Earnings Call: H2 2020

Mar 10, 2021

Hey, good morning, everybody, and a very warm welcome to this webinar on IP Group's results for 2020. With me today, I've got Greg Smith, who is our Chief Financial Officer. So this is the I think the 2nd set of results now we presented in lockdown land. And so hopefully, we're all getting used to the format. Greg and I have even managed to coordinate shirts and backgrounds this morning to show our professionalism in lockdown land. But let me kind of tell you the format. So what we're going to do is we're going to go straight into a prerecorded video, which lasts for 20 minutes, which is by me and that gives you an overview of the results. The session is timed for an hour in total, so we've got quite a long time for Q and A. Obviously, we completely understand that people want to drop off after the video, but we're available for the hour to answer any kind of questions that you might have. If you would like to ask a question, if you could use the Q and A function or the chat function, then we'll collect questions together and we'll sort of share them out between Greg and myself live after the presentation. So without further ado, if I could ask Adam to play the video. Thank you. Hello. IP Group celebrates its 20th anniversary in 2020. For 20 years, On behalf of our shareholders, we have been backing radical innovators in science and technology, impact investing long before it became a popular term. This requires patience, resilience and a long term perspective. And I'm delighted to have this opportunity today to provide an update both on the impact and the financial returns that have resulted from this approach. In this presentation, I will give an overview, a brief recap on our purpose, vision strategy, highlight the key aspects of the results and the portfolio performance and then finish with a summary of the key points. Starting with an overview. We have had a very successful 2020. We achieved record financials, a record return on hard net assets of €190,000,000 Record realizations of €191,000,000 And because of this success, we have declared a maiden dividend of 1p per share. And I will talk more about capital allocations later in the presentation. Our portfolio companies raised over GBP 1,100,000,000 in the period, over 2 times that raised in 2019. And this success reflects the alignment of our portfolio to structural growth themes, the transition to net 0, digitization in human health, for example. Looking forward, this alignment built over the last 20 year period means that we are well positioned to benefit as these themes gain momentum, and we have continued to see strong activity into the portfolio coming into 2021. Let me recap on our purpose, vision and strategy. Our purpose is to evolve innovation in science and technology into world changing businesses, businesses that make a positive impact on the environment and society alongside an attractive financial return. We do this by providing the access to the capital and support that scientific innovators and entrepreneurs need to navigate the tricky journey from innovation to scale up and impact. The problem we address is the difficulty that these businesses experience in accessing the capital they need to make this journey. Although the rewards can be substantial, the risks are huge and the time line is often long. And these factors combined make it difficult for many investors. For example, funds that have a fixed life, such as a 10 year venture fund or investors unable to follow their money, such as early stage funds or angel investors to back these ideas. We believe that by funding these opportunities through an evergreen structure, such as a PLC balance sheet, a vehicle that can follow its money through to scale up. We can mitigate these risks and help create impact for companies, companies that over the medium to long term can also generate attractive financial returns. Our vision is an ever growing alumni of self sustaining successful impact companies that IP Group helped create and sustained. Companies who themselves are achieving positive and measurable impacts on society and the environment alongside and attractive financial return. Our strategy is to seek an attractive balance between a diversification and focus, and we do this by operating separate business units or funds that focus on a key sector or key geography or key funding stage in the journey such as EIS funds. Our key sectors are life sciences, deep technology and clean technology. Our key geographies are the U. K, the U. S. And Australia. This diversifies the geopolitical risk that would arise from focusing on one country, also aligns the portfolio against several structural growth sectors without an over reliance on only one theme where momentum might suddenly reverse. The objective of our country facing business units is to create and support university spin out companies in their respective countries. The objective of our sector focused business units is to leverage their sector expertise to sort, invest and support a focused portfolio of start up companies that address critical challenges in their sectors. In addition to our sector and country focused business units, we operate a Global Strategic Opportunities Fund, which is held on balance sheet. This has the flexibility to invest across the portfolio where we consider it advantageous to our shareholders to do so. Because of its size and significance to the group, we also hold our stake in Oxford Nanopore through the Strategic Opportunities Fund. This slide illustrates the relative significance of these business units. So €1,000,000,000 or 90 percent of our portfolio is held within the Strategic Opportunities Fund and the Life Sciences and Deep Technology business units. The remaining 10% is held within the 2 country focused funds in the U. S. And Australia. Aside from investing balance sheet capital, our business units have the flexibility to manage 3rd party capital and will bring in 3rd party investors alongside our balance sheet capital, again, where we consider it advantageous to our stakeholders to do so. For example, at 31st December 2020, 3rd party investors held approximately 18% of IP Group, Inc, our U. S. Business with IP Group owned advance. In 2021, our U. S. Business raised further capital. And so now we're getting approximately 60% of that 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. In the UK, our university spin out focused business, Parkwalk, manages EIS funds, including funds dedicated to the universities of Oxford, Cambridge, Imperial and Bristol respectively. Management of these funds generate fee income to the group whilst providing capital to a greater number of start ups than would be fundable just from our balance sheet. Going forward, Parkour intends to launch a scale up fund to provide further capital to those companies that show the most potential in these EIS funds. We will be a cornerstone investor in this scale up by investing from our balance sheet capital. I'd like to say a few words now about impact investing. 