Good morning, ladies and gentlemen, welcome to the IP Group plc Valuations Deep Dive presentation. Throughout this recorded presentation, investors will be in listen-only mode. Questions are encouraged. They can be submitted at any time via the Q&A tab that's just situated on the right-hand corner of your screen. Please just simply type in your questions and press send. The company may not be in a position to answer every question it receives during the meeting itself. However, the company will review all questions submitted today and publish responses where it is appropriate to do so, and these will be available via your Investor Meet Company dashboard. Before we begin, I would like to submit the following poll, and if you could give that your kind attention, I'm sure the company would be most grateful. I'd now like to hand you over to CFO, David Baynes. Good morning, sir. Good morning. Thank you very much indeed, Dave. Hello. Yes, I'm David Baynes. I'm the CFO, actually, of IP Group, and I've got with me Chris Glasson, who's our Finance Director. Chris is with me. I'm gonna host it. Chris is gonna do most of the presenting, and that 'cause Chris and his team do most of the work. That seems appropriate. I hope you're gonna enjoy. This is our first of our deep dive webinars, where we're actually gonna pick up one particular topic and look at it more closely. I did say to Chris when we first conceived that we do a deep dive, valuations, webinar, but it probably wouldn't be overattended. I said, "Look, Chris, it's gonna get 10 or 20 people, but it's okay. You know, it'll be important 10 or 20 people, and, you know, it's an important subject. As I speak, we've got 257 people registered for today's event. Thank you very much to all of you for being here. I hope you find it as interesting as we do. Very quickly, we're gonna ready for a quick introduction, and then Chris is gonna go on to market context. He's gonna talk in detail about our valuation approach, how we value our assets, and then point out how valuations are disposed in the report accounts. And then finally, perhaps most importantly, look at our track record. How good we are at getting our values right. Because the litmus test is when you sell an asset, do you get it right? Do you hopefully get it for more than you've been carrying in the books at? We'll look at that at the end and see how well we've done on our track record. Very briefly, as a start, this is one of the key things at the moment about IP Group. There is quite a divergence between our net assets and our share price. We've got net assets rated fully valued at GBP 1.33 a share. I think this morning we're trading at about GBP 0.55. To put that another way, and as I pointed out at the year-end results, we've got about GBP 0.15 of that GBP 1.33 is in cash. Well, that's obviously, you know, cash is cash. Athenex at that time was about GBP 20 p, even after a slight reverse, it's still about GBP 17 pence this morning. Just a few, the three other companies we talked about in the year-end results, First Light, Especo, Oxbotica, that gets you to over GBP 60p of value, and yet we trade below that. The other 91 companies of 95 aren't included in that valuation at all. Clearly there's something going on around valuation, which is why we thought it was important to actually spend time looking at what we do to try and get valuations as right as we can. I'll come back to this slide at the end. At the beginning, we'll sort of start. This is our level of knowledge at the beginning of this webinar. You know, 8% of what we have on our NAV of GBP 1.33 is cash. That you know it, right? 17% is quoted portfolio companies. Again, you know that's right. That's a mark to market. That's the price they are on the market. It's that pesky 75% that we're gonna talk about today. That's the slide to remember. At the end of the presentation, we'll come back to that slide, and we'll hopefully we'll all know and understand better what components make that up. I think probably the last thing for me, now, I don't wanna look like I'm telling you what to think, but I'm gonna tell you what our key messages are, and let's hope they come over in the course of today. Firstly, we think we have a steady, thorough process, and we incorporate best practice in all the valuation work we do. We think the work we do is consistent and mildly cautious. As I said, the auditors agree with that. The realized gains on disposals seem to provide evidence that we are cautious and that we are getting our valuations right, if not at least slightly better than what they might be. Finally, we believe we're very transparent, and we give detailed disclosure in our valuation process. We'll let you judge. We'll come back to these points at the end of the presentation. For now, I'll hand over to Chris, who'll take you through the bulk of the presentation. Chris. Great. Thanks, David. Thanks for the introduction. As David said, I'm Chris Glasson. I'm the Finance Director here, and great to have everyone attending. Me and the finance team spend a lot of our time valuing the portfolio, so it's great to have an opportunity to take you through what we do in more detail. First section I'm gonna cover is market context for 2022, and this is partly to give you a sort of indication of how we think about the market when we're valuing our portfolio. The next couple of slides contain PitchBook data, where we find PitchBook to be our best source of private valuation data. They've got a very extensive database of U.S. and European valuations, private valuations. This is U.S. data from PitchBook from their Q4 annual report. At the very high level in the VC space, the two key themes, early-stage valuations on the left, we see as higher in 2022. Strong momentum from 2021 continuing in 2022 with valuations higher. Early stage, PitchBook defined as Series B or earlier, which consists of about two out of our top 20 companies and then many of the earlier stage companies in our portfolio. On the right-hand side, later stage valuations, so this is Series C and onwards. PitchBook data sees those softening in 2022, so about 20% down in the year from 2021 levels and with much of that softening happening in the second half of the year. It is worth noting that there is a large dispersion of experience within that data. Good companies can still raise at higher valuations. Drilling down to the next level of detail, cutting that data by our three thematic areas, we see the clean tech and life sciences data within PitchBook's datasets is indicating strong performance in 2022, so valuations up year-over-year. Within our tech thematic area, more mixed picture. Fintech flat, enterprise tech down a little bit, and consumer tech down somewhat more. We're saying that we've got very little direct exposure to consumer tech. Our exposure is more second degree via potential customers or acquirers. We do think that across our three thematic