Seraphim Space Investment Trust H2 2025 Earnings Call Transcript

Quartr
Provided by Quartr
October 20, 2025

Key Takeaways

  • Positive Sentiment: NAV per share rose 23.2% to 118.5p for the year ended June 2025, while the share price increased from 54.6p to 85.6p and the discount to NAV narrowed from 43% to 28%.
  • Positive Sentiment: The portfolio benefited from strong space-and-defense investment trends, with more than $2 billion raised by portfolio companies. ICEYE was the main driver, with its valuation more than doubling, revenue expected to exceed €250 million in 2025, and major government contracts supporting further potential appreciation and a possible future IPO.
  • Positive Sentiment: Management sees significant growth potential from rising European and U.S. defense spending, particularly in intelligence, secure communications, navigation, and in-space services. HawkEye 360 has reached profitability, while Xona, ALL.SPACE, D-Orbit, and other holdings are approaching important commercial or funding milestones.
  • Negative Sentiment: The portfolio remains highly concentrated, with ICEYE representing about 37% of NAV and the top 10 holdings accounting for 83% of NAV. Liquidity was approximately £21.5 million, or 7.7% of NAV, limiting new investments and leaving results exposed to foreign-exchange movements, valuation-multiple volatility, and delays in U.S. government contracting.
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Earnings Conference Call
Seraphim Space Investment Trust H2 2025
00:00 / 00:00

There are 11 speakers on the call.

Operator

Hello, Seraphim team. Can you hear me?

Speaker 1

Yes. Everyone's joining now, Will.

Operator

Yes, I can see that. Well, it's a testament to the flexibility and nimbleness of Seraphim Space Investment Trust that we are here five minutes after the biggest outage in some considerable time on the internet, using the reliable friends at Microsoft.

Speaker 2

Early April. Adapted to the. Yeah.

Speaker 3

All right. I believe that we have enough attendees now to begin. Mark, are you happy for me to start?

Speaker 1

Yes, please.

Speaker 3

Good morning, everyone, and welcome to the Seraphim Space Investment Trust full year results webinar. I will shortly hand over to the Chief Executive, Mark Boggett, Chief Investment Officer, James Bruegger, Chief Operating Officer, Sarah Shackleton, and Chair, Will Whitehorn, to run you through the results presentation. Once the presentation has concluded, we will begin the Q&A. If you do have a question, please raise your hand and we will take you off mute, and the presentation will also be recorded. I will now pass you on to Mark to begin the presentation.

Speaker 1

Thank you. Will is going to open up for us, so moving to you, Will. Can everyone please

Operator

Thank you, Greg.

Speaker 1

Go onto mute just while we do the presentation. Thank you.

Operator

Thank you. Yes. Good morning, everybody. I am pleased to present the highlights of Seraphim Space Investment Trust's annual report for the period ending 30th of June 2025. It is nearly 70 years, in October 1957, that the first satellite capable of transmitting was launched, Sputnik. Following the pattern of most industrial revolutions, here we are in 2025 with the hockey stick of satellite launches and takeoffs now at a record number. This has also been the quarter, in the last quarter, where there has been a record amount of investment in space, $3.5 billion in quarter three. It has also been a watershed period for SSIT's portfolio in the space sector as a whole. The change in the U.S. presidency has triggered major geopolitical shifts, reverberating right the way through the space industry.

Operator

As the Pax Americana of the past dwindles, we are witnessing potentially the most significant geopolitical shift since the Second World War. The U.S.' changing priorities have prompted Europe to recognize the urgency of greater responsibility and autonomous behavior for its own security. Governments worldwide are striving for greater security and sovereignty, and space tech is at the forefront of the decisions they are taking in their defense budgets, and those are driving a huge demand for cutting-edge new tech space services and capabilities. SSIT's portfolio has significantly benefited from this evolving landscape over the past year, and it has underpinned this strong set of results that we are announcing today. Key holdings have seen substantial traction, profits and valuation uplifts. Most significantly, ICEYE, which has doubled in value over the past year on the back of a string of major commercial successes.

Operator

With a well-funded portfolio, fund liquidity boosted through further IPOs and sell downs of some listed holdings, the SSIT portfolio is well-positioned now to continue benefiting from favorable market conditions. I am now going to hand over to Mark Boggett, our CEO, the manager of the fund, to provide more details on the results and the progress made by the portfolio to date. Over to you, Mark.

Speaker 1

Thank you, Will. Before we go into the detail of the annual results, I just wanted to take a step back and remind folks about the big picture for Seraphim. Seraphim is the most prolific investor in space globally. We have a portfolio of nearly 150 SpaceTech companies across both our public and private funds. Seraphim was the first SpaceTech focused VC in 2016, and SSIT represents the one and only listed investment fund globally focused on space. Our partners and backers include some of the biggest space corporates globally, and our position at the heart of the SpaceTech ecosystems allows us to receive a massive global deal flow. We are literally seeing the majority of all deals at all stages from all countries.

