Good morning, ladies and gentlemen, and welcome to the IP Group plc final results investor presentation. Throughout this recorded presentation, investors will be in listen-only mode. Questions are encouraged. They can be submitted at any time via the Q&A tab that's just situated on the right-hand corner of your screen. Please just simply type in your questions and press Send. The company may not be in a position to answer every question it receives during the meeting itself. However, the company will review all questions submitted today and publish responses where it is appropriate to do so. Before we begin, I would like to submit the following poll, and if you could give that your kind attention, I'm sure the company would be most grateful. I'd now like to hand you over to CEO Greg Smith. Good morning, sir.
Thank you very much. Welcome everyone to our 2022 full year results presentation. Thank you very much to everyone that's currently online or indeed if you're watching this as a recording, thank you for your time to hear our update. This is the fourth time now that we've used Investor Meet to do our results presentation. This is very much part of our continuing efforts to sort of dial up our IR activities and to get the IP Group story to as many shareholders and potential shareholders as possible. We've got a very active program of IR events this year. We will summarize those right at the end of the session. On today's call, we've got myself, Greg Smith, the Chief Executive.
I'm joined by David Baynes, the CFO, and Mark Reilly, who is our Managing Partner of Technology. The three of us are here at our head office in London. The backdrop reminds me of something that one of our shareholders said to me recently as to why he holds IP Group as a stock, and he said it offers him a window on the future. Behind me, over my shoulder, you can see the construction of the giant Google building behind us. Perhaps it's a view of a certain facet of sort of technology-led future. Also joined online by Sam Williams, who is the Managing Partner of Life Sciences.
We're also delighted to be joined by Gavin Jackson, who is the CEO of Oxbotica, and they are one of our most exciting companies in our key co-Cleantech portfolio, and he'll be giving us an update later. Obviously, as a public company, we've got our presentation up on the IR section of our website, I would just ask you to please note the usual disclaimers about the nature of this update and any forward-looking statements, and you can review those online. In terms of contents and the running order for today, I plan to cover a short overview, an update on how we are successfully delivering on the strategy that I set out this time last year, including progress in our three investment focus areas.
Then, as a bit of a leading indicator of success for the future, I'm going to give you an update on progress in some of our priority companies, Gavin will speak to Oxbotica at that point. Dave will then run through the financial results for the year, before I wrap up with a summary and outlook then onto questions. As usual, please post the questions in the Q&A, we will endeavor to answer all of them. If we can't, then we will respond to them within the system.
Before I get into the results for the year, I really wanted to give, you know, a short reminder of what we are, the key elements that enable the operational delivery of our business and what we do at IP Group, which is, you know, a very specialist activity, but we are a leading investor in breakthrough science and innovation companies with the potential to create a better future for all. You can see the main elements down the right-hand side of the slide there. One that I will particularly draw attention to is the expertise and the experience of our team that has been built over many years and through many investment cycles. I can't underestimate the importance of that sort of industry insight for the current environment in which we operate.
We are an impactful investor. We are trying to deliver both financial returns and societal and environmental benefits. We benefit from being an international group. We've got a network of relationships, particularly on the capital side, which is vital at this point in the cycle. We have a permanent capital structure, which gives us numerous advantages over the fixed life model, and that has enabled us, those ingredients have enabled us to build a portfolio which has been built around access to leading science and technology. We have a strong track record to date, three unicorns or billion-dollar plus companies that we've created to date. As I hope you'll see over the course of this presentation, there are a number of prospects for others within the portfolio.
There's been a lot in the press recently on sort of early-stage and venture investing, but a subject that's been really, really prominent here in the U.K. is this concept of a science superpower or innovation nation. The government this week announced and released its Science and Technology Framework. It, right at the start of the framework, it set out the reason for doing so, and it said, "Science and technology will be the major driver of prosperity, power, and history-making events this century." Our view is that science and technology or innovation creates hope, and innovation plus capital creates growth and value. Through IP Group, this is one of the few ways that you can invest in that type of science and technology that is the subject of this focus.
As I and the team will demonstrate today, and as we'll be doing over the course of our roadshows over the coming couple of weeks with institutional investors, we believe now represents a very compelling time to invest in this theme through IP Group. In terms of the overview, the financial overview for this year, firstly, we reported a significant loss for the full year, and this was flagged at the half year, and it was driven significantly by the reversal of about GBP 370 million of gains on our holding in Oxford Nanopore. However, we've now completed our rigorous and, as the auditors call it, mildly cautious annual valuation process and reconfirmed our NAV per share at 133 p per share.
Importantly, for the future, I'm pleased to be able to report strong progress in the underlying business and indeed in the delivery of our strategy. In fact, sort of to exemplify that a bit in numbers, if you exclude that fair value reduction on Nanopore, we actually made a modest profit. If you take Nanopore out of the numbers for this year and last year, both periods were profitable. The underlying business is strong. Another indicator of delivery of our strategy is the increase in our third-party assets under management, our managed funds, which grew by about 20% in the year to GBP 700 million.
Finally, I think critically for the current environment, your company is well-financed, has strong liquidity, and we've maintained our focus on a sustainable approach to shareholder returns. I've talked about liquidity as a strategic asset, and we continue to believe that this is the case today. During the current environment, during the current year, we responded quickly to reduce our investment levels, and we have a strong cash and net cash position due to success and realizations in recent years, and also the additional long-term debt placement that we announced in August, and Dave will refresh on that shortly. In terms of the approach to shareholder returns, we take this sort of sustainable approach, and it's centered around NAV per share growth, which is fueled by delivery of returns on NAV.
We do aim to supplement capital growth with some cash returns each year through dividends and other tools. We reserve a proportion of all exits for this purpose. We don't have a fixed proportion, but as a guide, in 2021, we returned about 20% of realizations. This year, total realizations were GBP 28 million. We're continuing with our policy to pay a modest and growing dividend, recommending a total dividend of 1.26 pence per share, which is an increase on the prior year. This represents just under half of our 2022 realizations, just reflecting our commitment to a growing dividend. Those are the key elements of our financial results. I just wanted to talk now about the strategy.
Before I do, I wanted to quickly update on what we're seeing in the early-stage venture markets in which we predominantly operate. I think for those who follow the space, it won't be that much of a surprise. The impact of economic uncertainty and inflation, and therefore the higher cost of capital, is likely to have a longer run effect on the public and private markets overall. I would say it's definitely a tougher environment generally. I'd say the industry is experiencing a bit of a shakeout following a period of relative exuberance, and this is particularly true in the later stage. We're seeing more discipline around valuations, particularly on the later stage, that sort of Series C and beyond.
For many of our companies are before this stage, and the U.K. hasn't seen such significant valuation increases. As an example, PitchBook data shows that combined seed and Series A valuations in the U.K. are on average about 70% less than in the U.S., so there's further protection there. In our portfolio, we've seen some funding rounds delayed, particularly around finding a lead, but the vast majority of these that have completed have been at or above the last funding round, which again, Dave will come on and show in our financial results. Realizations, IPOs and sales are significantly reduced, as you've seen in our portfolio and our numbers. What does it mean? What does that mean for IP Group?
Well, it means, you know, tech differentiation in the companies is key and will likely matter even more that when there's less capital around, it's focusing on the top companies. The good news is that our investment approach means that our companies are funded and founded on genuine technology differentiation. I think you'll hear that when Gavin speaks later. Another key element is that co-investors and co-investment capital are critical. Our portfolio raised around GBP 1 billion last year, of which we did just under GBP 100 million, so that's a critical element of the business, including our third-party funds under management.
I think it's important to point out look our team is experienced in investing through a number of cycles, and so we will manage our resources appropriately while ensuring that we maximize the opportunity for our leading companies like Oxbotica, like Istesso, and we will continue to have a strong financial position. Finally, we continue to see strong fundamental demand for our products and services across Life Sciences, Cleantech and DeepTech. You'll always get some sub-sectors like the recent huge amounts of interest in generative AI and applied AI. That's a big theme of ours, and so inevitably, we're seeing that. Again, Gavin will cover that in his talk. How are we setting out to capture this opportunity and to deliver value?