areas, we're actually playing into areas of strength in the market for 2022. Just putting that in a bit more context for what that means for IP Group's portfolio. Our portfolio of early stage and more mature companies are raising money as they go along. We typically expect about a third of our companies to raise money in a given year. In 2021 and 2022, actually 29 of our companies raised money in both years, in those years. When we have financing transactions in the portfolio, we track whether those transactions have happened at up, flat or down valuations versus the previous financing round that the company has executed. We saw in 2022 that there was no increase in down rounds within the financing done within our portfolio, and in fact, a slight increase in up rounds. We didn't see any evidence from our portfolio of a softening of valuations. It's also worth noting that we manage around GBP 700 million of third-party funds. We didn't see those trends in those third-party funds we manage either. Just drilling one level down into the data within our portfolio, we also didn't see a softening in valuations in the second half of the year, so we weren't seeing that picture that I mentioned from the PitchBook data. That's some high-level information on our market context. Moving on to the group's valuation approach. What do we mean when we're talking about valuation? We're talking specifically about fair value for accounting purposes, and that's defined under international accounting standards and the practice guidelines for how to carry it out in the private equity or venture capital portfolio are contained within IPEV. We follow those IPEV guidelines when we value our portfolio. What we're doing when we're assessing fair value, we're estimating fair value for our private portfolio. We're trying to arrive at the best estimate possible, supported by as much evidence as we can. That's the sort of core thing that we're trying to do. Some high-level valuation principles that really sort of form the core of our approach. We have a thorough, well-documented process. We take a mildly cautious approach to valuations. We have a policy that we have applied consistently for many years, that consistency we feel is very important. We make maximum use of market-based data, we're always looking for market-based evidence, we'll always use that evidence in preference to non-market-based evidence where it's available. We typically use multiple methods, we don't just take a price of recent investment, for example, but also look at revenue multiples or a DCF. We'll try and get multiple ways of looking at the same asset and triangulate those approaches. Our investment team input extensively into the process, but they're not responsible for valuations. The finance team are responsible with oversight from the audit and risk committee and evaluation committee. We have segregation of duties, which we think is an important part of best practice. We have multiple layers of challenge through the process, and then we have transparent disclosure of the resulting valuations. Just to give you some stats on the process from 2022, this is both our annual reporting and our interim reporting for 2022. We carried out 301 internal valuations, which we documented. We had 18 external valuation reports commissioned. We made 63 private valuation adjustments outside normal funding rounds. That's about 20% of our valuations resulted in adjustments. We held four valuation committees, four audit and risk committees focused on external disclosures, and our auditors included 93% of our portfolio value in their sample. What we're really aiming for from those principles is conservative approach. I've highlighted those areas where we feel help us to deliver that, and we're really looking to build best practice into our process. Again, I've highlighted those best practice elements which we feel are important. Before I get into the detail of how we do our valuations, just a handful of points on valuation capability and sort of what we feel really helps us to arrive at accurate valuations for our portfolio. Sort of key, most important factors are the long-standing expertise of our team. That's our investment team, also the board and support teams, many of whom have been enrolled for many years and working with the companies in our portfolio for many years. That consistency and that depth of knowledge is very, very helpful. The close relationship we've got with the majority of our portfolio companies also gives us insight and information that others might not have. We're the top shareholder in 10 out of our top 20 companies. That close relationship over many years often from inception is very important. Our wide portfolio, and that's breadth by stage, sector and geography as well as extensive history gives us a big data set to use. We use that both sort of in the year, but also looking back over time and seeing where we've got things right or wrong or could improve things. As a PLC, the governance and risk management processes that we have as a PLC are very useful to bring independence into our process. I think those are sort of the key elements of where we think we've got good valuation capability. Diving more into our process, now this is the same process, largely be it half year reporting or year-end reporting, with the main difference being the level of work performed by our external auditor, but effectively from an internal point of view, the same process. First step is the planning and risk assessment stage, where we're looking at factors like time since the last funding round, positive or negative milestones for specific companies, general market conditions. We use that first step to identify assets that we want to spend more time on, the more subjective assets. We also use that first step to select which companies we're going to give to our external valuers for them to take away and perform valuations on independently of us. The next step, which is really the sort of meat of the valuation process. This is information gathering, both gathering company-specific information such as board packs from the companies. It's worth noting that we've got almost three quarters of our companies, large companies we have board seats on. Discussion with our investment team to get their view on performance, on the outlook for the company. Financial modeling where appropriate, and then determining a valuation approach. Worth noting that we do cross-check our valuations where other public investors have investments and disclose, and we will cross-check our valuations to disclosed public valuations. After we've done that process, we've arrived at a set of initial valuations, then comes a review and challenge stage. Firstly, a valuation committee that comprises the CEO, CFO, and Audit and Risk Committee Chair. That's where really the majority of the discussion and subjectivity is covered. That valuation committee