2020 saw record capital inflows into ESG funds, and this trend will only keep growing because the next few decades will see the largest generational wealth transfer in history, an estimated and quite staggering, dollars 30,000,000,000,000 from baby boomers to millennials. This will turbo boost an existing trend towards ESG investing. And given the increased interest from investors in this area, we expect to see further development of ESGsustainable or impact labels as a mechanism to channel investments into assets with higher ESG content or value. A fundamental driver of scientific research is impact. So our portfolio is well aligned to the UN Sustainable Development Goals. And so it's naturally very high in ESG value or content. During the year, we've also pushed forward in terms of our own governance. For example, we carried out a materiality assessment to determine the most relevant non financial key performance indicators to report against, we also established an ethics committee chaired by Professor Gordon Clark of the University of Oxford. So as I said at the beginning, this business is about patients and long term investing. And so I'd like to spend a few minutes highlighting a couple of long term trends which are important. The first is the long term trend of hard net assets per share compared to our share price. And the orange line shows our share price since the company came to market and the blue line shows growth in net asset value per share. And net asset value per share has grown by nearly 6 times or over 11% cumulative since IPO. It dipped between 2017 'nineteen, which largely reflects the dilutive impact to the Touchstone acquisition, but it's now reset into its trend line. The second trend to highlight is the long term trend in cash into the portfolio and cash out of the portfolio. Here, the orange line shows investment in the portfolio and the blue line shows realizations and the bars show the net movements. And you can see how investments increased as the portfolio matured, but how this is now reversed in the last year or 2. In any short term period, these trends will continue to show some volatility. But over any medium term period, we would expect that net asset value per share will continue to increase at 10% plus per annum and the realizations will continue to exceed investment. So turning now to the results and the increase in hard net asset value per share. This slide shows the bridge from the opening hard net assets per share to the closing hard net assets per share. And the increase reflects strong performance in 3 of our business units in particular, the Strategic Opportunities Fund and then the Life Sciences and Clean Technology business units. Turning to our cost base. This slide gives an analysis of our net overheads compared to net assets. Overall, overheads have come down in both absolute terms and as a percentage of net assets between 2019 2020. And this reflects the completion in 2019 of the rationalization of the cost place that took place following the Touchstone acquisition in late 2017. As a percentage of net assets, the overhead base in the U. S. And Australia continues to look high, but that reflects a relatively younger profile of their portfolios. In 2020, in aggregate, costs across the net overheads across the group were 1.6% of hard net asset value, and we would expect this to continue to fall over the coming years. Moving on to our net assets. The left hand of this slide shows net assets at December 'nineteen compared to net assets at December 'twenty. As in previous periods, it's a very simple balance sheet with the 3 main components being portfolio cash and then long term loans. At December 'twenty, the hard net asset value was €1,300,000,000 or 125p per share. And the right hand donut shows how that 125p is made up. So the top 6 add up to 53p per share, the top 20 add up to £76,000,000 per share and the top 20 plus cash to £92,000,000 per share. I'll pick up the 1.1 €6,000,000,000 portfolio later in the portfolio section. Turning to cash flows. This slide reconciles the opening and closing cash. As you can see, the big movements are on the right hand side of this slide, realizations of €191,000,000 and investment in the portfolio of €72,000,000 We continue to reduce our term loans in accordance with plan. And so you can see in the table that net cash has increased by over 81% in the year. I would now like to comment on our capital allocation framework. Recent realizations have left us in a strong position. And understandably, we've had quite a few questions about our intended use of capital. We will deploy capital according to this framework, which has 3 key objectives. And firstly, to support organic growth across our seven business units, 3 countries, 3 key sectors and strategic opportunities. Here, we are seeking to achieve long term impact alongside attractive financial returns with appropriate diversification across structural growth themes within our sectors and also geographies. And we anticipate most of our existing capital will be used for this purpose. And secondly, to manage our gearing to ensure that our servicing requirements are always met. This is currently a commitment of less than £20,000,000 per annum. And then finally, to return any excess capital to shareholders. In the last 2 years, the group has made significant steps towards cash flow sustainability. We have introduced a progressive dividend policy this year and we will consider the return of any additional excess capital that we generate going forward as part of this framework. As a growth company, our shareholders expect us to invest in exciting growth opportunities. However, where there is excess capital, for example, if there is a large realization which cannot be reinvested in a reasonable time frame, we will look to return this to shareholders as quickly and as efficiently as possible. Turning now to the portfolio, which you may remember from the net asset side is €1,100,000,000 As I explained earlier, this has managed principally in 6 separate funds or business units, the 3 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 Australia and the U. S. Turning to the doughnut on the right. As usual, the portfolio is quite concentrated with the top 20 companies representing 74% of the value in the portfolio. In terms of contribution of the different funds and business units, the bars on the bottom show the relative contribution with Life Sciences, Cleantech and strategic ops all having performed strongly in the period. Turning now to our top 20 assets. This chart shows the value of our holding at December 'twenty, together with the fair value movements in the year. The positive movements are shown on the dark green bars. So you can see there are 3 positive movements of particular significance in the period from this