Earnings Call: H1 2021

Aug 5, 2021

Good morning, everybody. Welcome to this webinar on our interim results for the period ending 30th of June 2021. My name is Alan Aubrey, and I'm the CEO. With me today, I have Greg Smith, who is our CFO. Greg, you can unmute and say hello or just give a wave. Morning, everyone. There you go. You see we've coordinated with backgrounds and shirts this morning. Let me start by explaining the format of this webinar. In a minute or two, we will play a pre-recorded video which lasts for about 22 minutes. This video covers a presentation by me on the key aspects of the interim results. After that, we'll come back to a live Q&A hosted by Greg and I. You can ask questions via the Q&A facility in Zoom. The webinar is scheduled to finish at 11. We'll have about 30, 35 minutes or so for questions. If we run out of questions before that time, we will finish early. If we have too many questions, we'll try and consolidate some together into themes so we finish on time. At the end of the webinar, we're going to finish with a 3-minute video featuring some of our portfolio companies on their reflections on their relationship with IP Group. We're releasing this video to coincide with our 20th birthday, which the official 20th birthday is actually this week. Anyway, without further ado, let's play the video on the interim results. Hello. Welcome to this presentation on our interim results. I will cover an overview of the period, give a brief recap on our purpose, vision, and strategy, highlight the key aspects of the results and the performance in the portfolio, then finish with a recap of the key points. Let's start with an overview. 2020 was a record year for IP Group, and this trend continued into the first half of 2021. We achieved a return on net assets of 9% or 18% on an annualized basis, GBP 111 million of realizations. We ended the period with a healthy cash balance, and that has enabled us to declare our first interim dividend and also announced this morning a GBP 20 million share buyback program, and I will talk more about that later. Our portfolio companies raised GBP 1 billion. The first time that this milestone has been achieved in any 6-month period. We invested GBP 70 million out of that GBP 1 billion. This success reflects the alignment of our portfolio to structural growth themes, human health, the transition to net zero, and digitization. Let me briefly recap on our purpose, vision, and strategy. Our purpose is to evolve innovation in science and technology into world-changing businesses. Our aim is to achieve a positive and measurable impact on society and the environment alongside an attractive financial return. We do this by providing the access to the capital and support that these scientific innovators and entrepreneurs need to navigate that tricky journey from innovation to scale-up and impact. The problem we address is the difficulty of these businesses experiencing accessing the capital and support to make this journey, because although the rewards can be huge, the risks are substantial and the timelines often long. These factors combined make it difficult for many investors to back these opportunities. For example, the time from inception to scale-up can often be more than 10 years, and this means that funds that have a fixed life, such as a 10-year venture fund, cannot fund the early years. However, the multiple funding rounds involved means that investors who can fund the early years find it difficult to do so because of the risks of being heavily diluted before you hit that kind of hockey curve value accretion stage. Funding these opportunities through an evergreen structure such as a PLC balance sheet can mitigate these risks and generate economic value through the creation of companies that might not have otherwise existed. Such a vehicle can also follow its money, through to scale up. Being quoted, particularly at scale, can also provide liquidity to shareholders. Our vision is an ever-growing alumnus of self-sustaining, successful impact companies that we helped create and sustain, companies that may not have existed without us. Our financial returns will, of course, be measured by conventional metrics such as return on net assets, but our impact returns will be measured by the impact that these companies achieve in the world. Of course, any individual company in our portfolio is high risk. Through portfolio management, we offer investors diversified exposure to a portfolio of private companies focused on critical structural growth themes. Our strategy is to maintain a balance between diversification and focus, and we achieve this balance by operating 7 business units or funds that focus on a key sector or key geography or funding stage. Let's look at an overview of the group. On 30th of June 2021, these business units managed GBP 1.25 billion of our own assets and GBP 0.5 billion of third-party assets, as set out on this slide. It's worth noting that 90% of the balance sheet assets are managed within 3 funds, life science, strategic opportunities, and deep tech, whilst 80% of the third-party assets