Speaker 1

This information asymmetry and the conviction that we generate from seeing all of those deals is the bedrock to our past and future success. We triage deal flow between early and late stage, early going to our affiliated accelerator program and early-stage VC fund, and the growth stage going to SSIT. We are a value-add investor, a hands-on investor. We join the boards of the majority of the portfolio companies, and this allows us to build conviction. Now let's turn to SSIT and the annual results for the period ending June 30, 2025. First, a quick look back on both portfolio and fund performance over the last 12 months. Our portfolio has once again proven themselves to be highly adept at fundraising, with more than $2 billion raised across a combination of public and private markets. That's nearly twice as much as the previous year.

Speaker 1

Within private markets, which are the focus of SSIT, a majority of funding rounds were either led by or contained significant funding from new investors, providing strong validation of the enduring attractiveness of our portfolio. SSIT itself participated in over half of these financing rounds. The two charts at the bottom half of the slide show the year-on-year progress made by the portfolio and the fund as a whole. Over the last three years, we've seen consistent growth in the value of the portfolio relative to cost, alongside improving NAV and share prices, and a narrowing of that discount. We continue to believe that the discount is not reflective of either the value or the prospects of the portfolio, particularly given how well aligned the portfolio is to some of the key trends driving the market. Something I'll provide much more insight into during this presentation.

Speaker 1

We have continued to recycle cash from listed holdings to boost the company's cash reserves, with available liquidity having largely been preserved over the last 2 to 3 years. Moving on to now look at some of the financial headlines from the results. Over the year, NAV per share increased by 23.2%, from 96p to 118.5p. Over the same period, the company's share price increased from 54.6p to 85.6p, with the discount to NAV narrowing from 43% to 28%. Set against net assets of £281 million, the market cap, as at the 30th of June 2025, stood at £203 million versus £129.5 million a year earlier. The left-hand chart reflects the performance of SSIT share price over the last year against a range of indices from generalist tech, aerospace, defense, and climate.

Speaker 1

As you can see, SSIT share price has fluctuated considerably over the last year, but ended the 30th of June 2025 outperforming the various different indices. Looking at the right-hand chart, which compares SSIT's performance against that of an AIC peer group of other growth capital trusts, you can see that whilst SSIT share price underperformed the benchmark for much of the year, it ended the year significantly ahead of this peer group. Post period, there has been further fluctuations in SSIT share price, with the current price being slightly above that of the different indices relative to the period, and slightly below that of the AIC peer group. Taking it into the detail, let's start with the attribution analysis table. The value of the portfolio increased from £201.5 million to £259.8 million during the period, representing a 28.9% increase.

Speaker 1

This was driven in part by a total of £14.2 million of investments over the period, split between £4.1 million in new investments and £10.2 million of follow-ons. Increase in unrealized fair value of £66.2 million was mainly driven by the £57.3 million increase in the fair value of the funds holding in the key asset of ICEYE, which saw its value more than double over the year on the back of very strong performance. These gains were partially offset by £12.3 million of unrealized FX losses resulting from sterling strengthening against the US dollar. A total of £12.5 million of proceeds were realized during the year from listed holdings, representing a £2.7 million realized gain. Next, let's turn to the balance sheet as at the 30th of June. This table sets out the NAV bridge. The NAV increased significantly over the period from £228.1 million to £281.2 million.

Speaker 1

This equated to a NAV per share increase from 96.18p to 118.52p over the period. Following the sell-down of certain listed holdings, liquid resources stood at £21.5 million, equivalent to 7.7% of NAV. Although these reserves reluctantly limit our ability to make further additions to the portfolio for the time being, given most of the portfolio is well capitalized, we do believe that the fund retains sufficient cash to continue to provide ongoing support to the portfolio on a selective basis. Before turning our attention to reviewing the portfolio and investment activity, I wanted to spend a few minutes providing some context into the drivers behind this year's strong performance. The success of the portfolio as it has had in fundraising is reflected in the strength of the space tech private fund market itself.

Speaker 1

In spite of the wider macroeconomic turbulence that has resulted from Trump's so-called trade wars, VC funding into space tech companies has continued to grow. Globally, both the numbers of companies being funded and the amounts invested now reaching record highs. As this chart is taken from Seraphim's quarterly investment tracker, Seraphim Space Investment Trust has continued to outperform general VC activity levels over the course of the last year. So why has space tech investment remained so buoyant over the last year? Primarily because of the seismic shifts we've witnessed in geopolitics, which has turbocharged both defense spending and the demand for space tech capabilities from government. The re-election of President Trump during the period is potentially fundamentally shaping the world order that's been in place since the end of World War II.

Speaker 1

Specifically, there is now widespread recognition that Europe will no longer be able to rely so heavily on the U.S. for its security. This has resulted in an urgent need to dramatically increase pan-European levels of defense spending, with more than one trillion euros already committed by European governments to bolster European security. The recent announcement by NATO members that they're looking to increase their defense spending from 2% of GDP today to 5% of GDP by 2035 is further reflection on how profoundly the security landscape has changed in the last few short months. All of this augurs very well for the space sector, with the role of space protecting Europe being increasingly recognized.

Speaker 1

Our own white paper, published earlier this year, was a call to action for European governments to recognize the strategic importance of cutting-edge space tech innovation in addressing the current major capability deficits Europe has relative to both the U.S. and to potential regional rivals. Governments across Europe are heeding this call, with major procurements from space tech companies, including those within SSIT's portfolio, already being committed to. The boost in defense spending in Europe being allocated towards space capability has also been mirrored in the U.S. itself. The proposed annual budget for the US DoD has surpassed $1 trillion for the first time. The Trump administration have made their preference for commercial space capabilities very clear. This is reflected in the proposed Golden Dome missile defense system, which analysts have estimated could end up costing anywhere between $250 billion and $3 trillion over the longer term.