chart. Firstly, Oxford Nanopore, where we increased the value of our holding from £54.25 a share in 2019 to £70 a share December 'twenty, and that led to a fair value adjustment of approximately €77,000,000 And this reflects the very significant commercial progress made by that company during the year. And I'll talk a little bit more about Nanopore on the next slide. Secondly, ServicePower, which you can see in the table at the top right of this slide, has dropped out of the top 20 because we sold our holding in the year. And this sale generated £120,000,000 of proceeds and £53,000,000 uplift. And then thirdly, Hinge Health. This is a spin out of the University of Oxford that we first backed in 2012. In total, we've invested less than 1,000,000 in this and owned just over 2%. After a few pivots, Hinge Health evolved into a digital health platform focused on Musco's skeletal pain and is now based in the U. S. It is growing very fast and is generating revenues in the low 100 of 1,000,000,000. On 7th January 2021, the company completed a $300,000,000 Series D round at a valuation of €3,000,000,000 and that gave rise to our fair value uplift of about €39,000,000 Investors included Tiger Global, Bessemer Ventures, Atomico and Insight Partners. On one hand, this is a lucky break for us because we haven't been actively involved in the company for many years. On the other, the company would not have existed without us and this illustrates the optionality in our portfolio. I'd now like to talk about Oxford Nanopore. Oxford Nanopore has had a very strong year. The 2019 financial statements are on record at company's house, and these show a 60% increase in revenues from 2018 to 2019. The company experienced strong growth again in 2020, and it's worth noting the comment in those financial statements, which were filed on 9th October 2020, which stated that revenues at that point were in line with expectations. Revenues have grown strongly in the core business, the life science research tools market, which is thriving. But the company has also benefited from a first out in diagnostics with LAMP or a COVID diagnostic developed in 2020. COVID testing was really a way of moving the company's infrastructure forward. Lamport was a great test case showing that they can build a real on market diagnostic. And there are now many opportunities in the future pipeline, for example, diagnostics in infectious disease or cancer or immunology, for example, HLA tissue typing for transplants or in food and environmental testing. And the company is now very well positioned to grow gradually or in a measured way into these new applied markets, such as clinical diagnostics. And recently, there's been terrific improvement in the forms of the core technology, and this has led to increasing interest across the scientific research community. For example, a new sequencing kit featuring a modified enzyme, tweaked run conditions and a further improved base calling model have produced raw single molecule, single pass sequencing reads above a mobile 99% accuracy or Q20 plus This is classic disruption, new properties, for example, portability, real time ability to sequence long DNA fragments already established in the market. The recent technology developments are starting to push performance and reshaping the market to have new expectations. And it's worth noting that Promethein, the high throughput device can potentially sequence as many as 150 human genomes on a desktop device. But of course, COVID surveillance by sequencing by sequencing SARS CoV-two has been a particularly high profile use case this year, particularly around variant analysis. Nanopore sequence has been used in 77 countries and to sequence more than 130,000 genomes. But this just underlines the broader potential for the analysis of pathogens. I would now like to summarize. In 2020, we achieved record financials in terms of returns on hard net assets per share and in terms of realizations. We ended the year in a strong cash position. This has enabled us to recommend the main dividend of 1p per share. IP Group celebrates its 20th anniversary in 2020. For 20 years, on behalf of our shareholders, we have been backing radical innovators in science and technology. Impact investing long before it became a popular term. Because of this approach, our portfolio is highly aligned to the UN sustainable development goals. We are rich in ESG content. And as the portfolio matures, we see increasing evidence of its impact. During the year, over £1,100,000,000 was invested in our portfolio, over 2 times that invested in 2019. Our portfolios continue to make good progress in 2021. It remains very well positioned to benefit from structural growth themes such as the path to net 0, increasing digitization and human health. In the years ahead, we look forward to the further impact this portfolio can have. I will now leave you with our usual caveats, which can also be found on our website. Thank you. Okay. So we've had a couple of questions on the Q and A. So we will go to those questions and then Maybe more will come in answer on some of the first two questions. So the first question we've had is, what is your view on Cerys Power Holdings rise in share price since selling a significant proportion of your stake in the company, what influenced your decision to sell at that point in time. Yes, I mean, first of all, absolutely delighted for the guys at Cerus, their share prices continue to rise. Fantastic team, fantastic company, and we're very proud of everything they've achieved. And I think every company would want to sell out, so we would hope the share price will continue to rise. And that's my point that we want to leave a grand legacy alumni of companies that are going on to achieve great things. In terms of the timing, I mean, 1st of all, I mean, that is the model. We do start up to scale up. And so our job is to sort of traverse that journey, which other investors find it difficult to reverse. It's obviously quite difficult to get the timing exactly right when you sort of sell out. In the case of Sarah's, there were 2 or 3 kind of factors that were also kind of important. The first is we played a very strategic role in bringing Bosch onto the register of Cerys. And you can certainly argue that, that turbo boosted the price. And have we not sold? Bosch wouldn't be there because there wasn't the equity for them to take the stake, and we helped facilitate that direction of travel for the company. And as a result of that, the company needed to migrate its board to a fully independent board. So I was Chair, Roger Zona, our Head of CleanTech, played a pivotal role in the company, was on the Board. And we both stood down from the Board. And that meant we weren't actively managing the share. We were no different to any other fund manager at that point in time. So a combination of those reasons, plus the fact we made a fantastic return on our investment led us to the