IP Group Plc (IPO) Earnings Call Transcript & Summary

Good morning, ladies and gentlemen. Welcome to the IP Group Plc Half Year Results Investor Presentation. [Operator Instructions] The company may not be in a position to answer every question it receives during the meeting itself. However, the company can review all questions submitted today and will publish those responses where it's appropriate to do so. Before we begin, as usual, we would just like to submit the following poll. And if you could give that your kind attention, I'm sure the company would be most grateful. And I would now like to hand over to the executive management team from IP Group. Greg, David, good morning.

Good morning. Thanks, Jake. I guess in keeping with the late summer weather here in the U.K., a warm welcome to IP Group's Half Year '24 Results Presentation, and thanks very much, as always, to Investor Meet for continuing to host these live updates. They're open to all shareholders or potential shareholders and reflects our continuing commitment to transparency and reporting and getting the IP Group story out to as many shareholders and investors as possible. I will quickly start with the customary disclaimer. If you can read it, your eyes are definitely better than mine. As usual, though, the presentation will be up on the IR section of our website, and so please do note the important disclaimers here about the nature of the information here in the update and particularly any forward-looking statements that we might have within. So in terms of today's presentation, I want to do a quick recap on the market opportunity for IP Group and how we're structured to capture this for our shareholders and our investors over the longer term; and then secondly, look at the main value drivers in our portfolio and the value opportunity on a bit more of a shorter term and time frame; and then do a run through the financial results for our first 6 months; and then we'll get on to questions following a short summary. And thanks very much to everyone for sending in questions in advance. We had a good number. It's very helpful because then we can ensure that we cover as many of those as possible in the content of the presentation but also afterwards. So we'll endeavor, as always, to cover as many as possible either live, if we've got time, or otherwise, we can do so via the platform. As Jake mentioned, today, you've got myself, Chief Exec; and Dave Baynes, our CFOO, and he will be taking us through the numbers shortly. So key things for us to cover today or sort of the summary, if you like, of the half year. You'll probably remember that -- or you might remember, I'm sure you follow lots of companies -- that I said at the full year, that our strategy of increasingly sort of focusing our capital into fewer maturing companies meant that we had a portfolio with multiple upcoming milestones. It's good to be able to report that the themes for this half year so far are that, firstly, we're now starting to see that maturity translate through into portfolio exits; secondly, that those exits have enabled us to continue to deliver on that commitment that we made to shareholder capital returns, and that's been done despite a mark-to-market loss in the first half; and then thirdly, and we'll cover this, the momentum really feels like it's building in the second half with a number of potential further exits anticipated between now and end of 2025. So to start with the market opportunity and the model that we're adopting to best optimize that for you, our shareholders. I covered some of this back at the time of the full year results, so I'll go through it reasonably quickly. But as a reminder, over the last 20 years, we have been a leader in creating a thriving ecosystem for science and technology commercialization and investment here in the U.K. And the U.K. now compares very well to the U.S. and Europe on this front in terms of producing new seed and spinout type companies. To this day, we are the U.K.'s most active investor in science and innovation companies, and we're the most active backer of university spinouts in the U.K., and that's primarily done through our award-winning EIS fund manager, Parkwalk Advisors. This was reconfirmed in our latest annual equity investments and spinouts report that we do in conjunction with Beauhurst every year, and that was released yesterday. And we maintain extensive access to pipeline opportunities through these EIS funds. For example, we invested in 15 new companies just in the first half alone. So the beginning bit of the funnel is very strong, and that is a sort of a common U.K. story, and we're particularly well positioned on that front. But as probably some of you will know who follow this space, the scale-up side of science and technology is really key to the U.K.'s future industrial strategy. And you'll have heard the moniker in the U.K. of sort of growth, growth, growth, and that was certainly reconfirmed under the new U.K. government. And although it's very early, it's very encouraging to see the treasury confirming earlier this month that the EIS scheme will be extended out to 2035, and that sort of underlines, I think, support for the sector. I also remember that we highlighted the Mansion House Compact and the commitment therein to invest about 5% of default DC pension saving funds into private assets a year or so back. And although it's understandably taken a while for the 11 or so signatories to start putting the relevant investment structures in place, the plumbing for this capital is sort of starting to take shape. And this was particularly clear at the recent BVCA Annual Conference. They did a pension summit for that for the first time, and I and another member of IP Group were speaking on the subject of the opportunity and the investment case. And of course, you will know we already have a couple of the signatories, Phoenix and M&G as investors and co-investors. And we also are very well suited to defined benefit pension schemes, including our largest shareholder, Railpen. And so given this backdrop, what we've been doing is adapting our structure and strategy to be best placed to take advantage of that sort of significant growth opportunity. The group is now increasingly making the bulk of its earliest-stage investments through our Parkwalk platform. Here, the lower cost of capital from EIS tax relief is particularly well suited to sort of pre-seed, seed investment, and we raised about GBP 30 million to GBP 40 million per year, and this provides management and performance fees for the group as well as a differentiated investment pipeline. Then the next stage of funding, which is starting sort of late seed to Series A, predominantly comes from our permanent flexible balance sheet, and this offers capital returns to shareholders directly. And we obviously use a proportion of cash realizations to make capital returns or dividends at not such a significant discount to NAV per share. And then for the later stage, which is starting a sort of Series B and beyond, more traditional funds and backers, private backers, can be more appropriate. Again, these sorts of funds generate management and performance fees, and they also help to ensure that maturing portfolio companies can better access growth capital; hopefully, in turn, generating better returns for shareholders. To give you sort of an idea of the scale of all of this, so Parkwalk, at the beginning, is currently about GBP 0.5 billion in assets. It's at a good scale, but we've got opportunities to work with more universities here in the U.K. with that model. The balance sheet, as you'll have seen from the release, is about GBP 1.1 billion in NAV, and we're aiming to grow that to at least GBP 1.5 billion and beyond organically over the coming few years. And then the scale-up stage is where there's that sort of real opportunity. And I'm very pleased to update that we've signed a further increase in our investment partnership with Hostplus in the last week, taking our NAV commitments with them to over AUD 400 million. And of course, Australia and Canada has somewhat led the way in terms of private pension fund investment in the space. So I think this further endorses the strength of our offering. But clearly, there is a big opportunity for U.K. funds to follow suit here, easily sort of GBP 1 billion to GBP 2 billion to GBP 3 billion over the coming years. So you can see there's a sort of GBP 3 billion to GBP 5 billion and beyond strategy just from our current activities. So overall, the thing to take away is that the wider market context, and particularly that context in the U.K., continues to move very much in our direction, and this will be good news for our shareholders. Now on to the half year results, taking each of those 3 themes that I described earlier in turn. So firstly, that strategy of increased focus in terms of more focused portfolio investment into fewer companies is starting to bear fruit. I said at the start of the year, we'd be really proactively driving cash exits, and we were very pleased to be able to update in August that we'd already passed the total cash realizations achieved in both full year '23 and full year '24. The main contributor to that was the private sale of a top 10 holding, Garrison, to U.S. cyber firm, Everfox. This is a strong outcome, and