Seraphim Space Investment Trust Plc (SSIT) Earnings Call Transcript & Summary

Good morning, everyone, and welcome to the Seraphim Space Investment Trust Full Year Results Webinar. I will shortly hand over to the Chief Executive, Mark Boggett; Chief Investment Officer, James Bruegger; Chairman, Will Whitehorn; and Chief Operating Officer, Sarah Shackleton, to run through the results presentation. Once the presentation has concluded, we will begin the Q&A. [Operator Instructions] I will now pass you on to the team to begin the presentation.

Good morning, everybody. This is Will Whitehorn, the Chair of Seraphim Space Investment Trust, and this marks the third annual report of Seraphim. And in that time, we have to face that the world has been through unprecedented evil, global inflation, higher interest rates, the geopolitical tensions and war have created a challenging environment for all businesses. And investment trusts have felt those headwinds, too. As you're all too aware, [indiscernible] are still unprecedented level in the investment trust sector. But despite these external pressures, the Seraphim team has remained successful, consistent and persistent in our messaging and strategy. We've continued to execute the vision and adapted to the realities of this volatile landscape, managed cash levels acutely and actively supported the portfolio with their time and where possible, their money as well. Over the past year, our portfolio's net asset value has grown by 7.5%. And this is a solid indicator of resilience, and we believe those promising indicators lie in the key performance metrics of the actual portfolio itself. Revenue growth is strong across this portfolio and a growing number of companies are nearing EBITDA positive status and 1 or 2 are now EBITDA positive. And nearly GBP 1 billion in equity has been invested in our portfolio of companies over the last year. And why is the space market bucking the trends of [indiscernible] performance in other technical sectors? The broader backdrop continues to provide tailwinds for our sector. And of course, that is due to the very issues of defense and climate change, which industry as a whole is facing. Both of these are key drivers for the space sector. Defense budgets are now increasingly being directed to commercial space assets, including some of our own as new constellation of satellites, such as those within SSIT's portfolios were offering new forms of connectivity and intelligence gathering. Furthermore, advancements we are witnessing in space technology accelerating at an astonishing pace. For example, SpaceX's starship that you saw this weekend, which will be capable of taking 100 tonnes and 100 crew into orbit, heralds a new area of space commercialization and full-scale industrialization. This will undoubtedly unlock new avenues for growth opportunities for Seraphim's portfolio along with broader commercialization of space. And that's not to mention the commercial astronauts walking in space a few weeks ago. And that itself allows us to begin building infrastructure in space on a much faster scale. In short, while the challenges of the past years have tested us, we remain optimistic. The fundamentals of our portfolio was strong, and we believe we are well positioned to seize the opportunities that lie ahead. So for the strategically positioned back in companies that use space to drive capability on earth and many portfolio companies have leveraged AI to make their insights attractive to many different sectors in the insurance, real estate, oil and gas and logistics sectors. I will now hand over to Mark Boggett and the team to draw out those insights for the annual results. Thank you.