conclusion that We wish them the very best in the future. We're very confident in their future, but it was an appropriate time for us to take our money off the table, demonstrate that we can go from start up through to realization and then recirculate that cash into the rest of our portfolio. So that's that question. The next question is IPstroke Imperial, which I think means in Pillar Nations, which became Touchstone, have raised a lot of equity over the years from a small band of institutions who have largely exited the share register. Do you think you'll be constrained this is your model has historically over relied on raising equity. Well, I would say, if you go back to that slide I showed on the a trend on cash flows, you will see that there were really kind of 3 eras. There were the 1st 10, 12 years of IP Group where a very small amount of money will get into our portfolio. Then there was an expansion in quite significant investment from 2011 to sort of 2017, 2018. And I think that's the period, which the this question relates to. But then you also saw in recent years the realizations of exceeding investments. And so we certainly have no existing plans to raise further money from the market, and we're well funded. So we don't think that, that is a constraint on us for the foreseeable future. Greg, is there anything you want to add on that without Finance Director? I think you covered it well in the presentation. I mean, I guess, the long term trend is Over the last 20 years, we've been investing in these portfolio companies to bring them to fruition. And so it's a really exciting moment for the company to have evolved to a position where we're talking about optionality for how we can create value for shareholders rather than that question around do we need to raise further capital from the markets. So I think We are faced with a number of really exciting opportunities in the portfolio. We continue to balance the diversification and the focus. And I hope that the capital allocation policy that we have set out will give shareholders greater clarity on how we Look to prioritize our capital allocation and give returns to shareholders as things come through to fruition. Okay. Greg, if I answer the next question from Charles, I know you answered the question on So the next question is could you please comment on your relationship with OSI, particularly in relation to your realization? Those on the call who aren't familiar with that nomenclature, OSI is Oxford Science Innovation PLC. So Oxford Science Innovation Plc is a company we were a founder shareholder in about 5 or 6 years ago, and it has a formal relationship, it is the preferred commercialization partner of the University of Oxford. So, it's a single university special purpose vehicle that has raised a lot of money that can only invest in Oxford spinouts. We have a small shareholder in there now, 2% or 3%. I still sit on the Board of OSI. And the question relates to the fact we sold some of our shares last year. And the reason why we did that was because we concluded that the company was now pretty mature. We were less than 10%. It raised a lot of money from big global investors, it's going great guns. And now we want to move the relationship on to where we are, a natural co investor. We don't need a big shareholder to be a co investor in Oxford spinouts that OSI generates. And we have a lot of co investments with them both through our balance sheet fund and also through Parkwalk. And worth pointing out that Parkwalk manage the EIS funded Oxford. And so they have quite a lot of co investments. Often, they're the 1st investor alongside sort of OSI. So that's the reason why we did that. We can achieve all our strategic objectives without having such a large holding. The next question, which I'm going to hand over to Greg, is could you provide an update on Aestheto's progress in 2020 and the next catalysts? Yes, definitely. Good question. So you'll see there was about sort of 5, 6 words in the results release on Aesthetics. So I mean, the short answer is that they continue to progress towards starting a Phase IIb trial this year, which is consistent with what we said at the half year and at last year's results, Charles asked the question. He's one of our health care analysts, So knows that there's a lot of work that goes into preparing for those trials. Obviously, the team has been getting on with audit, quality, manufacturing, tox, Etcetera. So that continues, and we continue to anticipate the next milestone for that business will be The commencement of the Phase IIb trial. In terms of financing, you'd also note that IP Group alongside the Future Fund put a small amount of further capital into the business, £6,000,000 during the year last year. That's given them And a bit of flexibility around the start of that Phase 2b. We'd anticipate the business raising a further modest amount of capital in order to take them safely through that Phase 2b. So progress there continues. I suppose it's also worth saying we've had a reasonable amount of interaction with pharma Underlined our existing view that through a Phase 2b, this would be in potential. So hopefully, that's a helpful update. Could you provide more color on Nanopore's new sequencing kits? Would you have an expectation where consensus accuracy will be? And what markets would you say this opens up for Nanopore that were previously not addressable with below Q20 raw read accuracy. Well, again, for those You aren't familiar with this. There's a sort of difference between what they call raw read or single molecule and consensus accuracy. So I referred to raw read accuracy today, consensus accuracy was already kind of pretty high. So this will only kind of improve that. The markets, they will open up. It will increasingly open up markets in things like metagenomics, whole human genome sequencing and also people with complex sort of projects it was so whole and it's sort of driving the general kind of interest across the life science tools research community in this sort of technology. So it will be applicable to many aspects of those core markets. Next question is, can you comment on the PacBio share price rise and cash raise? Does it influence Oxford Nanopore's thinking re an IPO. Well, the first thing that I'd say, if we held the webinar yesterday, you might have been asking me to comment on PacBio's share price decline. So clearly, it has been quite a volatile stock. The Life Science Tools sector generally had a very strong back end to 2020, continued into 2021 and have sort of come off a bit in the last sort of 2 or 3 weeks. So there are maybe about sort of 8 to 10 companies in that sector that are doing very well, all reflecting the fact that, that life science tools research market is quite buoyant at the moment. So and that obviously has benefited Nampore as well and had a very strong 2020. The cash raise the question refers to, I'm guessing, is the fact that