Well, the business is now fully aligned behind delivering our purpose to accelerate the impact of science for a better future. The key activities and the deliverables to build a sustainable, resilient and successful and business investment business are aligned under these five key pillars of work. You'll be pleased to know, I'm not gonna talk through all of those, but I think as a shareholder, it's important to know that there is a guiding long-term framework to align the efforts of our people. The one that I will pick out though is that, you know, we want IP Group to be front of mind for incremental investment from shareholders, front of mind for the best talent, and front of mind for co-investors in industry.
Building a distinctive reputation is an important lever in this, and it also drives deal flow. When I first took over as CEO, I was told by a couple of stakeholders that IP Group was the best company that no one had ever heard of. Following an appropriate level of investment, we now have a new look and feel and brand identity to help change this. The main pillar that I want to focus on today is around accelerating value creation. A key tenet of that is our investment focus and approach. I've spoken about this before, but our business model is really very simple. We are looking for opportunities that sit at the intersection of huge commercial opportunity, huge societal need, and IP Group's distinctive strengths.
We back innovation, we use the technical acumen and the sector insights of our experienced teams to better assess value and the risk reward of that innovation. That leads us to these three thematic focus areas. I think helpfully, each of those three has a pretty distinct and complementary investment profile over the next one to two years. I just wanna take each in turn. If we turn to Healthier Future first, having consolidated the Life Sciences portfolio down into about 20 or so core holdings, there are now eight companies that are targeting key clinical milestones over the next one to two years, as you can see here, and they're spread across oncology and inflammation primarily.
The team will be focusing resource and capital to support the delivery of these milestones and of course, then driving commercial value for each company and while also looking at, you know, appropriate level of new opportunities. Just to mention, obviously on the healthcare side, continuing significant revenue growth is the key driver and focus of value for companies like Oxford Nanopore and Hinge Health. In terms of the tech and rich future, the DeepTech portfolio, a number of our leading companies, Featurespace, SaltPay, Garrison, you can see at the top of the list there, they are targeting value creation through continued double-digit revenue growth.
Then there's earlier companies like Diffblue, which I mentioned, is our generative AI company, which is writing test code for software, Audioscenic and Ultraleap are seeking to grow early revenues. Of course, the team continues to assess an appropriate level of new opportunities. Then finally on regenerative future, this we, you can call it climate tech or cleantech or sustainable investing. We made a deliberate strategic choice to double down on one of the most compelling parts of the business in line with our strategy.
This team, which is very experienced and is a relatively small team, as you can see from the photo, but in, you know, combined, it's got more than almost a century of investing experience in Cleantech, and they have a very strong track record. You see in the results, it was more than a 100% return this year, but overall, the gross historic IRR is in excess of 30%. So we think that now is the time to be doubling down on that performance. A focus for 2023 will be adding new companies to the portfolio, but also in the existing portfolio, First Light is planning to raise further capital following its inertial fusion result that I'll come onto in a moment.
Hysata is seeking to de-risk its breakthrough hydrogen electrolyzer technology. Three really clear set out themes and investment and value creation opportunities across our three main areas of the business. I do also just want to talk about this other element of the accelerating value creation, and this is around growing our access to co-investment capital. I said earlier that, you know, capital is and will remain a strategic asset and is a fundamental resource for our business. We've always maintained access to diverse sources of capital, be that PLC, be it debt, be it co-investors. An area where I still think there is a huge amount of opportunity is growing this third-party private capital partnerships.
I'm very pleased to report good progress on that in the year to date with a 20% increase in our assets under management. We've been building out our expertise and our track record here, and I think the opportunity remains significant. You know, in 2021, we invested about GBP 100 million out of about GBP 2 billion into the portfolio. I mean, even during 2022, we invested about GBP 90 million out of GBP 1 billion. There continues to be a big opportunity to do more in this space. And I would also say, you know, we continue to engage significantly with government, with HM Treasury and around long-term capital providers around these proposed reforms to financial regulation that might allow long-term capital to support this kind of activity in the U.K.
I think maybe our success to date and the additional resilience that this gives the group may be something that the market is missing at the moment. I will be making sure that that's very clear as we go on the road. In terms of impact in ESG, it's a fundamental driver of the business. The elements of, you know, sort of strong governance and they're just a, you know, a minimum requirement really as a quoted company. I think the opportunity for us is sort of really twofold. It's one, around accessing capital and two, around delivering outsized returns. I think the key to that really is around measuring, driving, and reporting against impact.
The two main focuses for the business this year are on, sort of developing and delivering on that framework. We'll be working with some of our aligned shareholders, such as Liontrust, M&G, EdenTree and others, as we continue to do so. The second area of focus is to maintain our current outperforming position with the ESG rating agencies, which means that you get into, you know, the indices, et cetera. If you're interested in this work, then we produce a separate sustainability report each year, and things like our ethical investment framework are all disclosed publicly on the website.
We're progressing really well against the strategy and to give you some sort of leading indicators of that success within those three themes, we try to evidence progress through a handful of priority companies that will drive returns across the group. The I showed this slide last year, and I wanted to just report back on a handful of those companies. We're gonna talk about Istesso and First Light, and then of course, Gavin's gonna talk about Oxbotica. Before I do that, I just want to quickly give an update on Oxford Nanopore.
I think the thing to say about Oxford Nanopore is, you know, we continue to have a deep and long-standing relationship with Oxford Nanopore and the management team there, having been the first investor in 2005. As a reminder, we've invested almost GBP 80 million in the company and realized over GBP 100 million. We've already covered our cost in full, and we remain the largest shareholder in the business at 10%. In terms of the company's progress, I mean, they're making strong progress technically, but you know, importantly, very strong progress in terms of revenue growth. They continue to target compound annual growth in excess of 30% through the medium term. We fundamentally, we continue to hold Oxford Nanopore because we believe the business to be undervalued at this point.
Underlying growth is better than any of their peers, the multiples don't sufficiently reflect this at the moment. Our strong capital position means that we don't need to be forced sellers at these prices, we will seek to optimize the timing of exit over the medium term because as I've said before, it's not our primary role to have large holdings in large listed companies. The next update from Oxford Nanopore is on the 21st of March, Gordon will be coming to speak at our AGM update in June. Do please come along or dial in through the platform. That's Oxford Nanopore. I'll quickly now talk about Istesso. Istesso is our leading...
I spoke about eight companies in the portfolio that are working towards clinical milestones and events over the course of the next 12-24 months. Istesso is the largest of those and probably represents the biggest opportunity. They during the year, we've had great progress, so we the company entered into Phase IIb trials for rheumatoid arthritis, which is a huge market. Also in the second half of the year, they achieved Fast Track designation and Orphan Drug Designation from the U.S.'s FDA for the treatment of a new area, IPF or a second indication, which is another condition with very high unmet needs and a multi-billion market opportunity.
In terms of upcoming milestones for this year, we, the company intends to commence a phase IIb trial in IPF in the summer, and then the readout from our rheumatoid arthritis trial is due in the first half of next year, and then the IPF trial in the second half of next year. Two very big, important value drivers for the group and a huge opportunity here to create both significant value, but also to have a huge impact on the hundreds of millions of people who suffer from autoimmune and chronic diseases.
First Light, I spoke about this one a little bit at the half year, and that was mainly because shortly after our financial results and this time last year, First Light achieved a world-first, you know, projectile fusion result, proving that you could create fusion from their unique approach to doing so through a projectile impact onto a fuel pellet. Since the half year actually, and sort of quite helpfully for First Light, many of you will have seen that at the Lawrence Livermore National Laboratory in the U.S., the National Ignition Facility achieved gain using the same underlying physics. Not just fusion, not just fusing two particles together, but actually getting more energy out than in in the target, in the cell.
That's I mean, the thing that's really interesting about that from a First Light point of view is the underlying physics are the same. The mechanism to create the impact is different. They use large lasers, but it proves that the underlying physics actually works. First Light have entered into a partnership with Canadian Nuclear Laboratories to help build out and develop their pilot plant, where they will then be seeking to achieve gain. In order to do so, as people will have read, they are planning to do a significant funding raise in order to allow them to build and develop that pilot plant. I mean, this is an incredible scientific achievement and a huge amount of value that could be created here over the longer term.