Thank you, Will. Good morning, everyone. I'm Mark Boggett, CEO at the fund and we've got James Bruegger, CIO; and Sarah Shackleton, our COO, on the call. So before I go into the detail of the report, I just wanted to take a step back and remind folks about the big picture for Seraphim. Seraphim is the most prolific investor in the space market globally. We've got a portfolio of over 130 SpaceTech companies across our public and private portfolios. Seraphim was the first VC to launch on this strategy in 2016, and SSIT represents the first and only listed investment fund focused on space globally. Our partners and backers include some of the world's biggest space corporates, and we continue to receive a massive global deal flow seeing virtually all deals at all stages, which provides us with an incredible information advantage and information asymmetry that we leverage. We triage deal flow between early and late-stage opportunities, earlier stage going to our affiliated accelerator program and venture fund and the later stage B Series Plus going to SSIT. We're a value-add investor, we're a hands-on investor, we joined the Boards of most of the portfolio companies, and this allows us to build conviction. Information asymmetry and conviction is the bedrock of our past and future success. So now let's turn to SSIT and these annual results. Starting with these headlines. So share price is up by 102%, albeit from incredible lows of 27p to the 54.6p per share as at 30th of March. NAV growth per share increased by 3.5% to 96.18p and market capitalization doubled over the period, now at GBP 129.5 million. In relation to net assets, despite strong performance, net assets have risen only 2.6% to GBP 228.1 million, leaving a discount of 43%, compared to an average of 34% in our AIC peer group. Cash reserves were at GBP 27 million, which is down from GBP 35 million a year ago, but as you'll see from my presentation, the portfolio is very well funded for the upcoming year, having raised $900 million during the past 12 months. Portfolio valuation increased by 7.5% to GBP 201.5 million. And shares in issue were reduced by 0.9% and to GBP 237 million after a small buyback at the start of the year. Below, you can see the indices and peer group comparison. Our share price performance and discount to NAV typically aligns with our AIC peer group. But as can be seen in the chart, we have experienced periods of relative outperformance in share price since the start of the year. This is notable amongst trusts like [indiscernible] and Schiehallion. So during this presentation, I'm clearly looking to demonstrate how SSIT is positioned to close this discount gap, especially as sentiment shifts back towards technology, growth in private companies. We have several distinct drivers that sets us apart from more generalistic nature of our AIC peers, and I'm going to highlight some of these today. So taking it straight into the detail, let's start with the attribution analysis table. So the portfolio's value grew by 7.5%, rising from GBP 187.4 million to GBP 201.5 million during the period, and this was driven by a combination of new investment, follow-ons and value appreciation. The portfolio of fair value now stands at 104.7% versus cost and in relation to new investments and follow-on GBP 6.3 million in new investments, GBP 4.7 million in follow-on investments. Together, these more than offset the GBP 7.3 million in proceeds from disposals made during the year. There was a nonrealized fair value increase of GBP 11.8 million with minimal FX gain, and this has offset a GBP 1.4 million realized value loss during the year. Next to turn to the balance sheet as of the 30th of June. This table sets out the NAV bridge. The NAV increased by 2.6% over the year to GBP 228.1 million, that's up from GBP 222 million in June '23. The portfolio fair value, including FX movements increased by GBP 14.1 million over the year. 2.2 million shares were bought back during the year at an aggregate cost of GBP 1 million and the NAV per share increased from 92.9p to 96.18p over the year. Cash stood at GBP 27 million liquid resources, that's 11.8% of NAV at the 30th of June, and this compares to GBP 35 million at the start of the year. Turning next to the investments. Ten transactions, GBP 11 million invested. The most significant investment during the period was a follow-on investment in ALL.SPACE, which is a U.K.-based antenna manufacturer. In July 2023, Seraphim participated in all spaces C Series round alongside AE Industrial and several other new and existing investors. The fund is supporting the completion of their first production model and the expansion of their sales efforts. And during the period, this company also secured $10 million in nondilutive funding from a U.S. defense customer. A key point to note is leadership change. Firstly, Chris Emerson was appointed as Chairman. He's a seasoned aerospace executive, former CEO of Airbus U.S. Defense & Space. Additionally, Paul McCarter became the new COO and was later promoted to CEO outside the period in September. ALL.SPACE is a pivotal Seraphim portfolio, ranking third by [indiscernible]. And this company is at a critical juncture as it begins to deliver its innovative antenna systems to its customers. Their electronic antenna designed for moving platforms like cars and boats and planes and trains and military vehicles is unique and that it can simultaneously connect to multiple different satellites from different providers in different orbits. The company has a sizable backlog from both government and commercial clients that has now started to fulfill. So other key investments include Skylo, which I'm going to go into some detail on our next slide. In April '24, Seraphim invested in satellite views A Series extension round alongside existing investors. This funding followed the failure of the first proof-of-concept satellite after 6 months of operations. So during this time, the company successfully generated significant interest, proved its unique inventory from a broad range of customers. And this new funding round alongside a full payment of the insurance on the first satellite has enabled the company to place orders for 2 new replacement satellites, which will launch next year. In May '24, Seraphim invested in Xona's $19 million Series A round. This will support the launch of the first production satellite and the execution of various government contracts related to this private GPS network. Also in May, Seraphim made a small investment, a follow-on investment in Voyager, our space station company. In relation to the early-stage investments listed there, I'll return to focus on these later in my presentation. So next, I'm going to profile the new investment made during the period, Skylo. Through enabling existing geo and future Leo satellite operators, to seamlessly connect with any smartphone and the IoT endpoint globally, Skylo has a cutting-edge software platform that bridges the gap between satellite communications and the terrestrial telecom networks. And this has the potential to unlock the direct-to device connectivity from space. Seraphim invested $2 million of a $37 million round alongside lead investor Intel Capital and investing alongside innovation endeavors, BMW, iVentures, Samsung Catalyst and Next 24. The problem that they're addressing is the connectivity gaps in the mobile networks. Outside of terrestrial mobile networks, there are vast areas where connectivity is either unavailable or too costly to cover with cell