SoftBank recently invested US950 million U. S. InterpacBio. Does that influence Oxford Nanopore's thinking re an IPO? Not dramatically. I mean, Nanopore have a very strong value proposition irrespective of what PacBio do. So it's kind of its interest in sort of noise and has definitely generated interest in Nanopore from investors around the world, but it doesn't directly influence the plans of the Nanopore Board, I would say. Next question, could you be a bit more specific on the plans with regards to FOX and Nanopore? Where and when can we expect an IPO? And what will you do with the proceeds? Well, the simple answer to that is we can't be more specific. No. I mean, the we've obviously read the speculation, as I'm sure everybody on the call has read the speculation about a Nanopore IPO. The timing of any Nanopore IPO was a matter for the Board of Oxford Nanopore. We are obviously a shareholder, we're a significant shareholder, but there are many other shareholders in Oxford Nanopore. So that is definitely a matter for Oxford Nanopore. And we wouldn't comment on the kind of the deliberations of a Board of an individual portfolio company for understandable reasons. I would say that I mean, the most important point is the company is going great guns. They're a great UK success story. They are very well positioned to be a dominant player in a very big growth industry. And we're very proud of them. We wanted everything we can to support the management team and the Board achieve its objectives. The question the final part of the question, what will you do with the proceeds? Well, that's obviously a kind of hypothetical question that we're not in a position to answer right now. Were there to be an IPO, then we have committed previously and we will fulfill this commitment to discuss with our shareholders at that point in time so that people are aware of what our intentions may or may not be with respect to Optimumical. Greg, is there anything you want to add on that? Now again, that was something that we hoped we would clarify by setting out our views on both capital allocation and dividend policy. So As with any material one off event in the portfolio that is liquidity in nature, then we would evaluate our options for deploying the capital and also any excess. We would return to shareholders as soon as Possible in as efficient a way as possible. So we talked about in our release, considering things like share buybacks, special dividends, All of those options remain open to us, but we felt it was important, given the maturity of the business to date, to include a small element of TSR In the form of a dividend, and we've included a scrip alternative for those investors who would prefer that the capital remains in IP Group and hold us for Capital appreciation, but that hopefully is a sort of a clear direction of travel on how we think about sharing our returns with our shareholders. Good. Okay. If I take the next question on competitive pressures and pricing dynamics, Greg, and then you said the question on shareholders. So the next question is, can you please comment about competitive pressures and pricing dynamics in the various markets you are operating in? Does this explain your relatively high cash balance? Well, again, that's a 2 part question. The first, I am in Serperton to mean do you have to pay more for the equity in the spin out companies that you back? I would say that we don't. I mean, our strategy on the whole is to back what we start. So we tend to be the 1st investor in a company, And then we tend to hold our corner or invest through subsequent rounds through to scale up. So as a general rule of thumb, we don't play in a kind of general market for technology opportunities. We play in the market for our own companies that we have helped sort of create. Does this explain your relatively high cash balances? Well, the cash balances, as we explained on the capital allocation, are held to satisfy 3 objectives. 1st of all, to allocate capital over our different business units to ensure organic growth. And we certainly have a kind of plan where we can project forward at least sort of 2 years and anticipate the likely capital requirements of every single company in the portfolio. So that's obviously our main sort of priority. The second priority is to ensure that we can meet our term loan commitments at all times. And then to the extent there is excess capital, then the priority is to sort of return that to shareholders in the most efficient way. Greg, do you want to answer the question about shareholders? Yes, good question. So I think in a way partly linked To the earlier one we had around, you had a reasonably concentrated register who were helpful in you raising capital during that phase of your growth. I would say the last 12, 18 months have been characterized by a broadening and possibly maturing of our shareholder register. So to answer the question directly, our main shareholder now at 15% is RailPen, who we're delighted to have on the register Long term capital pension funds seems highly, highly appropriate for the nature of returns in this business. Then the next 5%, all between sort of 4% 5% are Bailey Gifford, again, a very long term supportive shareholder Lansdowne Partners, same story. Lion Trust, who are on the sustainability side, which is one of Trends that Alan mentioned, they've been on our register for many years as well and have recently sort of increased their position a bit. BlackRock, primarily through the index side rather than the active side and then Imperial College, who are at 4%. So they're the main holders. And there was a question in the chat, which I'll just quickly cover off now, which is around, will we make the presentation available? Yes, we will. We'll put that up on the website after the conclusion of this call. And in the appendices, I'm afraid there are Quite a few appendices for people to read at their leisure. But in Appendix 3, we have all of our shareholders who are above 2%. And We're just looking at whether or not we can, I guess, sort of buck the trend of a main market company and include regular updates on our Top shareholders on our website, which is something that AIM companies do, but main market companies tend not to, but we get quite a few questions, Particularly from the retail holders? And in the spirit of high levels of transparency, we're looking at putting those on the website. So hopefully, that answers the question on shareholders. Okay. I'll take the next question, Greg. And then if I could pass over to you Stefan's questions, because they're mainly around kind of cash and quite complex. Stefan is one of the analysts. So that's kind of a little bit of a hospital pass for Greg. Our next question then is, in the presentation, you mentioned a planned fund in Parkwalk to finance the commercialization have developed in Parkwalk Investments. Please could you expand on the timing and plans for this fund? Yes. So