are managed within our wholly owned subsidiary company, Parkwalk. Because of its size and significance to the group, we hold our stake in Oxford Nanopore in the global strategic opportunities funds. Our business units have the flexibility to manage third-party capital and bring in, if necessary, third-party investors alongside our balance sheet capital where we consider it advantageous to our stakeholders to do so. For example, on 30th of June 2021, third-party investors held approximately 40% of our U.S. platform. This strategy has allowed IP Group Inc. to build critical mass in the U.S. without the need for our shareholders to provide all of the capital. Moving forward, I would expect the proportion of third-party assets under management to increase, maybe to nearer one to one in the first instance. This will help the company achieve its purpose, build critical mass in our chosen sectors and geographies, and generate income for the group. I'd like to say a few words now about ESG and impact investing. 2020 saw record capital inflows into ESG funds, and this trend is expected to keep growing. The global pandemic has, of course, disrupted just about every facet of our lives and, of course, has exposed many shortcomings in our economic and social systems. By extension, the pandemic has also had a profound impact on ESG investing as there is now a heightened sense of awareness and urgency to combat climate change and social inequality. There is a strong natural alignment between the group's purpose and impacts. In recent years, that's been articulated by assessing the impact of our portfolio against the UN's Sustainable Development Goals, or SDGs. We continue to focus on improving our own performance in broader ESG issues, and we will highlight some of these improvements in our second annual ESG report, which will be published shortly. This business is about the long term. I'd like to spend a few moments highlighting the long-term trend, in performance in hard net assets per share, in particular, compared to our share price. Hard net assets comprises mainly cash and portfolio, divided by the number of shares in issue at any point in time. The orange line here shows our share price since the company came to market, and the blue line shows the growth in that net asset value per share. Net asset value per share, over that period, has grown nearly 6 times or over 11% cumulative since IPO. It dipped in 2017-2019, which largely reflects the one-time dilutive impact of the Touchstone acquisition, but it's now returning to that trend line. Looking forward over the medium term, we expect net asset value per share to continue to grow at a double-digit rate, and that will comprise most of the total shareholder return. Cash returns in the form of dividends and share buybacks will also comprise a smaller but valuable element. Turning now to the results and the increase in net asset value per share in the period. This slide shows the bridge from the hard net asset per share. It's GBP 1.25 at December to GBP 1.35 at June, and this increase reflects strong performance in our 2 biggest business units, life sciences and deep tech. I'll come back to the underlying reasons for this later in the presentation. Turning to our cost base. Overall, net overhead has continued to fall, and costs have been well managed. In the first half, net overheads were just under 1.5% of assets under management. This reflects flat overhead, and an increase in fee income at Parkwalk offset by an increase in the accrual for performance-related pay, which is known as the Annual Incentive Scheme, or AIS. Staying with Parkwalk for a few moments, this business also had a successful first half. You will recall from the group overview slide that Parkwalk manages GBP 400 million of third-party money, 80% of all the third-party funds in the group. At present, this comprises EIS funds and the company is indeed the market-leading growth EIS manager. As you can see from this chart in the top left of this slide, assets under management have grown consistently over a period of time. However, looking at the chart in the top right, the net contribution to the group fell dramatically in 2020, and that reflected the fact that the first lockdown coincided with the end of the tax year, and this had a knock-on effect on the whole EIS market. Going forward, the company is planning on raising its first institutional fund, positioned as a follow-on fund. We have committed GBP 15 million to that fund. Moving on to net assets. The left hand of this slide shows net assets at June compared to net assets at December 2020. As in previous years, it's a previous period. It's a very simple balance sheet with these three main components, portfolio, cash, and then long-term loans. At June, the hard net asset value was GBP 1.4 billion, or GBP 1.35 per share. That donut on the right shows how that GBP 1.35 is made up. The top six companies in the portfolio equate to GBP 0.54, the top 20 to GBP 0.83, and the top 20 plus cash, GBP 1.01. In other words, that top 20 plus the cash are 75% of that GBP 1.35. I will refer to that GBP 