towers. However, in today's interconnected world, consumers and business demand always on solutions, whether or not they're in remote regions or in critical situations. And this is the problem that Skylo resolves by using its virtual radio network access to integrate non-terrestrial networks directly into the terrestrial mobile ecosystem. This means any mobile or any IoT device with the latest industry standard chipsets to automatically roam onto the Skylo network when outside of terrestrial covering. And this offers seamless connectivity. So this company is addressing a multibillion dollar market, focusing initially on messages and IoT services, the potential for growth is enormous with a future expansion into voice and data service poised to increase this market opportunity by up to tenfold. The latest development since investment include the appointment of Tami Erwin, who is the former CEO of Verizon business. They joined the Skylo Board to bring their expensive leadership and experience in telco and enterprise services. They also entered into an exclusive partnership with Google in August '24 where Google selected Skylo as its exclusive partner to provide satellite connectivity for its flagship Google Pixel 9 and this enables emergency SOS services through satellite. They also partnered with Verizon, which was announced in August. Verizon is the largest mobile network operator in the U.S. They partnered with the Skylo also to offer satellite-based emergency services starting this year, but also next year, moving that to satellite powered text messaging. So this is a huge opportunity, and this business has started to grow very rapidly immediately after we invested. During the year, the company also made 2 divestments. In April '24, the company announced the sale of 9 early-stage portfolio companies to a new venture fund that's led by Seraphim for a total consideration of GBP 3.8 million. This was settled through the issuance of new LP interest for the company in the venture fund. And this strategic transaction had the dual benefit of enabling the company to concentrate its resources on more mature assets, whilst also building a larger pipeline for future growth investment rounds via the venture funds wider portfolio of early-stage SpaceTech companies. It's also important to note that this was a one-off, SSIT will make no further commitments to the venture fund. The other divestment during the period with Astroscale, one of the top 10 holdings which went public on the Tokyo Stock Exchange on the June 5th. The IPO was priced at a level to achieve success, albeit from a Seraphim perspective, this was 40% lower than the fair value that we held that company at. The IPO was oversubscribed at subscription price of JPY 850 per share and backed by both institutional and retail investors. I'm pleased to say that the share price surged on IPO and has consistently traded above the IPO price. So we determined that we would sell down part of our holding in order to recycle the liquidity. So following the IPO within the reported period that we're talking about, SSIT sold 530,000 shares in the company equivalent to 40% of its holding for GBP 3.5 million. So this was equivalent to 94% of the original sterling cost of the investment that those shares were sold. And then outside of the period, SSIT completed a further sell-down of its holding in the company selling 47% of its original investment for consideration of GBP 3.5 million. Now this next page is a range of portfolio headlines, and there's quite a bit to unpack here. Firstly, starting with the private portfolio, which accounts for 94.4% of fair value and 83.3% of NAV, which showed a 7.5% rise in the year for fair value, now standing at 126.8% versus cost. Excluding Astroscale, which I just noted, went public during the year, the private portfolio's fair value increased by 10% over the year. Several private companies continue to meet critical milestones, driving significant growth. The top 10 holdings representing 81.8% of the overall portfolio fair value and 72.2% of NAV saw an average year-on-year revenue increase of 71% in sterling and 224% on a fair value weighted basis. Next, the listed portfolio standing at just 27% of costs. This remains impacted by the public companies that went through SPAC listings. They faced steep declines in share prices in 2022 and 2023. Despite these challenges, there was positive momentum during the year with the listed holdings, excluding Astroscale, reaching a GBP 5.7 million fair value. So that means that they were up by 56.3% from June 30. The listed portfolio, including Astroscale, which is 20% of the portfolio by the number of companies accounted for 5% of NAV and 5.6% of portfolio fair value at the end of the year. The fair value compared to cost of AST SpaceMobile was 99%. So this company has returned to the cost value. Spire Global 25% and Arqit down at only 3% with further losses of GBP 1.5 million in fair value during the year. Arqit sadly continues to face share price declines, but a new CEO was appointed after the period end that we hope is going to have a big impact on this business. In relation to cash runway, approximately 77% of the portfolio by fair value has a robust cash runway. Of this, 60% is fully funded according to the latest projections from the company's management teams. 17% of the portfolio is funded for 12 months or more from June 30, and that includes races that were completed outside of the end of the period. The management teams of 6 companies, 5 of which are in the top 10 holdings project that they are now fully funded. However, 5 companies representing 16% of the portfolio fair value, have less than 12 months of cash funded runway. These companies are taking various measures such as reducing cash burn, focusing on government development and grants and cutting costs to extend their runways. Many of these companies are actively fundraising and some have even closed new funding rounds after the period of end. It's worth noting, though, that it's not uncommon for venture-backed companies to have less than 12 months of cash runway as they typically raise funds on an 18-month cycle. So far, our portfolio companies have successfully raised the necessary funding to extend their runways when required. Excluding the fully funded companies, the remaining private portfolio has a fair value weighted average cash runway of 14 months from June 30. Whilst this is down from the 20-month average in the prior year end, it's important to highlight that only 2% of the portfolio was fully funded then compared to 60% as on June 30. And again, these are based on company's own management projections. So the next few slides are going to highlight some of these key developments that have contributed to these stats. So ICEYE, our largest company continues to thrive. This business has exceeded $100 million of revenues, reached EBITDA profitability during 2023 as previously reported. The company continues to perform well, and they've recently secured several significant new contracts with sovereign government customers. ICEYE also completed a $93 million oversubscribed Series E round structured as an unpriced convertible, bringing the total equity raised up to $403 million. D-Orbit has had a fantastic year, closing EUR 150 million round of which EUR 100 million was within the reported period. This is worth noting that this is one of the largest European SpaceTech company rounds ever. It was also ranked in the Top 10 Largest Global Deals of the year. So this round was