Ip Group (LSE:IPO) — Annual General Meeting 2024

0:00 Good morning, ladies and gentlemen, and welcome to the IP Group Annual General Meeting. Throughout this recorded meeting, attendees online will be in listen only mode. Questions are encouraged. They can be submitted at any time using the Q and A tab situated on the right hand corner of your screen. Please simply type in your questions at any time and press send. The company's AGM will commence shortly, and we will unmute the venue's microphones at the appropriate time. Thank you.

0:28 Ladies and gentlemen, it's now 11:00. Therefore, I declare the twenty twenty four annual general meeting of IP GROUP open. There's been a fire alarm test this morning, so if it goes off, it's real. So please follow the instructions. And if if you have a mobile phone, if you could put it on on on silent, please, so that we're not not disturbed. For those of you who don't know me, I'm Douglas Flynn, the non executive chair of IP GROUP, and it's my pleasure to welcome you here today. With me are, on my left, Greg Smith, the chief executive, David Baines, the chief financial and operating officer, and our five, non exec other non executive directors are in the front row. I'll get them to stand up. So you know who they are.

1:14 Doctor Caroline Brown, really really Heejay Chai is the chair of our remuneration committee. Amar Hines, who's our senior independent director, Elaine Sullivan, and Anita. And finally, Angela Leach, the company's secretary. Anything tricky, she's the person to go to. We have a quorum. Therefore, the the meeting is is open. The format of the meeting is I'm gonna say a few words and then I'll hand over to Greg. There'll be an opportunity after that to ask questions and then we'll do the formal business of the meeting. At this stage, wanna do something that's very important, is recognize and thank our nonexecutive colleague, doctor Elaine Sullivan, who having completed her third term of three years, extraordinarily nine years, seems like yesterday is not standing for reelection and therefore will step down from the board of directors effective at the close of this AGM.

2:10 On behalf of all my colleagues, indeed everyone at IP GROUP and actually on behalf of shareholders, I wanna thank you, Elaine, for the enormous contribution that you've made and the real expertise that you've brought to the board over time. We're gonna miss you. Thank you. As noted in my statement in the annual report and account, the phrase may you live an interesting time seem opposite both in 1923 given the prevailing geopolitical economic and market backdrop and clearly that sentiment and the backdrop has continued into the current year. In such times, balance sheet strength is important And by virtue of the long term debt that we raised advantageously in 2022, we ended last year with two twenty seven million of gross cash, having invested 73,000,000 into the portfolio. That was GBP 73,000,000 out of a total that the portfolio raised of GBP $667,000,000.

3:11 So we were about 10%. And cash from disposals was GBP 38,600,000, and we ended the year with only 13% of our companies at the end of the year needing or expecting to have to raise more funding in this current year. 2023 was not a good year for venture investing as risk appetite was muted. And as a consequence, we had a loss in the year of 174,400,000, which although lower than the loss in the previous year was clearly extremely disappointing. Our net asset value stood at just under GBP 1,200,000,000, which compares with just under GBP 1,400,000,000 in the prior year. And our share price closed the year at close to 50% of our net asset value, evidencing what we believe is an unjustified discount that the board remains committed to do everything it can to narrow.

4:02 That was one reason why we took the decision to pause paying a dividend and return money to shareholders through buyback of shares, a policy that we intend to continue to follow as long as the shares trade at a substantial discount. Today, within the £20,000,000 program of buyback that we announced last December, we bought approximately 12,000,000 shares at an average price of around that 50 p. Happily, there are now some encouraging signs that sentiment to our sectors is improving, particularly given announced public policy support for science and innovation reflecting UK's strengths in these areas. It's good to see if the major political parties both embrace that statement. And as you know IP GROUP exists to develop world changing science and technology businesses and the group's purpose of accelerating the impact of science for a better future remains highly relevant.

4:57 We therefore been publicly and privately highly supportive of the initiatives announced by the chancellor in the spring budget and in the autumn statement and in the matching house reforms which were designed to increase investment through UK retirement savings schemes and unlisted equities. The UK has an enviable, indeed leading position in academic led innovation and the various reforms have highlighted the opportunities available both for start up and scale up investment support for such businesses and thereby increase returns to retirees over the investment horizon with one it's the one year kind of anniversary of the Mansion Hatch reforms and we're encouraged to believe that we may see progress in those who signed up to them beginning to take action.

5:47 Having been active in The UK for over twenty years, IP GROUP has a recognized pedigree in this area and an acknowledged expertise in investing in science innovation. And therefore, we believe that once the various reforms are implemented, we stand to gain from the resulting investment flows and can be and hope to be a key player in helping The UK deliver its science and technology agenda. Our objectives remain to increase the investment in science and technology and through that investment to deliver returns for shareholders as well as making an impact to those who are benefited by the science and technology that we support.

6:23 So we continue to concentrate our effort and funding on working with a priority portfolio companies given the many critical events and milestones that we expect to see over the coming year, which have potential to deliver strong returns. Because we, developed that concentration, that resulted last year in our scaling back in some of our international activities to conserve cash and to reduce costs. As Greg will note in his remark, the environment for our business has remained challenging since the year end and that's focused attention on ensuring that the group's cost base is appropriate for delivering our strategy in this environment. And mindful of this challenging environment and the somewhat static nature of the share price, the board recently agreed to waive the pay rises for this year that were set out in the director's remuneration report and our reporting and future stock exchange disclosures will reflect this revision.