our congratulations go to Co-Founder and CEO, Dave Garfield, and his team. And it's a great validation of their anti-malware solutions for enterprise-level cyber defenses. And the initial cash proceeds of GBP 30 million that we received after the period end, plus about a further GBP 1 million in deferred, is almost exactly the same as our carrying value at full year '23 and represents just over a 2.2x return on our cost. In terms of funding rounds, we had Paul Barrett on our full year results call to talk about Hysata's prospects, and we announced the successful completion of their funding round in May. And then I also spoke about the fact that we were entering this milestone-rich window in our therapeutics portfolio, and we've had 4 out of 5 positive results, either on interim or final data, during the period. Then the second point is around that sort of maintaining capital returns. So those exits, particularly Garrison, has enabled us to both deliver on our capital returns commitments and maintain our financial strength. We did have a fair value loss in the period, about GBP 110 million or about 9% in NAV per share terms. Obviously, this 9% is disappointing. However, it's also worth noting that GBP 95 million of that was from Oxford Nanopore, and they were not alone among their peers in having a weak first half. However, I guess, less like their peers, strong share price performance since the half year has added back about half of this already. So sort of excluding Nanopore, our NAV was broadly flat for the first half, with momentum building well in the second half. So having accelerated our current GBP 20 million buyback following the AGM, we completed it yesterday actually, with spectacular timing, buying about 4% of our issued share capital at about 44p per share average price. So that makes now a total of about GBP 95 million return, and that's mostly been since I took over as Chief Exec. And we also announced a further GBP 10 million buyback that we will commence shortly. Cash remains strong, GBP 160 million at the period end, and actually, over GBP 180 million, as we included in the release, at the end of August as those realizations have been coming through. We've mentioned in the release, we've also addressed our sort of structure, capability and cost base during the first half. This was partly through revenue increases and partly through OpEx savings, but we've reduced overheads to GBP 8.7 million from GBP 10.3 million last year. And then consistent with that investment funding stage structure and the strategy I described earlier, we've been able to consolidate some of our functions and further streamline our business. And in this way, we anticipate reducing our net overhead run rate by 25% on an annualized run basis by the end of the year. And then looking forward, as I said, I think we've seen really positive momentum building in the second half. So firstly, as I mentioned, Nanopore has had a much better second half. The share price is up about 60% since June and will come on to what we think about Nanopore and why we think that's the case, we expect to see further exits, and this includes a number that are at an advanced stage of negotiation. And if completed, we would expect these to take place at or above the 2023 year-end carrying values. And there are a number of other milestones to come in our leading companies, not the least, Istesso. So NAV per share was about 105p at the half year, and a further 5p per share has been added from the quoted portfolio since then. So quite a lot in there, but that basically is our half year results in 1 slide. So it covers all of the main points that we wanted to get across in the release. So having talked about that increasing momentum, I just want to try to cover now where this momentum could take the portfolio, very much focusing on the larger holdings. So the opportunity to sort of frame it, this is the NAV per share at June. And the only real major change is that Nanopore is now nearer sort of 13p rather than 8p, and the total is about 110p rather than 105p. And it's a bit above that, actually, including the impact of the completed buyback. Now of that, there's about 70p in the top 5 holdings plus the 14 therapeutics companies that are at clinical stage. So I'm just going to cover those sort of top ones and give you an idea of the scale of opportunity and why we believe that, that balance sheet value can grow organically over the next couple of years and deliver value for shareholders. So Featurespace, I mean this is a really compelling business. It's addressing a growing multibillion-dollar market in fraud. And this business was actually founded in 2005, but it was very much a consulting business at the time. So we were the first institutional investor in 2012. And we brought in the excellent Martina King as CEO shortly thereafter, and we remain the largest shareholder at around 20%. We've invested about GBP 23 million to date in the company. It's maturing well. It's funded to breakeven. And as you can see from the data on the slide, the revenues are growing strongly, about sort of 50%-ish, almost 50%, in 2023 to hit the GBP 50 million. In terms of value potential here, we've consistently said that by '25/'26, revenue should be approaching the $100 million level recurring; and with a decent sort of market revenue multiple, a company value of around GBP 1 billion is more than realistic. Hysata, another very compelling business, one that we founded in 2021. CEO Paul Barrett, I mentioned, was on our full year results release. He was one of our former IP Group senior investment team members. We remain the largest shareholder here, too. There's a question asking about our stake size. So we have 37% holding in this company, which is the largest shareholding. Paul gave a really great overview of the business and the opportunity. It's on the Investor Meet platform from March, so please do revisit it if you didn't see it at the time. In terms of value, the recent GBP 111 million funding round, that was the largest Series B in Australian cleantech history. It was led by 2 excellent investors alongside us, bp Ventures and Templewater. And there was a really good mix of international investors, including strategic and financial investors, people like POSCO, Shinhan Financial Group, Oman, TelstraSuper. Hysata will be using that funding to expand production capacity. It's a fantastic beachside manufacturing facility, which Paul mentioned, and it will further develop its technologies. It focuses on reaching the sort of gigawatt-scale manufacturing. Now this one is a bit earlier than Featurespace, obviously, but the company's technology is very scalable, and it has ambitious revenue targets out in '28 and 2029, which would point to a very valuable business well in excess of $1 billion. The company is funded now until at least 2026, so we anticipate funding in sort of half 2 '25 at the earliest, and we would hope for a material step up in the value if they can achieve the milestones and make further commercial progress there. Moving on to Nanopore. So again, Nanopore, we were the founding investor in Nanopore. We've invested about GBP 78 million to date in the company. And actually, we've now realized about GBP 106 million in total. We remain the largest shareholder, just under 9% now following the Novo Holdings investment, but just over 9% at the half year, as disclosed on the slide. Now as I said earlier, the value of our holding in Nanopore fell by quite a lot in the period, about GBP 95 million, and that reflected about a 50% reduction -- or more than 50% production, which was pretty much in line with U.S. peers. That said, the shares have performed strongly and rallied around 60% so far in quarter 3. And I think that reflects both the outperformance against peers but also the reiteration of guidance that they will grow revenues in full year '24 by 20% to 30% in underlying terms. Now one of the big opportunities for Nanopore, which we were pleased to see disclosure on for the first time in their half 1 results, is that their customer base is now evolving to an increasingly diverse group of customer types. So in addition to the sort of traditional research, you'll probably be aware of at about 70%, it now includes biopharma and clinical and applied industrial customers. And it's particularly important because those end markets are both very significant but also Nanopore's technology attributes often make it uniquely suited to deliver. And given Illumina is guiding to sort of single-digit revenue growth in the core research markets, and even though we expect Nanopore should be able to grow quicker than that, these end markets are the ones that really underpin that sort of 20% to 30% revenue growth opportunity. So the company is making good progress in those markets. In the applied industrial, it's about sort of 12%-ish of the company's revenue in half 1. And these are customers who are using sequencing for sort of industrial service setting. Nanopore announced a multimillion dollar, multiyear contract with a business called Plasmidsaurus. And that gives an example, and we think that, that customer segment could reach at least 20% of the company's revenue by 2027, so a big growth area. And then the two other areas, so in clinical customers, these are people who are funded by reimbursement