1.25 billion portfolio value later in the presentation, keep that number in your mind. Turning now to cash flows. This slide reconciles the opening and closing cash. The big movements are on the right-hand side of this slide, those realizations of GBP 111 million and investment into the portfolio of GBP 71 million. However, it is worth highlighting GBP 26 million of funds raised into the U.S. business and the dividend payment of GBP 11 million. We've continued to reduce our term loans in accordance with plan, so net cash doesn't show the same increase, but it's still up over 23% in the period. I would now like to comment more on our capital allocation framework. This is the set of policies we have for how we allocate balance sheet capital, and these recent realizations have left us in a strong position. Understandably, we've continued to have quite a few questions about our intended use of capital, and the answer is that we will deploy capital according to this framework, which has three key priorities. Firstly, to support organic growth across our business units. Here, we're seeking to achieve long-term growth in net asset value per share alongside impacts. We anticipate that most of our capital will be used for this purpose, i.e., for organic growth. Secondly, to manage our gearing to ensure that our servicing requirements are always met. This is currently a commitment of less than GBP 20 million per annum. Finally, to return any excess capital to shareholders. In the last two years, the group has generated significant cash, and we expect cash generation to remain good, albeit lumpy, over the coming years. Whilst we will reinvest most proceeds in growth opportunities, we also recognize the benefits of a cash element to total shareholder returns. At the 2020 year-end, we introduced a progressive dividend policy, and we are delighted to continue that at the half year with our first interim dividend of GBP 0.48 per share. We've also announced this morning that we are allocating GBP 20 million for the purposes of buying back our own shares. Such shares will only be purchased at a discount to net asset value. Of course, we will update the market on any relevant transactions in this regard in the normal way. If there continues to be excess capital, for example, if there was a very large realization which cannot be reinvested in growth opportunities within a reasonable timeframe, we will look to return this to shareholders as quickly and as efficiently as possible. Turning now to the balance sheet portfolio, which you may remember from the net asset slide was that GBP 1.25 billion I asked to keep in your mind. As explained earlier, this is primarily managed in six separate business units or funds in three sector-focused business units, life sciences, deep technology, and clean technology, a group-wide strategic opportunities fund, which mainly comprises our holding in Oxford Nanopore, and then two country-focused funds in Australia and New Zealand and the U.S. Turning to the donut on the right, as usual, the portfolio is quite concentrated, with the top 20 companies representing 76% of the value of the portfolio. In terms of contribution, the bars on the bottom of the chart show contribution by business unit with, as I explained before, life sciences and deep tech having performed particularly strongly in the period. Let me just say a few words now about our top 20 holdings. This chart shows the value of these holdings as of 30th of June, together with the fair value movement in the period. Those movements in fair value are shown by the positive movements by the dark green bars. I'd like to highlight four significant transactions in the period. The first two are complete realizations, and so the companies no longer feature in our top 20 holdings. These are shown in the table at the top right-hand of this slide. In May 2021, the U.S. social media giant Snap acquired WaveOptics for a consideration in excess of half a billion dollars, which we believe to be one of the largest ever venture-backed deep tech exits in the U.K. This led to an uplift of GBP 24.6 million in the value of our holdings. The consideration was split in two equal tranches, the first of which was paid on completion in May, and the second will become due 24 months from completion. The first tranche of consideration was paid in Snap shares. We sold these shares shortly afterwards at a premium to their issue price, delivering cash proceeds of GBP 29.4 million. Also in May, we announced a GBP 30.7 million gain from the sale of Inivata to NeoGenomics, returning GBP 64.6 million in cash to the group. Turning to the chart, Centessa, which is the fifth company in from the left. Here, we rolled up our holding in a company called ApcinteX into a new company called Centessa Pharmaceuticals, which floated on Nasdaq in June, valuing our 2.8% stake at GBP 40.6 million and providing a GBP 21.5 million uplift. Earlier in the year, Centessa had carried out a GBP 250 million oversubscribed crossover round. Raised a further GBP 380 million at IPO. Two companies to the right of Centessa in number 7 is