The third company, this isn't one that I highlighted last year, but they had such a good year that we thought we should get Gavin to come and give an update. We were the first institutional investor into Oxbotica back in 2018. We supported the Series C through Kiko and through our Hostplus co-investment relationship, some of our assets under management. The Series C took them to a total of GBP 225 million raised. That new funding is going to drive Oxbotica's geographical expansion into North America, EMEA, into APAC, and accelerate the deployment of its autonomy software. Gavin joined as CEO in December 2021. He previously overseen EMEA operations for Amazon Web Services and was Microsoft U.K.'s managing director.
He really has been literally driving Oxbotica's mission to make the Earth move. I will just ask Gavin to outline the investment case for Oxbotica. Thank you, Gavin.
Super. Thank you very much indeed, Greg. Thank you everybody for taking the time with Oxbotica here. We are Oxbotica, and as Greg points out, we are changing how the Earth moves. Our mission ultimately is to unlock the benefits of self-driving technology to every person and organization on the planet. We think that applied the right way, those benefits are profound for the entire world. The impacts that we think we'll have on safety of industrial mobility and passenger mobility is profound. We think that the impact that we can have on the carbon footprint for all forms of mobility can be profound.
Of course, we think that through productivity and through different types of business models that will exist in the world through autonomy, we think that there are trillions of dollars worth of economic value will be created as a result of autonomy. We can do all of these things and apply the broadest brush for this software technology called self-driving, because we have developed the world's first and only operating system for universal autonomy. Which means that with a singular technology, software technology stack, we can apply that technology to make any vehicle of any size and substance that performs any industrial or passenger job in any vertical market to move autonomously at scale.
We have built that operating system, and we've applied that in the real world, which basically then gives us a great deal of optionality as to how we enter the market and how we actually turn on that value for the world and create value for Oxbotica, our customers, and our shareholders. It's most assuredly in the self-driving space, not in the area of passenger cars and robotaxis, where really that drives a continuation of single occupancy journeys which the world doesn't need, and it, and it won't return any form of benefit for the world or for stakeholders until after 2050 at best. What we do focus on, however, is applying that technology where there is the most urgent and persistent need for automation in the value chain.
That is up and down the supply chain in first-mile logistics in the ports and airports as goods arrive on the world shores. It is in middle-mile logistics, where there's shortage of drivers and increasing in just-in-time, just enough supply chain and connecting hubs in hub-to-hub trucking. It's in last mile delivery, where there's an expectation on the consumer these days that goods arrive, you know, again on time, and efficiently. Driving that type of application is how we mine the world for the materials that we need to heal ourselves and to energize ourselves and to enable, if you will, the built world. It's in construction and the safety areas of construction, and the productivity that we need there. It's how we feed the world in agriculture.
The farmers of the world are sort of migrating away from that particular trait. Automation is an inevitability. The vehicles need to do more without human intervention. Yes, there is also the opportunity to move people in shared mobility sectors. That's leveraging a different type of infrastructure, if you will, to what it would be in passenger cars and in the robotaxi application. This is leveraging bus lanes and fixed routes, which is a, an infinitely more accessible market and more nearer term market than anything else. Our market entry points for this singular software platform to unlock the benefits in each of those different areas is to find and partner and go really deep with category-defining anchor customers that will then lift us and accelerate the application of autonomy in that particular space.
Good examples of that are in the first, middle, and last mile logistics with Ocado. Ocado are both a grocery chain and an online-only grocery chain. The extent to which they can move goods in and around that value chain and get them to customers in a speedily way with good margins is profoundly impacted by autonomy. Ocado are both a customer and an investor in Oxbotica, that's a great example of a category-defining anchor customer. ZF is a multinational, or indeed a global automotive company headquartered in Germany, multi-billion dollar institution. They are creating the shuttles that will move in a shared mobility sector that will move people autonomously around cities and connect cities and provide more accessibility for the world.
We're working with, in the industrial sectors, we're working with the likes of BP for the light industrial applications, with mixed fleets of vehicles doing mixed jobs across the entire value chain of BP. They are both, again, an investor and a customer. Halma, a FTSE 100 company focused on safety and sustainability, providing autonomy systems for their customers. Trimble, an expert in agriculture, a multi-billion dollar publicly listed U.S. company, experts in construction, heavy industry, and agriculture as our sort of technology partner and route to market for those markets. Indeed, the likes of Google, who we partner with to distribute our technology in a very sustainable way. Again, Google are both an investor and a partner of Oxbotica.
Actually, our business model is very analogous to Google, which is one of the reasons I think that we come together so well, in that if you think about the Android operating system, it's a singular piece of software that can operate any hand device. Then third parties build applications. They build value on top of that platform and make those solutions available in Google Play. The same is true for Oxbotica. In our singular operating system for universal autonomy, the driving system for vehicles can drive any vehicle. With our anchor customers, they're developing the application, the value case for autonomy. Those solutions are then curated and available for customers that look like them, in Oxbotica marketplace as well, which makes it, again. Infinitely scalable.
Last thing I'll say just very quickly is a little bit on the business model. We are a pure play open software provider. We don't make any hardware. We don't make vehicles. We partner. We're at the center of the ecosystem and the value chain and the flywheel for autonomy. Our software is a license. It's a software-only license, and it's on a per vehicle, per year basis for the life of the vehicle. At this point in time, we have circa $4 billion worth of pipeline and over 500,000 vehicles that are driven by Oxbotica in that pipeline, and that's a recurring software license for the duration of that vehicle's life.
We also have software that enables end users like Ocado to control those autonomous vehicles and build those applications and workflows for sending the vehicle to go and do the job that it was intended to do. Finally, we are leveraging the metaverse and generative AIs to make sure that A, we're able to accelerate the development of the technology in the places that we are deploying it so that we can eke out all of those nasty edge cases that stop self-driving from happening. We can do all of that in the metaverse. It also provides the world's first and only assurance platform for runtime.
When vehicles are operating in industrial sectors or on public highways, the MetaDriver will actually give assurance that the vehicles are running safely and inside of the envelope of what is insurable. That's a world first as well for this industry. We're really excited about the opportunities. The $140 million that we've raised, as Greg pointed out, is going to increase our penetration into the markets and continue to accelerate and build the moats around our business that we think we've built up to this point. Ultimately, we aim to be a generational company that will outlive all of us and create, as I say, trillions of dollars worth of value for the world and for our stakeholders. With that, I'll hand back to you, Greg.
Thank you very much, Gavin. You know, really exciting journey that the business is on. I seem to end up saying drive and journey, et cetera. It's not, it's not deliberate, but we think there's a huge value creation opportunity here, and I think as Gavin pointed out, also a massive impact opportunity, in terms of efficiency and use of vehicles. They were the three sort of leading indicators of success in the portfolio. I just wanted to touch on one, which has had a quite a bit of news in the last few weeks. I guess sort of no presentation from IP Group would be complete without a bit of future technology. This is a small part of our portfolio.
You can see in the bottom right-hand corner there, it's about half a per share, a little bit more than that. This company always sort of captures imagination, and it reminds me of a quote from Peter Thiel, you know, the sort of legendary VC investor back in 2013 who said, "We wanted flying cars, but instead, we got 140 characters." For the first time, Australia is a step closer to getting flying cars through our portfolio company, AMSL Aero, and I guess now they get 280 characters to tweet about it if they wanted to as well.
They've had a huge amount of coverage having completed their first maiden test flight. It was obviously in accordance with all of the safety regulations over in Australia. The idea here is that this will create a sort of a zero carbon emission vehicle with room for four passengers and a pilot that'll have a cruising speed of a few hundred kilometers an hour. By the time you start using hydrogen fuel, it'll be able to fly up to 1,000 km, which is about 3 x the range of any other eVTOL out there. Just very briefly, I thought we'd just play you a minute's worth of video to give you an idea of some of the coverage.
This is on our socials, etcetera, I thought it'd be helpful just to sort of set the opportunity and context and a bit of the excitement that we've seen around birds yet. Ta-da.
An Australian company has begun trialing flying electric cars that take off like a drone and fly like a plane. A prototype has already been tested, promising to revolutionize medical patient transport.
Flying cars have long been a dream but are accelerating towards reality. Last week, local aerospace company, AMSL Aero, successfully completed its maiden eVTOL test flight.
It's the first of a long campaign of testing to prove that the technology works and is safe.