covers typically around 80% of the portfolio by valuing a quoted portfolio. There's an Audit and Risk Committee consisting solely of independent directors. We also have our external auditors who, as I said earlier, sampled 93% of our portfolio for the event reporting. Finally, once we've gone through all that process, we're at a point to go ahead with our external reporting. Just a note on our use of external valuation specialists, which I referenced earlier. We use those for larger and more subjective valuations, typically. Kroll and Deloitte are the two valuation specialists we used in 2022. They valued 10 out of our largest companies, and those overall contributed to 40% of the portfolio. We feel like that's an important part of our process. It introduces independence. They have good market insight across a wide range of companies that they're working on, and they have specialist technical expertise. In terms of the process, they do a similar process to if we were doing an internal valuation. They give us an output which is typically a valuation range. I've summarized the valuation range on the right for a section of the assets that they worked on. You can see there's a top of the range at $577 million and bottom of the range at $392 million. In all cases, we took no higher than the middle of the range given to us by our external valuation experts, and in some cases we took lower or indeed the bottom of the range. Overall that comes out at around a third of the way up the valuation range that we were given. We actually think that that's a really good sort of indication for the mildly cautious approach that we think we take. That's a sort of good benchmark for how we would describe it. Going on to talk to the specifics of the valuation approaches that we take. I've listed them out here. These are in order of preference, and they're ordered top to bottom, and that's based on the degree of market input that there is in each of the approaches. At the top quoted market prices, which are obviously the gold standard and used wherever possible, and towards the bottom, more subjective approaches with less direct market input. You can see on the right we've just got a little set of bars showing the proportion of the NAV used by each approach. The top three are the predominant ones by far. We've got quoted prices at the top and then recent financing transactions. We've used a recent financing price without adjustment. Next down would be a recent financing price that we've adjusted upwards or downwards based on positive or negative performance. We then have future markets or commercial events which haven't completed at the time of the valuation, where we've got clear documented terms showing us that there's a change of value that's likely to happen. Likely but not certain at the valuation date. We have discounted cash flow models and revenue multiples, which contain less market input. Those are the broad approaches that we use. A few additional comments on our thinking for each of those approaches. On recent financing transactions, key questions that we're asking ourselves there are, first of all, is the financing transaction at arm's length? Does it include third-party investors? That's gonna tell us whether we're even going to use it at all. If it's a purely internal round we made, so actually we don't think that represents fair value. Assuming we are going to use it, then we're thinking about what's the length of time since the financing round. Is the company's performance significantly positive or negative? We typically think of recent financing transactions as being strong evidence for the majority of the private portfolio where they've had recent financing rounds. We have an early-stage portfolio, a portfolio that includes early-stage companies. They are raising money on a regular basis, and we do receive regular inputs from financing rounds. Just one minor point to note is that sometimes preference structures can complicate the application of recent financing rounds, and that's particularly the case where a company is raising money with preference terms, which mean that those preference shares they're issuing have additional rights versus the ordinary shares, for example, that we might hold. We do have a methodology for dealing with that, which typically means applying a discount between the issued share class with preferences and the subordinate share classes without preferences. Those are some thoughts on recent financing rounds. Adjusted financing, sort of many of the same questions, many of the same considerations. Really this is where we've had a recent financing transaction that we have determined that the performance is negative or positive enough for us to adjust the transaction. We're then looking for what metrics can we use to help us quantify that adjustment. It's worth saying that, particularly for internal valuations, we're quite reluctant to use this approach to increase the value of companies. Typically we'll use this to assess that a company's underperforming, which therefore reduce the value. Where we see ourselves taking uplifts on adjusted financing, that's typically where we use third-party valuation specialists. You can see on the assets on the right, First Light Fusion, we increased the value on this basis, but we used an external valuation. Actually, we used external valuations for all of the three companies highlighted on the right there. Moving to the less frequently used approaches. I mentioned briefly earlier future events. This is where we have a transaction that is taking place around the valuation date but hasn't completed at the valuation date. Typically we're looking for documented deal terms, otherwise we wouldn't typically incorporate it into our valuation basis. Where we have an event that appears to be happening and is documented, we're then thinking: What's the nature of the event? Is it a sale? Is it a commercial deal? How certain is it? How likely is it the deal parameters will change? How good is the evidence that we've got? We'll factor all of those in. We will typically be quite conservative in the approach because there is a risk that we overvalue the asset if that deal does fall away. The biggest example of this was in 2020 where we had a financing transaction for Oxford Nanopore was partway through completing when we released our results, and we did incorporate the valuation uplift in that, and that was the correct number that was completed shortly after we released our results. Just briefly on the couple of other approaches that we use less frequently. Discounted cash flows. We typically only use this for therapeutic companies because they have a well-defined path through clinical trials. They have a set of probabilities that have relatively accessible market benchmarks on clinical trial success rates. There's often also market data around deal values. We feel more comfortable on therapeutic assets. Outside