Nasdaq-quoted Athenex. This holding arises from the sale of portfolio company Kuur Therapeutics to Athenex for paper, and so we now own approximately 11% of Athenex. I'd now like to say a few words about Oxford Nanopore. This company continues to perform very well. It's enjoying very strong growth in its core life science research tools business. As indicated in the first half of 2021, revenues in this core business will have grown greater than 80% year-on-year. The company also benefited from revenues from COVID-19 testing, although these are not core business, and we are assuming they won't continue beyond this year. The company remains very well-funded, having raised GBP 202 million in new capital during this period, including GBP 125 million from new investors Temasek, Wellington Management, M&G, and Nikon. There are many factors driving this growth. However, I thought it worth highlighting two. Firstly, the significant progress of the company's PromethION device, which provides sequencing data at very high throughputs. This will be a key driver of future growth, and in the period, the company announced several high-profile projects in this area. In May, the NIH in the U.S. purchased PromethIONs to support research into Alzheimer's and related dementias. The researchers are seeking to generate long-read Nanopore sequencing from roughly 4,000 patients with Alzheimer's disease. Genomics England also recently announced that they will sequence thousands of human genomes using PromethION in a project that will evaluate its potential to provide rapid, rich insights into cancer genomics. Finally, the PromethION has been used on the ambitious Emirati Genome Program in the UAE. Although this project was announced in late 2019, it only really started to scale this year because of the pandemic. Secondly, of course, higher profile for a general audience, Nanopore has played a critical role in the world's epidemiological response to COVID-19 and is being used in over 80 countries for this purpose. As an example, in June, the Rockefeller Foundation announced over $20 million in funding and the establishment of a new pandemic prevention institute to help strengthen global capability in this area. Oxford Nanopore is one of just 20 organizations collaborating with the Rockefeller Foundation on this initiative and to expand global sequencing capability. The aim is to identify disease outbreaks early and stop their spread within 100 days. Let's hear this 2-minute video from Dr. Rick Bright from the Rockefeller Foundation explaining this initiative. You might not know this, but we discover more than 200 outbreaks every year that could spark another pandemic. To stop the next outbreak from becoming the COVID-19 of tomorrow, we need to move quickly today. I'm Dr. Rick Bright, and I'm going to tell you how we can prevent the next pandemic in less than 100 days from its first outbreak. Three things hold the key to an early pandemic response, collection and sharing of data, a trusted early warning system, and modern data analytics to pull it all together. As part of our work to create The Pandemic Institute, the Rockefeller Foundation is already building the partnerships and tools necessary to meet this ambitious goal. We're committed to making these measures transparent and equitable, and we believe they will keep the next outbreak localized and controlled wherever it happens in the world. It's important to start now to avoid the damage of another COVID-19. It's the only way we can stop the next deadly disease in the first 100 days. That's how, together, we can stop pandemics for good. I'd now like to summarize. In 2020, we achieved record financials, and this trend continued in the first half of 2021 with a return on hard NAV of 9% and GBP 111 million of realizations. This has allowed us to evolve the business to a new level and distribute some of these realizations to shareholders. Today, we have declared our first interim dividends, and we've also announced an allocation of GBP 20 million for a share buyback program. IP Group celebrates its 20th anniversary in 2020. For 20 years, on behalf of our shareholders, we've been backing radical innovators in science and technology, impact investing, long before it became a popular term. Our portfolio has made great progress in 2021 and is very well positioned to benefit from these structural growth themes, such as human health, the path to net zero, and digitization. Companies like Oxford Nanopore have demonstrated the impact and returns that can be achieved by backing world-class science and taking a long-term supportive approach. On behalf of our shareholders, we also reinvested GBP 70 million of our money in the period into world-class science, and we look forward with confidence to updating everyone on both the impact and the financial returns that this investment will generate in the coming years. I will now leave you with our usual caveats, which can also be found on our website. Thank you. Hello again. Welcome back, everybody, to the Q&A. What's going to happen, I'll act as the sort of compere and divvy questions up between