led by strategic investor, Marubeni and was priced at a solid premium relative to our book value. These funds are being allocated towards U.S. expansion and new capability and notably, just announced in the last 24 hours, D-Orbit has won a landmark EUR 119 million deal with the European Space Agency for its inaugural satellite services mission. HawkEye 360, the signals intelligence company secured an additional GBP 68 million in equity during the year in a round that was led by BlackRock, bringing the total amount of equity raised to $412 million. The company launched clusters 8 and 9 in April and cluster 10 more recently in August, and each of these clusters has 3 satellites. This expansion has significantly enhanced service levels, has reduced latency and expanded the company's addressable market, in particular, amongst U.S. DoD and global defense organizations. Finally, on this slide, LeoLabs, very much remains the market leader in the space domain awareness market, which is a rapidly growing global market. LeoLabs accounts approximately 75% of all satellites in low earth orbit as customers. This year, the company raised $29 million, bringing the total equity funding up to $111 million, which will accelerate the deployment of its ground-based radars, improving visibility and accuracy. Additionally, during the year, a new CEO with extensive experience in securing large U.S. DoD contracts joined the team, sharpening the company's focus on opportunities in the U.S. and with foreign governments. So on this slide, we've already spoken about Xona, we've spoken about Skylo and SatVu. So I'll focus on AST, which has been a huge success story during the course of the last few quarters. AST, which is listed on NASDAQ has seen a very strong recovery in its share price over the period. Indeed, its share price increased by nearly 150% during the period and increased by more than another 100% post the period end. Investors' confidence in the business was boosted by a slew of positive announcements including a $200 million strategic investment by Google and AT&T and then commercial agreements with both AT&T and Verizon to provide the company's first space-based broadband network direct to cell phones of their subscribers. And more recently, the launch of the first batch of its 5 industrial cell towers in space. I'm going to skip over this slide in the interest of time as we've already spoken about Astroscale in some level of detail. The other 3 growth portfolio companies have each announced contracts with leading customers during the year. So you'll be familiar with this slide, which provides a snapshot of the portfolio and drawing out some of the insights on the donuts on the left and into the ecosystem chart on the top right, more than half of the portfolio is invested in platform, which means satellite constellations. These are the businesses developing the digital platform in the sky, providing capability of data and insights from large fleets of low-cost satellites. The biggest customers today are typically defense, and they're thriving due to the challenges of geopolitical situation globally and the increase in the size of the budgets. In relation to geography, it's pretty evenly balanced between the U.S., Europe and U.K. And in relation to stage, the bottom left chart, circa 75% of the value is in companies at the later-stage growth series of C Series and beyond. So turning attention to the NAV chart on the right. The top 10 companies dominate NAV accounting for 74% with cash at 12%. ICEYE, the largest holding with a portfolio NAV of around 20% was one portfolio company, we've doubled down based on our high levels of conviction. That conviction is continuing to pay off as this business is performing exceptionally well on all measures. So this chart shows the changes in the fair value of the top holdings individually alongside the rest of the portfolio collectively. So over the year, there were significant increases in the fair values of D-Orbit, so the fair value versus cost of 285%, and this was driven by a funding round, which closed earlier in the year, which I've outlined earlier. ICEYE whose fair value versus cost is 121% were driven by higher premium being applied because of the price of the last round and the previous year and due to continued strong performance. So these gains more than offset value reductions experienced by other private portfolio companies, fair value reductions in the private portfolio included SatVu where the fair value versus cost is now at 160%. And this is due to the setback of its failed satellite and then Altitude Angel fair value versus cost at 98% due to commercial underperformance. So this slide, which is my penultimate slide focuses on 5 notable developments post the period end. In ALL.SPACE, SSIT invested a further GBP 5 million alongside other existing investors in a new funding round for the company that will now be opened up to new investors. We talked about AST SpaceMobile that's launched its 5 commercial cell towers in space, saw its share price increase to $24 as at October 11. So that's the equivalent to a further GBP 4.7 million post period increase in fair value. D-Orbit announced that it reached second close and final close on its Series C funding, bringing the total round size to EUR 150 million and as mentioned earlier, in the last 24 hours, it's also announced EUR 109 million contract with ESA. Astroscale, where SSIT completed a sell-down of its holding in the company outside of the period, a further 47% of the original investment was sold for GBP 3.5 million. And then finally, on a negative note, Spire announced that it would delay the filing of its Q2 2024 financial report due to an ongoing review of certain elements of its accounting practices. This company has until mid-February 2025 to comply with the SEC filing requirements. So this is now the final slide before we open for Q&A. So in relation to the Q4 review, despite a challenged macroeconomic backdrop last year, marked by high inflation, rising interest rates that led to a risk-off approach by markets, SpaceTech has defined this trend. Investment activity in the quarter to September 30, growth and outperformance has continued. Our portfolio has performed well with the top 10 companies seeing an average revenue growth of 72% and with the portfolio raising nearly $1 billion in equity. These companies are very well capitalized. And as stewards of cash, we believe that we've balanced the needs of the portfolio against adding selective new names such as Skylo. The outlook for the year ahead is that we're optimistic about the prospects of the improving macroeconomic conditions. Inflation appears to be under control and interest rate seems to have peaked. This combined with strong secular tailwinds of defense and climate gives us confidence as we move into the new year. Our key assets are all performing well, demonstrating growth and financial strength. And the next milestones for the portfolio is achieving EBITDA profitability which is anticipated for multiple key assets over the next 12 to 18 months. We'll continue to closely support our portfolio of growth stage companies as they approach this critical profitability milestone and we believe that achieving consistent EBITDA profitability could be a springboard for potential IPOs or acquisitions of interest thereafter. So I hope you enjoyed my presentation. I'm going to now open up the floor for questions, which will be fielded by my partners, CIO, James Bruegger; and COO, Sarah Shackleton.

