeed into 2024. I included some of the statistics in my statement in the annual report, but there are things like a global decline in VC investment of around 40% during 2023 compared to the prior year, which sort of compares-ish to about a 34% reduction in the total capital raised by our portfolio. So a bit better than a tough market as far as your portfolio is concerned. And Douglas mentioned earlier, the financial return, it was disappointing. The negative return of 13% on NAV per share is definitely below our longer-term aspirations, and we're working very hard to reverse that. So as a result, our year-end NAV per share, which is the assets, which is predominantly portfolio and cash, less our long-term debt divided by the number of shares in issue, which is about GBP 1 billion, is about 115p per share at 31st of December. Despite that, we did make positive progress during the year. So as Douglas mentioned, we closed the year in a well-funded position with GBP 227 million of gross cash. And as Doug has already mentioned, the portfolio raised about GBP 0.7 billion in total and so therefore started the year in a relatively well-funded position. In terms of how we've been shifting the strategy of the business, it's definitely been one of increased focus. We focus both capital and management resource into those areas that we think offer the most compelling forward-looking financial returns. And that has definitely meant deprioritizing some areas. You can't prioritize things without deprioritizing others, and that included deprioritizing our investment in our U.S. business and also ceasing our plans for a fund in China. However, that concentration has meant at the year-end, about 80% of our portfolio value is in about 20 companies and about 90% is in 40 companies. And around half of the investment that we have made into the portfolio over the last 2 years has been into just eight priority companies, and we will see the results of those investments play out over the course of the next year or 2. So I remain confident that, that increased level of focus, combined with a really substantial number of portfolio inflection points over the coming 18 months can drive really compelling portfolio returns. And as Douglas said, that in return will lead on to shareholder returns. Just to quickly recap a few of those. So in Life Sciences, in my statement, I noted that there are 10 companies that are in clinical trial at the moment. That's the most we've had as a business and it offers a really interesting mix of risk and reward. And they will be reading out over the next 2 years, so between now and the end of 2025. One of those, one big significant one coming up is Istesso. Istesso has successfully completed all the recruitment of its Phase IIb clinical trial for Leramistat. That's the name of the new compound that they are developing in rheumatoid arthritis. As a reminder, millions of people in the U.K. and globally suffer the debilitating effects of rheumatoid arthritis. It's estimated to be about 1% of populations and an incredible challenge. And as a result, unsurprisingly, it's also a multibillion-dollar market. So it's both highly impactful, but also highly financially lucrative. Istesso expects to receive that financial -- sorry, that clinical data by the end of June. But as in all clinical trials, the management team of Istesso will have to ensure the integrity of that data and work through the data before they are in a position to release it. And as we've said previously, we don't know the outcome of that trial. We don't have the data yet. But provided the data is not negative, that very much the plan will be for Istesso to explore ways of partnering and bringing commercial value to that opportunity. As well as Istesso, since the year-end, you will have seen, hopefully, that we've had some good progress in some of the other clinical-stage companies. So for example, Pulmocide. Pulmocide is currently running a Phase III study of a novel antifungal drug for something called invasive pulmonary aspergillosis. And if you can -- if you know what that means then you're in a select group. But effectively, it's a fungal infection of the lung which particularly impacts people who have had lung transplants or have a suppressed immune system. So that Phase III is running. During the past couple of months, the company announced some positive data. They also ran a Phase II safety study alongside that Phase III that read out well during the period. It also demonstrated that there was some prophylactic effect of the drug. So if that comes through in the Phase III in full, then that could be a really interesting commercial proposition. So another one to watch. On the Deeptech side, our most valuable deeptech holding and Featurespace continued to impress during the year, posting double-digit returns. That's a fraud software business, applying machine learning to card and payments fraud. And that's a really sort of hot prospect within the portfolio. And we've also seen good progress at our cyber company, Garrison, which, again, is in a really interesting space. So we hope that there will be further milestones to come on those businesses this year. And I said at the full year that one of our big focus areas is around sort of identifying, backing and growing businesses that either contribute to or benefit from the rise in artificial intelligence. And so we've got a huge amount of opportunity in that space. I'm definitely not the only CEO of a business to tell you that there is a huge opportunity in that space. But I hope from following IP Group over the years, you will have noticed that this is an area that we have got great pedigree in investing in, and companies like Featurespace are a great example of that pedigree. We're, of course, also using those generative AI tools within our business, and we think that can over time positively impact everything from sourcing to due diligence and market analysis. And we've developed things like proprietary IP landscaping tools that enable us to assess new opportunities. So the final area is Cleantech. And Cleantech, again, at the year-end, we had the first close of funding round for one of our most exciting cleantech businesses. That's a business called Hysata, an Australian business that came from our partnerships in Australia. And only last month, we announced that they have completed actually an oversubscribed $111 million financing round. We think it's the largest Series B in cleantech that's ever happened in Australia. And it was great to see such strong support from bp Ventures and Templewater, who led that funding round alongside us, of course, and we funded it through both our cleantech platform, Kiko, but also through our scale-up platform which we manage for Hostplus one of the top 10 superannuation funds in Australia. So that was very good, and we invested -- we didn't hold our corner, but we invested a significant amount into that round of about $15 million from our balance sheet and about GBP 18 million from our managed funds so we continue to be able to support these really leading businesses to success. So there's some good evidence, I think, of momentum in the portfolio. And of course, that means that we have some very clear priorities for 2024 for the year ahead. Very simple. I like rules of three. The first priority is delivering cash exits and portfolio returns. We aim to have -- to post positive returns. But crucially, I think based on the level of cash realizations we've had over the last couple of years, demonstrating that we can both deliver cash on the portfolio, verify the NAV and we'll add a degree of confidence to our shareholders. The second is around accessing additional scale-up capital. That will include through Parkwalk, our leading EIS platform, we're a market leader here in the U.K. with about GBP 0.5 billion of EIS tax advantaged capital under management and also hopefully through our Hostplus relationship in Australia, the superannuation funds, very aligned around using long-term capital to back long-term productive assets. So that's great. And then thirdly, as Douglas has said, those two factors will hopefully contribute to narrowing the discount to NAV, which is something -- which is very important to us, and a lot of your executives remuneration is focused around long-term pay in the form of shares. And so we couldn't be more aligned with shareholders in that respect. So in summary, as the U.K.'s most active investor in university spinouts, we continue to see that sort of huge policy support for investing in science and technology. Our investment thesis that we've been following for 20 years is very aligned with this sort of you have heard the term and the science superpower agenda. And we think we will be well positioned to both contribute to and benefit from that. And while the current macro environment remains challenging, we do see continued interest in our portfolio and remain confident that investor appetite for growth companies will return. And on that slightly positive note, I will return to Douglas for the main part of the AGM.