Electrical vertical takeoff and landing aircraft, eVTOL for short, take off and land like helicopters but fly faster like airplanes. The aim?
You'll be able to take off somewhere near your house and fly to your destination anywhere up to 1,000 km away.
CareFlight transports patients to medical help using planes and choppers, but those aircraft are costly and complex. CareFlight is now testing an eVTOL craft kitted out with the best emergency equipment.
We can do more for the community. You know, we can move more patients at a lower cost.
Just one of the exciting things that you as shareholders are backing through your exposure to IP Group. That hopefully has given you an indication of some of the leading indicators of future success in the portfolio. I will now pass on to Dave to talk about financial matters.
Hello there. I'm David Baynes. I'm the Chief Finance and Operating Officer. Good to be with you. That's a bit of a hard act to follow, of course. I'll just quickly for about five or 10 minutes take you through the key numbers. The first of four key messages I'd like you to take on board, and if you get these, then, you know, that'll be good really. First of all, on the cash, there's gross cash of GBP 242 million. Also with access to another GBP 60 million of debt that we have lined up. About GBP 300 million pounds worth of actual gross cash of interest. We're in a good, strong position from a cash point of view.
Secondly, our net assets at GBP 1.4 billion, despite the reductions in the year, are still very significant. We still have a significant portfolio and significant size business. In actual assets make up GBP 1.33 per share. When we look at the underlying assets, there's actually GBP 1.33 per share of asset against each share, despite this morning, it only trading at about GBP 0.58. As you've heard, there was a significant loss in the period, about GBP 345 million. Actually, all of that can be accounted for by Nanopore. Nanopore represented GBP 370 million of that. If you do exclude that, we actually have a very small profit, about GBP 25 million. Also perhaps worth noting, nearly all that happened in the first half of the year.
Actually, the half year we had about GBP 310 million loss. The second half has been relatively flat. Lastly, as you've already heard, we're maintaining kind of our focus on shareholders. We're still paying out a dividend of 1.26 pence, which is a small increase from last year, to keep that kind of shareholder-friendly approach. This slide really explains it, you know, it was a key year in two halves, really. The public companies were down significantly. You can see down by GBP 428 million down the year. The private companies are actually up. They're up by GBP 100 million in the period. Which gives you a net position. When you look down, as I've already mentioned, you can see those key movements by sector.
Nanopore down on its own by GBP 370 million. Life Sciences again, down, but really relating to our public companies. That's Diaceutics, Centessa, all of that reduction is due to that. DeepTech, relatively flat, but the outstanding performer was Cleantech, and that was relating to First Light Fusion, which you've heard about, and also Oxbotica, two really exciting companies. You can see really why those values have come. Australia, America, relatively flat. A pretty strong form, though, overall in Australia, which was up about GBP 10 million on only about GBP 30 million of assets. They had a very strong year. Again, showing the same information really. You can see again that there's key companies that really have swung in the year. We've heard First Light, Oxbotica, whilst public companies coming down. Worth mentioning briefly, Hinge Health there.
We've got Hinge Health, actually had a very strong year. It's got fantastic financial performance. We can't actually report it's confidential, but it's got very strong growth. We've looked at a number of our companies who've had external valuations, and because some companies in the public domain, particularly in the private sector, there's been a reduction of kind of the value against the turnover. We've taken a reduction. We've taken it to the lower end of the range of values, but still a very exciting company. I've already talked, obviously, Nanopore. That really does lead us, I think, that analysis, to looking perhaps our valuation. Obviously, that's one of the key things, how we're valuing our portfolio. We take the view, and I hope we can demonstrate, but we have a very conservative approach to valuation.
If you just look at that pie chart to the top right there, that's effectively representing our net assets. How have we valued each component of that net? Obviously, cash is valued for cash. 9% of it, you know, 100% of that is your cash. Small amount of working capital items. You've got your quoted, 17% is quoted. Again, that's marked to market. There's no dispute, there's nothing we can really do with that. We have 21% that's actually been financed in the period. That's something we've actually raised money, a material amount, from third parties, and then we've marked it to that value. That seems a pretty good endorsement about a company's worth if people are prepared to put their own money into it.
Actually, it's interesting to observe. You can see on those bar charts at the bottom. Actually, our experience in private market hasn't really been reductions in value. You can see either up rounds or flat rounds. We had some 90% of them are up or flat, really 10% actually down. That didn't change between first and second half. It hasn't weakened, particularly in the second half. It's pretty much consistent during the two periods. Of course, because we have Parkwalk, who are also a very heavy investor in this sector, we also have their experience, where on their investments, 15 were up, one was flat, and only two were down. It seems pretty consistent across the sector. That last 35%, that big sector there is e-external valuations.
What we did was, because obviously valuation is very sensitive at this time, we went out and for the next 10 biggest assets, we got third-party valuations. 35% is valued by third parties. In every case, because they always provide you with a range, you get a range of values. In every case, we've never taken more than the middle of the range. We've never gone above the middle. Number three of the 10, we had actually the bottom of the range, as you just heard on one. On average, we were about a third of the way up. We tended to be conservative even against external valuations we had. Then last, finally, there is actually 19% of our portfolio which has actually been valued internally. Again, all of those are open subject to investment committees, as a guide.
Obviously, the auditor does do extensive work on this. The companies that we provided them to audit made up over 90% of all of our portfolio. Virtually the whole portfolio has also been reviewed by the auditors as well, who, as you heard from Greg, say we are mildly cautious. I think we feel very confident with our valuations and that GBP 1.33, which underpins our actual net assets. Looking very quickly, you know, we have a very simple set of financial accounts, really. There's only two key features on it, really. There's the portfolio made up of the companies we've invested in, and then there's the cash. You can see effectively, we had significant increases last year in 2021, and obviously they've fallen back, but not as far as the 2020. Still GBP 100 million up from that.
As we've already heard, most of that does really relate to Nanopore, which we remain obviously big supporters of, and we believe will recover over the next year or so. The slide on the right is quite interesting, in fact, because it sort of tells us something that perhaps the market's not fully picking up. I've already mentioned about GBP 1.33 net per share, this sort of shows you where it's coming from. GBP 0.15 of it is just cash. Nanopore, even at these much lower values, is GBP 0.20. If you look at those other companies we've just talked about today, First Light, Istesso, and Oxbotica, they make up enough to get you about GBP 0.61. Just what we've talked about in cash represents considerably more than the current market cap, share price.
The remaining 76p, it's all the rest of the company that you've heard about. At the moment, in this current market, that's not factored into our share price at all. That will include all of the four companies have got double-digit growth in the DeepTech side. It's seven of the therapeutic assets that are in clinical trials are gonna be out over the next two years. All the other companies, we actually have 95 companies in total, so it's the other 91 companies. It gives you a good idea, but we believe there's great potential for an increase in the value of our shares. I won't spend too long on this slide. I'll go through it relatively quickly. You certainly take away our total portfolio there of GBP 1.3 billion.
The shape of it hasn't changed too much. Nanopore used to represent 31%, but now it represents 16%. Meanwhile, tech has come up a lot. That was only 7% this time last year when we've spoken, and obviously, that's now increased a significant % since that period. If you look to the right, another thing to take away is actually, although we have a big portfolio of 95 I spoke about, actually, most of the value is concentrated in that top, small sort of top 20 companies, which represents 76% of all the portfolio. Perhaps the key takeaway from this though is if you wanna get access to some of the most exciting science in the U.K. through a single investment in a public company in, in this country, we are unquestionably the best investment.
We also have exposure to America and Australia as well. Some of the most interesting DeepTech science in the world, and really, we are the best place to come and find it. Final slide, although one more slide after this. This is the cash flow, and this cash flow kind of gives you the story of the year in a single slide, I guess. I'll just quickly run across. We invested GBP 93 million a year. That's actually down from what we thought we were gonna invest at the beginning of the year when we were talking this time last year. That's 'cause we very quickly spotted where the wind was blowing, where the market was going. By January, we could see.
We made significant reductions in our planned investment, which proved to be a wise move, 'cause we could see that the kind of exits we'd had in previous years, you may remember we did GBP 119 million and then, GBP 191 million, sorry, and then GBP 214 million over the last three years of exits. We could see they were gonna fall, and sure enough, we actually only had GBP 28 million of exits during the current year. We had adjusted for that early. We maintained our dividends, as we've spoken about, and a small amount of share buyback, which we completed, meaning we paid out GBP 20 million to shareholders. Overheads are pretty much consistent. Overheads, we were at GBP 19.1 million this time last year, and we're GBP 20 million now.