7:22 We expect to see portfolio realization opportunities during the rest of this year and remain committed to return a good proportion of such realizations after taking into account the funding needs of the portfolio. And this will build on the $80,000,000 of cash that the of the cash returns the group has delivered to shareholders via dividend and share back since 2021. So let me, at this point, hand over to Greg. Greg? Thank you. Thank you, Douglas, and thanks to all our shareholders in the room and to the shareholders online. We very much appreciate your engagement and support over this sort of reasonably challenging period. I guess I'd like to start, though, by saying that as The UK's most active investor in university spinouts, we see a huge opportunity ahead for the group to benefit from increasing public interest and policy support for science and innovation.

8:19 We benefit from a number of very long term tailwinds as a business. That said, as Douglas noted earlier, we have seen a tricky overall market environment for private growth companies and early stage investing in general has remained challenging during 2023 and indeed into 2024. I included some of the statistics in my statement in the annual report, but there are things like a global decline in VC investment of around 40% during 2023 compared to the prior year, which sort of compares ish to about a 34% reduction in the total capital raised by our portfolio. So a bit better than a tough market as far as your portfolio is concerned.

9:06 Douglas mentioned earlier, the financial return, it was disappointing. The negative return of 13% on NAV per share is definitely below our longer term aspirations, and we're working very hard to reverse that. So as a result, our year end NAV per share, which is the assets, which is predominantly portfolio and cash, less our long term debt divided by the number of shares in issue, which is about £1,000,000,000 is about 115p per share at December 31. Despite that, we did make positive progress during the year. So as Douglas mentioned, we closed the year in a well funded position with GBP $227,000,000 of gross cash. And as Douglas already mentioned, the portfolio raised about GBP 700,000,000 in total and so therefore started the year in a relatively well funded position.

9:57 In terms of how we've been shifting the strategy of the business, it's definitely been one of increased focus. We focus both capital and management resource into those areas that we think offer the most compelling forward looking financial returns. And that has definitely meant deprioritizing some areas. You can't prioritize things without deprioritizing others, and that included deprioritizing our investment in our U. S. Business and also seizing our plans for a fund in China. However, that concentration has meant at the year end, about 80% of our portfolio value is in about 20 companies and about 90% is in 40 companies. And around half of the investment that we have made into the portfolio over the last two years has been into just eight priority companies.

10:48 And we will see the results of those investments play out over the course of the next year or two. So I remain confident that that increased level of focus, combined with a really substantial number of portfolio inflection points over the coming eighteen months, can drive really compelling portfolio returns. And as Douglas said, that in return will lead on to shareholder returns. Just to quickly recap a few of those. So in Life Sciences, in my statement, I noted that there are 10 companies that are in clinical trial at the moment. That's the most we've had as a business, And it offers a really interesting mix of risk and reward. And they will be reading out over the next two years, so between now and the end of twenty twenty five.

11:34 One of those, one big significant one coming up is ESTESO. ESTESO has successfully completed all the recruitment of its Phase 2b clinical trial for Loramestat, that's the name of the new compound that they are developing, in rheumatoid arthritis. As a reminder, millions of people in The UK and globally suffer the debilitating effects of rheumatoid arthritis. It's estimated to be about one percent of population, so an incredible challenge. And as a result, unsurprisingly, it's also a multibillion dollar market. So it's both highly impactful, but also highly financially lucrative. ESTESO expects to receive that financial, sorry, that that that clinical data by the end of June.

12:20 But as in all clinical trials, the management team of ESTASO will have to ensure the integrity of that data and work through the data before they are in a position to release it. And as we've said previously, we don't know the outcome of that trial. We don't have the data yet. But provided the data is not negative, then very much the plan will be for ESTESO to explore ways of partnering and bringing commercial value to that opportunity. As well as ESTESO, since the year end, you will have seen, hopefully, that we've had some good progress in some of the other clinical stage companies. So for example, Pulmicide. Pulmicide is currently running a Phase III study of a novel antifungal drug for something called invasive pulmonary aspergillosis.

13:07 If you know what that means, then you're in a select group. But effectively, it's a fungal infection of the lung, which particularly impacts people who have had lung transplants or have a suppressed immune system. So that Phase three is running. During the past couple of months, the company announced some positive data. They also ran a Phase two safety study alongside that Phase three. That read out well during the period, But it also demonstrated that there was some prophylactic effect of the drug. So if that comes through in the Phase three in full, then that could be a really interesting commercial proposition. So another one to watch. On the Deep Tech side, our most valuable Deep Tech holding feature space continued to impress during the year, posting double digit returns. That's a fraud software business applying machine learning to card and payments fraud. And that's that's a really sort of hot prospect within the portfolio.

14:05 And we've also seen good progress at our cyber company, Garrison, which, again, is in a in a really interesting space. So we hope that there will be further milestones to come on those businesses this year. And I said at the full year that one of our big focus areas is around sort of identifying, backing, and growing businesses that either contribute to or benefit from the rise in artificial intelligence. And so we have we have got a huge amount of of opportunity in that space. I'm definitely not the only CEO of a business to tell you that there is a huge opportunity in that space. But I hope

14:39 from following IP GROUP over the years, you will have noticed that this is an area that we have got great pedigree in investing in, and companies like FeatureSpace are a great example of that pedigree. We're, of course, also using those generative AI tools within our business, and we think that, that can, over time, positively impact everything from sourcing to due diligence and market analysis. And we've developed things like proprietary IP landscaping tools that enable us to assess new opportunities. So the final area is Cleantech. And Cleantech, again, at the year end, we had the first close of funding round for one of our most exciting Cleantech businesses. That's a business called HySata, an Australian business that came from our partnerships in Australia.