Greg. Thanks very much. Before we move on to the formal business of voting on the AGM resolutions, so I'd like to invite shareholders, both in the room and online, to ask any questions of Directors, non-execs and management that they may have on matters relevant to the business of the meeting. We've already received some questions in advance from shareholders through Investor Meet Company, and we'll seek to answer those as part of the conversation. By dealing with the questions at the outset of the meeting, hopefully, we can give shareholders sufficient time to ask all the questions that you have. For those in the room, before you ask your question, if you're able to give your name and state whether you're a shareholder, a proxy or a corporate representative, and if either of the latter, if you could indicate who you are representing. For those that are submitting questions online, again, if you could do the same, that would be helpful. So are there any questions? Put your hand up and a microphone will be whisked to you.

At the moment, Doug, I've got 30-some coming in online. So I'll send you guys some when you want them.

Go on.

I'll kick off so people can prepare in the room. So first one, actually, this was pre-submitted. So they haven't been able to give their name or details. However, why have you not sold down post-IPO Oxford Nanopore? And others -- it clearly makes your and others, it clearly makes you now volatile and less trusted. I give that to you, Greg.

Yes. Thank you. Well, we obviously look at the position that we hold in Oxford Nanopore from the place that we are at any point in time. So all the time, we are assessing the relative risk-reward of that holding. We were one of the original founders in Oxford Nanopore and currently are the single largest shareholder in that business. We have increased engagement quite substantially with the management team over the course of the last sort of 3 to 6 months and partly, that's to ensure that we're as close to the business and its fundamentals as we can be, but also secondarily to play the role of an active major shareholder in that business in order to ensure that its strategy is aligned with where we think the strategy should be. And I would say, the management team have been very engaged in that process. I mean the important thing about Oxford Nanopore is that actually, fundamentally, the business is broadly doing commercially what it said it would do at the point of IPO. It suffered definitely alongside all of its Life Science research tools peers. I mean if you look at the performance of Oxford Nanopore share price since the time of IPO, it's incredibly correlated to the 4 and other U.S. peers. So that's -- it's not an excuse, but it's useful context. We took the decision to take 20% of our holding off the table at the point of IPO. So we realized about GBP 80 million at that time, so our total realization from Oxford Nanopore over history now more than exceed the cost that we put into that position. We think it's in shareholders' best interest at the moment is to actively work with the management team in order to build the share price. But the long-term plan remains not to hold significant holdings in public companies. But obviously, we try to have that position managed out of the portfolio from a position of strength rather than at a point where we think it's towards the lowest level of multiple end valuation.