such as like clinical labs. About 9% of the revenue came from there and about 9% of customers who are sort of funded to develop, make and sell pharmaceuticals to sort of biopharma type clients. Very encouraging to see the traction in that market, it's got a huge opportunity, and they've got some really blue-chip customers. So we have people like Lonza, Sanofi, Bayer Tech, many of whom will be presenting at the customer conference in Boston this week, so we'll be looking out for updates from those businesses. Lots of technology updates as usual. The two of particular interest to us were the launch of 2 new products in their regulated product pipeline. So they have an automated sample-to-answer solution called ElysION and the sort of lockdown version of the GridION, a sort of midsized device, and they are both aimed to drive adoption in the new clinical and applied industrial markets. Another really good piece of news following the half year was a significantly oversubscribed placing, and that was led by a really renowned life science investor, Novo Holdings. We see that investment as a really strong endorsement of Nanopore's strategy and its future growth plans, and we think there's scope for work between other companies in the Novo Holdings portfolio. This again is probably particularly relevant in that biopharmaceutical market, and we believe this is a very exciting opportunity for the company over the medium term. So in terms of value opportunity, I mean Nanopore clearly addresses multibillion markets with highly differentiated technology solutions. Some near-term milestones for value creation. We'll obviously be hitting '24 guidance and potentially joining the FTSE 250 Index when the golden shares expire in October. And we're looking for more sort of brand name customer deals to further underpin the applied markets opportunity. And hopefully, we'll see those this year. Moving on to Oxa. So again, a bit of a theme here, we were the first institutional investor. This is also held through our Parkwalk funds. So as a group, we are the largest shareholder. On the slide is just the balance sheet investment, which is off the back of having invested about GBP 17 million into the company. This is really, really, if you're interested in the space of autonomous vehicles, a great company to follow on LinkedIn and X. And you can see some of the very significant customer-led solutions that Oxa is rolling out in the field. There are now 3 locations in the U.S. where they've rolled out their software in conjunction with Beep and another company. And what's interesting about those rollouts is it's Oxa software. It's not operated by Oxa, it's not on an Oxa car and it's not Oxa's hardware. So it demonstrates the sort of scalability of that model. In terms of sort of potential value here, I mean, there's a widely cited listed U.S. company, Aurora. They are currently at about $8 billion valuation. However, they are a bit more commercially progressed. They've got revenues in the sort of tens of millions, but there is a longer-term potential here. And then closer to home, Wayve, which is a Cambridge-based autonomy company, which is a bit further behind Oxa in terms of commercial rollout, reportedly completed $1 billion funding during the first half, so again, a great opportunity for value here. And then the last one, since I'm running out of voice, the last one is First Light. So again, another company, we're the first investor here and the largest shareholder at 27%, having invested about GBP 18 million into the company. The company has definitely had a mixed first half. On the tech side, continues to make very strong technical progress, major milestone in February in becoming the first fusion company to successfully fire a shot on the Z machine, which is at the Sandia National Lab. This is the world's largest pulsed power machine. And that shot broke the pressure record for the machine in its first shot, so it's a really major achievement. And it validates a couple of things, firstly, that the amplifier technology is clearly well leading; but secondly, their ability to work with third-party facilities. And this points the way for First Light to follow a more capital-light strategy. And this will include working in partnership with the likes of Sandia and other providers of inertial confinement fusion driver technology. We strengthened the team here with the appointment of a new acting CEO, Graham O'Keeffe, in the period. And our Founder, Nick Hawker, has moved into a new role of Chief Scientific Officer, and he will be responsible for driving the company's scientific mission and focusing on how it really transforms its sort of unique technology for ICF into a commercially viable, scalable proposition for energy production. I said it was mixed because, while there's still some activity in the fusion funding market, we definitely haven't seen a return to the sort of multi-hundred million funding rounds of 2021. And First Light is yet to complete its Series D funding. So as a result, we've again reviewed our valuation using expert third-party input, and we reduced the value by a bit to our holding at about GBP 50 million for our 27% holding. I mean in terms of the opportunity here, completing the financing is clearly the short-term priority. Beyond that, unlocking the engineering behind inertial confinement nuclear fusion power could clearly lead to a very valuable business and, given the potential size of the end market, again, could have multibillion dollar potential. Two more portfolio things to update you on. And so on the therapeutics side, this is about 28p a share across 14 clinical-stage companies. I'm not going to go into detail on this, but it's there in the presentation if you want to refer back to it. Two things to note. First, the biggest single position is Istesso, as you'll probably be aware. And while we remain in regular dialogue with the company and with management, the company has told us that it's not yet in a position to update us on the final data from their Phase IIb trial. This is later than we had expected and later than I had guided shareholders, which is obviously frustrating, but it definitely doesn't mean that the trial has failed. In fact, I would imagine if that were the case, then we would definitely know by now. So having given a pretty clear view on timing and not achieved this, I'm not going to risk making the mistake of giving a new date. However, we do look forward to updating the market as soon as Istesso reports to us. Second point, we've had 5 readouts, though, in the first half, either full or interim, of which 4 were positive and 1 was negative. As it happens, Oxular, the one that was negative, we'd actually largely written down by the end of 2023 and we might be able to rescue a small amount of our value. You can see we've got in the books at just over GBP 3 million. And of the others, we're typically on the Board, and we're working very closely with them to deliver value. And of course, a positive trial result doesn't always mean an exit or a licensing deal and it can sometimes mean moving to the next stage of development. But we would hope to have a deal on at least one of them within the next 6 months. There is a bit of further info in the appendices on each of those 4 if you would like to know more about what the company does in the nature of the trial, but I won't go into it in the interest of time. Okay. So final one for me before we pass on to Dave to do the results. And don't worry, this is meant to be illustrative rather than for me to talk to the detail. And I think what I just wanted to do, now that the market is clearly picking up in terms of funding and in terms of exit appetite and some of our key companies are clearly reaching maturity, I've had an increasing number of shareholders asking about, "Okay, what's next? You talk about the sort of the top 5 and the focus. What is behind that?" And I just wanted to include a slide to give confidence in the depth of the future pipeline. So there's about 80 companies in the portfolio, and that's excluding some of the platform companies like sort of OSE and the UCL Tech Fund, et cetera. But taking out the 5 that I've already covered and 14 in the therapeutics side, there are about 30 that are worth more than GBP 3 million, so more than 0.3p per share. And this is where the future value for shareholders will mostly be derived from. And you can see there's some quite mature companies in there, too. For example, in that more than 10 years, on the right-hand side, Hinge Health. Hinge Health continued to deliver strong revenue growth into the hundreds of millions of dollars. And we're effectively already in cash realization mode there at the right price, of course. And we have sold down, and we'll continue to do so, and we're always looking at secondary opportunities there. And then if that's not enough, beyond this, you can see at the bottom, there are a further 100-or-so companies in our Parkwalk funds, so there's a really rich pipeline. And this is particularly for that Series B plus private scale-up capital opportunity that I mentioned earlier. So overall, I hope that gives you a flavor of why we're confident on the value creation opportunity on the balance sheet. And with that, I will hand on to Dave to take us through the numbers. Please, Dave?