that sort of specific example, we tend to find things like the cash flow forecast very difficult to get comfortable over, and probabilities are equally very difficult to quantify or get comfort over. Therapeutic assets would typically be where we'd use this approach, but only if we haven't got a recent financing transaction. Istesso is the example on the right there, and we did have an external valuation as part of substantiating that approach. Finally, there's a small number of companies in the portfolio which we call commercial roll-outs, where we haven't got a suitable recent financing, so we will use revenue multiples for those companies. One approach that I didn't mention earlier but is also in the analysis that we give of our portfolio is a statement from LP. We do have some holdings which are not held directly, but by a fund managers who manage those funds for us. The biggest example being IPG Cayman LP, the group's U.S. platform. In that case, the fund manager goes through their own process, which will look similar to ours, to value their assets, and they then give us the output of that. We receive those. They're typically audited. They're typically audited in arrears of the publication of our group results. As a listed company, we publish earlier than those. Their valuation process will be thorough, but we'll also review the process and review the outputs. Where we deem it necessary, we will source independent valuation advice on any of the larger assets that we feel that's appropriate for, and we will adjust the valuations given to us by the LP downwards if necessary. That's the sort of detail, the meat of the valuation approaches that we use. I thought it was helpful to harness a handful of practical applications of that information from 2022. We talked earlier about the later stage market data indicating reductions in later stage valuations. We incorporated that into our valuation process by looking at some of the more mature companies engaging external valuation specialists and taking some focus right down between 25%-40% for some of those companies. We reflected that market data. First Light Fusion is a good example of an adjusted funding round where they had a very significant milestone of validated fusion results. We engaged external valuation specialists, that resulted in initial doubling of the carrying value, and that was below the midpoint valuation range given by our external consultants. Finally Oxbotica, December financing, a very recent financing. The subjectivity in there was an assessment of the discount between the issued share class and its subordinate share class, where we took a small discount between the issued share class and the subordinate shares that we held updated the valuation. Hopefully that gives you a feel for how we're approaching that valuation process. I thought it was helpful just to highlight a handful of our valuation disclosures, which give you more detail and transparency on some of the points that we just talked through. Top 20 data, some data around portfolio company fundraisers, which we disclose, portfolio valuation basis and external valuation ranges. Many of these are additional disclosures that are outside the core disclosures that we'd be required to give, but we do feel are helpful from the point of view of transparency. On top 20 companies, we disclose that information in two places. We disclose that in the portfolio review section of our accounts, that's at the top table on the right-hand side over here. We disclose the investment movements, the percentage holding, and the closing value in any in-investments or divestment from the company. In the back half of the account, Note 13, we also include the list of companies, the valuation basis, and whether they've had an external valuation or not. Around market data, we include data on the total capital raised within the portfolio, which is in the portfolio review section of our accounts, and that gives you a sense for how much of the capital being raised by our portfolio IP Group has contributed, so about 10% for 2022. It gives you an idea for the degree of third-party funding going into our portfolio and what that means from a recent financing point of view. We also disclose the up flat down round analysis that I have on the market context slide. That's in the financial review section, which hopefully gives you a feeling for the market dynamics that we're seeing in our portfolio. We disclose the portfolio valuation basis against those categories that I've just been through, so that's both in the financial review section of the accounts and also in Note 13 of the accounts where we include some disclosures around valuation inputs. We also include valuation ranges. These are slightly buried at the back of the account. These are in Note 13. We've included ranges on two of our largest assets and then the overall range for the remainder of our assets. That corresponds to the external valuation range slide that I showed earlier. A lot of transparent disclosure in there, and a lot of additional information which will hopefully help you to come to the same conclusion that our process is thorough and our conclusions are sensible. Very briefly, on our valuation track record, the key piece of evidence that we're looking for, which we think provides strong evidence of our conservative valuation approach, is realized gains on exits. Over the last four years, IP Group's realized over GBP 500 million in cash. What we're looking for is on exit, we want to be seeing realizations for, from the exit at or above the last carrying value of the company. Where that happens, we generate a realized gain on disposal. As you can see from this first slide, over the last four years, we've generated realized gains in each year. That indicates that we're realizing our assets for more than their carrying value. In terms of how much more, I've highlighted some of the key exits from the last four years, and I've shown here the carrying value, the profit on disposal, and the premium on disposal. How much above the carrying value did we sell our assets at. You can see that range of experience and that works out as an average premium of 76% across those companies that are highlighted, which is, you know, a significant premium. You do think that provides pretty good evidence of the conservative valuation approach. We do feed that back into our valuation process through a process called backtesting, where we're validating and incorporating this exit data into our approach. I'm gonna hand back now to David for some concluding remarks before we move on to Q&A. Brilliant. Thanks so much. Amazing. You get through all that material in just 20 minutes. Fantastic. Thank you. When I was asked if this is where we were, we were looking at, you know, you could see that net cash was 8% and quoted at 17%. We were trying to understand what the rest of the portfolio valuation is made up