15:29 And only last month, we announced that they had completed actually an oversubscribed $111,000,000 financing round. We think it's the largest series b in cleantech that's that's ever happened, in Australia. And it was great to see such strong support from, BP Ventures and Temple Water who led that funding round, alongside us, of course, and we we funded it through both our cleantech platform, KeCo, but also through our scale up platform, which we manage for Hostplus, one of the top 10 superannuation funds in Australia. So that was very good, and we invested and we didn't hold our corner, but but we invested a significant amount into that round, about $15,000,000 from our balance sheet and about $18,000,000 from our managed funds. So we continue to be able to support these really leading businesses to success. So there's some good evidence, I think, of momentum in the portfolio. And of course,

16:21 that means that we have some very clear priorities for 2024, for the year ahead. Very simple. I like rules of three. The first priority is delivering cash exits and portfolio returns. We aim to I suppose, positive returns, but crucially, I think, on the level of cash realizations we've had over the last couple of years, demonstrating that we can both deliver cash from the portfolio, verify the NAV and will add a degree of confidence to our shareholders. The second is around accessing additional scale up capital. That will include through PartWalk, our leading EIS platform with a market leader here in The UK with about 500,000,000 of EIS tax advantaged capital under management and also hopefully through our Hostplus relationship in Australia. The superannuation funds very aligned around using

17:16 long term capital to back long term productive assets. So that's great. And then thirdly, as Douglas has said, those two factors will hopefully contribute to narrowing the discount to NAV, which is something which is very important to us and a lot of your executives' remuneration is focused around long term pay in the form of shares, and so we couldn't be more aligned with shareholders in that respect. So in summary, as The UK's most active investor in university spin outs, we continue to see that sort of huge policy support for investing in science and technology. Our investment thesis that we've been following for twenty years is very aligned with this sort of you'd have heard the term the science superpower agenda, we think we will be well positioned to both contribute to and benefit from that. And while the current macro environment remains challenging, we do see continued interest in our portfolio and remain confident that investor appetite for growth companies will return.

18:24 And on that slightly positive note, I will return to Douglas for the main part of the AGM. Greg, thanks very much. Before we move on to the formal business of voting on the AGM resolutions, I'd like to invite shareholders both in the room and and online to ask any questions of of directors, non execs and management that they may have on matters relevant to the business of the meeting. We've already received some questions in advance from shareholders through investment company and we'll seek to answer those as part of the the the conversation. By dealing with the questions at the outset of the meeting, hopefully, can give shareholders sufficient time to ask all the questions that that you have. For those in the room, before you ask your question, if you're able to give your name and state whether you're a shareholder, a proxy, or a corporate representative, and if either of the latter, if you could indicate who you are representing.

19:18 For those that are submitting questions online, again, if you could, do the same, that would be, that would be helpful. So are there any questions? Put your hand up and a microphone will be whisked to you. I'm in the moment, but I've got certainly some coming in online. So I've certainly got some when you want them. On. Shall I kick off? Well, people can prepare in the room. So first one, actually, this was pre submitted, so they haven't been able to give their their name or details. However, why have you not sold down post IPO at Oxford Nanopore and others? It clearly makes your NAV more volatile and less trusted. I'll give that to you, Greg. Yeah, thank you. Well, we obviously look at the position that we hold in Oxford Nanopore from the place that we are at any point in time. So all the time, we are assessing the relative risk reward of that holding.

20:14 We were the one of the original founders in Oxford Nanopore and currently are the single largest shareholder in that business. We have increased engagement quite substantially with the management team over the course of the last sort of three to six months, and partly, that's to ensure that we're as close to the business and its fundamentals as we can be, but also secondarily to play the role of an active major shareholder in that business in order to ensure that its strategy is aligned with what we think strategy should be. And I would say the management team has been very engaged in that process. I mean the important thing about also Nanopore is that actually fundamentally, the business is broadly doing commercially what it said it would do at the point of

20:59 IPO. It suffered definitely alongside all of its Life Science Research tools peers. I mean if you look at the performance of Oxonanapol share price since the time of IPO, it's incredibly correlated to the four other U. S. Peers. So that's it's not an excuse, but it's useful context. We took the decision to take 20% of our holding off of the table at the point of IPO. So we realized about GBP 80,000,000 at that time. So our total realizations from Oxford Nanopore over history now more than exceed the cost that we put into that position. We think in shareholders' best interest at the moment is to actively work with the management team in order to build the share price.

21:49 But the long term plan remains not to hold significant holdings in public companies. But obviously, we try to have that position managed out of the portfolio from a position of strength rather than at a point where we think it's towards the lowest level of multiple and valuation. Thanks, Greg. The second one: As the market clearly disbelieves the net asset value claimed by the management, why has the management not demonstrated value by selling or part selling more of the portfolio? Failing to do this has exacerbated the level of distrust as can be seen with the share price.