[Operator Instructions] So we have a first one here from Shiva.

Maybe just to be clear, does anyone beyond ICEYE have positive EBITDA? And if not, do you have any further granularity beyond the sort of 12 to 18 months idea on the rest. Is there any particular one that's expected within a few months, et cetera? Because I think earlier in the year, you were hoping for 1 or 2 more this year. Then second, if we could get your take in a bit more depth, sort of how serious is this global issue because, obviously, the share price returns there have been quite promising. And then maybe as an [aside], is there any further interest from your perspective in conducting buybacks as for the Board, perhaps?

I'll take that one. It's okay. All right. So first question was around EBITDA and profitability. So point one, I'm afraid we're not in a position to disclose the specifics of any of the other companies. These are privately held companies, and we need to respect their confidentiality. What we can talk about in general terms is what's the trajectory towards EBITDA profitability. There are a number of more mature assets, which is correlated with our top 10 holdings that are now close to the point of EBITDA profitability. We will await to see where those companies end up at the end of 2024 and as to whether they become EBITDA profitable or not. But as we look ahead for 2025, there is a meaningful proportion as indicated. So 6 of the portfolio, 5 of the top 10, based on the latest projections from management are indicating that they expect to reach the point of EBITDA profitability during the course of 2025. And as concluded by Mark, we see the transition of some of our key growth holdings becoming EBITDA profitable as a really important milestone that we do hope once those businesses have not just passed that milestone, but if evidence consistent EBITDA profitability, we would hope that is an important pillar of growth for the businesses as they move towards potential exits either through public market offerings or M&A. In terms of the Spire issue, so point number one, we're not on the Boards of Spire and therefore have no particular insights into the issue beyond those that everyone else is aware of. So we believe the company is working through the issues. I guess the only observation that we can make is that the accounting practices of very complex multiyear agreements has been an issue more broadly across the sector. So we certainly hope that Spire is going to resolve these issues and continue positively. And in terms of the buybacks, I guess, I'll perhaps give Will the opportunity to comment on that.