of. Hopefully now, because I've explained it, this will make sense. About 30% of recent financings that we talked about, you've got pretty high levels of certainty in the value because of that. There's 22%, you've got adjusted financings. That's where you base it on a plant valuation, but then you've made some adjustments of often in conjunction with third-party valuation. You know, you actually know for sure it gives you the confidence to make a change if you've got that kind of third-party valuation on your side. The smaller, perhaps slightly more esoteric approaches are up here. Discounted Cash Flow is only 7%. Revenue multiple is only 8%, as Chris said, and 3% and 7% from statements from LP, current market potential. You can now hopefully when we go through that now makes sense what it is we've done. We get a very strong feeling of how it is that we have really very good evidence for an awful lot of the valuations we actually have in our portfolio. When you take the cash and the public and the recent fundings and the ones valued by third parties, over 80% of the portfolio is backed by those metrics, pretty much outside of our control in most cases. At the risk of being slightly dull, hopefully, we've made our points. You know, we do have a thorough process incorporating best practice. We do believe we're mildly cautious. The auditors seem to agree with us on that point. Realized gains do seem to support the values we've been carrying things at. If you have the energy to go through it, 205 pages of our PLC account, we do have pretty detailed disclosure as well. What I'm gonna do now is go for some Q&A with Chris. For those of you who were here when we did the year-end results, it was at this point that I ticked over these questions from 10, instead of having two or three, I had 42, which was slightly daunting. Actually, especially as we've made a commitment that we're gonna answer every single question. Actually, this time, I've been watching as we go, and I'm glad to report they're very good questions, all of them. There aren't too many, so hopefully we'll be able to go through them together, between me and Chris. I found them. Chris, we'll probably be answering them together. Chris, the first one, from Bruce. Bruce has asked, this was related to the very early slides when you were talking about the performance of public market information. Fintech has seen some very high-profile down rounds. You know, strike something down 80%, 90%. Are you saying that those are not representative of Fintech as a whole, or are you saying they're not representative of your own portfolio? That's a really good question. It, it is worth saying we don't have significant fintech exposure. We have, at least one fintech holding, but we're not sort of heavily into fintech. I'm, you know, by no means an expert on the fintech space. I would say those high-profile rounds, they will be captured within the, data that the PitchBook produced. They will be factored into that, and that does at least suggest, indicate that there have been other financing transactions that have happened at higher valuations because we're not seeing an overall decrease in fintech, valuations. I mean, I do think it is really interesting to sort of look at individual companies, and clearly, there are company-specific dynamics like, did they have to raise at a particularly bad time? You could say perhaps that's the case for at least one of the companies on the list there. Obviously, we don't know the detail of that. You know, I think it's one of the really difficult things that we have to do is trying to reconcile company-specific information with the broader picture for the market. Part of the way we try and do that is to track the data in our portfolio, which is partly that flat down round analysis. I think you also have to admit that the fact is also been for us, as I said earlier, we never had those very, very high increases. We didn't have an awful lot of companies in our portfolio if you go back to 2021, which had been valued at kind of West Coast American multi-billion valuations. We never took them up a lot in the first place. We didn't have a lot to bring down. I mean, some of those remarkable adjustments from GBP 47 billion to GBP 5 billion and stuff. We didn't, you know, have as much of that in our portfolio. I think it's a factor as well. Yeah. Yeah. A lot of the stuff, as earlier said. It is worth saying that the largest Fintech company in our portfolio, we did write down in 2022. You know, that picture on the market is important, but we've also had external valuation support on the carrying value of that asset, and we did take a write-down. I think at least to some extent, we are sort of doing these suggestions and doing some write-downs. We took that 27% in that one. It's a five, actually. I won't name it. We're trying to avoid naming individual companies. That's had an amazing performance since we invested. Second question, another very good one. It comes from Ken. Ken, I know it's effective 10 months. Hello, Ken. Good to see you. Thanks for being here. For listed companies, do you apply a discount for liquidity size of stake versus market bid, which would be perhaps a smaller block? I think you used to do that. OMT would be an obvious example. Are we carrying it at book value or are we allowing for the cost of sale, I guess? That's a straightforward one. We don't apply a discount. The reason we don't is we're specifically prohibited from doing that under IPEV guidelines. No, we don't do that. Good answer. I can't add to that. We can probably both answer this. How many investment opportunities do you look at in a year, and how many actually pass the valuation metrics? Where typically do they fail to meet your standards? Well, I'll start with that one, shall I, Dan? Yeah. I mean, we do see a lot, so, we're looking at a very significant number. You know, historically, if you go back when we used to be, looking at very, very early-stage only, you were only probably investing in one in 100 things. Those sort of numbers may not change that much, actually. We see an awful lot of information, opportunities come in, and a lot come in at different depths. It's a very small number that we do, and as in keeping with our kind of, overall strategy, the ones we're doing and are the key thematic areas that we're very focused on, ones that are very disruptive, have the potential to make a big impact on the world, so we want highly impactful stocks. You know, we want things that are ESG positive, ESG plus we call it. We wanna make sure we have a very positive impact on the world through what we do in our main areas. They're the main criteria. It's a big market, very disruptive, good forces, a force for positive good. Don't know if you wanna add to that. Yes. The one thing I'd add is that we are talking here primarily about valuation for fair value for accounting purposes, whereas the investment team are