Thank you, Greg. Yes, hello. Nice to see you all again. It's David Baynes, CFOO. Some of this, you'll have already heard, but it's worth just going through it again, I think. We ended the period with gross cash of about GBP 161 million. Actually, of course, it's strengthened, as Greg has already mentioned, since that time because of the exit of Garrison. So at the end of last month, we're about GBP 184 million. So we still feel pretty confident. Our plan was always to end this year at about GBP 150 million, and that still looks like what we would achieve. As Greg mentioned, we did have a relatively sizable loss in the period, about GBP 110 million, which has reduced to about GBP 1.4 per share. But since the period end, actually, we've recovered about half of that. So GBP 95 million of the loss related to Nanopore. And then, of that, effectively half are some of the other private companies. So now actually, having had a reduction in NAV per share of about 9%, it's only about 4%, 5%. So much of that has recovered. And the last point is around overheads. They are slightly down, down from about GBP 10.3 million to GBP 8.7 million. It's a little bit nuanced, and I'll explain that a little bit more in a slide in a moment. So as I said, the vast majority of that loss was actually a single stock, Oxford Nanopore public stock, much of which has already recovered. The remaining portfolio was pretty much flat, actually, about a loss of GBP 8 million, so about a total loss of portfolio of about GBP 103 million, with GBP 95 million being Nanopore. In that, on the positive side, we've already heard about Featurespace, they're performing extremely well. Revenue is up from about GBP 32 million to over GBP 50 million. We really had to take some increase in that value. And about GBP 40 million of that GBP 54 million does relate to that. We still believe there's probably more in that. But I think it more fairly values the stock and how we had it funded at the year-end. At the other end of the scale, one that was sort of canceling out that benefit, we did take a little bit of a write-down on First Light Fusion. That's in that GBP 18 million negative funding environment. About GBP 14 million of that is actually on First Light Fusion. It's performed well, as Greg has explained. But actually, it's just a little bit delayed on the funding. And when you have a situation that the lending is a bit delayed, it makes sense to perhaps adjust the price. We did get a third-party valuation on that, and we've adjusted the valuation in line with the kind of guidance we got from the third-party. And the other slightly large negative is with a company called Ultraleap, which actually made its own public announcements about reducing its workforce and slightly changing its model. And for that reason, we wrote that down. A relatively big proportion of that negative comp is specifically from that one company alone. So it's a relatively simple story. Most of it was Nanopore; the rest, pretty much flat. And where there's a swing in that, it's sort of 1 up and 2 down. So it's actually quite a simple story to understand. Same thing with balance sheet and net assets. As you would expect, assets are down by the value of reduction, about GBP 110 million. But actually, overall, things like the net liabilities are pretty much consistent year on year, GBP 66 million to GBP 68 million. All of those, by the way, are only liabilities that are payable in the event of an exit, so they're not going to affect too much. Cash at the period end at about GBP 29 million net. But because we've had more exits since that point, at the end of last month, that's actually up about GBP 55 million. Next point, the point Greg has already made. A very simple slide, but it's just a point worth making, that we are increasingly focusing on the top value companies. So we have a great pipeline, as Greg has just shown you, a lot of really interesting stuff coming down the production line, if you like. But actually, in terms of our investment and our money and our focus, a lot of it is in that top 40 companies, so 35% in the top 20. If you're a good top 40 company, you're nearly at 90% of the portfolio. Our portfolio remains well funded. I talk about this each time we speak. About 1/3 of it -- this is quite simple math. About 1/3 of it is funded. It doesn't mean those companies won't have to raise more money, but they don't need any more money to get to breakeven. In the second half of this year, actually, mainly, in the second half of the year, there's only 2 companies about GBP 4 million that need to raise money. But then next year, about another 1/3, about 1/3 of the portfolio will need to raise money next year, which is pretty consistent. And then another 1/3 at the year after that. But we're pretty comfortable with that. Obviously, when you run a portfolio, a lot of companies do require fundraising. But actually, there's no immediate requirement for a lot of cash. And what tends to happen is -- you'll know if you follow this presentation -- as you move forward, things get funded and these numbers move out. So kind of 1/3, 1/3, 1/3 seems a fairly good guideline for us. The next slight change is something I've talked to every time. So it didn't seem fair not to include it because actually, it's technically worsened slightly, but I'll explain a bit more. We've been consistently looking since the end of '21 at the kind of ratio of when we do fundings, whether they are, actually, up valuations, flat valuations or down, basically as a kind of endorsement of the carrying value of our portfolio where we're getting the valuations right. And we saw this at the end of last half, there has been a little increase in the down rounds, so going from a very small, sort of sub-20%, up to about 1/3. It's only across 8 companies, not an enormous sample, you've got that sort of 3 going down, 1 flat and 4 up. But I think one point which I think have failed to make in past years but is worth making is that although they had down rounds from the last funding round, they weren't down rounds from the price we carried them at. So in fact, all 3 of those companies were carried below the price we fundraised at. So that seems to support our sort of carrying values very much. I mentioned that overhead is a little bit more nuanced than just the simple reduction that we've seen during the period. There has been a 16% reduction in the first half. A couple of points I'd like to make about that. That's net overheads. So that's both our costs less our income. So some of that reduction actually is an increased income, over GBP 1 million of it actually, mainly from Parkwalk where we've had slightly higher income in the period. There is some reduction in costs but not the full 16%. About 5% of that related to the reduction in costs. However, since the year-end, we have focused more on the cost and accelerated that process as we increase sort of refined our strategy. And we've done a number of things. We're increasingly trying to streamline our operations, particularly between Parkwalk and the balance sheet, simplifying things like legal, compliance and accounting. And that allowed us to reduce costs. We simplified the structure. We talked about this in the past. We're doing less in China than we had originally planned, so that's saving quite a lot of money. And we're also rationalizing our sourcing, putting more and more reliance upon Parkwalk because it's a brilliant business, helping us source particularly in the area of university opportunities. And that across the board has allowed us -- well, will allow us, more accurately -- by the end of the year to reduce costs on an annualized basis by 25%. Just to say that again, so it's clear, costs won't reduce by 25% in the year, I don't think. I think what will happen is, when you get to the end of the year and you look at the costs, they will be 25% lower than they were at the same time last year. So obviously, by '25, they'll be running at that lower cost level. That also will probably be a more appropriate cost base for the amount of assets that we're managing on the balance sheet. I think this is the last thing for me before I come back on questions. We continue, we believe, to deliver on shareholder returns, Greg has mentioned this before, still committed to making returns on exits, still committed to doing that in the form of share buyback if the discount exceeds 20%. As Greg already mentioned, by a bit of a miracle, we exactly completed the first GBP 20 million yesterday, which allows us to say that's completed. And as soon as possible, after the end of this result period, we will commence the next GBP 10 million buyback, which we have already announced our intent to do. So to date, we have actually paid back GBP 95 million. That doesn't include the additional GBP 10 million. So with the additional GBP 10 million, we'll actually be at GBP 105 million. And then kind of a guess, at the rate we're buying back, if the rate of buyback accelerated quite quickly in that second half of the year, I would anticipate that GBP 10 million will probably get completed by the end of this year. You never know for sure because it depends on price and volume but one would anticipate on that sort of time line. And as Greg has already said, with the amount of GBP 20 million buyback we did, we bought back about 45 million shares at an average price of about 44p. So it's quite a significant amount. That's for me for the moment, I'll hand back to Greg.