Greg and I. As is traditional, I'm going to use the CEO prerogative and throw 3 questions to Greg. Get ready, Greg. Thank you. By all means, keep questions coming as we go through the initial batch of questions that have come through. The first question I am going to pass to Greg, the question is, can you give further details on the share buyback program? In particular, how will it work, and what discount will you buy at? Greg? Thank you. Sounds like a fair one for me. As Alan mentioned in the presentation, for the first time, we've now allocated £20 million of our capital to buyback, that forms part of our overall approach to total shareholder returns. Those of you who remember from the AGM will remember that our AGM authority enables us to buy back shares in circumstances where doing so is accretive to NAV per share, only when our shares are trading at a discount to NAV. The use of that £20 million of capital will obviously depend on a few factors. There are the usual regulatory considerations. For example, we couldn't buy back while there's inside information. In terms of practicalities, we'll use a broker to buy in the market subject to volume and price requirements. In terms of that specific question on the discount, we don't have a formal discount target. In fact, we believe that announcing a specific target could hinder rather than help the execution of buybacks. Obviously, we will look to be consistent with that plan to be accretive to NAV per share. We will update the market as and when this capital is used via the usual channels of RNS. Okay. Thanks, Greg. Moving on to the second question we've had, which is, when will Nanopore do its IPO, and what will you do with your shareholding at IPO? I'll take that one. For those, I guess most people on the call will be aware of this, Nanopore announced a few months ago that they had started the planning with a view to doing an IPO in the second half of 2021. The first thing I would say, it's obviously fantastic the company is doing so well. Hats off to those guys. They're doing a kind of fantastic job. The second thing to say is we remain very supportive of the board's plans. I think you'll understand we're not able to comment when the IPO is a matter for the board of Nanopore. We're not able to comment any further on those plans other than what they have put into the public domain. I appreciate that's frustrating for people, but I'm sure you can all understand the reasons why it's not our place to comment on those plans in any detail. In terms of our shareholding IPO, again, these are matters that are governed by regulatory requirements. We're not in a position to speculate on what we may or may not do on an event that may or may not happen in the future. We can't really comment any detail on that. Let's move on to the next question, which is a bit of a technical question, so I'm going to put this one to Greg as well. The question is, the loans from limited partners of consolidated funds, circa GBP 26 million in the operating cash flow, can you help us understand better what these are and what the payback terms timing is? All right. Good question. I'll try and keep this as simple as possible. Basically, this is a quirk of consolidation accounting. Where we have external investors in funds alongside us and where those funds are structured as limited partnerships, which is not uncommon, then when we produce our group results, we bring into our balance sheet the assets, i.e. the holdings in the portfolio companies and also the loans, which is how capital is typically provided through limited partnership structures. In terms of repayment, there's no fixed date or profile. It's not like our term debt with the EIB. The idea is, or the mechanism is that those loans are only repaid from proceeds from sales of the underlying portfolio companies in that particular fund. The GBP 26 million this year, positive in our operating cash flow, that predominantly reflects the capital that our U.S. business, IP Group Inc., raised during the period. You'll note that we noted that there was about $60 million of capital committed to that business, and they draw that down as needed, part funded by us and part funded by external LPs. It's a bit of a quirk of the accounting, but that's why that one's in there. Okay. Thanks, Greg. Next question is about the allocation of cash and capital. If I say a few introductory remarks, then again, I'll hand to Greg to describe the process. The question is quite a long question, so get yourselves ready. Now that you're in the strong position of having a very sizable cash balance, can you give us a deeper insight into the cash allocation discussions that the board has? How do you think about the allocation to new projects, further investment in existing assets, versus buybacks, versus dividends? Would be great to get your latest thinking. Thank you. If I just say a few comments. As I described in my presentation, we have these essentially 6 business units, 3 focused on key sectors, which is Life Sciences, Deep Tech, Clean Tech, and then 3 focused sector agnostically, but on countries, which