Parkwalk is planning to launch a what they're calling the scale of funds. So today, Parkwalk manages EIS funds, Enterprise Initiatives Scheme funds, typically raised from alumni in university specific funds. So they've been running funds for several years now at Universities of with Cambridge Imperial well, Oxford, Cambridge and Bristol and then more recently Imperial. And they are planning to launch a scale of fund, which could then be a natural kind of follow on fund for companies that have had EIS money. And if you think about it, Parkwalk has been doing this for a number of years. That portfolio is heavily concentrated in 3 of the best top 10 universities in the world. And the scale of fund will invest in the kind of the most promising companies coming through those various CEEDAR EIS funds. So that seems very compelling idea. And it seems entirely appropriate for IP Group shareholders to be a cornerstone investor in that fund alongside other third party investors. And we would expect that fund to launch this year. Can we give any further guidance on time on that, Greg, on this? No, I'd be confident if it to be this year, Probably not much more than that. I hope we can update you at the next set of results. Yes. So maybe when we do the half year results, we can ask the Parkwalk guys to come along and give an update and presentation on that business generally. Yes. And Parkwalk is worth saying for those of you that don't know the Parkwalk business, given the nature of their investors are generally Individuals in the U. K, they have a very active communications team and blog. And so you can see quite a lot of information on the portfolio companies in on their website. It's worth saying we don't include a lot of it on the IP Group website, Mainly because at the moment, we don't have balance sheet exposure to those EIS funds. But as we become a cornerstone, we will obviously update shareholders on the Major components in that scale up fund. Right. Do you want to take the next two questions because they're both kind of cash finance taken, and I'll pick up on the touchstone one, Graeme. Yes. I'll read them quickly. So They are all around strategy on realizations, deployment and potential returns. Is the balance sheet now at the right size is sort of fundamental question. The specific questions are portfolios maturing and growing. So how do you see rate of deployment changing in 2020 21 or growing in 2021. Will you follow your money more this year? And I would point everybody to The longer term trends slide in investment and divestment. Over the course of the last 5, 6 years, We have typically been investing between €60,000,000 €65,000,000 at the bottom end and up to about €115,000,000 at the top end. And that depends, to a degree, on the major transactions in any given year at the sort of the top end of the portfolio. The $67,000,000 we invested this year, I would expect that we would invest more in 2021 than 2020 Just on balance of the transaction, so there will be an element of that growing. In terms of following our money more this year, You might remember from the first summary slide, there were 2 very big transactions in terms of the overall monies raised the portfolio this year and $392,000,000 of which was into Hinge Health. Alan explained the background to that company, but We didn't participate in the Series C or the Series D in that round. And so the question around sort of following our money, Typically, we have been able to back and support all of our focus companies with the capital that we want to deploy. So we haven't been Constrained, but the sort of the simple answer is I would expect to see it go up in 2021, but within that range over the last 5 years. 2nd component of the question was, will the need for cash realizations be more passive and opportunistic rather than necessary from here? I mean, on every portfolio company, we are taking the sort of decision that Alain articulated on CERES. There is A plan for the company to develop commercially in the early phases that requires net funding into the business of which we are typically The first investor, then a large component as a part of a syndicate. And then at points in time, it becomes appropriate for us to recycle capital and start the process to gain with the next batch of maturing companies. So I'm sure, given the capital markets at the moment, there will be plenty of inbound opportunity, and there are also planned commercial and technical points that will give us opportunity to realize? And then finally, would you see cash from here as What's the right size of balance sheet given there are now a steady flow of realizations? Well, Alan sort of answered this one already. We have done We sort of allocate our capital on a 2, 3 year out basis given the nature of the portfolio. And All of that capital on balance sheet is earmarked for primarily the maturing companies in our U. K. Portfolio on the Life Sciences and the tech side, where we see the greatest opportunity for shareholder value creation and realization over the next 2 to 3 years. But we continue to assess that. And if we have more realizations in excess of the plan that we've built, Then as I said before, we will look at the most sort of speedy and efficient way to return any excess to shareholders. But we're at a really exciting point. We have got lots and lots of Opportunity in the portfolio to create value. And so we will balance that to the best of our ability for shareholders. Okay. Do you want to take the next one, Greg? Yes. I was going to say the next one, what are your performance targets, I. E, IRR, time period, money multiple, Cash generation per annum, as I would expect any professional BC outfit to state. I think It's definitely an interesting one, this. So we obviously have a collection of business units, and we believe the way to generate outperformance is to have The Specialist Sector and Specialist Geography Business Units that Alan described earlier in the results presentation, the long Term trend of our return on capital, and as you saw right at the start of the presentation, was about 11% per annum. And that puts us in really good company, and we're in a lucky position this year where we can talk about 17% returns and confidence for the portfolio and for the coming year. We in order to achieve that at an individual company level, we're clearly targeting much, much higher than that. This is the typical pre money for one of our first rounds of investment in a brand new company can be anything from 500,000 to 1000000. So we're clearly looking for that to grow in excess of 50 to 100, if not 1000x. So The growth in the IRR targets do definitely change by stage, but our view is we're in a really exciting position. And if we can achieve at least that 10% regularly, particularly in the next growth world and at scale, Then we will be competitive with all the major asset classes. Okay. The next question is one relating to Touchstone, which I think most people on the call we'll know it was an acquisition we made back in 2017. The question is, this was an acquisition that wasn't taken very well following several write downs early on. But more recently, we have seen quite a few of its holdings notably contributing to returns and some of the synergies being realized. Could you take us through your side of the journey from the acquisition to the write downs, the recent contribution and your expectation of how its portfolio will perform going forward. So yes, that will probably take another days to take you through that whole journey, but I will I'll do my best to do it in 2 or 3 minutes. So if we start with the kind of logic, the logic at the time was that both Touchstone and IP Group had 2 constraints. 