Speaker 1

Satellites procured from commercial sector are expected to form fundamental elements of this system, both in terms of identifying and tracking potential missile launches through to the communication system used to respond to any threats. Although the ongoing shutdown of the U.S. Federal Government is causing delays in new contract awards, we anticipate that as and when the budget impasse is resolved, we should see major procurement wins for some of our key holdings that are aligned with the US DoD's strategic priorities. To help better explain the role of space tech plays in defense, it's not primarily about weapons or offensive capabilities. It's about the capabilities that underpin the ability of any military to operate effectively. This slide highlights some of the areas and how some of SSIT's holdings are aligned with these different domains. Intelligence, surveillance, and reconnaissance, known as ISR.

Speaker 1

These are satellites that are key to collecting wide-scale, regular, reliable, actionable intelligence. This encompasses both government spy satellites and increasingly commercial operators, such as those in the SSIT's portfolio. Secure communications. Militaries can't function without having reliable, secure communication. For decades, this has meant relying on government-owned communication satellites, but increasingly also means leveraging connectivity from commercial players. Navigation. GPS was developed by the U.S. DoD. Today, it's a bedrock of technology in the modern world, and this includes militaries who rely upon it both for navigation and for targeting. Finally, in-space capability. This includes space situational awareness, being able to identify bad actors in space who are damaging or blocking satellite capability, the need to protect important sovereign space assets from cyber and kinetic threats.

Speaker 1

Worth noting that the potential reduction of U.S. defense support leaves Europe with the most significant gaps in intelligence and in-space situational awareness. As much of the surge in demand for space-related defense capabilities has been the primary driver of growth of the sector over the last year, it's important not to overlook the fact that space tech is inherently dual-use. This means that the same satellites and capabilities can be used not just for defense applications, but for commercial applications too. Perhaps the best example of the positive impacts of these recent changes in market dynamics has been on the portfolio company ICEYE, the fund's most important holding. As a reminder, ICEYE operates the world's largest constellation of radar satellites that capture insights about Earth day and night through rain or shine.

Speaker 1

ICEYE supports governments and militaries gathering intelligence, both by selling images taken by their satellites, in addition to also selling nation-states their own satellites where there's a pressing need for sovereign control. ICEYE's government customers span North and South America, Europe, the Middle East, and the Far East. ICEYE is able to serve customers worldwide because unlike American-based competitors, they're not restricted by U.S. ITAR export controls. This makes ICEYE a blueprint for success of Europe's domestic space tech and defense emerging players. Driven by demand by governments, principally in Europe, for sovereign space-based intelligence gathering, ICEYE has had an incredible year. As well as closing an additional $65 million in funding, the business has announced a slew of major contract wins and industrial partnerships.

Speaker 1

These include nine-figure contracts, including contracts worth up to EUR 200 million with the Polish MOD post period, and this has been followed by an announcement of EUR 158 million contract with the Finnish Defense Forces. Although much of the revenue associated with all of these contract wins won't start to be recognized until the new year, the business is already showing very strong growth. With ICEYE's CEO having publicly stated that he expects the business to generate up to EUR 250 million of revenues in 2025, that's more than double 2024's figures. Diving in now to some of the key stats in relation to the portfolio. Driven by the uplift in the value of ICEYE, the private portfolio has performed strongly over the last year, with fair value now standing at 156% relative to cost.

Speaker 1

More than half the portfolio measured by fair value remains fully funded based on the latest projections from management teams. It has also been pleasing to see some of the mature key holdings, such as ICEYE and HawkEye 360, starting to consistently hit profitability at the P&L level, quarter on quarter. We see hitting profitability as the key milestone to the pathway for such holdings reaching a stage where considering an IPO might start to be viable. The top 10 holdings, all of which are private companies, now account for 89% of portfolio value. Whilst this is reflective of the typical distribution of many venture or growth portfolios, where there is typically a handful of key assets that drive fund performance, it is worth noting that we see significant future growth potential in some of the less mature holdings currently outside of the top 10.

Speaker 1

In contrast to the private portfolio, the value of the public portfolio stood at just 26% of cost. Albeit this was after having achieved a profitable realization on the majority of the fund's holding in AST SpaceMobile. With the holdings in public companies now only representing less than 4% of the overall portfolio value, we expect the key assets in the private portfolio, such as ICEYE and HawkEye 360, to be the primary drivers of future appreciation in the year ahead. This slide provides a snapshot of the portfolio composition. Drawing out some of the insights from the donuts on the left into the ecosystem chart on the top right, roughly two-thirds of the portfolio, as measured by fair value, is invested in platform. This means the satellite constellations.