22:28 I could pivot on that if you like. Yeah. I mean, I'm sure we all have comments and that should pass down the line. Yeah. From my side, we always make the point that in the valuation process we are genuinely very prudent. We try to be conservative. It is unfortunate when the market seems to then discount those conservative numbers make more conservative. It certainly has the backing of our auditors. Our audit partner actually apologizes isn't here today because he's got held up on the way over, sends his apologies, but they have always for the last three or four years given the public rating of mildly cautious. So if give us a audit opinion, they say mildly cautious. So we certainly have the backing of that independent auditors to our valuations. The second point to quickly make is when we have made exits they have tended to be at a valuation above the value we carried in the books at. Should we go back a couple of years, over two years in a row where we sold at about 60% uplift from the value we had in the books which seemed to support that. The last point I make on this is because much of our portfolio, despite the comments we had before about public companies, much of our portfolio is private.

23:25 You can't just sell it whenever you want. You do need liquidity events. So what I am confident about is as the market begins to recover, which we'll begin to see signs of, and as we do start to sell more, you will then see that we will be selling at or above NAV. I'm pretty confident though, in most cases, we'll be at and above NAV because I'm confident in our values. I don't know if Yeah. Mean, I think it's it's a theory that the price is different from the NAV because people don't trust the NAV. I mean, the the NAV, as David says, is is is well well founded and supported. But we're in the risk business. I mean we invest in a number of companies in life sciences and we have a very interesting investment in nuclear fusion which are fairly binary in terms of the possible outcomes. And and I think that's part of what we do. I mean, we hope to balance those that are terribly successful from a small investment to be very very remunerative to those that that will fail.

24:23 But that's the the nature of the business we're in. But I, you know, I think that as as David says, when we have realized assets, we've realized at or around the the net asset value and I hope that gives confidence to people when they see that. That it's not that the NAV isn't trusted, It's that there is a difference between the way the market values the company and the way we value the assets. But our job is to prove that the the the NAV is well supported. And I think the way to do that is to realize assets at or around or importantly, above our net asset value. And I think that just underlines the reason that, that's one of the three priorities for this year is to demonstrate that we can have continued cash exits from the portfolio that are supportive of the NAV for a number of reasons. So yes, the management team is very focused on that. I'll keep going. Probably one for you, Greg. Can you elaborate on the key value creation opportunities within the maturing portfolio?

25:22 Yes. I don't know whether did that question come in before I did then elaborate? Well, that's a fair point. It came in as you were elaborating, and they might have thought it wasn't enough. But you might say you've already done. That's a fair point. Well, the key ones over the next sort of six, twelve months will be on the Life Sciences side, a number of those clinical trial results coming out. Obviously, not all of them are going to be positive. That's the nature of having a portfolio. Roughly, phase that you go through is a sort of a fifty-fifty. But the idea is to have a portfolio of sort of 10 to 12 of these such that, on average, so long as we are no worse than average, then it's a very compelling financial return. I mentioned two of them, Esteso and Pulmicide. They will be opportunities this year. There are a handful of others, and we'll report on those as we go. And we put news out, so you might have seen there's another company in the portfolio, Storm Therapeutics, had some good data as well. So we do put those out. But the idea is that those larger passing through of the clinical stage will either lead to sort of no further funding or it will lead to a commercial outcome. So that's those. On the Deep Tech side, I mean, really, it's around revenue growth within businesses such as Garrison and Feature Space. And then on the Clean Tech side, Isata was one of those milestones for this year. And we're also working very hard with First Light Fusion,

26:53 as Douglas mentioned. So there's a good selection across the three. The next one is quite a long question. The asker doesn't mind, I'm going to condense it to make it a little bit easier. It is a shareholder, Shevil Koussir, it says I'm both a private investor in the company and a representative of T, the engagement appeal, says thank you to Douglas for the support you've given. There are four parts to this question given in accordance with section 172 but what I'm going do is I'm going to make it one question if that's okay. It's basically around the general area which is how informed the younger

27:26 generation especially Gen Z about personal finance, capital markets, investing? In your opinion, what matters most to the younger generation of venture investors? And what more, if anything, can companies like our one that do to educate, empower, engage individuals on basic personal finance and investing? That's quite a general question. I don't know if you want to add anything, can make a few comments. I think it's a great question. I mean, I think the democratization of savings so that people can save for life events and ultimately retirement, think is usually important.

27:58 And I think Gen Z, I think young people have a completely different approach. I'm old enough to remember when you had to cut a coupon out in Sunday Times, put a pin through it and attach a check, including a 3% starting commission and a 1% trail to buy a mutual fund. Happily those days are gone. I know from my own children, one of whom is a very modest investor, but quite active he tells me. He invests modest amounts of money in companies I have never heard of. And he does it through chat rooms and his friends and they all talk about what they do. I mean, people are are taking different view and and I have to say, I've I've been to Cambridge University a few times because of things that I do and talking to students about where technology is going. That's what they want to invest in because it's kinda cool.