is the U.S., Australia, New Zealand and Parkwalk in the U.K. All of these business units have fantastic opportunities. We sit down and allocate capital across those business units as is appropriate. The business units themselves are responsible for getting the balance right between backing new projects and backing existing projects. A couple of things I would highlight in particular. First is Life Sciences. There's an amazing opportunity in Life Sciences. If you look at the kind of the Life Science industry across the world, 30% of the top 50 Life Science universities in the world are in Europe. Yet, on average, a European biotech have access to one sixth of the capital available to their counterparts in the U.S. Quality of science in terms of citations, patents, is as high, but the capital isn't there. We've managed to build critical mass in life sciences, and we've built a portfolio that is at a really kind of key inflection point. We see major opportunities to push on in life sciences and the leading player in providing that kind of capital in Europe. The second area I'd emphasize is clean tech. Clean tech was 5% of the total assets you saw on one of those earlier slides of the total, but that's partly because they exited some of their bigger opportunities like Steris last year. We do envisage backing more new projects in clean tech, and we see a major opportunity to back science-based businesses that are fundamental to that net zero transition. We have one of the best performing and longest-standing climate tech teams in Europe, and so we see that is a kind of major opportunity going forward. Those are the two I would highlight in particular. Greg, do you want to say a few more comments on the actual process we followed? Yeah. Actual process, as you'll imagine, this is a core part of what we do as an executive committee and a board. Capital is one of our most important resources. It takes up a lot of our thinking time and getting this balance right between those 3 capital priorities in our framework is going to be a big driver of how successful we are in delivering our strategy and our business model. I think as I've commented in previous years, the process is probably as you'd expect, we look out 3-4 years across the portfolio, across those business units. The business unit heads have plans for balancing their maturer assets and new opportunities. We look at 3 things. We look at the available capital that we have now. We look at our funding sources, which are, luckily at the moment, recycling capital from successful execution of the strategy. Obviously you have to risk-weight realizations because experience has tended to show us that they can be a bit later than planned and some of them don't come off as planned. We do the same thing on our investment requirements as well. We allocate those, so we have a top-down and a bottom-up process. We review that formally on a full year basis, looking out about four years. Every quarter, the senior team meets and goes through those forecasts and makes any adjustments as necessary. I think what I hope shareholders will see is a consistent approach to generating that double-digit return. The majority of that will be by way of capital return. You should expect to see us reinvesting the majority of capital that we realize. Partly to deal with the historic volatility in our share price that we've seen around NAV per share, we do think a cash component or a distribution component is an important part of the overall TSR for an IP Group shareholder, we'll continue to balance that appropriately. I hope that gives a bit more color. In terms of the how do we think about the level of capital going into new opportunities, sort of new opportunities in a given year? Remember, the IP Group model is to start backing things very early in their life cycle. Typically, capital into new things is a very small proportion of the overall capital in any given year. I included a stat in the half year results where more than 90% of the capital that went into the group's portfolio in the U.K. was into companies, and that are either in the top 20 or focus, typically they're older than four years. That's just a natural part of how we seek to deal with the timelines involved from a capital point of view. I hope that gives a bit more color. Thank you, Greg. I will take the next question. It's a two-part question. Part A is, what has gone wrong with LamPORE as the government have abandoned use, et cetera? That's related to Nanopor. Part B is, are you still confident in Nanopor given that it will not turn a profit for five years? The first part of the question as a reminder, LamPORE was a diagnostic test that Nanopor developed for the diagnosis of the presence of COVID-19. This is not sequencing genomes. It's not identifying strain variants. For example, it is merely detecting the presence or non-presence. Company developed that last year and sold tests to the U.K. government. The short answer is, it's not a short answer, actually, but the test is really good. It works well. It sat between kind of PCR and lateral flow, so it was far