Speaker 1

These are the businesses like ICEYE and HawkEye 360 that are developing the digital platform in the sky, providing capability of data and insights from large fleets of low-cost satellites. In relation to geography, the EU accounts for the majority of current value, principally as a result of the fund's holdings in ICEYE and D-Orbit. Remaining value is fairly evenly balanced between the U.S. and U.K.-based companies. In relation to stage, the bottom left, 75% of the value is in later stage rounds of C series and beyond. Turning our attention to the NAV chart on the right, as referenced in the previous slide, top 10 companies dominate NAV, accounting for 83% with the cash at 8%.

Speaker 1

To reiterate the point I made earlier, notwithstanding the dominance of the top 10 holdings, we see significant future value in those holdings outside of the top 10, which are typically at an earlier stage of their development. It is also worth calling out that given the strong traction, consistent quarter-on-quarter profitability, strong visibility of growth, and now that we have transitioned both ICEYE and HawkEye 360 onto an EV revenue multiple base valuation approach, using a basket of more than 15 listed comparables to arrive at a composite revenue multiple that is used to value both companies. With the top 10, we have seen two companies increase in fair value significantly over the period. ICEYE as a result of growth in revenues and the transition to an EV revenue-based valuation methodology.

Speaker 1

Xona Space Systems as a result of closing a large Series B financing at a materially higher valuation than the previous enterprise value. We have also seen two new entrants into the top 10. Skylo, by virtue of closing a new round of funding at a materially higher valuation, and that was combined with a follow-on investment by SSIT. Zeno Power, a new investment closed during the period. Given the visibility ICEYE has on revenue growth through the sizable contracted backlog it has from the recently announced contract wins, we would anticipate seeing further gains on ICEYE's fair value over the forthcoming quarters, subject to any potential changes in the EV revenue multiples of the listed comparables. To help reinforce the strong performance of our top holdings, this table, on an anonymized basis, shows the revenue growth across our top five holdings.

Speaker 1

Collectively, these companies are projecting that revenues will increase by 101% in 2025 versus 2024. Moreover, these companies are anticipating that they will maintain this positive momentum into 2026 with a further 79% growth in revenues predicted. Should such high growth be achieved, we would hope that this would start to result in further increases in the values of these holdings. Turning next to the investment activity within the portfolio. Across the year, the fund invested £14.2 million across seven different transactions, one new investment and six follow-on investments. I will now provide some further insight into each of these transactions. Firstly, Zeno Power, the one new investment during the period. Seraphim invested $5 million into Zeno Power as part of a $50 million B series syndicate led by Hanaco Ventures. Zeno is developing nuclear batteries the size of a microwave to provide a 10-year reliable power supply and modular energy capability.

Speaker 1

The company, headquartered in Seattle and Washington, D.C., is funding expansion of its workforce and manufacturing footprint as it aims to deliver and demonstrate full-scale systems in 2026, and deliver its first commercially built nuclear power batteries to power frontier environments in 2027. The company secured over $60 million in government contracts from the Department of Defense and NASA, supporting prototypes for highly maneuverable satellites, seabed infrastructure, and lunar landers. One current project involves a nuclear-powered battery satellite backed by the US Air Force, which Zeno plans to demonstrate in 2026. Nuclear energy is having a renaissance, and Zeno is at the forefront of bringing nuclear batteries to defense into space. Longer term, this has the potential to transform how energy is delivered remote and distributed environments. Next, we will look at the follow-on investments completed during the year.

Speaker 1

Started with ALL.SPACE, the developer of the world's most advanced SATCOMS antenna for resilient communication. Over the year, alongside other key shareholders, SSIT invested a further $7.5 million of bridge funding into the business. Post period, the company signed term sheets for a sizable amount of combined equity and debt that we anticipate should close during the current quarter. ALL.SPACE's current unique capability to simultaneously connect to multiple different satellites from different operators in different orbits is directly aligned with the strategic imperative for militaries around the world to develop resilient communications, to neutralize the threat of interference from both cyber attacks and electronic warfare.

Speaker 1

With several branches of the U.S. DoD having already tested, approved, and selected ALL.SPACE technology, and with the business now shipping product to customers, we believe that ALL.SPACE is very well positioned to benefit from the surge in space-related defense spending. Next up is Xona Space Systems, who are looking to develop the world's first commercial GPS constellation, offering enhanced centimeter-level positioning precision and resilience, which is resilient to jamming and spoofing. We see Xona as one of the highest potential companies in the portfolio. GPS is already a bedrock of the modern world, powering trillions of dollars in the global economy. Once fully deployed, Xona's GPS constellation will offer greatly improved accuracy and security that could unlock a whole host of new opportunities across both defense and commercial applications.

Speaker 1

Xona's had a very positive year, launching its first production satellites and delivering its first live sky navigation signals. It also closed a $92 million Series B round led by Craft Ventures with participation from SSIT. We're super excited to see what the year ahead will bring for Xona. Moving on to AST SpaceMobile. They completed the redemption of existing warrants and undertook two at-the-market equity finances during the period to raise over $800 million in equity. In addition, they issued a further $460 million in convertible senior notes. AST successfully deployed and commissioned its first five satellites in space, cell towers in space, successfully testing its service with mobile phone carriers, including Vodafone. They received their first radio spectrum to enable them to be engaged with first responder solutions.