Actually, there has been a small increase during the period, which is slightly disguised by the fact that we deconsolidated America at the end of last year. About $4 million of expense have dropped out. There's not been a significant increase, and we still believe this is a sensible level of overhead for the business. The last thing, which I'll go on to the next slide, was really the debt. We've managed to access another GBP 120 million of debt during the year. We're in a very strong financial position. We only drew down half of that, which means although we paid some of the European loan off and had some interest payments, actually our net increase on the debt side was GBP 30 million. We've got another GBP 60 million to take down.
It means that we've really got about GBP 300 million of cash that we can access. You've heard this slide before. I talked about it at the interims, but just going through it one more time because I think it's worth reiterating. We're delighted to have this facility. I think we did a good thing by getting it early in the year. Again, at the same time as we decided to moderate the level of investment, we decided to make sure we had sufficient financing as well. What you could see was gonna be a difficult full year in terms of exits. We got 5.25 fixed on it, which put that in perspective, we're currently getting 4.6 on the money we're depositing, so it's almost self-funding, this loan facility.
We paid a little bit off of the European Investment Fund, so we've got GBP 105 million net increase, and we're delighted that it's been provided mostly by Phoenix. We're very pleased to have that relationship, both of us trying to promote sustainable investments. Two tranches, one to go, as I said, and a nice, good long-term out. We don't have to repay until all of it till the end of 2029. It's a well-priced, decent-sized facility, but for long term. With that, I'll hand you back to Graham.
Thanks, Dave. Just to quickly summarize before we move on to questions then, I thought, quickly a reminder of the three main headlines. The financial result is definitely disappointing and reflects the overall macro environment, particularly Oxford Nanopore. I hope that you will agree that we've made significant progress in the underlying business and in our delivery of our strategy. I think crucially for the current environment that we're in, we're a very well-financed company, and we've continued our sustainable realizations-led approach to returns to shareholders. Before we move on to Q&A, I want to do two quick things.
One was to reiterate this slide. I think the key thing that I want to highlight again is our expertise, our experience, our insight, and our knowledge of the sector that's been built over many years, which we think will allow us to continue to build that portfolio, deliver returns, and deliver track record, which ultimately is the way that we create value for shareholders by driving that NAV per share. That is a singular focus of the business at the moment. The second thing I just want to remind you is, you know, I do think science and technology or innovation creates hope. Innovation plus capital creates growth and value.
As Dave said, IP Group is one of the few listed companies that you can play that investment theme in a diversified way and at scale. You know, we believe we're very well-placed, given the prospects for the portfolio to deliver substantial returns out to 2025. I thought I would just highlight a few of the businesses that have got upcoming catalysts or value drivers underneath those three themes, which I set out the prospects for each. Life Sciences, as a reminder, clinical trial progress and revenue growth. You can see some examples there. Technology, our DeepTech, is all about revenue growth, continuing the double-digit revenue growth of those top businesses.
Then on the cleantech side, an element of technical progress, significant fundraisings and a focus on new pipeline. Thank you very much for your attention, everybody, and we will now turn to the Q&A. Greg, that's great. David and Gavin as well, thank you very much indeed for your presentation this morning. If I may ask the rest of the team just to bring up your cameras for the Q&A, that would be great. Ladies and gentlemen, please do continue to submit your questions just by using the Q&A tab that's situated on the top right-hand corner of your screen.
Just while the team take a few moments to review those questions that were submitted already, I would like to remind you that a recording of this presentation, along with a copy of the slides and the published Q&A, can be accessed via your investor dashboard. David, we did receive a number of pre-submitted questions ahead of today's event. As you can see there in the Q&A tab, we've also received a number of questions throughout your presentation this morning as well. Firstly, thank you to all of those on the call for taking the time to submit their questions. David, perhaps if I just hand over to you to chair the Q&A session with the team, then I'll pick up from you at the end. Thank you.
Of course. Great. Thank you very much for that. Yeah, no, we've got a very impressive display of questions, thanks everybody for that. I'll go through and I'll try and dish them out as I go. The first one is, can you provide an update on the prospect of resuming share buyback policy and progressive dividend payments? Shall I perhaps do that with the financial hat on, perhaps I'll do that one first.
Well, I think just conscious we probably covered that one, didn't we, in the, in the presentation. As you got 25 questions.
Yeah, okay. Yeah. Okay, fair enough. No, if people are happy with that, I think that's probably covered. The next one is probably one for, I know they keep coming in. Oh, yeah. Fair enough. One for Sam, probably. It says that we were targeting some sales, maybe Hinge Health, some time ago. Why did it not happen? There's a why we have a more aggressive approach to selling other shareholders where the board has minimal influence on the management strategy. Would you like to comment on that at all, Sam?
Well, I'll take the first half of that. I don't think we ever explicitly said we are targeting to sell our Hinge Health state. We did take some off the table at the time of the company's Series E financing at the end of 2021, I believe it was. And we stated that we would look for other opportunities potentially to take down our holding if and when they arose. But as you will know the market for, well, for all tech and growth companies has hardened or softened, depending on which way you look at it, since that time. There really hasn't been an opportunity to do that. But, you know, we're actually very happy with Hinge Health. It's performing fundamentally very well.
Again, if and when the opportunity arises, we would potentially look at taking some more off the table.
Thank you, Sam. I'll answer this one very quickly. Can you provide an update on the lockup constraints of any on the sale of Nanopore? There aren't any. I'll move on with that one, if that's okay. Please outline some important cost-cutting measures that the board has actioned at group level. I'll very quickly answer that one. Actually, in the current year, we haven't made significant reductions in costs. The reason for that is we actually did it over the last two or three years. The last two or three years, we were refining our overhead. You may or may not remember, we actually reduced head count by about 40 staff when we stopped doing the tech transfer activities at Imperial Innovations, for example.
actually, we really had our cost base in very good shape before the turn in the market. We haven't found we need to this year. Next one. I'll give this to you, Greg, if that's okay.
Of course.
Can the board explain its understanding of the continuing discount to the share price? In light of the fact that it's been a feature for quite a long time, has the board considered a more aggressive approach, perhaps, to asset disposals?
Yes. I mean, the discount to NAV is a challenge for the business, and it's very disappointing as a shareholder myself in the company that we trade at such a significant discount. Our observations on it, and we've discussed this with shareholders, potential shareholders, and we are very focused on reducing that discount to NAV. I think the comments I'd make are, one, long-dated returns at the moment are quite out of favor for in terms of being an asset class. Fundamentally, we have to continue delivering against our strategy and delivering shareholder returns. We have to grow our NAV and investors will take a view on whether or not that's an attractive investment proposition.
The way that we are growing our NAV through the strategy is to focus down on those investment areas where we see the greatest opportunity, where we've got the best track record, so an example is in Cleantech, and also on the companies that we think are gonna drive returns. I've tried to set out in the presentation and in the results the key value drivers for each of those three areas of the business. We think there are very compelling returns to be had. In terms of narrowing the discount to NAV, we've done two things. One is to have a clear, sustainable approach to shareholder returns. That's based on realization. When we make realizations, we will use a proportion of those realizations to make cash returns to shareholders.
As I said, in 2021, it was about 20% of our realizations. Given, realizations were lower during 2022, we actually returned about 50% or just under 50% of our realizations, and that was by way of a dividend. We will continue to employ that policy. The other thing that we're doing is, you know, we want to ensure that we are in front of mind and have spoken to and made the investment case to as many shareholders as possible who would hold this asset class. When the investment appetite in the space increases, we are front of mind and buy our shares. That's definitely the way we're taking. We've got a long-term approach, and we've got a short-term tactical approach as well.
I think that probably covers the next question as well.
The next question, and the next question after he does. The question is, I'll do it very quickly, which is one talking about, Sorry, it's a bit, about share buybacks, very quickly saying you've had some exits, GBP 28 million. We don't seem to have done any more share buybacks. That's because we've never set a formal number publicly. We don't state it publicly, but we do consider the dividends we do being part of the distribution of those exits. In the years we're going to be paying out dividends of about GBP 13.5 million. As a, we think that's a big enough proportion effect with the exits in the air. That's why.