The second one, as the market clearly disbelieves the net asset value claimed by management, why has the management not demonstrated exactly by selling or part selling more of the portfolio, failing to do this has exacerbated the level of distrust as can be seen with the share price. I could pivot on that. Can I?

Yes.

I mean -- and I'm sure we all have comments on that and I should pass down the line. From my side, we always make the point that in the valuation process, we are genuinely very prudent. We try to be conservative. It is unfortunate in the market since to then discount, those conservative numbers make them more conservative. It certainly has a backing of our auditors. Our audit partner, actually, I apologize, isn't here today because he's got held up on the way over. He sends his apologies. But they have always, for the last 3 or 4 years, given the public rating of mildly cautious. So you get their opinion, they say mildly cautious. So we certainly have the backing of our independent auditors for valuations. And the second point we could make is when we have made exits, they have tended to be at a valuation above the value we carry where the book's at. To go back a couple of years, both over 2 years in a row, where we sold at about 60% uplift from the value we had in the books, which is then to support that. The last point I'll make on this is because much of our portfolio, despite the comments we had before that public account, much of our portfolio is private. You can't just sell it when if you want. You do need liquidity events. So what I am confident about is as the market begins to recover, which we begin to see signs of, and as we do start to sell more, you will then see that we will be selling at or above NAV, pretty confident. Now, in most cases, we're at or above NAV because I'm confident in our value. I don't know if...

Yes. I mean I think it's a theory that the price is different from the NAV because people don't trust the NAV. I mean the NAV as data says is well funded and supported. But we're in the risk business. I mean we invest in a number of companies in Life Sciences, and we have a very interesting investment in nuclear fusion, which are fairly binary in terms of the possible outcomes. And I think that's part of what we do. I mean we hope to balance those that are terribly successful from a small investment to be very remunerative to those that will fail. But that's the nature of the business that we're in. But I think that as David says, when we have realized assets, we've realized at or around the net asset value. And I hope that gives confidence to people when they see that. That this NAV, the NAV is entrusted, is that there is a difference between the way the market values the company and the way we value the assets. But our job is to prove that the NAV is well supported. And I think the way to do that is to realize assets at or around or importantly, above our net asset value.

And I think that just underlines the reason that, that's one of the three priorities for this year is to demonstrate that we can have continued cash exits from the portfolio that are supportive with the NAV but for a number of reasons. And so the management team is very focused on that.

I'll keep going, probably one for you, Greg. Can you elaborate on the key value creation opportunities within the maturing portfolio?

Yes, I don't know whether does that question come in before I did then elaborate or...

One fair point. It came in as you were elaborating. They might have put it within than. You might say you've already done it, it is a fair point.

Well, the key ones over the next sort of 6, 12 months will be on the Life Sciences side a number of those clinical trial results coming out. Obviously, not all of them are going to be positive. That's the nature of having a portfolio. Roughly, each phase that you go through is a sort of a 50/50. But the idea is to have a portfolio of sort of 10 to 12 of these, such that on average, so long as we are no worse than average, then it's a very compelling financial return. I mentioned two of them, Istesso and Pulmocide, they will be our opportunities this year. There are a handful of others, and we'll report on those as we go. And we put news out. So you might have seen there's another company in the portfolio, STORM Therapeutics, had some good data as well. So we do put those out. But the idea is that those larger passing through of the clinical stage will either lead to sort of no further funding or it will lead to a commercial outcome. So that's those. On the Deeptech side, I mean, really, it's around revenue growth within businesses such as Garrison and Featurespace. And on the cleantech side, Hysata was one of those milestones for this year. And we're also working very hard with First Light Fusion as Doug has mentioned. So there's a good selection across the three.

The next one is quite a long question that they asked. If you doesn't mind, I'm going to condense it to make it a little bit easier. It is a shareholder now, [ Cheryl Krizia ]. It says, I'm both's a private investor in the company and a representative of TEA, The Engagement Appeal. So thank you to Douglas for the support you've given. There are four parts to this question, given in according to Section 172, but what I'm going to do is going to make it one question, if that's okay. It's basically around the general area, which is how informed the younger generation, especially Gen Z, about personal finance capital markets testing. In your opinion, what matters most to the young generation of into investors? And what more, if anything, can companies like ours do to educate, empower, engage individuals on basic personal finance and investing? So it's quite a general question. I don't know if you want to add anything to that, a few comments.