28:55 And I remember having to tell one one one student, I wouldn't put your entire savings into it. He was fascinated with nuclear fusion. I wanna put all my money into nuclear fusion. You need diversification. But but I but I do think, you know, people are are interested and and and hopefully we'll see retail investing coming back into this country because it's at the lowest it's been for

29:19 almost ever and and institutionally best. So one of the challenges we as a company face is the the amount of money pointed towards small and growing companies is is pretty modest. UK institutions now own 4% of The UK stock market. Twenty years ago, they own 50% of The UK stock market. And the and the largest support now comes from public sector funds and and public sector pension funds, including our largest shareholders. So that, you know, there there is a there is a demographic need for retail investment and hopefully, when we see the see whatever the shape of the next government is, that would be one of their priorities. Certainly,

29:57 all the major parties have been told that should be one of their major priorities and and I think they realize how important it is. And from our side, think we are big supporters of retail investors and democratisation. That's why, for example, this event is being broadcast on Investor Day Company. So where the traditional AGM might have had ten, twenty people, there was like two thirty people registered to do this online. So it gives much greater exposure and we do that in all our events, interims and our year ends and our markets events. We're all broadcasting on this medium, which must greatly help because it gives private investors the insight, the kind of conversations that you've gone only with institutional investors. And also we sign up things like Edison research notes, which problem is at the moment if you're private investor you can't access the search, but Edison is widely available so it goes to about 16,000 people. So although it's paid for research, which is tightly obviously reduces its value in some people's eyes, it does mean that the general public actually can get some decent quality information about the company.

30:51 Are there any questions in the room? No hands are going on. I've only got two left, you might be glad to hear. What are the plans for expanding the company's footprint globally with the key focus of UK? I'm sure that's you, Greg. Yeah. I mean, I think in a time of reasonably constrained resources, we, as a management team, our job is to focus those resources onto the areas that we think offer the most compelling risk and reward. I think at this point in the company cycle, while there is clearly a huge amount of opportunity for science and technology investing in other jurisdictions, the focus of the business is on the current territories in which we operate. And indeed, as I mentioned, we've had to sort of deprioritize some areas in order to focus on what we think offer the most compelling risk and reward in the shorter term.

31:46 From a position of strength in one, two, three years' time, then of course, we're always looking at areas that we could expand the business. And there are a handful of jurisdictions around the world that have more than 3% or 5% of research innovation spend and research innovation output that will be obvious places. We tend to look for the confluence of supportive long term capital, a good wealth of fundamental innovation and research and either the presence of or the opportunity to build a talent ecosystem that can bring those things together. That's why we started in Australia

32:25 seven years ago. And thankfully, we've been able to build a partnership with one of the big superannuation funds there. So I'd say in the short term, no plans for other jurisdictions. In the longer term, there is, of course, a huge need and opportunity for what we do as a business. And you attract money from all over the world. I mean, we said, we invested about 10% of the total that the portfolio invested, and that money came from all over the world, from Asia, from from The States, from the rest of Europe because there is a huge one of the one of the superpowers of The UK, if you like, is the is the science and innovation skill set, which is massively respected around the world. So when we're investing in companies, we see a very international group of shareholders or investors who are interested in coming with us or us with them. Just a couple more. I'm hang on, Dan. Bill h has asked he's actually asked two bits. I think it's referring to the same question.

33:23 You say that IP GROUP is the most active investor in university spinouts. Why did it fail to take part in backing WAVE, the market leader in embodied artificial intelligence, which was spun out of Cambridge University and recently raised £1,000,000,000 mainly from US venture capital funds. Well, we have about I mean, we were delighted to see the Wave funding round offers good, again, sort of slight green shoots that private funding for these sorts of opportunities is starting to come back, which is great. We have an equivalent, we would obviously say, technology in the form of Oxford Autonomy, which is an Oxford spin out with a larger shareholder in that. You might remember, Oxford did the first ever

34:07 driverless fully driverless on public roads transport in The U. K. And in Europe recently. So it's a real market leader. We see Wave as a good flag bearer for that industry. And it does show the weight of capital that's interested in large language models, in AI, and we're hopeful that Oksut can blaze a similar trail. In terms of why we didn't back that one, I mean, by being the market leader, we were about 20% of the market as measured by capital into university spinouts over the last five years. So in, I think, it's four out of the last five years, we've been 20% of the capital into university spinouts.

34:53 That doesn't mean we're 100% of the market, and indeed, it's very healthy that there are others. And of course, we try to get our fair share of the ones which are worth GBP 1,000,000,000 plus, and we have aspirations that Oxford will be similar.

35:08 Thank you. Very last question, I think we've probably covered this, but I'll ask for completeness. Is Gaby W. Thank you for your question. What are your plans to grow in Asia, particularly Hong Kong and China?

35:19 You repeat that a little bit? So

35:23 we don't have any immediate plans for significant presence on the ground. There are we benefit from a number of shareholders from the region and a number of co investors from the region. So we don't have any there's no plans to sort of set up an office there or to start doing commercialization activity there. But as Douglas mentioned, there's a lot of inbound from the wider Asian region. If you look at some of the investors in Hysata, for example, some of the big Korean conglomerates were came into that round. So it's an area that we continue to actively pursue, but more from an investment point of view and potentially business opportunity for our portfolio companies, but not an area where the group currently has plans, but consistent with geographical focus in the short term.

36:15 And that, from my side, is that. I have no more on the outside of the room. So finally, is there anything in the room? Julia?

36:26 Hi, everyone. It's Julia Diaz from Railpen. We are shareholders. We are IP GROUP's largest shareholder. Just following on from one of the questions that you had about, I guess, show me the nav. How do you balance as a management team that almost urgency to improve the share price or the pressure that you feel from shareholders versus the long term future of the business and doing the right thing for long term shareholders? In two words very carefully. But I would say so since I took over as chief exec, I've tried to set out so it was one of the challenges around being an IP GROUP shareholder. And I've been an IP GROUP shareholder now for the best part of fifteen years. So I've I'm I have shared the highs and the lows with shareholders, and and I I plan for there to be more highs.