going to be thinking more about value creation over a longer term and maybe less focused on the sort of mark-to-market twice a year exercise. We definitely do feed in as a finance team on specific investment opportunities and discuss the valuation with the investment team where, particularly where they want our input on it. I would say there's probably two slightly different things going on there around long-term value creation, which is what our investment team are focused on, and the shorter term accounting and mark-to-market valuation, which is primarily what we're talking about here. Good technical one coming up from Julian. What discount rates do you use in your discounted cash flows, and have they changed over the year? We have put our discount... We're saying we don't use DCF that extensively as you'll have seen from the slides. We did increase the discount rate that we used in the asset that we value on a DCF. We don't disclose the interest rates that we use, and we use a combination of discount rates and probability adjustments. The probability adjustment that's designed to capture things like the chances of an asset getting through the next phase of their clinical trials, that should I think be combined with the discount rate that we use, and that would get you to a sort of high 20%-25% on a both probability and discount rate basis. I won't add to that. Next one: How do you generally find management valuations vary Their management expectations vary regarding value against the ones that we put in? You go first, and I might come back to that. Yes. I suppose, we tend not to discuss valuations extensively with the management teams of the companies that we're valuing, and we feel that that's appropriate. We will sometimes, but it's fairly rare. I guess management teams are typically thinking more about fundraise dynamics. Mm. Particularly where a valuation has where a funding round has happened at a specific price, that's often a big factor on their thinking. Sort of our trickiest job sometimes is to assess where we're moving away from that recent funding price, be that positive or negative, and quantifying how much lower or how much higher. That's probably where we can have friction with management teams where they don't necessarily see eye to eye with us. We're looking for input from both predominantly from the investment team, sometimes from the company, although more rarely. We are forming an independent valuation conclusion based on our assessment. Yeah. No, well, we're not, we're not going back for approval, are we? It's not such a factor. An enormous number, as you say, are either mark to market or on recent funding value. We have a completely aligned expectation. Yeah. We value it what they managed to value it at quite rightly, to be honest. Manoj's question from Edison. Nice to have you here. I think you can answer this. In the case of asset value due in the future, then do you include any discount for execution risk? Yes. Yes, definitely. No, that's an important part of it. We would include quite big execution risk discounts normally. Depends a lot on the nature of the event, how likely it is to go ahead, how likely the deal terms will change. Particularly on exits where those are often quite binary, we will apply quite heavy discounts. Yeah. These questions come up all the time. Just fair enough when often we say we'll answer all questions not directly linked to the valuation deep dive today, but, why do you not embrace a share buyback program given the misplaced of assets in public markets? We answered it a number of times through our year results of last month. Actually, you know, we do have a dividend policy as we talked about. We give money back to shareholders. We do have a policy towards retaining a certain proportion of our exits. Certainly at the moment, we don't have the enormous amount of exits in this current market, but we do still have that policy and we'll follow it. Similar question: What steps the management take to increase the value of the group from the stock close of today? Well, you know, we are, we believe doing a lot. We've been very proactive in terms of our public facing activity such as this. We are still got the share buyback policy we talked about. We're talking to our shareholders regularly. Actually, perhaps most importantly, we're growing our, hopefully, the value of our underlying portfolio. We believe there's a lot of very key inflection points in our portfolio over the next 12-18 months. You know, particularly with eight clinical trials out there that we have. We believe that all those things will hopefully start to reduce that gap, much of which is actually driven just by macroeconomic forces which are hard for us to manage. We are doing everything we can to try and reduce that gap, and are very aware of it. There's Betty Wong from Euclid. Is the average gain of 76% over valuation a value weighted average or a crude unweighted average? That's on the, you know. That's a value- -Valuation. -Weighted average. It's actually the sum of the realized gains over the sum of the carrying value, for those specific assets. It is effectively a weighted average. Next one from Steve. Not valuation related, but how involved are you in the companies that you're invested in? Are boards attended? Answer yes, we're very involved with the name. I think we sat earlier in a presentation there, but we're very involved in all our bigger assets on the board. We definitely have a very hands-on model. We are, you know, in that business of helping companies grow very much. Yeah, business building alongside the company. Yes, we made all of our private assets, we're directly involved. Yeah. Yeah. It's a really helpful additional element that we have in our valuation process. Sort of that historic perspective on many of the companies we've been involved in for years, being on the board, getting board material. That information flow of that insight is really helpful for valuing these assets. Yeah, it's an important part of our model, I'd say. Next one from Odysseus. Hello, Odysseus at Berenberg. Good to see you yesterday at the conference. Any chance, might catch us now. Any chance you have data on figures on the average fair value gains on funding rounds that took place following internal valuations? I take it it's not just about exits. We've already talked about that at length. I think historically these have been quite notable and proves your mark caution point more. You like that one, Chris? Yes. I mean, I guess this is sort of quantifying the point on up, down, flat rounds. We don't have readily, sort of presentable data on that, but it's a good point. You know, it is very company specific. We, you know, we've certainly seen plenty of examples of companies raising money at significantly higher valuations. We haven't seen lots of instances of down rounds. You know, I think your general point is correct, and it would sort of