I think it's a great question. I mean I think the democratization of savings, so that people can save for life events and ultimately, retirement, I think, is hugely important. And I think, Gen Z, I think young people have a completely different approach. I'm old enough to remember when you had to kind of coupon out in Sunday Times a pin through it and attach a check, including a 3% starting commission and a 1% trail to buy a mutual fund. Happily, those days are gone. I know from my own children, one of whom is a very modest investor but quite active, he tells me, who invest modest amounts of money in companies I have never heard of. And he does it through chat rooms and his friends and they all talk about what they do. So I mean, people are taking a different view. And I have to say I've been to Cambridge University a few times because of things that I do. And talking to students about where technology is going, that's what they want to invest in because it's kind of cool. And I remember having to tell one student. I wouldn't put your entire savings into it. He was fascinated with nuclear fusion. "I want all my money into nuclear fusion." "You need diversification." But I do think people are interested. And hopefully, we'll see retail investing coming back into this country because it's the lowest it's been for almost ever an institutional investor. One of the challenges we as a company faces, the amount of money pointed towards small and growing companies is pretty modest. U.K. institutions now own 4% of the UK stock market. 20 years ago, they owned 50% of the U.K. stock market. And the largest support now comes from public sector funds and public sector pension fund, including our largest shareholders. So there is a demographic need for retail investment. And hopefully, when we see whatever the shape of the next government is, that will be one of their priorities. Certainly, all the major parties have been told that should be one of their major priorities. And I think they realize how important it is.

I mean from our side, I think we are a big supporter of retail investors and democratization . That's why, for example, this event is being broadcast on Investor Meet Company. So where the traditional AGM might have had 10, 20 people, there was like 230 people who are tuned to this online. So it gives much greater exposure. And we do that in all our events, in our interims, in our year-end, in our capital market events. We're all broadcasting on this medium, which must greatly help because it gives kind of private investors insight which kind of conversations gone only with institutional investors. And also, we sign up things like Edison Research, which probably at the moment private investors haven't got access to search, but Edison is widely available, so it gets to that 16,000 people. So where it's paid-for research, which tightly obviously we do see is valid in some people's eyes, it does mean that general public actually can get some decent qualities of information about the company.

Are there any questions in the room?

No hands are going up.

I've only got 2 left we might need to answer here.

Go Ahead.

What are the plans for expanding the company's footprint globally is a key focus U.K.? Up to you Greg.

Yes. I mean, I think in a time of reasonably constrained resources, we, as a management team, our job is to focus those resources on to the areas that we think offer the most compelling risk and reward. I think at this point in the company's cycle, while there is clearly a huge amount of opportunity for science and technology, investing in other jurisdictions. The focus of the business is on the current territories in which we operate. And indeed, as I mentioned, we've had to sort of deprioritize some areas in order to focus on what we think offer the most compelling risk and reward in the shorter term from a position of strength in 1, 2, 3 years' time, then of course, we're always looking at areas that we could expand the business and there are a handful of jurisdictions around the world that have more than 3% or 5% of research, innovation spend and research innovation output that will be obvious places. We tend to look for the conflicts of supportive long-term capital a good wealth of fundamental innovation and research and either the presence of or the opportunity to build a talent ecosystem that can bring those things together. And that's why we started in Australia 7 years ago. And thankfully, we've been able to build a partnership with one of the big superannuation funds there. So I'd say in the short term, no plans for other jurisdictions. In the longer term, there is, of course, a huge need and opportunity for what we do as a business.

And you attract money from all of the world. I mean, as we said, we invested about 10% of the total that the portfolio invested, and that money came from all over the world, from Asia, from the States, from the rest of Europe because there is a need. One of the supervisor of the U.K., if you like, is the science and innovation skill set, which is massively respected around the world. So when we're investing in companies, we are very international with shareholders or investors who are interested in coming with us or us with them.

Just a couple more and I think I'm done. [ Bill H. ] has actually asked 2 bits. I think it's referring to the same question. You say the IP group is the most active investor in university spinouts. Why did it fail to take part in backing with the market leader in embodied artificial intelligence, which was spun out of Cambridge University and recently raised $1 billion mainly from U.S. venture capital funds?