On the subject of buybacks, the Board obviously reviewed the buyback that we did in the last year, and it was successful in helping the share price to improve. But as far as we can see at the moment, we have not taken a decision to continue the buyback, we have not taken a decision not to do another buyback. We are going to carry on reviewing that and reviewing it in light of basically how the portfolio also performs over the next 18 months.

Next up, we have Charles Murphy.

Can you talk about the ALL.SPACE funding round, what's the use of proceeds targeting? And you seem to indicate that the actual rounds ongoing, is that correct?

Yes, certainly, I'll take that one. So as Mark described, the company has a significant backlog of orders from both defense customers and governments and commercial satellite operators. The business is now fulfilling that backlog. So that means shipping terminals to customers. And the latest round of funding that we and other investors have made is really to give the business the resources that it needs as it now looks to ramp up production in order to service the significant demand. Just to provide some more context about where that demand is coming from, the unique capability that ALL.SPACE has is this ability to simultaneously connect to multiple satellites. Why is that important? It's specifically extremely important to Departments of Defense, who increasingly now see their own space assets, so these are the satellites, their own satellites they use for communication, potentially being vulnerable to interference from other state actors and likewise, if you look at some of the things that have been happening in Ukraine, for example, the advents of electronic warfare and interfering with the ability of ground terminals to be able to connect to satellites. So the only mitigant to that is to have an ability through a single antenna to connect to multiple different satellites from different operators at the same time. That's enabling what's referred to as resilience and this is an absolute key strategic priority for Departments of Defense around the world and ALL.SPACE's technology is unique in being able to deliver that resilience across different frequencies, and combining different satcom operators, both from the commercial domain with those operated by governments themselves. So we believe that this business is very well positioned and look forward to significant growth under the new leadership of Paul McCarter in the year ahead.