more accurate than lateral flow. It was more scalable than PCR. Essentially, what's happened is there is a sort of surplus of PCR testing capability at the moment. We always envisaged it would be a one-off kind of revenue stream for COVID-19 testing. Obviously, the company is benefiting very substantially from genomic analysis of COVID-19 with all of the concern on various strains, so it continues to benefit from that side of COVID-19. The intention was, and still is, that the LamPORE test and the platform will be developed for other diagnostic tests, which will take longer to come through because of the regulatory requirements to get certain diagnostic tests approved. That's the answer on LamPORE. Are we still confident in the company, given that won't make a profit for five years? Well, the answer is yes. The company is growing very strongly, and if you look at the comps and what drives the valuation of the comps, it tends to be 2 metrics in particular, revenue growth and gross margin, because that gives the concept that people can sacrifice profits in the short term in order to gain market share. If you have high gross margin and high revenue growth, then the path to profitability is more easily executable, and there's a far bigger benefit to be gained from growing your market share. That's the position Nanopore's in. We believe that the market will recognize that, because that's how they value all the comps. That's the kind of right strategy for the company to follow. That's the answer to that one. Just moving on, the next question is, I'm going to give to Greg. What do you think is driving the discount to net asset value of the share price? Well, yeah. That's a great question, and I suppose one answer is, the director shouldn't have a view on the share price, but obviously we do look at it and what's driving the discount. If you look at the history Alan showed in the presentation, and we've shown this for the last sort of 5, 10 years of our presentations, we've grown our NAV per share, our assets per share on a relatively consistent basis at about 11% per annum over that period. The share price has been very volatile, and this is not an unusual thing for companies such as ours. If you look back to 3i in the '80s and '90s, they saw a similar phenomenon, perhaps a bit less as pronounced as for us. That's something that we are aware of and could be a bit of a challenge for some institutions to hold our stock, hence the evolution of our approach to total shareholder returns. In terms of why investment companies trade at a discount to NAV, there's a whole load of research and academia on why this may be the case. Part of it can be down to market cycles. If people are anticipating our NAV is going to go down in future, then it trades at a discount. If people anticipate it's going to go up, then it can trade at a premium. There's liquidity and how liquid the underlying portfolio is. While it's not our job to manage a discount, we are mindful that a discount that gets too wide and that's too volatile compared to our NAV per share is something that we should be involved in looking after. I think the brokers and the market all have a view on why or why not the discount may or may not be there, and we should trade it sort of with NAV as an anchor, is my belief. Okay. Thank you, Greg. Next question is, can you give some detail on how exclusive your agreements with your named universities are, i.e., do you have first dibs on any startups, or how does it work? Yeah. This is an interesting question. It probably dates back to when, 10, 15 years ago, when IP Group sort of started, we did have a number of exclusive agreements with universities, which were kind of fairly straightforward. There was a seed fund at each university. That seed fund provided seed capital to viable spin-outs from each of those universities. We've migrated that model over that period. It's kind of richer now. The way we source product is kind of richer than that simple model back in the day. For example, the 3 sector teams have their own proprietary relationships and knowledge of where key science fundamental to what they are trying to achieve is. If you looked at the clean tech pipeline, you will find very deep insight into each of the propositions on that pipeline, but those propositions may not come from our old partner universities. We found that kind of sector-based approach is better on the whole than the universal partnership model because the downside of the universal partnership model was you sort of really had to back every viable spin-out rather than just the really kind of premier 1s. We use those sector teams to effectively cherry-pick key bits of research that they have strong hypotheses on. In addition to that, we've also got Parkwalk who run EIS funds at leading universities like Oxford, Cambridge, Imperial. As I mentioned in the presentation, Parkwalk now are looking to launch their own scale of fund, which will be in a position to invest in the best of those spin-outs that have come through the EIS funds. We have committed to be an anchor investor in that sort of scale-up