Well, we have about -- I mean, we were delighted to see the Wave funding RAND offers good, again, sort of slight green shoots that private funding for these sorts of opportunities is starting to come back, which is great. We have an equivalent, we would obviously say better technology in the form of Oxa autonomy, which is an Oxford spinout with a larger shareholder in that. You might remember, Oxa did the first-ever driverless and fully drives on public roads transport in the U.K. and in Europe recently. So it's a real market leader. We see Wave as a good flag bearer for that industry. And it does show the weighted capital was interested in large language models in AI, and we're hopeful that Oxa can blaze a similar trail. In terms of why we didn't back that one, I mean by being the market leader, we're about 20% of the market as measured by capital into university spin-outs over the last 5 years. So I think it's 4 out of the last 5 years we've been 20% of the capital into university spinouts. That doesn't mean we're 100% of the market. And indeed, it's very healthy that there are others. And of course, we try to get our fair share of the ones which are worth $1 billion plus, and we have aspirations that Oxa will be similar.

And very last question. I think we probably covered this, but I'll ask for completeness. This is [ Gabi W. ], thank you for your question. What are your plans to grow in Asia, particularly Hong Kong and China? You beat that a little bit on.

From a -- so we don't have any immediate plans for significant presence on the ground. There are -- we have -- we benefit from a number of shareholders from the region and a number of co-investors from the region. So we don't have any -- there's no plans to sort of set up an office there or to start doing commercialization activity there. But as Douglas mentioned, there's a lot of inbound from the wider Asian region, if you look at some of the investors in Hysata, for example, and some of the big Korean conglomerates who came into that round. So it's an area that we continue to actively pursue but more from an investment point of view and potentially business opportunity for our portfolio companies, but not an area where the group currently has plans but are consistent with geographical focus in the short term.

And that from my side is I have no more from the outside of the room.

So finally, is there anything in the room. Julia?

It's Julia Diez from Railpen. We are shareholders. We are IP Group's largest shareholder. Just following on from one of the questions that you had about, I guess, show me the NAV. How do you balance as a management team that almost urgency to improve the share price or the pressure that you feel from shareholders versus the long-term future of the business and doing the right thing for long-term shareholders?

I would say since I took over as Chief Exec, I tried to set up -- so it was one of the challenges around being an IP Group shareholder and I've been an IP Group shareholder the best part of 15 years. So I have shared the highs and the lows with shareholders, and I plan for there to be more highs. One of the challenges around what we do is that quite often the investing in long-term businesses is done through fixed life funds and the benefit of a fixed life fund is that you know as an investor after 5 to 10 years, you're going to get your money back. And we are -- we were set up as a public company to offer liquidity to shareholders so that they could trade in and out of their shares. And there were different points in the cycle that liquidity hasn't been there and at the times when some shareholders want to sell out and so that can be quite frustrating. So what I've tried to do over the last couple of years is to evolve the capital allocation policy such that it is both sustainable but also supports some returns to shareholders who may not want to or be able to sell shares. And so the policy in sort of steady state, if you like, is broadly, we reinvest 80% of the money that we realize from the portfolio, and we use 20% of it to either provide a dividend, which is what we have done over the last couple of years or to do things like share buybacks or indeed, we'd obviously explore things like tender offers. We operate in an environment where there is far more opportunity than capital at the moment. So it's all the time, the discussion around the board table is how can we invest and ensure the long-term health of the portfolio and long-term financial returns, but how can we also recognize that as a listed company, one of your most important stakeholders is your shareholder group and so if you can't demonstrate returns to shareholders, that's the table stakes that allow you to operate as a business. So we balance it in that way. The 80-20, as Doug has mentioned, in times where the risk-reward potentially of our own shares is greater and the portfolio needs are met. And we would obviously look at that mix of reinvestment versus return and do that in a way which offers good opportunity for shareholders.

I think the other thing I would add -- I agree with everything Greg said. The other thing I'd add is that part of our ability to partner with companies that are in early stages is their understanding and what they've heard from other portfolio companies that were in for the long term because they don't want to find someone that gets them to an early stage and then cash it and they want to say, we want someone that will stay with us and guide us as to what the point of exit is. So there's a balance. I mean for so long as the NAV is not represented in the share price, it's important that we have events that demonstrate that the NAV is good, so that we can narrow the gap, because look it's always in the very future. I don't -- I find it very difficult to see how you can evidence to shareholders that the NAV is a good number. So you need to have realization events that proves the quality of the NAV and then hopefully, that builds trust. We've come off, I think, an extraordinary 4 years where, apart from all the geopolitical stuff, there has been a risk-off sentiment over the last couple of years because of economic circumstances. I think that's beginning to change. And I think we're beginning to see across the U.K. market more of an interesting European and U.K. companies. As quite a lot of money now is beginning to be thoughtful about whether the U.S. valuations have got to a point where they can continue to be supported because the growth that's driven those valuations continue to be realized. So we'll see. But we need a balance, but I do think that we are -- I hate the word patient capital, but we are patient capital.