quantify the points on. I would argue to some extent, the fair value gains of over GBP 100 million in private portfolios demonstrates that those ones genuinely realize, actually realized fundraising steps. Yeah. By definition, that's what that is saying. Yeah. Yeah, exactly. Exactly. I mean, I suppose the only sort of counterargument to that is you'd expect companies that are going well to increase in value over time. They, you know, they probably should be going up over time in terms of unrealized gains. Yeah, I think it's definitely a good question. Good point. Good point. Ed, to what extent is the pace of cash burn factored into your valuation methodology? Definitely factored in, yeah, how much cash a company's got, what their cash runway is, and particularly. Particularly when we talked about adjusted funding rounds and adjusting those downwards, where that starts to get quite kind of heavy-handed. We will take quite big write-downs is when that cash runway starts getting short, unless they've got, you know, pretty well developed plans to raise money. Yeah, that is where we tend to get quite appropriately conservative. And certainly it's a, it's a factor when a company doesn't need to raise money. It's harder to factor in, but the fact that they're not gonna be in the market, that they have that stronger position, I think is a, is a factor. you know, we do tend to get inklings when companies are out raising money around what their target valuation or the level of interest. It's definitely an important part of the overall picture. Going back a little bit to the original question of some of those fintech companies, if you're out in a weak market raising money, you might have to take a much lower valuation. That, you know, is an important factor. Next one, we've both got answers. This is Paul. Good evening, Paul. Numis. How well financed are the top 20 companies? Will they need to raise money in 2023? Want to go first, Chris? I'll come in later. Yes. Yes. We track the cash runway of the majority of our portfolio, including the top 20 companies. There's a good number of companies in the top 20 that we don't expect to have to raise again. For the companies that we do expect to raise again, the sort of average runways is getting towards the back end of 2024. There's obviously some variation within that in some companies that we do expect to raise money in 2023, but that's the average position. Pretty well financed. It's a different question. We had this question a lot on the roadshow, actually. It's quite difficult to answer in one word when you've got 95 companies. You know? How do you answer that one word? Which is right. That weighted average one was quite good. Yeah. The calculation of the weighted average. Weighted average for the top 20. Came out at the back of half of next year. I had a look at doing weighted average. I looked at the top 35 companies, about GBP 1 billion, just over GBP 1 billion of assets, and 15% of those didn't need to raise money for no break even or weren't gonna need to. About 30% were really a year, and another 30% were two years, and then there's another 20% odd that actually went out to 25 years. It's quite well spread out the back. We showed a similar sort of that, I would say. Thanks for that, Paul. There's others. Thank you. You're back. Another question. We're doing well. All analyst questions so far. Do you think you can achieve higher uplifts on exits when selling to trade buyers compared to exits to financial investors? Hmm. Chris, you go first, I'll go second perhaps, or would you like me to start this one? Yeah. I'll start with this one. Okay. It's an interesting question. I think maybe some of it depends on market. I think particularly therapeutic, both therapeutics. As we mentioned before, historically, we probably had one clinical trial out every two years. We're at a key moment in our view, but we've got eight clinical trials being out in the next three years. I would have thought a lot of those ultimately would go into trade. You know, 'cause obviously Big pharma is gonna pay much more money so they know the value what they're getting, and they also know the value they're gonna add. They can take a drug that we can struggle to distribute or our portfolio companies have struggled, and they'll have a worldwide marketing infrastructure to distribute it. They know they can take something, pay a lot for it, and it's still gonna be worth a lot more money to them. I think there are particular areas where, yeah, I think trade buyers are better. That's to an extent. In the other portfolio, it'll be a mix, mismatch. A lot of time I do think trade is the way to go because they'll understand the real disruptive nature quite often of what we've got if we measure that. Clean tech portfolio, people will understand that. U.K. portfolio, sort of the value of what we've got there, probably better than initial financial partners investors would. Right. Another one. This is Margot. Could you help us think about some of the factors that might contribute to a discount to NAV? For example, present value of future central office portfolio management charges. I'll say that again. I didn't hear you very well. Could you help us think about some of the factors that might contribute to a discount to NAV? A public question. For example, present value of future costs, I guess is what it's saying. Just deducting those from the NAV. Yeah. I mean, that is obviously, in theory, our assets are fair valued at the year-end, so the balance sheet value is what it is. I do see that if you were doing a DCF, you would bring in the discounted value of costs. On the other hand, if our portfolio continues to grow as we hope it will, you've got the value growth in the portfolio to offset that. You know, it's definitely one way of looking at it. It may well be a valid way. In theory, the portfolio is fair value at the end of the financial year. You know, if you're looking at it from a value point of view, it sort of is what it is. Okay. I think we've got that right, Robert. If not, come back to us. I think we've got that right. Paul's back. Does Kiko see an increasing mix of investors coming to the early-stage clean tech companies? I don't think the answer that they will do. Kiko, very highly regarded team in the market, actually, very well-networked. I think recognition of Kiko as kind of textbook brand is certainly helping. I think they're putting an enormous amount of energy into becoming even more well-networked in that marketplace. I think the answer to that is yes, definitely. You'll definitely see a great diversity of high-profile investors coming to that space. Yeah. I was going to say they certainly, you know, they do report that it's a competitive space. There's obviously a lot of interest in clean tech. We think we're well-positioned there. You know, it's a competitive space, so important to have that market position that we do. I'd just like