37:19 One of the challenges around what we do is that quite often the investing in long term businesses is done through fixed life funds. And the benefit of a fixed life fund is that you know as an investor,

37:33 five to ten years, you're gonna get your money back. And we are we were set up as a public company to offer liquidity to shareholders so that they could trade in and out of the of the shares. And at different points in the cycle, that liquidity hasn't been there at the times when some shareholders want to sell out, and so that can be quite frustrating. So what we what I've tried to do over the last couple of years is to

37:58 evolve the capital allocation policy such that it is both sustainable, but also supports some returns to shareholders who may not want to or be able to sell shares. And so the the policy in in sort of steady state, if you like, is broadly we reinvest 80% of the money that we realize from the portfolio, and we use 20% of it to either provide a dividend, which is what we had done over the last couple of years, or to do things like share buybacks or indeed, we'd obviously explore things like tender offers. We operate in an environment where there is far more opportunity than capital at the moment. So it's all the time, the discussion around the board table is how can we invest and ensure the long term health of the portfolio and long term financial returns, but how can we also recognize that as a listed company, one of your most important stakeholders is your shareholder group. And so if you can't demonstrate returns to shareholders, that's the table stakes that that allow you to operate as a business. So we we we balance it in that way. The 8020, as Douglas mentioned, in times where the risk reward potentially of our own shares is is greater and the portfolio needs are met, we would obviously look at that mix of reinvestment versus return do that in a way which, you know, offers good good good opportunity for shareholders.

39:22 I think the the other thing I would add I agree with everything Greg said. The the other thing I'd add is that part of our ability to partner with companies that are in early stages is their understanding and and and what they've heard from other portfolio companies that we're in for the long term because they they don't wanna find someone that gets them, you know, to an early stage and then cashes in. They wanna say we want someone that will stay with us and guide us as to what the point of exit is. But there's a balance. I mean, for so long as the NAV is not represented in the share price, it's important that we have events that demonstrate that the NAV is is good so that we we can narrow the gap because if it's always in the the very future, I don't I find it very difficult to see how you can evidence to shareholders that the NAV is a good number. So you need to have a realization events that proves the quality of the NAV and then hopefully that builds trust.

40:24 We've come off, I think, an extraordinary four years where apart from all the geopolitical stuff, there's been a a, you know, a a risk off sentiment over the last couple of years because of economic circumstances. I think that's beginning to change and and I think we're beginning to see across The UK markets more of an interest in European and UK companies as quite a lot of money now is beginning to be thoughtful about whether The US valuations have got to a point that they can continue to be supported because can the growth that's driven those valuations continue to be realized. So we'll see, but we we need we need a balance. But I do think that we are, I hate the word patient capital, but we are patient capital.

41:12 I should probably finish with the opportunity side as well. So there is a big opportunity to build out our funding capability using platform that we've built around that permanent capital vehicle. I think we've got the beginning bit really well set with Park Walk. I think we've got the middle phase well set with the permanent balance sheet. And we've got the beginnings of quite a big opportunity with our relationship with Hostplus. And it's not easy to engage these big long term pools of capital, but we have been successful in attracting people like Railband. I mean, I think it's a pioneering example in The UK of what we should be doing more broadly. But we, hopefully, as IP GROUP, offer the ability to fund businesses at the very earliest stage through tax advantaged capital. It's the most appropriate form, in my view, for the very, very early stage. The permanent balance sheet gives you flexibility and allows companies to be funded along that journey and offer compelling financial returns to shareholders.

42:09 But there is still a big opportunity to scale into that scale up capital side, and we've been building our evidence and credentials over the last five years. And that is another focus for the team. So I think sort of being able to balance the long term needs and the long term thinking also is about the sort of type of capital that we use for each stage in the in the journey. Sir? Hello. Are you still investing, or you're only realizing some investments? No. We're still investing. Still investing. Okay. And you give little dividend. What is the source of that dividend?

42:57 So this was on on the capital allocation approach. So the what we use realizations from the portfolio to fund returns to shareholders in order to be sustainable as a business. In the last six months, we made the decision to change the mechanism that we pay cash to shareholders. When there is a bigger than 20% discount to our NAV per share in the share price, we'll use the mechanism of buybacks rather than dividend as we think that's in the long term interest of all shareholders. But it's it's it's funded from realizations from the portfolio. Okay. You still have money to do buybacks? You still have cash in the company? Yeah. We we finished the year with just shy of £230,000,000 gross. We are investing still into the portfolio, And we announced a £20,000,000 buyback of which we've used about we've completed about £6,000,000 ish of that to end of last week. Okay. So this this is still latest asset value, NAV, at this moment?

44:11 We we don't publish a periodic one. But if you take into account the movements in the public stocks, it's between 105 and 110p per share. You can calculate based on the year end. Made the movement in Nerdfell has been the biggest movement since the year end. So if you look at the year end, you can adjust by that. Douglas, you had yeah. Douglas says you're a very small shareholder. Would you like to say a bit of your relationship with the government and for that matter, the political parties in view of where we are? I would say it's extraordinarily strong. I mean, we are almost a flight carrier for the agenda of getting more money into into science and innovation based on UK research.

45:07 Greg is deeply involved in a number of the the working groups that are trying to articulate how this could be done. I am as well. In fact, the whole team is. Whether no matter what the flavor of the political party is, both sides are very active in saying they support the science and innovation agenda. Moving words to action is is more problematic, and I think part of that comes from there is a strong requirement, I believe, on on on the next government to think about how we harness defined contribution pension defined contribution schemes.