Follow-up question. In terms of the funding rounds that have been happening in the last 12 months or so, are these to accelerate growth or just to allow them to complete initial business plans? Can you give sort of -- just add a bit of color around that?

Short answer, Charles, is it's a mixture of both. But if you look at our more mature top 10 holdings, multiple of those companies have announced very significant rounds in the sort of GBP 50 million to GBP 100 million plus range. So that includes the likes of D-Orbit, ICEYE and HawkEye as 3 examples. And in each of those examples, these funding rounds are very much to fund growth. These are businesses that are maturing seeing revenues grow significantly to reasonable scale and putting those businesses in line of sight of achieving EBITDA profitability we hope within the relative near term. So it's really more orientated towards growth, albeit for some of our earlier-stage companies such as Xona, funding rounds have been provided in order for them to go through key milestones in the case of Xona, that milestone is launching their first commercial grade GPS satellite which will be the first private company to develop this capability, which is an area that we think offers very exciting growth potential in years ahead.

Apologies. Just a quick follow-up on ALL.SPACE. So was this funding round complete as the company continued to speak to investors?

Sorry, which funding round?

The ALL.SPACE one, the August '24 one.

The most recent round of funding from insiders has been completed, but the business continues to receive interest from new investors, given the prospects that I've outlined.

We now have a question from Will.

I've got 2 questions, please. The first is what was behind the valuation of Xona Space Systems falling about 25% over the last quarter, as I think it was written up over 100% in the quarter before that. And the second question was, I'm a bit surprised to see that most of the Astroscale holding has already been sold below cost too, given I think you said at the time of the IPO, the issue price was aggressive and you expected the price to rise. And even though it has risen, it still remained at a level, which implies a valuation below where you last held it at?

Yes. So first one, in terms of the changes in fair value over the course of the year of Xona, we announced earlier in the year this is going back to the sort of second half of 2023, that we've made a partial provision against our investment in Xona at that time as the company had limited cash runway, and we're still working on the fund raise, which clearly ultimately, it was successful in raising. So on the back of successfully raising the funds, that provision was unwound. And then during the last quarter, the full effect of the new funding round has been represented in the enterprise value of the business and then applied to the waterfall. So appreciate there's been various changes, but the fair value is now fully reflective of the ramps that has recently closed. In terms of Astroscale, so we have elected to take the opportunity to recycle some cash from that investment in order to boost the cash reserves of the funds. We've done that on the basis of as we do with any potential opportunity of liquidity, weighing up what we believe the future potential return on the capital is and from where the money is currently invested, in this case, Astroscale versus other potential new opportunities that we might look to invest into. We've acknowledged that the IPO pricing of Astroscale was aggressive, but has improved significantly. And as we've reported, the sell-down that we made during the period was very close to the original cost of the investment. So sell down at 94% on a sterling basis relative to relative to cost. So I hope that answers the question.

Yes, that's good on the Astroscale. Just to follow up on to the Xona, am I right in saying it has -- despite being written back up, the valuation has fallen about 25% between March and June, just the reason behind that subsequent fall after being written up?

The rounds has now been fully reflected. So there was the unwinding of the provision and then reflects of the pricing of the rounds. There were 2...

Okay. And so it was essentially a down round, I guess?

It was -- the round was done at a premium relative to the provision, but at a lower valuation relative to the last price round.

That now marks the end of the question. So I'm now going to pass back to Mark and the team to -- for any final closing remarks.

Well, thank you to everyone for tuning in today to listen to the year-end results. I think we've made it clear that our portfolio companies are now firmly on the pathway to becoming EBITDA positive. Six companies that we anticipate are going to achieve that within the funding that they've already raised based on management's own projections, 5 of those in the top 10. So hopefully, there's a recognition here that our portfolio is maturing. And we believe that as the economic environment improves, that this portfolio is going to be well geared to both the recovery and sentiment and a more general recovery in the market opportunity. So thank you for listening today, and we always stand by to answer any further questions if you wanted to contact us directly.

Thank you very much, Mark. And that concludes the presentation. Just to say that I have joined you for the first time from Starlink, having finally got rid of my BT in Sussex. It works extremely well. Thank you very much.