Speaker 1

Given the surge in AST's share price, which had increased from $3 a share in March 2024 to $25 a share in May 2025, we took the opportunity to recycle the majority of the funds holding in the company into cash to enhance our ability to continue to support the highest potential candidates in the private portfolio. AST share prices continue to form strongly in this time and is now included in the U.S. large cap Russell 1000 Index. Next, Skylo, which closed a $30 million Series B led by NGP Capital and The Westly Group including a follow-on investment by SSIT. Skylo is making always-on connectivity a reality today. The company is a global non-terrestrial network provider, pioneering technology to enable consumers and enterprises to seamlessly connect with their mobile phones and IoT endpoints to existing satellites when they're out of terrestrial coverage.

Speaker 1

Skylo does this without the need for any proprietary hard or software. The service went live in the U.S. with partner Verizon, the U.S.'s largest mobile phone carrier, connecting its customers to Samsung and Google's Pixel phones with the Skylo satellite network. We also invested small sums into the tail of the portfolio into AI-driven businesses, both in the insurance sector. One, ChAI, was developed as a parametric insurance for commodity pricing. The other, PlanetWatchers, is developing agent-centric AI solutions for the multi-billion crop insurance market in the U.S. In both instances, the businesses are fusing information collected about Earth from satellites with AI to develop entirely new applications. This is a trend we anticipate seeing much more in the market in the forthcoming years. Next, we turn to other non-fund-related key developments within the portfolio during the period, with three companies within the top 10 holdings.

Speaker 1

D-Orbit completed one of the largest equity rounds in Europe, enabling the business to extend its leadership in the in-space services market. Its space heritage is a beacon in Europe. With 19 successful missions under its belt, we believe this positions the business well in relation to defense-related awards over the medium term. Building upon its leadership, we have seen the first of what we anticipate to be a flow of M&A as the business acquired Planetek Group to develop the in-space data management capability aligned with its data center in-space strategy. HawkEye 360 goes from strength to strength with its defense-focused signals intelligence business. Within the period, launching its 11th, and outside the period, its 12th cluster, each with three satellites. All of these now successfully operationalized.

Speaker 1

The business has witnessed considerable growth this year, with bookings revenue very significantly across both the U.S. and the rest of the world customer base. This business is now profitable and very well-positioned to continue its trajectory. It showcases the increased value of Earth observation businesses as they scale their constellations, resulting in material time savings in both the frequency and latency of their dataset. Tomorrow.io, the hyperlocal weather business, has succeeded in the transition from a pure-play AI-driven data analytics business to building a constellation of proprietary space data added to their AI weather engine. They have now got their first few satellites operational as the first crucial step in building a larger constellation. This has been a defining period for the business. Other portfolios outside of the top 10 also experienced key milestones during the year.

Speaker 1

Space station company Voyager was the second space company to IPO in the U.S. this year, with their $3 billion NASDAQ debut in June. Wasting no time, they accelerated their buy and build strategy, acquiring their eighth company, Electromagnetic Systems, for an undisclosed sum. Voyager's acquisition strategy is described as a roll-up model, consolidating specialized space and defense companies to build a vertically integrated portfolio. This approach has been credited with unlocking significant value, such as their $217.5 million Starlab contract with NASA. Next, Pixxel accelerated their rollout of their multispectral constellation whilst proving themselves as an emerging national space champion in India. Spire Global, one of the public-listed holdings, made a large divestment during the year, selling its commercial maritime business for $241 million in order to retire the company's debt facilities and boost cash reserves as it looks to pursue new growth opportunities.

Speaker 1

Other portfolio companies outside of the top 10 also experienced key milestones during the period, although I have largely covered these in earlier slides. Next, we turn to divestments during and after the period. We continue to actively manage our listed holdings, executing a series of strategic divestments both during and following the reported period. Astroscale, following its IPO on the Tokyo Stock Exchange in June 2024, SSIT reduced its original stake in Astroscale, retaining a modest holding of less than $1 million to maintain exposure to the business. More recently, we began to unwind our long-term position in AST, prompted by a series of technical and commercial announcements that drove nearly a tenfold increase in its share price in little over a year. As with Astroscale, we scaled down our holding to approximately $1 million, preserving a residual interest.

Speaker 1

Outside of the period, we completed the divestment of our positions in both Arqit and Spire, capitalizing on recent share price rallies. In both cases, we fully exited, leaving no residual stake. In total, these transactions, during and subsequent to the period, generated £18.7 million in liquidity, reinforcing our commitment to active portfolio management and capital recycling. Turning now to developments beyond the reported period. I have already covered most of the material updates in this presentation, so in the interest of time, I will treat the remaining items as read, except for one particular noteworthy announcement. Seraphim, the manager of SSIT, has opened a new office in Berlin to spearhead our expansion across continental Europe. This move is highly strategic. With European defense budgets now exceeding EUR 1 trillion and Germany alone committing EUR 500 billion, the Berlin office positions us at the heart of this rapidly evolving market.

Speaker 1

Just weeks ago, at the BDI conference in Berlin, which Seraphim sponsored, the German Defense Minister, Boris Pistorius, announced a euro space budget to deployed over the next four years to 2030. This signals a major acceleration in Europe's sovereign space ambitions. We believe this marks the beginning of new European defense super cycle, and SSIT is uniquely positioned to participate, leveraging our deep sector experience, portfolio reach, and now enhanced geographic footprint. To conclude this presentation, we have recently experienced positive momentum both at the portfolio and the fund level, and we believe this will continue to build over the course of the year ahead as the tailwinds driving this momentum continue to strengthen. Our top 10 holdings are strategically aligned with the core pillars of space defense across both U.S. and EU. These companies are not just participating in the sector, they are helping define it.