Thanks, Dave. So I'll just do a very quick summary. One thing that we always like to do is just to put up the catalyst that we mentioned at the full year results in March to say how we're getting on against them, so you can sort of mark our homework. You can see the main ones that have happened so far was the Garrison exit. And the Hysata and Genomics fundings being completed, they're the main ones, but there's a number of other potential milestones to come. So a quick summary, leaving sort of 20-odd minutes for questions. So in March, I said we focused our capital into fewer maturing companies and also that we were proactively targeting cash exits. The first takeaway is that we've made good progress in seeing that maturity translate into exits, already exceeding the totals in '23 and '22; and secondly, we've used those exits to enable us to continue to deliver on our commitment to shareholder capital returns; completing our GBP 20 million buyback and a further GBP 10 million, as Dave said, to start imminently despite a mark-to-market loss in the first half; and then finally, momentum is really building in the second half, including progress at Nanopore and a number of potential further exits anticipated between now and the end of 2025. So we will stop there, and we will go to questions. And Dave can compile the questions.

I'll compile the questions. Actually, before we started, there were 15 questions. So I quite understand if people can't stay for all of them. We'll try and get them down by the end of the hour, probably a little risk we won't get them all done, however, here we go. I'll try and answer the first one. I welcome the increased rate of share buybacks since the AGM at prices well below the NAV and encouraged that the total program has increased to GBP 30 million. Good. Why does the Board not commit to canceling all future purchases of treasury shares, perhaps limiting the outstanding number to, say, GBP 990 million? This would address the concern that the Board should be more disciplined in issuing stock. Well, I mean we do have that option. I think that the actual practical effect is no different. When you calculate NAV per share, you exclude those shares in treasury. So it won't actually affect the NAV per share at all. We use a relatively small amount of the shares just to satisfy any shares issued under our EIS or bonus scheme. So we will use about a fraction of the number of shares for buying back. So I mean the answer is practically, it doesn't make a practical difference, but it is an option that we could get at some time. Certainly, at the moment, it's not our intent to increase the shares at all. And I think, as Greg mentioned, we have now fallen below 1 billion shares. And hopefully, as we progress with the share buyback, it will fall further. Next question, your current discount implies that your net asset value figure is not trusted by the market. Has the Board signed off on the asset value? Should they not be considering their positions in light of the ongoing and prolonged disbelief of market? I'll let Greg on it, that's a tricky one.

A pointed question, but all questions are valid. Well, I'd hope -- as we've demonstrated in the presentation today, we think our portfolio is very appropriately valued. And this will be demonstrated by further exits and uplifts. I think didn't Warren Buffett say that the market is a short-term voting machine and a long-term weighing machine? And our asset class has definitely been out of favor with the elector, the electorate, as evidenced by the performance of us and our peers. But I guess it's sort of fair to say that acquirers of our portfolio companies are definitely coming along with their scales and they are concurring with the weights that we've got our companies at. So yes, hopefully, we'll deliver some further evidence on that in the coming months.

And the next one I'll fire your way as well, though you may feel we've answered some of this, share price discount. Like another investment company I own, Augmentum Fintech suffers from a large discount to NAV. Augmentum help understand the pathway to profitability of its holdings and the likelihood of them probably being taken out in trade sales. Could IPO choose a few of its companies to highlight where they are? If several are close to being profitable without a need for funding, then their IPOs will stand up regardless of market shenanigans. Good word. Some of our long-held companies must be close to standing on their own feet and give us long-suffering shareholders some share.

Well, again, thanks for the question. And part of the thinking with this half year results presentation was to do exactly that. I'm always mindful of not doing loads and loads of companies, but the top 5 holdings, I've given you an idea of the value potential and a bit of an idea of when we think that value potential could be realized. Timing of exits and signaling when they might exit is, obviously, the sort of the trickiest bit, but we're confident in the value of those top 5 companies and indeed more beyond. IPOs, there's not lots and lots of them in the pipeline still, but there definitely are more than this time last year. And you can sort of imagine companies that are growing revenues quickly, addressing big markets, could well be the sort of the first candidates for IPO. So maybe we'll see one next year. But as I said, over the last couple of years, we're definitely not basing our realization forecast on IPOs, it's much more trade exits at this point in the cycle.

Next, whilst fully recognizing the longer-term nature of the investment, please, can the Board outline its strategy for crystallizing the value of its shareholding in First Light Fusion and give some sense of a realistic time frame?

Okay. So again, well, timing, harder to call on this one the most. I sort of tried to give an update in the presentation around the new business model that the company is following. This is much more capital light, with the company aiming to partner with various providers of inertial confinement fusion technology and really leverage sort of the particularly unique thing about First Light, which is the amplifier technology. So if you're interested when the shockwave hits, you amplify and focus the shockwave down to create the very high areas of temperature and pressure. That's the real magic sauce within First Light. That should enable First Light to get to revenues more quickly as the technology becomes established as a sort of unique value-adding component within bigger fusion schemes. So there should be an opportunity for us to realize value from this through exit to trade. And unlike maybe many other fusion energy start-ups who are following that path of building a sort of a commercial fusion power plant, we anticipate that means we could achieve an exit before that through demonstration of the high gain from its target technology. So I hope that gives you an idea. I can't give you much in terms of the time frame but hopefully, quicker than other fusion companies given that partnering approach and a capital-light approach.