I should probably finish with the opportunity side as well. So there is a big opportunity to build out our funding capability using the platform that we've built around that permanent capital vehicle. I think we've got the beginning bit really well set with Parkwalk. I think we've got the middle phase well set with a permanent balance sheet, and we've got the beginnings of quite a big opportunity with our relationship with Hostplus. And it's not easy to engage these big long-term pools of capital but we have been successful in attracting people like Railpen. I mean I think it's a pioneering example in the U.K. of what we should be doing more broadly. But we hopefully, as IP Group, offer the ability to fund businesses at the very earliest stage through tax advantage capital. It's the most appropriate form in my view, for the very, very early stage. The permanent balance sheet gives you flexibility and allows companies to be funded along that journey and offer compelling financial returns to shareholders. But there is still a big opportunity to scale into that scale-up capital side, and we've been building are evidence and credentials over the last 5 years. And that is another focus for the team. So I think sort of being able to balance the long-term need and be long-term thinking also is about the sort of the type of capital that we use for each stage in the journey.

Are you still investing or you're only realizing some investments?

No, we're still investing.

Still investing. And you give little dividend, what is the source of that dividend?

So this was on the capital allocation approach. So we use realizations from the portfolio to fund returns to shareholders in order to be sustainable as a business. In the last 6 months, we made the decision to change the mechanism that we pay cash to shareholders. When there is a bigger than 20% discount to our NAV per share and the share price, we'll use the mechanism of buybacks rather than dividends as we think that's in the long-term interest of all shareholders. But it's funded from realizations from the portfolio.

Okay. You still have money to do buybacks, you still have cash in the company?

Yes. We finished the year with just shy of GBP 230 million gross. We are investing still into the portfolio. And we announced a GBP 20 million buyback of which we've used about -- we've completed about GBP 6 million-ish of that to end of last week.

And what is the latest asset value, NAV, at this moment? We don't publish a periodic one. But if you take into account the movements in the public stocks, it's between 105p and 110p per share you can calculate based on the year-end.

[indiscernible] the movements to NAV or NAV would have been the biggest movement since the year-end. So if you look at the year end, you can justify that.

Douglas, you're a very small shareholder. Would you like to say a bit of your relationship with the government and for that matter, the political parties in view of where we are?

I would say it's extraordinarily strong. I mean we are almost a flag carrier for the agenda of getting more money into science and innovation based on U.K. research. Greg is deeply involved in a number of the working groups that are trying to articulate how this could be done. I am as well. In fact, the whole team is. No matter what the flavor of the political party is, both sides are very active in saying they support the science and innovation agenda, moving words to action is more problematic. And I think part of that comes from -- there is a strong requirement, I believe, on the next government to think about how we harness defined contribution schemes. I don't think you can direct the money to go somewhere because that leads to bad outcomes. But you can certainly think about how to promote the kind of opportunities that we represent and help people understand why that might be a good thing to have as part of their portfolio. And that was the notion of the motion, the reforms that 5% of the default funds would go into science, leaving the asset managers decide which companies to support, that's absolutely fine. But that would make a big difference. But yes, no, we have very strong contacts, regular contacts with those that are in charge of science in government and indeed, in the city institutions that have this as an objective as well.

A long-term shareholder, almost 15 years like Greg. I recognize that the market has been very difficult for you over recent years, and you've highlighted that very clearly. And I'm encouraged by the comments you are making today that you're seeing signs of recovery and also, David's comment that -- a clear focus on selling businesses at or above NAV. And your comments need to have realization events that narrow the gap to the NAV. But these are events that are external to the group in many ways. What I focused on in my question last year, and I return again this year, is this issue of what you yourselves can be doing in terms of the share price? And I welcome the fact that you have introduced the share buyback although I think at the time when shareholders were agitating for such a move, they didn't anticipate the dividend being waived. But in the last 2 years, your dividend payments have been, I think, around GBP 12 million and GBP 13 million roughly. You have spent GBP 6.1 million to date on share buybacks. You've highlighted that you have almost GBP 230 million -- or had almost GBP 230 million in gross cash at the end of the year, which clearly is a wonderful strength for the Group. But I would just challenge you about the need to be more aggressive in that share buyback program. I think it was a question at the full year results meeting, and I think you responded that there were technical factors, but that we would be seeing an acceleration of the rate of increase in share buybacks. Bluntly, it's, in some ways, decelerated. And I just am puzzled that you are, as a Board, not being more aggressive in that share price through share buybacks action that you could directly take.