Speaker 1

Noting, however, a range of companies outside of the top 10 are also well-positioned to emerge over the year ahead. Importantly, the macroeconomic opportunity in defense is now translating into tangible results. We are seeing this reflected in both revenue growth and rising valuations in the portfolio. As our portfolio matures, we have transitioned several assets to comparable multiples valuation approach. This reflects their scale, commercial traction, and alignment with public market benchmarks. Finally, in relation to the review of the period, we have actively managed liquidity to ensure SSIT is well-positioned to support the existing portfolio companies, but also to seize on newer opportunities as they emerge. Looking ahead, the landscape for defense and space is evolving rapidly, and SSIT is well-positioned to capitalize on the opportunities emerging across both public and private markets.

Speaker 1

We are seeing unprecedented mobilization of capital by governments and the EU to strengthen defense infrastructure, with space tech now recognized as a critical pillar of national security and sovereignty. We foresee private investment in space tech is set to reach new heights, both in terms of capital deployed and the number of companies receiving backing. This is a clear signal of growing conviction in the sector's long-term potential. Finally, we expect IPO momentum in space to continue, with more businesses reaching scale and the public market readiness. As previously indicated, several businesses in the portfolio are preparing for potential IPOs in the year ahead. At the same time, defense M&A is accelerating, driven by strategic consolidation and the need for sovereign capabilities. That now concludes my presentation for the full year.

Speaker 1

We'll now open for Q&A, and I'll bring my colleagues, James Bruegger and Sarah Shackleton in to help field the questions. Thank you.

Speaker 2

Then down to seven in 2023, and then one-

Speaker 3

Thank you, Mark. We will have a first question here from Shivaa. If you could take yourself off mute, please, and we'll hear your question next. Thank you.

Speaker 4

Hello, can you hear me?

Speaker 2

Yeah, that's sort of-

Speaker 3

Hi, Shivaa. Could we ask everyone else to remain on mute? Not sure who's come off mute.

Speaker 4

Thank you very much. Well, first, I guess congratulations. This is one of those results which, I guess, merits that. A couple of questions from me. First, on the revenue growth, thank you for sharing that just now. Could you just specify, was that the top five companies or a selection of companies out of the top 10?

Speaker 3

It was the top five.

Speaker 4

It was the top five. Okay, thank you very much. On the cash runway data, you said there's a 9-month average for companies not fully funded. Is that of the 42% of companies that are not fully funded, just to confirm?

Speaker 3

Sarah, do you want to answer that one?

Speaker 5

Yes, that's correct, Shivaa.

Speaker 4

Okay, thank you. On HawkEye 360, you disclosed some idea of profitability, and you noted some enthusiasm just now. What drives the slight write-down year on year?

Speaker 6

The short answer is it's only a very modest change, principally relating to FX. To reiterate, the transition of the valuation methodology has not resulted in any material change in the enterprise value.

Speaker 4

Thank you very much. Then maybe because you referenced that conference in Berlin that you sponsored, can you talk a little bit about sort of the fragility of satellites, and particularly in the context of the German minister noting that their satellites were being pursued at that conference?

Speaker 6

Mark, do you want me to have first go at that?

Speaker 1

Yeah, you take first go and I'll chime in.

Speaker 6

I think without knowing the exact comments that were made, Shivaa, from reading between the lines, I think what the reference to there is the fact that space is becoming an increasingly contested domain. What does that mean? It means that for all of the reasons behind the opportunity for SSIT, space is an intrinsic capability that if you lose that capability, would have really very profound and widescale impacts terrestrially. There is a view that given the geopolitical tensions, we're seeing increasing activity in space from rival nation states to try and establish space-based supremacy. What does that mean? It means having satellites doing flybys of adversary satellites. A bit of proverbial saber-rattling around that.

Speaker 6

It's about developing capabilities, as we've talked about in this presentation, to potentially interfere and degrade the capabilities of adversary satellites, be that through cyber attacks, electronic warfare, or even potentially in the future, kinetic-based attacks. We have seen, as reported by a range of different ministries of defense, increasing levels of activities from the likes of both China and Russia with regards to NATO and other allied nations' assets. I hope that provides the context you were looking for.

Speaker 1

I'll just add to that. Really what this is a sudden realization by the world, this is not just Europe but the U.S. as well, that they have inadequate protection in space for their existing assets. There is now a sort of scramble to invest into companies like D-Orbit and Astroscale and leveraging companies like LeoLabs in order to be able to get the visibility and control to be able to protect those assets. This is a massive investable opportunity that we're positioned around.

Speaker 4

Thank you very much.

Speaker 3

Perfect. Next we have Gavin. If you could take yourself off mute next and we will hear your question.