to say we're at 9:45 A.M. now, which I think is what we scheduled it for. Quite understand if some people wanna drop off now. We said this before, but we made a commitment that for those that want questions, we will keep answering our questions until we get to the end. Having confidently said there weren't very many, there seems to be growing as we go. I'll take a few more to go. I do quite understand people may need to get their lives, but we'll carry on through and try and answer all the questions as well as we can do on the spot. Which is ironic because the first one we may not answer because it's company-specific. You'll probably avoid. I'll read it out, though, from Paul. What risk adjustment do you use on assessing Discounted Cash Flow? Keep saying. Fantastic. Can I make a comment on it? I know it's a little bit unfair, isn't it, Paul? It's worth sort of saying that Paul's certainly right in terms of how we're approaching that DCF. We have, you know, a drug in clinical trials. We have an estimate of the success rate. If they're going through clinical trials, we have an estimate of market value and partnering value. That's sort of how our DCF works. I don't think we'll go into the specifics of the assumptions in this one. You happen to be an analyst. Maybe within the four walls of an analyst conversation might give you some indication, but probably not fair to put it in the public domain. Ed, you're back. Thank you very much. Good question. How often do peers carry valuations above yours? Chris, I think you- I would say, I mean, we would certainly like to be in the kind of slightly below our peers, consistent or slightly below. We had at least one example I can think of clearly, which we discussed in our valuation committee, where we looked at peer valuations and we were at the lower end, below the two comparative valuations that we saw being disclosed out there. Yeah, we typically wouldn't want to be significantly above our peers. Aditya, hello. Good to have you back. Good try, though. Good try. You're trying to actually the same question that Paul tried. I'll read it out, but I think you're going to get the same answer. Could you go on a bit more on detail on your assumptions behind assessing valuation, addressable markets, assuming commercialization, probability of success of phase II-B, etc. I think we won't put those in the public domain. I will say I still think most of them are pretty prudent, I have to say. Particularly assumption of sales after the patent date. We won't put those in public domain. Perhaps within the confines of an analyst day meeting might give you some indication. Here's an interesting question I haven't actually seen before. David R, thank you very much for this. Do you factor in any environmental or social costs, benefits of portfolio businesses in their valuations? If not, through separate measurement and reporting of their impact on people and planet. I'll read it again. Do you factor in any environmental or social cost benefits of portfolio companies in their valuations? If not... I don't think we specifically do. I mean, clearly, if something's got enormous ESG positive impact, it's likely to be more valuable. One degree, yes, we do. There's not specific criteria on that. Interestingly, your point about are we measuring, reporting their impact on people and planet? Yes, we are. Remember, we're a very impact focused business, so we really are only interested in companies which are gonna be impactful and have a positive impact upon the world going forward. We've appointed a new full-time ESG director who's working on improving our reporting in this area. One of the things we're doing is actually incorporated it into our benefits and incentives, is identifying key impact targets for our top 20 companies and then agreeing reporting with them and factoring those into our performance in the year. This is an area we put an awful lot of thought into. What we also put an awful lot of thought into, how on earth you report impact? It's a very difficult thing. You can report turnover in one number. Net loss in one number. How would you report impact? We are gonna do an awful lot more work over the next year trying to come up with some metrics which can help people with reporting impact. Not quite the answer to your question, but so it's not specifically factored into valuation companies, but generally we invest in companies that have got significant impact. Last one. A comment from Paul saying, "Thought it was worth a try," why he's being so open on board evaluations. That does look like... I'm not that far over actually. 50 minutes in. David. Like we're there. David. Coming to the end. David, Chris, absolutely. Thank you very much indeed for being so generous with your time then, addressing all of those questions that came in from investors today. Of course, if there are any further questions that do come through, we'll make these available to you immediately after the presentation has ended for you to review, to then add any additional responses, of course, where it's appropriate to do so, and we'll publish all those responses out on the Investor Meet Company platform. David, just really before redirecting those on the call to provide you their feedback, which I know is particularly important to yourself and the company, if I could please just ask you for a few closing comments to wrap up with, that'd be great. The only other comment I'd say, hopefully, we're gonna do a lot more of these events, as we said during this presentation. We're looking at, you know, more communication with the markets in general and with shareholders. You can see here our upcoming events. Quite an array. About 10 events are being listed there. We are having a flash of e-event. All the ones with asterisks against them, we're gonna include on this platform. Any of you on Investor Meet will get invited and will be able to attend. Our next big event is certainly gonna be AGM, an investor update, where we're hoping that Nana will probably be coming and speaking as well. A big event. Invites will go out for that soon. You will see further invites for some, a further deep dive event, probably deep tech, clean tech, any life sciences. We'll do some more deep dive specific events. Thank you very much. That's a great attendance numbers. Hope you all have a good day. Thank you. Bye. Bye. David, Chris, that's great. Thank you once again for taking the time to update investors today. Could I please ask investors not to close this session, as you'll now be automatically redirected, and for the opportunity to provide your feedback in order that the management team can better understand your views and expectations. It's going to take a few moments to complete, but I'm sure will be greatly valued by the company. On behalf of the management team of IP Group plc, we would like to thank you for attending today's presentation. That now concludes today's session.