We debate this a lot. So it's a very good point, and we've had innumerable discussions. Of course, there is always a limited amount of money. The more we return by buyback, the less we've got to invest, the less we've got to invest the danger is we're not able to follow our investments and get diluted by those who do follow their investments. So there's a conflict. I don't -- I think we had a dividend because it was important to show that we respect the shareholder value, which we do. When our shares are trading at 50% of NAV, it's more efficient to give money back -- give money back through buyback than share price, it's actually more efficient for shareholders. But we've got to manage the cash that we've got to support the portfolio. There's only so much we can afford, and that's what it's calibrated on. There's also -- and you'll say it's because it's a limited amount, there's obviously not yet really much evidence that it has a great deal of influence on the share price. I mean our share price has been pretty range bound this year. I personally think that companies that spend too much time worrying -- they should worry about what they need to do to change the share price rather than worry about what the market is doing in the share price. The market, in many ways, is a bit of a voting mechanism. We should worry about what we're doing to enhance the portfolio, support the portfolio. And we've got to focus on our costs, and Greg mentioned that in his comments. I mean that, we can focus on that, and we need to -- and that's why we curtailed some of the activities that we had internationally. So we will do what we can do. And then I mean I think our communication is very good. I'm not disappointed that we're not getting the story out. But at the moment, that story is being received well in terms of we like what you do, but it's not being reflected on the price. And we need to find a way to make that connection work better. I'm slightly optimistic, I have to say that when we get a -- when the election is out of the way, that there's going to be a renewed focus on whatever this science superpower, science and innovation support from government through whatever mechanisms they've got, they have to do something. They know they need to do something. It's been all deferred for a year because of the politics of the U.K. But I do think there will be traction, and I think there'll be traction from the insurance and pension companies that signed up to the Manchester reform. So I hope in the second half of the year, we'll see some action. I believe a lot of it is pending. So fingers crossing what others will do, but we'll continue to focus on putting money into the portfolio when it's -- to support where we see value and managing our costs carefully.

And on that, on the buyback, I think we are still committed, we probably made a commitment to buy back GBP 20 million, and we do still plan to do that. So in later in the year that requires -- within what we're allowed to do kind of what's going to say half. As also operating in that limit, you might well see some increase and, I think, good. Obviously, we're committed to achieve that. So that remains our aim.

Are there any other questions?

I've got a few online. Do you mind? I'm afraid I have -- this one, maybe I should do this, I don't share this one. Some more tricky ones coming in now. Do you feel the cost base is appropriate for the level of activities in the business? What I would say about that is we look at cost all the time. Obviously, one of the things we look at a lot is cost versus the NAV, the actual value of the business. It's quite difficult to compare us just to traditional like fund manager because we are slightly different creatures. I'm well aware what investors we are, we are actually writing at the early stages, often creating businesses and we're very handsome and very involved. And that, by its very nature, is a more cost-intensive activity. We sit on that top 40 Board -- well than most of these Boards in person. We have direct involvement in them, for example. So when we compare just to traditional fund manager, it's slightly inevitable, I think our cost can be a higher percentage of NAV than you might suggest for a fund manager. However, we are aware that obviously is what happens is our actual cost base hasn't really yet to change much. But our NAV has come down mainly because of in Nanopore in the last 2 or 3 years. And as a result, our costs potentially do look higher. So we will always keep an eye on that, and we're very aware of it. And certainly, at the moment, we're trying to keep our costs pretty tight, if we can, certainly not increase in the moment. And we will continue to look at that. So I would say, so I don't know if someone wants to add into that. The only other one was, again, possibly coming my way. It's another very good difficult question. I was always heartened by your cautious valuations, Featurespace, et cetera, which I think is valid. I was a bit shocked by the write-downs at year end of both the U.S. and First Light Fusion. Can you add any color to this? It's a reasonable question. So I'd start and a number of shareholders asked this when we went out and did institutional presentations. I think they're really rather specifics, when First Light Fusion achieved fusion for the first time, we took a view at that time to market value up. Even when we did that at the time, it looked like we're being conservative. Companies that we'd mark up to about GBP 400 million value. Its sort of peers, which were raising money, some haven't achieved fusion. We're raising money at $1 billion at that point. So we actually still thought we're being pretty conservative. Obviously, since the end of '21, the markets have contracted quite a bit. There's less liquidity around those kind of those fusion. It's not that the science hasn't developed, actual science has developed very well at the company, so their kind of comps you see have come down quite a lot. So because it hasn't fundraised, and we have said to people at the half year, if this doesn't fundraise, we're going to have to stay our prudence. We pretty much took it back to where it was, which of course, was quite a size adjustment, whether that's an anchor adjustment, it's impossible to say. So it's a hard company for a bigger value in the portfolio because of its extraordinary upside potential, but also the length of time until it happens and the technical risks in achieving it. And America was really, again, about specific case in that we have got a very good portfolio, we've been out there about 9 years. It's an exciting portfolio. It's been developing well that people may be aware that it's structured slightly different. It's structured like a venture fund called an LP fund. And actually raising money for that kind of business where you have co-investors, not just us in that platform, has been very, very difficult in America for the last 3 years, not just us, pretty universally. And therefore, we took a prudent view about the value of the portfolio at a time we had relatively limited money to invest. So again, it was a result of our prudence, but I do still feel very confident in the value of our portfolio. And I'm optimistic that when, as I said before, when we get to exits, hopefully to be at least at or above value.