Anyway, if you get above a bigger number like we did in previous years, you start getting an excess for share buybacks over and above the dividends. I'll do this quickly. How do you allocate new investments between IP and third-party managed accounts? Would you like to? Yeah, great. Perhaps.
Well, I mean, we can do the, at the moment, we have way more investment opportunity than we have capital for across both balance sheets and our managed funds. They're relatively clearly defined. Parkwalk starts very early with EIS funds, and the balance sheet has its three thematic focus areas. As some of our growth capital relationships, like with Hostplus, tend to come in at a later stage of development. There's no sort of crowding or risk of a sort of conflict there. They're very complementary capital. As and when we achieve what I'm setting out to achieve and have much more third-party capital, much more balance sheet capital, then obviously we'll be developing sort of fair allocation policies.
At the moment, we've got more opportunity than we've got capital for.
Thank you. Now here's a RIM-related one. I'll summarize a bit. It's quite a long question, but the point it basically says, the ND of Saga, so the LSE-listed company, funnily enough, so in the office next door to us as I sit here, has directed its board to say that they need to buy shares, and they also have to have a minimum holding in shares. Are we going to do the same thing? Shall I talk very briefly on that? We don't stipulate that we have to buy shares. That bit we don't do, but we do have a minimum holding. It only relates to executive directors, myself and Greg, obviously. We do have to have a minimum holding. Any shares we do accumulate, we can't sell unless it's more than a certain multiple of our salaries.
We do have that. Yeah, from time to time, I'm sure we will be buy shares. We haven't made it a requirement to buy. A chunk of our remuneration is in shares, which means if we get them, we've said we can't sell them because we've got the holding minimum requirement, which is entirely reasonable in my view.
I'm targeted to only 3.5 times my salary in shares. I've bought shares a couple of times last year. As Dave said, I'm sure I'll buy some shares this year. Any bonuses that we get, half is deferred into shares. We have tried to make our remuneration policy as aligned as possible with the very long-term business model that we have. I think when we did the consultation with major shareholders, they agreed that we were being, I think quite sort of thought leading in this space by weighting the majority of our remuneration towards the long term, which I think is fitting for the type of business that we run.
Yeah. Another one I'll give to you, Greg, if I may. How do you see the balance of investment between the key theme sectors changing over the next five years?
Yeah. It's quite an interesting one that. I mean, the approach to capital allocation is, we do both bottom up and top down, as you would expect. In some cases, we then make some, you know, sort of directional strategic allocations. An example of that would be the allocation to Cleantech, where we have, you know, deliberately focused more capital because of the opportunity and the quality of the team and the quality of the deal flow that we see there. I think we should build a business, and we are proud of building a business which has got this diversification across three themes. I would expect the three themes to be major components of the business in five years' time.
I think you can see, or at least hope you can see from the way that we describe the value opportunity in each of those three sector areas. The Life Sciences, particularly, has got a number of companies which are existing portfolio, and the real focus for that is to get those eight clinical stage companies through their clinical trials and then to deliver value from those. That's quite a different approach to say the technology side, where the key driver of value and growth there is growing revenues. The team is focused on helping those businesses to grow revenue. I would say, you know, we continue to have an approach which focuses on those three thematic areas.
I'd envisage that being the case, in five years' time.
Next one. I've not been calling out people's names to keep your anonymity, this one I will say. This is Ken, one of our analysts who follows us. Nice to have you on, Ken.
Ken. Nice to have you.
Could you give an indication of how much capital the existing portfolio would require in the next one year or so? I assume you have budgets based on maintaining your shareholding or other assumptions. I'll do this one, shall I? You'd be glad to know, Ken, we do have budgets. Yes, we certainly do. We're looking all the time. We've got a complex capital allocation process. We're always looking at least three years ahead at our requirements, capital requirements, more than likely exits are. The portfolio could take an enormous amount of money. Won't always get all at once, it clearly goes without saying. What I can say is I think over the next one or two years, we'd expect to maintain the sort of levels of investment we're making at the moment, maybe slightly more as well.
The sort of levels of investment you've seen is what we'll be making into the portfolio. It's probably a fair thing to say. Gavin, I'm delighted to say there's a question. Oxbotica timelines to commercial rollout and revenue generation, please.
Absolutely. We are already in the phases of commercialization, we're already generating revenues today. I think the way to think about this is to be distinct between three categories of revenue generation. One category is in the products that we sell to customers that are data-centric. Our driving technology itself, and that is generating revenue. There are no barriers, if you will, to entry in providing data in exchange for revenues. The second part is in the industrial sector, where we're applying the technology is starting to scale now. Again, we've been commercializing that for the last 18-24 months, now we're in the phases of scaling that up.
In the off public highway areas of industrial applications, that is where we are really focused now and where the nearest and clearest value creation is happening. The third dimension is on public highway, where essentially the revenues that we are also generating on public highways are really about developing long-term strategic and deep programs with our customers that apply autonomy in their space. The shuttle program and the goods delivery program are good examples of that. They are ultimately rate limited and accelerate once you have harmonization on regulation, which we believe will happen during the course of 2025.
That's when we think that we'll intersect with the then decades long tailwinds that come with having a fully assured and fully validated on-road self-driving technology that can expand to many, many markets on the public highways down the line. In the meantime, in that particular space, we're monetizing the development of those areas with those first category-defining customers.
Thank you, Gavin. There's two more coming. As you speak, two more coming on you. I'm sorry about that. Just so everyone knows, we're gonna carry on with the presentation. We know we've gone over the allotted time. We quite understand if people have to drop out off, but we'll keep going through these and try and answer everyone's questions if we can. Two more came in on Oxbotica. You may not be able to answer these, Gavin, please don't if you don't want to. They're both basically about revenue. What was the revenue in 22? The presentation suggests there'd be several billions in the future. Can you give some idea of current revenues? Same sort of point. It's probably hard for you to comment on that.
Yeah. It is hard for us to comment on that, but just to say that we've really been in the stage of commercialization since early 2021. That is increasing exponentially, and we expect that it will continue to increase exponentially for the foreseeable future. When I say exponentially, I actually mean exponentially, not in a, in the figurative speech. It's actually doubling and then doubling again in every period that we're operating in. I can't break out what that looks like today, but needless to say, we are really hurtling towards, in the end, mass scale production of all of these different applications that apply our technology, our singular software technologies of all those applications.
Excellent. Thank you very much. One for you, Sam. How will Istesso fund the IND studies now that the Fast Track designation and orphan status has been secured?
There's a second question on Istesso funding. I'll address them both at the same time. I mean, in short, a mixture of funding from IP Group and external funding. Actually, in reference to the second question, yes, it's late stage development, which we're very excited by, but at the same time, it's actually not egregiously expensive. Just to give you an idea, the phase IIb rheumatoid arthritis study is costing about GBP 15 million, which is obviously a lot of money, but in the grand scheme of things is not hugely. It's not in the sort of GBP 40 million-GBP 100 million that you get into some phase IIb studies or even phase III. An IPF would be a sort of similar magnitude.
We're pretty confident that funding IPF is not gonna be an issue.
Thank you very much. There's one about how many shares do the management team hold. It's a relatively small percentage disclosed in the back of the account.
As disclosed, yeah.
Yeah. Will IP Group commit to a progressive dividend policy? At the moment, that is our policy. We have a dividend policy and we are increasing it each year. That's currently where we are at the moment.
There's another one on discount to NAV. I think we've covered it, you know, the sort of the longer term.
Yeah. We've covered that when it comes down-
The shorter term approach to that.
I've got the front. The majority of your investments in this year seem to be on companies outside of your top 20 holdings. Could you give us a bit more color on what the sector theme focus for your investments were? Mark, would you like to perhaps comment on that? Mark and Sam, perhaps you could comment on your current investments in the year.
Currently it's 2023 we're talking about.
2022.