The -- it's always going to be difficult a lifetime in that company, by definition, but the upside is so enormous as a kind of [ bounce to us.] The next one is an Oxa question. The announcement of recent contract awards for Oxa Autonomy are encouraging. Please, can you indicate how this revenue is being recognized and where there is scope for price escalation within these contracts? Can you give a rough estimate of likely revenue in '24?

Well, generally speaking, we have to be a bit careful with the confidential information of our companies where they don't publish their results unlike a public company. To give you a bit of an idea, they're still in the initial revenue phase. So most customers are in sort of proof-of-concept and trials. So as a result, we're not expecting material revenues in 2024. What we can say is each of the various verticals that they address, so you have industrial, the shuttles like what we've got with Beep and logistics. Each of those is a multi-hundreds of millions of dollar ARR possibility, and it can roll out quite quickly as you've seen with Beep because you're just using Oxa' software on others machines and technology. Whether it will gear up in 2025, we'll have to see. But there might be some brand name customer contracts that could start at sort of the end of this year and then roll out quite quickly next year, for example. So sort of probably quite small this year and hopefully, there'll be some larger ones that could scale quite quickly next year.

Has the Board approached our existing shareholders in Hinge Health with a view to disposing of its shareholding?

Yes, in simple terms, I mean, I mentioned it very briefly in the presentation. This is a really healthy growing company with impressive financial performance and metrics. And those types of companies tend to be realizable. So definitely one that we have in our sort of in the realization phase of the portfolio.

Yes, absolutely. What's the time frame for Hysata to be manufacturing product? And what is the peak year for CapEx expenditure?

Well, remember from Paul's presentation, it is a -- at scale, we'll be using outsourced contract manufacturing. But, I guess, to answer the question, we're expecting first commercial units to be deployed from sort of 2026 onwards with partners and then scaling up the manufacturing after that. And so sort of peak year for CapEx will be the next sort of -- over the next few years as we establish those sort of manufacturing processes. And then once we've established the manufacturing processes, including the one that will be funded by this funding round, we'll then go on to the contract manufacturing. Then there'll be much lower CapEx requirements as we scale.

I can do this one because it's an easy one, I'll take it. Is IP group the biggest shareholder in Hysata? How much debt is Hysata carrying? Yes, we are -- I think you've already seen we have about 37% on balance sheet. And the company is not carrying any debt, which makes that easier. Next one, please outline the measures for reducing the group's recurring cost base for 2025. I think I'd probably sort of answered that. I talked about the way we're rationalizing across the business, legal, compliance and finance, and we're reducing complexity in the group, and we're also simplifying our approach to sourcing, all of which allows us to streamline lower cost business. Next one. Does the group extend loans for any of its portfolio companies or invest only in the form of equity? If loans, what is the total? Well, we do invest in loans quite a lot. We tend to normally do them as convertible loans because normally they're kind of like a bridge. So often, it's not possible to ascertain exactly what the right equity investment maybe you're putting around together. And you quite often will provide bridge loans to some of the companies. And in most cases, those bridge loans will themselves convert. And I think off the top of my head, we have about GBP 53 million of the value is in loans. I'll check that. I think I'm about right of the total GBP 1 billion. Just out of just over GBP 1 billion of assets. So about 5%, I guess. Next, you have this one, Greg. What are the principal assets of Oxford Science Enterprise? And what is the logic of this very small shareholding relative to IP Group taking a direct shareholding in the underlying assets?

There's a long answer and a short answer, I've given it 10 to 10. I'll do the sort of shortish answer. So the reason we have a holding in OSE is because we helped to found that specialist investment vehicles, the private investment vehicle that focuses capital only on Oxford University. And it's an important relationship for us and offers a bit of pipeline. Increasingly, actually, most of our sourcing in Oxford has been done through Parkwalk and through our alumni funds. So we manage annual alumni funds in Oxford, I think we're up to number 9 or 10 now. And that -- we run those in partnership with the university. So a lot of the early stage spinouts, we do through that range of vehicles. OSE is often a co-investor with us. And to be honest, there's way more opportunities than capital at the moment. So it's good to have another check around the table with their connections. We have sold a little bit of this during the year-to-date. It's helpful to have a -- it's almost like a sort of a little fund of funds holding, sort of -- for pipeline and co-investment. But you're right, it's a smallish holding, and we do more principally hold direct shareholding in the underlying assets.

Next one, can you please give a rough time frame for the results of the Phase III trial being undertaken by Pulmocide.

End of '25.

Correct. That is right. What -- no, slightly tricky one. What is the likely level of turnover for Featurespace in '24? And time frames of EBITDA breakeven?

I won't comment on the latter the time frame for EBIT breakeven, although as I said in the presentation, the company is funded to breakeven. Level of turnover. Well, the -- so the company has been growing at or above the level of the market growing. So the market is growing sort of 20% to 30% per annum. The rate of growth sort of varies from year-to-year. It's quite high in 2023, nearly 50%. And so I guess you could envisage it will be sort of at or above the level of the market again in terms of increase during 2024, continues to trade very healthily and very well. So we're very pleased with that business and the progress that they're making.

Yes. I guess, I can have a go with this one and Greg can correct me if he disagrees. Does the Board agree with the focus of returns to shareholders from the realization of investments should be in the form of share buyback rather than say, tender offers or dividends? I think the answer to that is, at the moment, our policy is to do share buybacks at a time when NAV is -- or shares are trading at a discount more than 20% to NAV. It doesn't mean that we completely discount other alternative methods. So if a tender offer was more appropriate, for example, it's a very sizable buyback or a very large exit, that is something we would consider. And if there was a lower discount to NAV, I think dividends is something we would consider. But at the moment, the current policy is to do share buybacks. But we don't discount any of them.

I think it's fair to say the -- we consulted pretty widely with our institutional investor base, and there are a couple of income funds on the register. And even the income funds agreed given the current discount to NAV that buybacks were the most appropriate way of returning capital to shareholders. And one of our investors said, "Look, I don't think I've ever said this to a company before, but I actually support you shifting from dividends to buybacks in your unique circumstances." So as Dave said, it's not to say that we won't ever do dividends or tender offers, but the buyback seems to be the most value-efficient method at the moment. As I said, we've returned about 4% of our capital, just about GBP 20 million buyback. So hopefully, that will prove to be very good value for shareholders.

We're doing well. And if you're not counting, we're on question 16. 10 more have come since we started talking, so you know. Potential future exits through '25, mix by theme? More tech or balanced? [indiscernible], I guess, there is a mix. Actually, at the moment, we do have a thing called capital allocation policy. It's kind of almost a central planning document in the business where you're looking at what you think you're going to exit. You're looking at what obviously your costs are going to be, what you want to invest and obviously what your closing cash is. So at the moment on that kind of '25 realizations, there's quite a big list of potential exits in '25 number companies, at least 10 with significant value. I would say on the balance off the top of my head, slightly more weighted towards life sciences actually, but there is the representatives of every part of the business. I don't know if you want to add any more to that.