Yes. It's one of the real challenges, when you've got a limited amount of money to invest you have to make choices. And almost by definition, if you fail to follow companies that you would otherwise -- if you had the money you would invest in, you get diluted. And therefore, it's not necessarily the companies become less value, it's that your interest in the company has reduced because the people who are putting in fresh money get preferential rights, so you get diluted. So -- and that's one of the challenges, the cost of not following our investment because we've made a choice to put the money somewhere else where we think we can get a better return and has consequences on the portfolio of companies that we can't invest in. And the U.S. was deprioritized partly because the co-investors in the U.S. were not stepping forward to put more money and then wanting us to put more money in to support it. So we decided that we get better opportunities here. Any other question? I see no hands. I will move on. Okay. Thank you for the questions. Thanks for the engagement. We'll now move to the formal part of the meeting. The notice of the meeting, together with explanatory notes, was published on the 23rd of April. So the requisite notice of the meeting has been given, and therefore, if there are no objections, I propose taking the notice convening the meeting and all 16 pages of it as read. Angela is desperately hopeful -- we're all fine with that. Good. Angela's here to help, if you're not, but we are fine, we'll move quickly on. The voting today, as in last year, will be conducted by way of a poll, polling each resolution. This is best practice. It gives everyone the opportunity to participate in the decision-making of the company and have their votes recorded respecting the number of shares that they hold. It will take a little bit of time to complete the poll procedure. So the final results of the voting, including the proxy votes on each of the resolutions will be announced through the regulatory and published on the website as soon as reasonably practical following the close of this meeting. It shouldn't take too long. Link Asset Services, the company's registrar, has been appointed to act as scrutineers. A summary of each resolution will be shown on the screen behind me. Resolutions 1 to 12 and numbers 15 and 18 are proposed as ordinary resolutions, and resolutions 13, 14, 16 and 17 are proposed as special resolutions. For shareholders that are attending online, as was advised in the notice of the AGM, you're not able to vote online, but I hope you will have submitted your votes by proxy. For those shareholders who are attending physically, you have three options for each resolution. You can vote for, you can vote against the resolution or you are -- you can withhold your vote. A vote withheld is not a vote in law and therefore, doesn't get counted in the calculation of the proportion of the votes for or against each resolution. If you have previously voted a proxy and don't wish to change your vote, you don't have to do anything, you don't need to complete a poll card. If you want to vote now, can you please complete the poll card that was given to you at registration by ticking the appropriate box next to each of the resolutions, depending on how you want to cast your vote. And once you recorded all your votes, if you could sign the poll card and put the completed poll card in the ballot box at the back of the room. If anybody requires further assistance, the registrars who are here will be happy to assist. And we'll keep the poll vote open for 15 minutes or so while you complete the cards. That concludes the formal business of the AGM, and I want to thank you again for your interest for attendance. And before I declare the meeting closed, once again to thank Elaine for an amazing 9 years, and we genuinely are going to miss you. We'll put the final results up on the regulatory information service and the website, as I said, as soon as we have it. But thank you all for attending.

Thank you very much to the Board of IP Group for updating the shareholders today. I now redirect those online to provide the company with their feedback. May I wish you all a very good afternoon.