Speaker 2

Great. Thanks, Mark, and thanks team. I feel ICEYE is probably a good one to focus on here, given the significant move. I guess firstly on that, are you comfortable with the level of concentration risk with 37% of the portfolio now, or are you happy to keep running that position? Then looking forwards on ICEYE, any potential exit routes and press reports previously on a possible IPO. Do you think that is the most likely exit route in the future? Then I guess in relation to that, so you have a couple of companies, you said ICEYE and HawkEye as well, being valued on multiples. Using multiples, given the portfolio is maturing, are you going to expect to see other portfolio companies valued in a similar way going forward as well?

Speaker 6

I will take that one, Mark, given I am the representative.

Speaker 1

Yep

Speaker 6

For ICEYE. I think I will deal with those in reverse order. Do we expect other companies, as they mature, to transition onto an EV revenue multiples-based approach and indeed in due course onto an EV EBITDA-based approach? Yes, we do. That will be on a selective case-by-case basis once we feel that there is both sufficient scale maturity and visibility of future performance. In terms of ICEYE and IPO, we fully expect the business to IPO. ICEYE's CEO has gone on record recently reiterating that. The unknown variable right now is a question of timing, some of which is clearly dependent on market conditions. But the business really is thriving and has an amazing opportunity ahead of it. Then in terms of your final question on concentration, clearly it is a double-edged sword, having that level of NAV concentrated in one single business.

Speaker 6

Equally, as we alluded to within the presentation, within venture as an asset class, very typically within a strong performing portfolio, it will be a relatively select number of outliers that drive overall performance. To give you a sort of general rule of thumb here, it is typically between 10%-20% of companies that for a good portfolio will drive 80% of the overall value. This has been our most important and material holding since we invested in it just after the launch of the trust. The business is performing exceptionally well. It is our best performing company and therefore in terms of that balance of risk reward of concentration versus future growth, our firm view as of right now, is that it is in shareholders' best interest to continue to hold this position through to at least an IPO and potentially beyond.

Speaker 6

We see very, very significant future growth potential in this business, and therefore believe continuing to have the exposure, even if it is at an imbalanced level relative to other companies. I think my final point on that is we obviously hope to see similar NAV appreciation from other companies in the year ahead and beyond that should reduce that level of concentration risk over an extended period of time.

Speaker 1

I will just add one more thing to that, James. We would also like to see us have the ability to raise some more money into this trust in due course, which would also reduce that sort of concentration. A combination of those things we believe will happen this year to reduce that concentration.

Speaker 2

That is great. Thank you, guys.

Speaker 3

Thank you. Next, we have Will, if you could take yourself off mute next, and we'll hear your question for the team.

Speaker 7

Morning, all. First one, just on revenue growth. Thank you for that slide. That's pretty helpful. Apologies if I missed it, but is there normally some sort of total aggregate portfolio revenue figure provided in the finals? Has that been omitted this time, or have I just missed that?

Speaker 6

I don't believe that we have published that figure. We focused on the top five given, as we've articulated from a materiality perspective, that represents the majority of the value of the trust.

Speaker 7

Sure. Can you give any guidance on the underlying performance on everything outside the top five, maybe just in aggregate?

Speaker 6

I don't have a specific figure that we can share with you other than to provide general guidance that the kind of growth trajectory that you're seeing in those top five is broadly mirrored in the wider portfolio as a whole, given that the portfolio is playing to the same sort of trends that we've articulated and showcased around our most important holdings.

Speaker 7

Okay, great. Thank you. Back onto ICEYE. There was talk of a funding round upcoming in the press the other week. I think $2.5 billion valuation was being talked about. Even though it's on a comparables multiple basis now, I presume if there's an upcoming funding round, that will take precedent. Did any of the gain over the last quarter, was any of that driven by a potential funding round?

Speaker 6

The valuation that we have published is based on a multiples-based approach and is not in relation to any potential funding rounds that may have been discussed in the press. As and when the company does close a new financing round, clearly, the pricing of that round will be a consideration that we will take into account. There has been no public announcement about such a funding round having been completed as of today.

Speaker 7

Okay. Just to follow on, the prior method being the recalibrated EV method, that considered comparable multiples as well, didn't it? What is the actual specific change that's been made in terms of methodology?

Speaker 6

The recalibration methodology took into account a broad range of both internal and external factors, of which public market comparables were a subset. It was a contributing factor, but nonetheless, only a contributing factor. And we had always had the intention that as our businesses reach greater maturity, we would look to change the methodology to be focused exclusively on public market comparables, and that is what we've done. Through that process, we have also refined, slightly, the basket of companies that we're using to value both ICEYE and HawkEye, albeit substantively, the comparables are broadly the same versus the previous valuation methodology. Sarah, I don't know if you've got anything else to add to that.

Speaker 5

No, nothing else, James. It's just more of a subset as you mentioned, rather than a much broader set of considerations.

Speaker 7

Yeah, that makes sense. Thank you. Are you able to disclose what the comparables are for ICEYE?

Speaker 6

Not at this particular juncture. As I said, there is quite a large list of companies. That is a consideration we will take into account going forward.

Speaker 7

Sure.

Speaker 6

The guidance I can provide is it's principally companies that are as approximately analogous as possible in terms of both scale, growth, profitability, and crucially, obviously, what the companies actually do.

Speaker 7

Sure. Just to clarify, around 15 comparables, did you say?

Speaker 6

Correct.

Speaker 7

Yeah.