1 was a lack of kind of critical mass or size to appeal to global investors. And 2 was an overreliance on, as one of the previous questions referred to, a small number of investors in the U. K. Who were prepared to sort of back innovation over the medium to long term. So the logic of bringing both companies together was to create greater sort of scale, more efficient cost base and a vehicle that could would appeal more to a greater number of investors on a kind of global basis. That was the kind of the logic. Obviously, it was contested and it was primarily contested because we didn't pay a premium. We bought the business at net asset value. And the reason why we didn't want to pay a premium is because we for their portfolio was a tad overvalued looking at it from the outside, even though we thought the logic for all the shareholders on both sides made absolute sense. And so their board contested it because they wanted to get a premium, which we weren't prepared to pay, the write offs that came were higher than we had anticipated. I mean, if you look at their bid defense, they kind of wrote up their assets quite significantly immediately prior to acquisition. And so a lot of those then reversed out. There was also then a natural period of sort of rationalization or consolidation. And so we gave explicit instructions to our sector teams to focus on the assets in the combined portfolio that could have the most impact. And so obviously, there's an old saying in Venture that the sort of lemons ripen before the plants and there was an element of that. There was an obvious degree of rationalization and so that's why the kind of Bright House came first. And the question is absolutely right. It's absolutely right that sort of more recently, there's been some strong performance in some of those companies that we acquired, companies like Featurespace, WaveOptics, Enterprise Therapeutics. There's quite a few companies about strong performance. So going forward, we have quite a high level of confidence in the refocus of the portfolio. So hopefully, that answers that question. Moving on, what's your medium term plan with respect to Nanoport, I. E, should I enter your IPO at some point? Would that impact your desire to continue to hold onto this investment in similar size? Well, I referred to my earlier answer, I can't speculate on an ONT IPO has for some time and also likelihood. And we've always said to our shareholders that But were that event to occur, we will make our intention sort of clear. We're going to enter a consultation with them, and we will keep to that commitment. Next question. Following the sales over the last 18 months by Wim Invesco and Lansdowne, nearly 50% of the company has transferred ownership. Only around 15% has been RNS ed and accounted for by newholders, leaving approximately 30%. It is hard to believe that all of this volume has ended up in the hands of those with holdings below the 3.3% reporting threshold. I think it is in the interest of other shareholders that you attempt to find out if somebody in stake building and persuade them to reveal their position. I would be interested in your comments. Well, we are certainly not aware of anyone's state building and we certainly have released all the TR-1s as soon as we have received them. There were a number there were several existing holders who did top up their holding as a result of that kind of Invesco sale. So it was there were quite a widespread of kind of buyers And there were certainly new institutions who came on the register below that sort of 3% threshold. As Greg said earlier, there is an analysis of shareholders to the best of our knowledge and belief in the presentation, which will go up on the website later in one of the appendix, it's currently in which appendix it is. Does that show over 2%, is it? Yes. Yes. So in Appendix 3 on the presentation on the website, we will disclose every shareholder of 2% as far as we have been notified. Next question. During a period of VC boom in the States, why are we unable to raised such a small amount of money from so few institutions to the U. S. Fund. And the answer to that is that was all we were seeking to raise. Obviously, we don't want to raise significant amounts of money and dilute down PLC shareholders at a relatively still relatively young age in the age of the U. S. Portfolio. And if you think back to that slide I showed on the trend on investments and divestments in the portfolio, you will have noted in the 1st 8 years in IP Group's history, probably 10 years actually, including 5 to 7 years of Nanopore, the amounts of money invested in the portfolio were very, very small. So the nature of this game is you do want to invest small amounts of money in the early years and allow a Darwinian principle to play out and then put more significant capital behind your winners as they become obvious. The U. S. Portfolio is looking really very promising, I think, at the moment. And but you can see the bigger amounts of money will go in probably in 2022, 'twenty three time period rather than in 2021. So the answer is we raised all the money and a bit more than we were seeking to raise. Right. I think we're down to our last question now. There's a couple we had on e mail, Alan, and I'll just I'll cover those as well. Just Do you want to do the assessment? The next one is aesthetic. And Craig, do you want to pick that one up? So conscious that there's been no change in attributed value to this holding for some time, is it still realistic? Will Phase IIb trial be the only trigger? So is it still realistic? Well, you'll see in the results released that this is one which is not valued on the last funding round. €6,000,000 that we put into the company was convertible debt. But obviously, given the size of it, we have taken A third party valuation reporting to account. So we've worked with Deloitte on that one and have done for the last couple of years. As part of the work that we've done in looking at the commercial side of the business over the last year, we've Ensure that, that model is accurate. I mean, clearly, it gives you a wide range of outcomes depending on the size of the