2022. Yeah, they're looking at the, let's get the numbers right.
I mean, the, the sort of the statistics on this tend to be quite influenced by a few individual assets that are in a particular stage of their funding cycle. There were a couple that got funded the previous year that then didn't need cash in 2022, that sort of skews the, skews the numbers a bit. I mean, our focus is largely concentrating capital towards the assets that are clearly starting to emerge as the successful assets. Also trying to bring up the next tier of assets into that high growth category, we concentrated quite a lot of capital in that area last year. Whilst a small amount goes into sort of seeding new stuff and developing very early stage portfolio, last year followed that pattern.
There were a couple of quite large investments in real assets that we felt were very high potential and had the opportunity to grow rapidly.
Sam, would you like to comment on some of the investments you made in the year?
I missed the question, sorry.
The question said you didn't seem to be investing that much in the top 20 and you invested some other.
Oh.
In the portfolio. Can you comment on what your-
We have definitely I think if you look at our budget, most of it has gone into the top 20. We did make a few, a small number of new investments last year, which are looking very good, and there was extremely strong investment case for each one, but they're very judiciously chosen. In Life Sciences, which is the biggest portfolio, we are reaching a point, as Greg suggested earlier in his talk, with a number of companies that are entering or will be delivering key clinical data over the next sort of couple of years. So we think there'll be a number of opportunities to exit some of those companies or see liquidity in some form, and that will enable us to recycle some of that money and start investing in more new opportunities.
At the moment, we're focused on playing out the existing portfolio with some very judiciously chosen new investments.
Brilliant. Thank you, Sam. I appreciate that. There's quite a long question. I won't say it all the question about the fact that obviously we're trading a significant discount, which we know, but what reassurance can you provide that we can expect to see some profitable exits in the coming years driving positive shareholder returns? Would you like to take that, Greg, perhaps?
Well, I mean, we anticipate more exits this year than we did last year, but we don't expect the level of exits that we saw in 2020 and 2021. That's why we've got the capital position that we've got, and we have a very proactive approach to realization opportunities. I think it's by sector really. Life Sciences, the opportunities will primarily be driven around those clinical trial successes. On the tech side, it's predominantly around achieving the revenue growth. On the Cleantech side, they're really in a sort of an earlier phase of investment now having made significant realizations.
I think it's about GBP 160 million of realizations over the last few years from the Cleantech side, with those top two or three companies, Oxbotica, and First Light Fusion and Hysata, developing, there. That's how we think about the profitable exits, but the pipeline of exits looks very strong, particularly into 2024 and 2025. We're mindful of we want to have a capital position that means that we're not selling companies at a bottom.
I've got two from Odysseas, another analyst. Lovely to have you with us today, of course. You mentioned a few funding rounds have been delayed. These are both capital allocation questions, so perhaps I'll take them. Taking into account, along with your funding round schedule for 2023, does it look like it's gonna be a busier year than 2022? Do you plan to continue focusing efforts on your top 20? We're definitely focusing on our top, what we often call our priority assets. That we're certainly doing. We are also, yes, there are some investments carried over. As I said already, I think we're gonna invest a little more than last year, but it won't be significantly more. We probably will invest a bit more than last year, yes.
Then the other one, I think, again for Odysseas, given the now discount in your share price and NAV, what are your thoughts around the extension of the buyback? We sort of touched on that. We do still have a policy on buybacks. If we make big enough exits over and above the dividends we pay, there will be some element of buyback. So that is still there, but that will be dependent upon significant exits, which didn't happen this current year. We're not really projecting for 2023. We're not expecting the market to significantly change during the course of this year. This is probably one, again, probably a quick Mark and Sam one next. Can you give us an insight to some of the companies you're looking to invest in in the next year?
Some of the companies you are looking to invest in with the cash you have available. I guess it you pretty much covered that, I would argue. If you want to have any comments you'd like to make on that. Any new companies, perhaps touch on new companies you'd like to invest in?
Yeah. A couple of new opportunities in the portfolio. We just invested in a video compression company called Deep Render that we're very excited about. We are closing an investment round in Acceleron, which is an up-and-coming asset in the DeepTech portfolio. There's lots of exciting stuff sort of coming through at the fact some lesser-known end of the portfolio.
Sam, would you like any comments about any new things you may be doing in the year?
No. As I said, we're focused on the existing portfolio. There might be a one or two, again, carefully chosen new investments, but most of our investment budget will be going into those companies that are gonna play out over the next couple of years and ensuring that we have maximized our position in those companies so that we are well positioned to benefit from success.
Thank you. Sorry, I didn't mean to cut you off. Another one to Greg, I think, really. It sort of points out obviously the post-listed performance of RNT has been a little bit difficult. Has that changed your view about IPOs or as a, as a route as partial exit?
I mean, we've done far fewer IPOs in the recent past than we had sort of early in IP Group's life. We definitely learned that AIM was a difficult market for these businesses. The idea with Nanopore really was to list a company only once it had got to sufficient scale that it was doing more than GBP 100 million of revenue, had well-defined customer base, and we had hoped that that would mean that it was a company that would be appropriate for the London markets. Indeed, you'll remember we had an awful lot of pressure, both us and the Nanopore management team to list that business.
There was a lot of, you know, "Why haven't they listed yet?" The management team and us said, you know, when the company is mature enough to do so. I think, I think our approach on IPOs is that we will only do that when the companies are mature enough to be on the public markets. I think in the case of Nanopore, I mean, they certainly the wider market and their peers have come off significantly as a result of, you know, a big reduction in risk appetite. I don't think it changes the, that sort of, that fundamental learning around the company should come to the public markets when they are mature. We believe that was the case with Nanopore.
Thank you. One for you, Sam, I think probably, it's really one for ONT themselves, but it's really, you know, how are ONT doing, compared to their peers on revenue?
On revenue K particularly-
Yeah.
Which is how we look at it. Yeah, Sam can talk about that.
Well, I mean, obviously, I think their results, their trading update was taken relatively negatively by the market because their revenue came in at the bottom end of the revenue guidance. However, that was still a pretty healthy growth rate compared to their peers, most of who've had to downgrade their growth forecast during the course of 2022, or some, a couple of them actually, withdrew forecast altogether. ONT is still growing on a very strong relative basis. The market is probably more focused on revenue multiples. Actually now at the current price, the company is trading about in line with its peer group on a.
It was a little bit higher earlier and before the sell-off, but it's now trading in line, and that doesn't take into account the higher growth rate. You know, it's fundamentally, it's doing well as a business. We think it's undervalued here. Obviously, we're in a tough market. It'll, anyone's guess is as good as mine as to how long it will take for that to correct. I think if they can get through, you know, the first half of this year and show that they continue to demonstrate growth kind of in the high teens, possibly low, you know, into the 20s, then I think, then, you know, we think the stock is well-positioned, the company is well-positioned.
Thanks, Sam. One for you, Mark, if that's all right. First Light's in the process of a large fundraising. Generally, what's the current funding market like?
Well, the statistics suggest it's more hostile than it was a year ago. If you read the State of Venture report that I was reviewing the other day, it says the sort of pre-money valuations are down. I think there's a lot of nuance to that sort of overall market pattern, and I think one of the nuances is that some of the better companies are still getting funded, and it's the sort of the lesser end of the spectrum that's starved of money. We certainly think that First Light falls into that category. We're optimistic about them raising money and some have got good interest, as you'd expect, having achieved something so exciting last year and of course, having had a big sales validation as an resulting addition to that.
There's good interest in that company. The timelines are this year and the next several months that we'll be working through that fundraise. Obviously, it attracts a specialist type of investor, and not every investor is able to invest in an asset like a First Light Fusion site. I wouldn't sit here and sort of guarantee the outcome of what it might be and what number it might be, but there is good progress being made on that.
Thanks, Mark. I think, one for Greg. Are you still planning on pushing ahead with the Chinese investment platform, the current political climate?
Yeah, that's a great question. I mean, it's one that we continue to see Asia and China as being, you know, a huge part of the global economy. You remember. Well, you may not remember, but when we started looking at what activities we should carry out in that part of the world, our view was that it was an area of potential capital, and it was an area of potential growth that our businesses sell into. The political climate has definitely changed over the course of the last couple of years.
We're taking a long-term view with, sort of credible local partners, and are taking, I guess I would describe them as sort of measured steps with that strategy so that, we're building out our capital partners and our relationships over there. If, you know, if it holds true that over the next five, 10, 15, 20 years, this remains a huge part of the world economy, which we think it will be, then, making sort of, you know, judicious and managed steps into having a business presence there makes sense. We are, you know, very aware of the sort of political climate at the moment.