No, that's fair. [indiscernible].

Next question, I think we've answered. David, I'll ask it, but don't offend you don't do it again. How do you weigh share buybacks versus other forms of shareholder returns such as dividends in your capital allocation strategy?

I think that one is answered.

Yes. I think that's answered too. So another good question. [ Paul Siya ], it's Paul, analyst. Istesso data is long over June. Will IPO commit any more capital to it in the event of mixed data? I' you have that.

I mean, obviously, you never say never. We're not planning to. And I would say the plan from the management team with our full support is that we use this data to get commercial validation or indeed an exit. So I don't see that as being a plan at the moment, but I suppose you never rule anything out.

No, I agree.

There's definitely sort of a base case and a couple of other cases, depending on the nature of that validation. I mean we've funded this business largely from IP Group for a number of years with a number of grants. I do think now is the point at which we're looking for and sort of commercial validation off the back of this data.

Yes. [indiscernible] cash out. It's quite a long way at the moment. So hope [indiscernible]. Yes, plenty of time. In any circumstance, there is plenty of time. Again, certainly one for you. How is the U.K. government's policy on innovation and science influencing your operations? And are there any regulatory changes you anticipate that could benefit IP Group's business model?

Yes, good question. We've definitely done more engagement with industry bodies, government, the regulators, the stock exchange. I mean in some cases, it's very specific. So sort of very important in our world, probably didn't get noticed in anybody else's world sort of thing, but there was a risk that the EIS tax relief would expire next year, which obviously will be quite tricky for our award-winning EIS investment business, but we engaged, including through the BVCA, we've got a number of people on their expert panels with Treasury and with government to explain both the very cost-effective nature of this for the public purse. So when we look at our portfolio as a whole within our Parkwalk funds, we repay the initial tax relief that you get on the EIS investment and annually about every 15 months through payroll taxes. So it's actually a very efficient mechanism for the Exchequer. And we engage a lot with government, explained that, and we were very pleased to see in the last couple of weeks, in fact, that the EIS so-called sunset clause has been confirmed to be pushed back out to 2035. So that's very good news. There's little things like that. I mean there's lots of big picture stuff going on. There's -- I mean there's a real need for us to deliver growth in the U.K. economy. I heard at the Capital Markets Industry Taskforce and the second annual CMIT Conference at the Stock Exchange a couple of weeks ago, People are talking about what's the investment need in the U.K. And a report by -- that was sort of chaired by Sir Nigel Wilson, who is the former Chief Executive of Legal and General, which is worth a read, actually, if you search for capital markets of tomorrow, talks about the need and the investment opportunity and also what might happen if we don't do this. But there's about a GBP 15 billion or so opportunity to invest into science and tech scale up out of about GBP 100 billion in total annual investment needed. That's across things like housing and infrastructure as well as in equity assets. And it was talking really about the role that long-term capital in the U.K. you can play on that front as various metrics. So I think some of the government policies that have been announced. It's very encouraging to see the pensions and investment review announced, encouraging to see that as a joint minister across sort of DWP and pensions investment, which is obviously sort of again indicative of the direction of travel. So I think the new government is obviously bedding in and having not been in power for a while, but the fact that they are focusing very much on growth and very much on funding that appropriately through a smaller portion of the pension fund assets. It feels like it could be very good news for us. So we're engaging a lot on that front. And of course, through Hostplus, we've been doing that for sort of 6 years or so. So we've got good track record to date. So we definitely think that there's a big role for the group to do that.

I have noticed it's now 10:00. So we quite understand those of you that need to go. Obviously, please do. We'll carry on, and I thought I've got 6 or 7 more questions. So we'll carry on and try and answer all of them. What kind of annual NAV return are you targeting over the medium term?

Well, more than history, we've delivered about NAV per share has been sort of high single digits, 7%, 8% or something over 20 years. We've definitely made mistakes along the way. We've had to refine the model. We've had to help create an industry. So I think above that level, in the shorter term, I think there's good opportunity for double-digit returns and double-digit returns with cash. So again, I think we're targeting above what we've been able to achieve historically and hopefully, some of the top companies that I mentioned in the presentation underpin why we think that's possible.

Great. This one, we sort of had before, I'll read it out, but it's a theme I think. The share price has been trading at very persistent and frustratingly large discounts, which we agree, which typically indicate markets lack conviction in willingness and ability of companies' management to deliver shareholder value. Are you contemplating any changes to the structure and/or composition of the management in order to address markets' negative perception of the current management?

Well, we definitely look to address the structure. And we're also -- I think, you will be the judges, but I think we are now delivering on the strategy that I set out to focus capital on to those maturing companies to deliver realizations, to use a proportion of those realizations to deliver value to shareholders. I guess, it's encouraging to see the share price is sort of getting positive momentum rather than negative. So yes, I mean, we're confident in the -- in being able to deliver on the value opportunity here. And I think there is -- beyond this sort of period, there really is a very big opportunity for us to address, and we'll probably do that through private funds in addition to the balance sheet, which will sort of smooth out our earnings and make the cost base lower in total as well. So I think there's a really big opportunity here. And I would like to think we're delivering on what we said we would do.

I'll go and shot at it first. Will the company consider investing in some of the exciting small cap companies? I know many of which have had successful run rates this year, for example, [ ANGLE, Avacta, Genedrive ]. I mean, many of you may know, we actually founded Avacta. We were a founder. So we're a founder of number of AIM companies. I think in general, our model isn't investing in companies that already are established on [ AIM]. I mean, you never say never. We have on a few occasions made investments in public companies, couple I can think of ever. But generally, that isn't our model. Generally our model is actually more conception to maturity often. And we're often taking things to AIM rather than just actually identifying something that's been floated [indiscernible].

Yes. I mean you remember things like where there's an opportunity to deploy our -- what we think is our USP in being able to sort of take and price technology risk, then we can do that. We can act quite quickly. So Ceres Power is a good example of that. But typically, there's a big opportunity on the private side.

Yes, that is true. Ceres was already listed. It wasn't invested. Next one, do you have any events where your portfolio companies can communicate and exchange ideas? The companies, of course, need to be careful about their intellectual property. But there's a lot of potential in cooperation across corporate boards.

Yes, we do. We could definitely always do more. We host various sort of panel events and things where we get companies along. There's an annual Parkwalk Showcase event that we do, that has about sort of 20 or 30 companies, and there's a lot of discussion between teams and we sometimes bring together groups of CEOs and Chairs and Chief Technology Officers. We can definitely do more on the sort of ecosystem front, for sure. And we've got a predominantly private capital-focused event is bringing together about 8 or 9 of our deeptech companies with a panel, which is next Wednesday, I think. So I think Berenberg have sent around some invites from Numis to some of our institutional investors as well. So yes, we do -- we can definitely always do more. Creating that ecosystem is a big part of how we make this work even better in the U.K.