market for RA and other anti inflammatory indication. So it's clearly one of the subjective valuations, but we're comfortable with it. And it's supported And agreed. And I'm pretty sure KPMG, when they reviewed it, rated it as sort of a medium balanced valuation. So yes, we are. And we do still believe that's realistic. Will Phase IIb trial be the only trigger? It's clearly the main one. And there might be some other bits of news around other indications, proof of concept, etcetera, but the Phase 2b is the one that we're pointing at as the main trigger. The next question was USA, will shareholding and Inc. Fall further in 2021? Well, the as at December 2020, as Alan said, we owned about 80% of the business, the funding, which We'll see the business for about 2 years. In the U. S, we'll see us at about the 60% level for that period. And then clearly, we will look at that as one of our major places that we can allocate capital at the point in time that the business next needs to raise funds. And then any general feedback on large shareholder conversations last year Regarding possible share buyback, all of that wealth of shareholder conversation feedback that we had Since the half year results last year has gone into shaping our capital allocation framework that we have articulated in this set of results under the joys of the expanded Section 172 world where we talk about all of the Various consultations we have with our important stakeholders, and we do cover that a little bit, and that will be in the full annual report and accounts. But I would say, On the whole, major shareholders were supportive of a share buyback below NAV for excess capital over and above that, which we can deploy to successfully deliver organic growth as per the first leg of the capital allocation policy. Great. Okay. We're at 11. We've got one final question, which is from our great friend, Kerry, at Numis. So I'm going to answer that one even if we go 1 or 2 minutes over. We'd be really not to. The question is, can you comment on the recently announced proposals for a revised national security review on investments in the U. K, leading the possible global investor constraints. Sounds counterintuitive for Life Science and Tech sectors and your efforts to globalize U. K. Asset platform. So this question is around I mean, this is a trend we're seeing across the world where almost like as a result of recent geopolitical events, countries are becoming more xenophobic and passing legislation to prevent access to intellectual property from outside influences, the probably diplomatic way to put it. I mean, the sort of good news is that everyone's waking up to the value of hard science and intellectual property. I mean, clearly, it is a risk in the U. K, and we're actively involved in that sort of debate. I mean, we probably have more experience than the vast majority of people because we've seen similar legislation in the U. S. And in Australia. And we're starting to see mergers of the pattern. There's a lot of tough thumping in political statements. And then when you get into the detail, you're able to kind of negotiate pragmatic ways around things so that you can continue to engage in investment activity. And I think that's because the overall purpose of this legislation is probably not to stop legitimate investors buying minority interests in particular kind of companies. But it is definitely kind of a risk. I agree with Kerry. It's risk to the U. K. So it doesn't need to be properly addressed. Okay. With that, one minute past 11, is there any concluding remarks you'd like to make, Greg? Or are we okay? I was just thinking we have had 3 or 4 questions in on e mail. I'm conscious that it's 11 Many of the themes have been covered. But if I just do 1 or 2 minutes, if people want to leave, Then no problem. But in the sort of spirit of completeness, I think it's just fair to cover those off. So One was on Nanopore valuation. I hope the presentation, the comments that Alan made around The progress made commercially, particularly since Q3 last year, drove our view on the Nanopore valuation. The second one was on, does the Board have a view on how much cash the group needs? Again, I hope that I've covered that one in terms of capital allocation. And then there were 2 sort of more specifics. One was might Hinge this is Hinge Health be close to a sale or an IPO. There are a number of press reports in the U. S. Quoting Dan Perez, who is the CEO there, That they're targeting an IPO in 2022 off the back of doubling their revenues to $200,000,000 in dollars 200,000,000 this year. So there definitely is some sort of public intention on that front. And then there was a more general question. Are there any foreseeable milestones in 2021 Stones in 2021 'twenty two outside the Life Sciences and Strategic Portfolios. I would answer that one to say yes. Probably two themes to look out for. In tech, there are a growing number of our businesses whose value will be driven by revenue growth. That includes FeatureSpace, which is of our top 5 assets, which is AI for combating cyber fraud and Garrison, which is a cyber defense business And Azuri, which is in our cleantech portfolio, they do off grid solar energy systems. And it's also worth saying that a number of the analyst reports have picked up on The positive progress of WaveOptics, who we note count 8 of the top 10 tech and social media companies or the biggest top 10 in the world and as customers, and they flagged in their 2019 results that they were planning a funding round. So that's on the tech side. And then in Life Sciences, I guess, sort of aligned with that question around the portfolio coming good. The team has worked really hard to Shape that portfolio into a handful of focus assets that we have great conviction on. And there are about 15 sort of significant clinical, technical or commercial milestones in the next 2 to 3 years, the first of which Is the EMA or MHRA decision for Cronacort in Europe for Diurnal. And you might have seen recently, if you follow that company, that the FDA recently confirmed the sort of relatively easier 505 Regulatory pathway for their big testosterone product, DieTest, and that has a really attractive market of sort of $5,000,000,000 a year. So clearly, that's very interesting. And then finally, I'd say, we've been talking about maturing businesses and realizations. You will come to sort of see a number of the earlier lesser known businesses over the next 2 to 3 years coming to the fore. I mean, there's plenty more in the tail for investors to make great returns on. So I think, hopefully, that answers all the questions Great. Okay. Well, with that then, we will wish you all a very good day. Thank you very much for your attendance. And if you have any kind of follow-up questions, then by all means, just sort of e mail Greg or I or Liz in our IR team, and we'll do our best to answer them. Thank you all very much. Thanks, everyone.