Thank you. I'm gonna give you another one. Let's go ahead. This is quite a tricky big one.
Mm-hmm.
Please articulate the case for investing in IP Group over VCT save, which has tax incentives?
Yeah, the tax incentives point is a really, definitely an interesting one. I mean, as shareholders, you may well know that we operate one of the biggest platforms in the U.K., most successful platforms in the U.K. for EIS investing, which is Parkwalk Advisors, and they provide vital capital relatively early on in the process. I mean, we're not a, an investment trust. We're not a VCT. Being a VCT means you have to hold shares in the company for five years in order to retain all of the tax incentives, and there are a few other bits and pieces that you have to adhere to. I mean, it's a, it's a fair point, and the tax incentives are quite attractive for this area.
We're a broader, more diversified play on the portfolio that we operate. You know, we continue to look at things like structure of the business, et cetera. The, you know, the tax incentive is definitely helpful, provided you're happy to hold the shares for five years. We have liquidity all the time at IP Group.
Thank you. Another question which I think will be for you, Greg, as well.
Mm-hmm.
Is there any tangible progress being made by the U.K. government on helping to build large technology businesses, particularly to improve access to funding through the scale-up gap? Could IP Group benefit from this in terms of managing funds? Conversely, could the potential R&D tax credit change hurt U.K. companies?
I don't know if that is another one of the analysts who follows us who's asked that question, 'cause it's a very knowledgeable question.
Mm-hmm.
We engage a lot with U.K. government and HMT on what the industry and what the financial services industry could do to free up an appropriate proportion, this isn't sort of like loads and loads, but an appropriate proportion of long-term capital, particularly in the U.K., to help fund the scale-up of businesses. There are many, many conversations, and in terms of tangible progress that we haven't seen anything sort of significant announced. We are. This is one of the areas of engagement that we are driving, and, you know, I'm hopeful that there will be further signs of change towards the financial regulations in the budget and in the budget at the end of the year.
We, you know, we continue to try to be positioned so that we could benefit from that if it happens. As many people have said in the past, you shouldn't base your strategy on, sort of government policy and changes in government policy, so we don't. We would hope to be well-positioned if those changes come through, and we're certainly helping to push for them. On the R&D tax credit change, I mean, that had a, that sort of almost sent shock waves through-
Yes
The early-stage industry. Almost all of our portfolio companies in the U.K. benefit from that, and we and many others in our sector have made representations to the government and to the Treasury around those changes. You know, we support the principle of trying to get fraudulent and incorrect claims on R&D out of the system, but the manner in which it was done, I think was a bit extreme. We're hopeful that they will listen to the industry and that we'll get a better structure as a result. Yes, we very much engage on both of those fronts.
I'll go through these fairly quickly. I think I'll quickly deal with how many people does IP Group employ, and what's happened to the headcount and overall operating costs? I kind of touched on that. We have about 100 people. It's 99 on average over the year. Actually we really adjusted our costs before this year, so we haven't made any significant changes in the current year. Perhaps one for you, Greg, if you're happy with this. Have you considered a U.S. listing in the light of more favorable valuations and shareholder recognition of the mix of your assets?
I mean, we and our portfolio companies are always looking at this. I'm not sure we want to add another layer of complexity to the IP Group business at this point in time. We're really focused on delivering against the portfolio over the next, you know, one, two, three years. We, you know, we do look at that as a listed company, of course we do. I think fundamentally we want to drive value in the underlying businesses.
Thank you. Sorry. Have you considered U.S. listing?
That's what I'm just-
I just said that. I apologize. It just came out. Okay. I'm sorry. The portfolio looks really exciting and clearly you're investing across a wide universe. Why would you not buy back your shares? Sorry, it's a share buyback one. I apologize. Well, I think we've probably covered that. Don't know if there's anything else you'd like to say about share buyback.
I mean, we do look at it. I mean, we think that we've spoken to all of our major shareholders. Capital is clearly a strategic asset at the moment. The approach, the sustainable approach to shareholder returns, i.e., based on realizations and a proportion of realizations is the policy that we think is the best for delivering long-term value to shareholders. That will include buybacks and similar mechanisms when we have significant realizations to return a proportion.
Well done. We've got a question probably both, again for you, Greg, but probably I think you've covered the one we just had. Just says, could you not redirect potential Chinese investments to Korea or Japan to avoid political risks? I don't know if you want to make any comment on that at all.
Probably not my place to.
Yeah
Comment on sort of political side. You know, our China operation, would be investing locally in China, not using balance sheet funds. I think it's measured and appropriate steps to you know, for the longer term.
Only two to go, one of which we've already done, you'll be glad to know. What's the state of play on R&D tax credits in the U.K.? I think we've covered that comprehensively. Last question, probably for you, Mark, I think. Can you talk a bit more about Hysata, given the recent fundraising and the significant acceleration of interest in green hydrogen over the last two years? How quickly could Hysata have products available for evaluation by prospective customers?
Yeah. One of the earlier stage companies that we're extremely excited about, we think it's got huge potential in terms of its market opportunity. It is, it is an Australian-based company, as you know, and, well, I'm hesitating slightly because I'm not quite sure what they've said publicly about their timeline for products in the public domain. I think that I'm safe to say that sort of 24-month timescale is reasonable for expectation of those kind of early products being available for evaluation for customers. Greg, in fact, you were in their company more recently than me, having visited the company. I don't know if you've got any additional insight that you can give.
Yeah, no. I think that's. We think that there will be a particular pickup, or the industry thinks there'll be a particular pickup in demand for their products around 2025, 2026. The technical program and the scale-up program is aiming to be ready for when we think that pickup will be. The next milestones for that business over the course of the coming year are basically to prove that you can scale the business from a single electrolyzer to an array of electrolyzers. If we can do that, the prospects look very, very good.
I mean, it's still, there's still technical risk there for sure, but it's got the greatest level of inbound market interest in terms of sort of, you know, conditional orders, if you like, than of any business that we've seen. They've got to get through and prove that they can scale the technology up. If that's the case, then we think we'd be very well set to have products available.
Thank you. Just when I thought I'd killed it, one more of that, I think we have covered it as well. It's really more of a statement saying that in your current situation, there must be some opportunities for share buybacks. I think we've probably covered that question, it can't make
Yeah. Our policy, I mean, I'm very happy to repeat it. Our policy is to have a sustainable approach to cash returns, and we do this based on a proportion of realizations that we make from the business, and we continue to discuss that with our major shareholders and think that's the best way to build and generate return and value for shareholders, which ultimately is what we're here to do.
I think that's all the questions. I'll hand back to you, Greg. That's.
Dave, Greg, David, Gavin, Mark, and Sam, thank you very much indeed for being so generous with your time then, addressing all of those questions that came in from investors this morning. Greg, just before redirecting those on the call to provide you their feedback, which I know is particularly important to yourself and the company, if I could please just ask you for a few closing comments to wrap up with, that'd be great.
Yeah. Well, I mean, I think I'll go back to that point that I said earlier. You know, we, this focus on science and technology, we think, you know, innovation creates hope, but innovation plus capital creates growth and value.
If you believe in that, then IP Group is one of the few listed companies that you can make an investment into back science and technology in a diversified way at scale. You know, we believe our prospects for the portfolio as we've set out, including fantastic businesses like Oxbotica, give us the opportunity for substantial returns out to 2025 and beyond. We're, you know, we're pleased with our financial position and look forward to the future with confidence. On the IR front, as I said at the start, you know, we continue to make sure that we are front of mind and engaging with as many potential shareholders in IP Group as possible.
There's a list of upcoming events, most of which, as you can see from the stars, are available to all shareholders and most of those will be broadcast through the excellent Investor Meet Company platform. Thank you very much for hosting us, and we appreciate your support.
Greg, that's great. Thank you once again to the rest of the team for updating investors this morning. Could I please ask investors not to close this session as you'll now be automatically redirected for the opportunity to provide your feedback in order that the management team can better understand your views and expectations. This will only take a few moments to complete, but I'm sure will be greatly valued by the company. On behalf of the management team of IP Group plc, we would like to thank you for attending today's presentation. That now concludes today's session. Good afternoon to you all.