45:52 I don't think you can direct the money to go somewhere because that that leads to bad outcomes, but you can certainly think about how to promote the kind of opportunities that we represent and and help people understand why that might be a good thing to have as part of their portfolio. And that was the the notion of the management reforms that 5% of the default funds would go into science. Leaving the asset manager to decide which companies to support, that's absolutely fine. But that would make a big difference. But yes, no, we have we have very strong contacts, regular contacts with those that are in charge of science in in in government and indeed in in in the city institutions that have this as an objective as well.

46:41 Gentleman on the Thank you, and thank you for this opportunity. Long term shareholder, almost fifteen years like Greg. I recognize that the market has been very difficult for you over recent years, and you've highlighted that very clearly. And I'm encouraged by the comments you're making today that you're seeing signs of recovery and also David's comment that clear focus on selling businesses at or above NAV and your comments need to have realization events that narrow the gap to the NAV. But these are events that are external to the group in in many ways.

47:33 What I focused on in my question last year, and I return again this year, is this issue of what you yourselves can be doing in terms of the share price. And I welcome the fact that you have introduced a share buyback. Although, I think at the time when shareholders were agitating for such a move, they didn't anticipate the dividend being waived. But in the last two years, your dividend payments have been, I think, around GBP 12,000,000 and 13,000,000 roughly. You have spent GBP 6,100,000 to date on share buybacks. You've highlighted that you have almost GBP $230,000,000 or had almost GBP $230,000,000 in gross cash at the end of the year, which clearly is a wonderful strength for the group.

48:25 But I would just challenge you about the need to be more aggressive in that share buyback program. I think it was a question at the full year results meeting. And I think you responded that there were technical factors, but that we would be seeing an acceleration of the rate of increase in share buybacks. Bluntly, it's, in some ways, decelerated. And I just am puzzled that you are, as a board, not being more aggressive in that share price through share buybacks, action that you could directly take. Thank you. You know, we debate this a lot. It's a it's a very good point, and we've had innumerable discussions.

49:13 Of course, there is a there is a always a limited amount of money. The more we return by buyback, the less we've got to invest. The less we've got to invest, the danger is we're not able to follow our investments and get diluted by those who do follow their investments. So, you know, there's a there's a conflict. I don't you know, I think we we had a dividend because it was important to show that we respected shareholder value, which we do. When our shares are trading at 50% of NAV, it's more efficient to give money back give money back through buyback than than share price. It's actually more efficient for for shareholders. But it, you know, we've got to we've got to manage the cash that we've got to support the port. There's only so much we can afford and and that's what it's calibrated on. There's also and you'll say it's because it's a limited amount. There's actually not yet really much evidence that it has a great deal of influence on the share price.

50:10 I mean, our share price has been pretty range bound this year. I personally think that companies that spend too much time worrying they should worry about what they need to do to change the share price rather than worry about what the market is doing in the share price. The market in many ways is a bit of a voting mechanism. We should worry about what we're doing to enhance the portfolio, support the portfolio. And we gotta focus on our costs and and Greg mentioned that in his his comments. I mean, that we can we we can focus on that and we need to focus and that's why we curtailed some of the activities that we had internationally. So we we will do what we can do and then, mean, I think our communication is is very good.

50:56 I'm not disappointed that we're not getting the story out but at the moment that story is being received well in terms of we like what you do but it's not being reflected on the price and we need to find a way to make that connection work better. I'm slightly optimistic, I have to say, that when we get a when the election's out of the way, that there's there's going to be a renewed focus on whatever this science, superpower science and innovation support from government through whatever mechanisms they've got. They have to do something, they they no need to do something. It's been all deferred for a year because of the politics of of The UK, but I I do think there will be traction and I think there'll be traction from the the insurance and pension companies that signed up to the matching extra forms. So I hope in the second half of the year we'll see some action. I believe a lot of it is pending. So fingers fingers crossed on what others will do, but we'll continue to focus on putting money into the portfolio where it's to support where we see value and managing our costs carefully.

52:06 And on that, on the buyback, I think we are still committed. We've publicly made a commitment to buy back GBP 20,000,000 and we will do still plan to do that. So if in later in the year that requires within what we're allowed to do, there's kind of what's called a safe harbor, as long as we're operating within that limit, you might well see some increase in that, I think, because obviously we're committed to achieve that. So that remains our aim. Are there any other questions? I've got a few online. Do you mind? No, afraid I have. One maybe I have to do this. Don't share this one. Some more tricky ones come in now. Do you feel that the cost base is appropriate for the level of activities of the business? What I would say about that is that we look at cost all the time, obviously. One of the things we look at a lot is cost versus the NAV, the actual value of the business.

52:52 It's quite difficult to compare us just to traditional like fund manager because we are a slightly different creature as I'm all well aware, which is why investors are writing at the early stages, often creating businesses and are very hands on and very involved. And that's by its very nature is a more cost intensive activity. Sit on that top 40 boards. We've got most of those boards in person. We have direct involvement in them, for example. So when compared just to traditional fund management, it's slightly inevitable. Think our cost can be a higher percentage of NAV than than you might see just from a fund manager. However, we we are aware, but obviously, what happens is our actual cost base hasn't really actually changed much, but our NAV has come down mainly because of Nana pool in the last two or three years. As a result, our costs as a percentage do look higher. So we will always keep an eye on that and we're very aware of it.