fund. That's another different method of getting exposure to best spin-outs. The final point is in the overseas territories, it's slightly different again. In the U.S., they focus on 6 or 7 key Ivy League universities, Yale, Johns Hopkins, Penn, Princeton, but they don't have exclusivity. In reality, on the grounds, they're one of the key operators in those regions. Finally, in Australia, they do have more of an exclusive arrangement with the 8 leading universities there. That's very good because that business is at the stage the U.K. business was 15 years ago. There is more logic in that exclusivity because it helps build critical mass with limited competition in its early years. That's the answer to that question. I'm going to give the next question to Greg, which is, do you think that the very long timeline for startups to mature into something worth a multiple of cost has shrunk in recent years due to tech advances, so your IRR will improve in the future? Yeah, Craig, if you want a question that drives you towards a forward-looking statement, that's certainly one, isn't it? In terms of trends, it obviously differs from sector to sector. What's clear, and people who've paid any attention to the financial press or indeed the wider press over the last 18 months, there's been a lot of talk of acceleration in various trends that we've been following and investing in for a long period of time, digitization, human machine interface, even the remote working, and also human health. Of course, the amazing things that we've seen in terms of development of new viral treatments for diseases is making biotech companies look at the development timelines and work out what it means for the whole sector. A lot of the big shifts, and again, this is a trend maybe that's accelerated, but was an existing trend in software and companies that are less based on deep technology and IP, they can see quite rapid increases in value. Most of the companies that we back are fundamental science creating a product or a service based on IP. The timelines are slightly longer there. Hopefully you've seen in the recent past, in the last 18 months or so, some quite rapid value accretion, even in the life science businesses, as those companies either partner, or hit successful milestones, or indeed get acquired. Will our IRR improve in the future? We're certainly confident of the business model delivering double-digit returns. We plan for more than that and hope that we can share that success of both financial return and very impactful companies with shareholders and our stakeholders into the future. Thank you, Greg. I'm going to give you the next question as well, because it's a little bit of a techie one. No, sorry, I got that wrong. What is the intended split on the dividend between half year and full year, and what sort of dividend growth do you anticipate? We've obviously only done 1 full year dividend and 1 half year dividend. Sort of indicating our intentions for growth. There's very small data set so far. Typically, the dividend interim to final split is something like 50/50 or 40/60, you should expect something similar from us. In terms of our plans for the dividend, we have said it will be a modest component. I don't have any intention to try and turn IP Group into a yield stock. That's definitely not what we're trying to do. We started from a modest GBP 0.01 a share, we do want to have a progressive dividend strategy where that increases over time. By the time of the full year, you'll see whether it's 50/50, 40/60, you should see some growth in the dividend expected for the full year. Okay. Thank you, Greg. I will take the next one, which is, can you please comment on your thinking about portfolio concentration, particularly in respect of ONT? More specifically, how sensitive are you to IP Group potentially viewed as an ONT proxy, especially in case of a successful IPO of ONT? I can think of many things worse in the world than being viewed as an ONT proxy. Having said that, it is a sort of a fair point. We see ONT as an exemplar of what you can do by backing high-quality, disruptive science and over the long term. We certainly have no intention of being an ONT proxy over the medium term. That said, we obviously want to ensure we get a proper value for our stake in ONT. Yeah, that's the way to handle it. Sort of over time, in the short term, that's possible, but in the long term, we see our job to create more ONTs. As I described earlier, we see amazing opportunities across all of our business units, particularly in the short term in life sciences and around the transition to net zero. No, we don't intend to be an ONT proxy in the long term. Good. Okay. I think that is all. Well, we have answered all of the questions. We'll just kind of wait a few seconds to see whether anybody has any kind of final questions. Right. In which case, I thank you all very much for your participation and your kind of questions, and we'll finish with the final video on 2021 and reflections from some of our portfolio companies, both past and present. Thank you all very much and have a great day.