Talking about Berenberg. The next question is from [ Odysseas ], an analyst. Well, we got an analyst alongside Paul. He's got two different questions here. So I'm going to break it in half. Number one, on Hysata, given the recent funding, are there any milestones to expect from them over the next 18 months? When would they need to raise again?

I think I covered that. But I think -- there was quite a lot of information there. So the funding takes them through to 2026. We would anticipate that they would not, therefore, plan to raise money until 2025, probably late 2025. In terms of milestones, I mean, it's really about being able to demonstrate that first manufacturing, so building a sort of a pilot line and also building a sort of smaller stack that will go to an early partner. So not a sort of full commercial stack, but one which will be taken by a local commercial partner near Wollongong for them to be able to test that, and then that will pave the way for further sort of manufacturing.

And then this is the second part. In the case of a big cash realization or exit later in the year or let's say, early next year, how should we think about the potential buyback if you're still trading at a wide NAV discount? So if I say the second bit, not quite sure I fully understand. Is there a way to think of buybacks as a proportion of the exit? [indiscernible]

Yes. Great question. This is -- so the sort of the stated policy, which is the one that we are delivering on, is that we use a proportion of our realizations each year to return some cash to shareholders to supplement share price, particularly when the share prices and performance from the capital side hasn't been what we want. The sort of steady state, I guess, is reinvest 80%, return 20%, plus or minus. Last year, it was higher, and we returned much more than that. I think it was near sort of 40%, 50%. What we have said is, if we had a very big exit where there were sort of more capital than we would plan to invest over the next year or 2, then the proportion would be greater in terms of returns of shares and perhaps in those instances, we look at things like tender offers. We might look at just ordinary buybacks to sort of keep the return going regularly. So it's sort of ordinary course 80/20, but obviously, if there's a very significant amount, we don't sort of hold capital, we're trying to be capital efficient. And would return a greater proportion if we didn't need it for the next year or 2.

From [ Julia ], do you think there is scope for further cost cuts beyond what's already been done, or earmarked within the 25% reduction expected by year-end? I guess, if I go on that -- I guess, my answer was there's always. I mean, obviously, in any company, you can choose to structure as you think is appropriate, and you can obviously do a lot less than you already do. But the answer is no, not at the moment. There isn't a plan to do any further. The plans we have, we've put into place, and there isn't a [indiscernible] any more than that at the moment. I'll come back to next one. I might be puzzled that you have not been able to say more about Istesso. Does raise doubt about any uplift in value, albeit modest at June '24? Does Istesso have the readout data but revisiting it because it is disappointing? Do you want to go first or?

Well, we -- I don't want to speculate on the data. I mean the company is under obligation to tell us when it's got the final data. It's well aware of its obligations. And then obviously, I think we'll be working, as any Board should in the best interest of all shareholders to deliver value and we'll update as soon as we can. I do hear it's frustrating. And with hindsight, guiding to half 1 '22. Obviously -- sorry, half 1 '24 wasn't the right thing to do. However, I remain confident that there is and there's still value potential there, and we will update as soon as we get an update from the company on that front. Yes. And the -- by the way, the little fair value change was just a technical change. It was just an unwinding of the discount in the way that we value it. So it's just a very small change to the valuation.

Luke, nice to have you here. I think we're speaking to you later. On Oxford Nanopore, Gordon's anti-takeover share is due to lapse next month. Are you expecting market activity given the undisputed stellar technology advancements? Is a very good company? ONT is valued at a depressed GBP 1.4 billion, which is considerably cheap. Would you agree?

We would definitely agree, and we've been doing a lot of work with Nick and Gordon around how we can sort of better communicate that to the markets. I think the team have done a great job in bringing in Novo Holdings as a strategic investor and the shift away from sort of purely research markets to a greater proportion in clinical applied, biopharma, et cetera, is very encouraging because the -- certainly that life science research tools market, which is weighing on Nanopore's peers, and they really do have a unique technology that can address many of those markets like sort of RNA manufacturing, Q&A as you go and Q&A and QC. QA on the slide. QC as you're going through the manufacturing process. So there's a great talk by the guy at [ Lonza ] at the clinical and biopharma day @nanopore London Calling, you can watch online that talks about sort of revolutionary from 6, 7, 8 different machines and tests to just 1 in a much shorter time frame. So there's a big opportunity there. On the golden share, that's an interesting one. I mean the technical thing that it should allow is index inclusion, which will create greater liquidity. We think that the book of investors who participated in the placing alongside Novo, where there's a high-quality book and it was oversubscribed. So again, that's encouraging. And the share price seems to be showing good traction. They've got a number of really interesting strategic investors as well. So I think the ability for somebody to sort of buy them on the cheap might be quite challenged. We think there's [indiscernible], Oracle, the Larry Ellison family office, now Novo Holdings. So there's some quite big strategics there. But yes, you're right, that might well be catalysts.

And I think for -- and that's the last question. So we haven't done too badly there. 12 minutes past 10 in the absence of any more, I think we're there, Jake.

Great. Thank you very much, everyone.

Perfect. Greg, David, if I may just jump back in there. Thank you very much indeed for your presentation and for being so generous with your time there in addressing all of those questions that came in from investors. And of course, if there are any further questions that do come through, we'll make these available to you immediately after the presentation is ended. Just for you to review to add any additional responses and of course, where it's appropriate to do so. And we'll publish all those responses out on the platform. But Greg, perhaps before really just looking to redirect those on the call to provide you their feedback, which I know is particularly important to yourself and the company. If I could please just ask you for a few closing comments to wrap up with, that would be great.

No problem. Thanks very much again for hosting. Thank you, everyone, for giving your time and for actively engaging with questions. We do try to answer all of them. I'll just leave you with these 3 key takeaways. So good progress, and that portfolio maturity that I talked about coming at the beginning of the year is now starting to be validated through particularly exits, which is good news. Tough exit environment for the last couple of years. The -- those exits particularly have enabled us to maintain that commitment that we made on capital returns, but we still also maintained our financial strength despite that half 1 loss. And I hope the presentation has given you a view of the positive momentum and the value opportunity that is building in the second half. So thank you all for your time and look forward to updating you again soon.

Thank you.

Perfect. Greg, that's great. Thank you once again for updating investors this morning. Could I please ask investors not to close this session as you will now be automatically redirected for the opportunity to provide your feedback in order that the management team can really better understand your views and expectations. This will only take a few moments to complete, but I'm sure it'll be greatly valued by the company. On behalf of the management team of IP Group Plc, we would like to thank you for attending today's presentation. That now concludes today's session. So good morning to you all.