53:40 Certainly, at the moment, we're trying to keep our costs pretty tight if we can, certainly not increase them at the moment, and we will continue to look at that. But I would say, don't know anyone else wants to add into that? The only other one was, again, possibly coming my way. It's another very good difficult question. I was always heartened by your cautious valuations, feature space, etcetera, which I think is valid. I was a bit shocked by the write downs at the end of both The US and First Life of Fusion. Can you add any color to this? It's a reasonable question. Should I start? And a number of shareholders asked us this when we went out and did the institutional presentations. I think they really were the specifics. When First Life Fusion achieved fusion for the first time, we took a view at that time to market the value up. Even when we did that at the time, it looked like we were being conservative. Companies that we'd marked up to about a 400,000,000 value. Its sort of peers, which were raising money some hadn't achieved fusion, were raising money at 1,000,000,000 at that point. So we actually still thought we'd be pretty conservative.

54:42 Obviously, the end of twenty twenty one, the markets had contracted quite a bit. There's less liquidity around those kind of first those fusion phase. Not that Sance hasn't developed because actually Sance has developed very well at the company, but the kind of comps you see have come down quite a lot. So because it hadn't fundraised and we had said to people at the half year, if this doesn't fundraise, we're gonna have to be fairly prudent, We pretty much took it back to where it was, which of course was quite a sizable adjustment. Whether that's an accurate adjustment, it's impossible to tell. So it's the hardest company probably to value in the portfolio because it's extraordinary upside potential, but also the lengths of time till it happens and the technical risks in achieving it. America was really again a rather specific case in that we've got a very good portfolio, been out there about nine years. It's an exciting portfolio. It's been developing well. But people may be aware that it's structured slightly different.

55:28 It's a it's like a structure like a venture fund, what they call an LP fund and actually raising money for that kind of business where you have co investors, not just us in that platform, has been very, very difficult in America for the last two years. Not just us, pretty universally And therefore we took a prudent view about the value of the portfolio at a time when it had relatively limited money to invest. So again, it was a result of our prudence, but I do still feel very confident of the value of our portfolio and I'm optimistic that when, as I've said before, when we get to exits, hopefully they'll be at least at or at pound value. Yes. It's one of the real challenges. When you've got a limited amount of money to invest, you have to make choices. And almost by definition, if you fail to follow companies that you would other if you had the money you would invest in, you get diluted.

56:14 And therefore, it's not it's not that the necessarily the companies become less value, it's that your interest in the company has reduced because the people that are putting in fresh money get preferential rights, so you get diluted. So and that's one of the challenges, you know, the the the the cost of not following our investment because we've made a choice to put the money somewhere else where we think we can get a better return has consequences on the the portfolio companies that we can't invest in. And, you know, The US was deprioritized partly because the co investors in in The US were not stepping forward to put more money and then wanting us to put more money and to support. So we decided that we got better opportunities here. Any other questions?

57:03 I see no hands. I will move on. Okay. Thank you for the questions. Thanks for the engagement. We'll now move to the formal part of the meeting. The notice of the meeting together with explanatory notes was published on the April 23. So the requisite notice of the meeting has been given, and therefore, if there are no objections, I propose taking the notice convening the meeting, all 16 pages of it as read. Angela's desperately hoping. We're all fine with that. Good. Angela's here to help if if you're not, but we're we are fine. We'll move quickly on. The voting today, as in last year, will be conducted by way of a poll. A poll in each resolution, this is best practice. It gives everyone the opportunity to participate in the decision making of the company and have the votes recorded respecting the number of shares that they hold.

57:56 It will take a little bit of time to complete the whole procedure. So the final results of the voting including the proxy votes in each of the resolutions will be announced through the regulatory and published on the website as soon as reasonably practical following the close of this meeting. It shouldn't take too long. Link asset services, the company's registrar has been appointed to act as scrutineers. A summary of each resolution will be shown on the screen behind me. Okay. Resolutions one to 12 and numbers fifteen and eighteen are proposed as ordinary resolutions, and resolutions thirteen, fourteen, sixteen, and seventeen are proposed as special resolutions. For shareholders that are attending online, as was advised in the notice of the AGM, you're not able to vote online, but I hope you will have submitted your votes by proxy.

58:48 For those shareholders who are attending physically, you have three options for each resolution. You can vote for, you can vote against the resolution, or you are you can withhold your vote. A vote withheld is not a vote in law and therefore doesn't get counted in the calculation of the proportion of the votes for or against each resolution. If you have previously voted by proxy and don't wish to change your vote, you don't need to do anything, don't need to complete a poll card. If you want to vote now, could you please complete the poll card that was given to you at registration by ticking the appropriate box next to each of the resolutions depending on how you want to cast your vote? And once you've recorded all your votes, if you could sign the poll card and put the completed poll card in the ballot box at the back of the room. If anybody requires further assistance, the registrars who are here will be happy to assist, and we'll keep the poll vote open for fifteen minutes or so while you complete the the the cards.

59:50 That concludes the formal business of the the AGM, and I want to thank you again for your interest, for attendance. And before I declare the meeting close once again to thank Elaine for an amazing nine years, and we genuinely are gonna miss you. We'll put the the final results up on the regulatory information service and the website, as I said, as soon as we have it. But thank you all for attending. Thank you very much to the board of IP GROUP for updating shareholders today. I'll now redirect those online to provide the company with their feedback. May I wish you all a very good afternoon.