Speaker 6

Yes.

Speaker 7

Okay. Thank you very much.

Speaker 3

Thank you. We have three questions left, so I believe that we will go through those three, and that will get us towards the end of the webinar.

Speaker 8

Good morning, and an excellent call. Thank you. Couple of questions across the space. Let's start with ALL.SPACE. Good to hear about a new funding round. Have they been able to sign new contracts with, or are they still just focused on executing their U.S. contracts?

Speaker 6

Yeah. Thanks, Charles. Yes, they have been able to sign new contracts, and yes, they have been delivering against existing contracts. Just to clarify what the status is of procurement in the U.S., given the shutdown of U.S. Federal Government, and indeed the continuing resolutions under which the government has been operating for the last year. That enables the US DoD to continue to procure under existing programs, of which ALL.SPACE is already contracted on a number of those. Likewise, it's able to continue development-orientated contracts as extensions to existing engagements. What we are waiting on, and this will be contingent on a new budget actually being formally adopted by the U.S. Federal Government, is to start being able to procure under new programs of record that are in the FY26 budget.

Speaker 6

It's those programs of record that we see as being the main driver of potentially very significant near-term revenue opportunity. As we've discussed previously, you're looking at an install base within the US DoD of tens of thousands of just renewals or upgrades of satellite antennas. Again, the guidance we've given in the past is that each of these antennas that ALL.SPACE sells is a six-figure sale. So we're talking potentially very significant revenue opportunities, albeit that does require a federal government to have actually been approved, which is clearly something that timing of that is somewhat uncertain as of today. I hope that clarifies.

Speaker 8

It does, thank you. Just on the shutdown, are any other portfolio companies expected to have revenue interrupted, disrupted?

Speaker 6

What I would say about that is that, yes, there are clearly, as we've articulated, a number of our companies that are servicing the U.S. DoD today through a number of different contracting mechanisms. We have seen across the portfolio, over the course of the last 12 to 18 months, some delays in timing of when contracts have been awarded. Albeit to date, what we've typically found is that although timing may be uncertain, the contracts have come through. That's typically in lockstep with each continuing resolution that gets passed. Their expectation is that the federal government current impasse will inevitably have to resolve itself, not for our benefit, but for the hundreds of thousands of people that work for the federal government. At which point, any delays that may have manifested in recent weeks and months should resolve themselves.

Speaker 6

Overall, we see the portfolio's exposure to the U.S. DoD as very much a net positive, given the scale of budgets that are being allocated and the strategic importance to space. Any uncertainty around timing is something that, by and large, we think the portfolio is well-positioned to be able to weather.

Speaker 8

Thank you. Just final quick questions. How much of the portfolio is valued in dollars? How volatile do you expect the EV revenue multiples to be quarter on quarter? How should we think about that? Should that be a major concern, or are you using some sort of moving average?

Speaker 6

Sarah, I will answer first, and then maybe you can follow up with anything I have missed. A majority of the portfolio is U.S. dollar denominated. I think that is the first thing to say. In terms of the companies that have adopted a pure-play EV revenue multiples-based approach, one of the reasons for having such a broad basket of comparables, so in excess of 15 companies, is to try and anticipate and mitigate, within reason, any quarter-on-quarter volatility. We are not intending to try and smooth that at the moment. Clearly, there has been, within the sector as a whole, over the last one to two years, significant increases in the valuations of defense and space-related businesses as a whole. That is reflected in the current multiples that form the composite for the two companies that we are valuing on that basis. Sarah, do you have anything to add around that?

Speaker 5

Nothing really to add other than just to say we use the quarter-end rates. We do not try and smooth out the rates over a period.

Speaker 8

Thank you very much. I am done.

Speaker 3

Thank you. Now we will hear the question from Marcus and then from Ash, and that will be the end of the Q&A.

Speaker 9

Hi. Morning, everyone. Just two from me. I was just interested in how much funding capacity remains on the trust and how fundraising's been elsewhere in the business. Secondly, how much of the ICEYE valuation gain was driven by actual growth versus the switch to a multiples-based valuation methodology? Thanks.

Speaker 6

Mark, do you want to take the first question on fundraising elsewhere in the group and current capacity? Or do you want me to comment on it?

Speaker 1

Can you comment on it, please, James?

Speaker 6

Yeah. So in terms of capacity, as we've articulated, we've got plus or minus GBP 20 million of liquidity, which we have looked to maintain through the process of selling down listed holdings. As we've reported, the portfolio has been extremely successful in fundraising. We have a continued ability to, on a selective basis, as we have been doing, look to continue supporting those assets where there is both the greatest need and the greatest potential. Candidly, we would love to have more money to deploy. There's an abundance of opportunities out there. Clearly the limits of the reserve mean that we are only able to selectively support companies, but certainly sufficient given how well the portfolio is capitalized.

Speaker 6

Elsewhere, in terms of Seraphim, the manager's broader group activities, we continue to achieve additional closes on our early-stage venture fund with a final close anticipated during the current quarter. Mark, anything you wanted to add on that?

Speaker 1

No, I think you've covered it all there, James. Fundraising is robust across the board. I think that's reflected in the charts that we represent from the Seraphim Space Index. We're now back beyond 2021 heights and accelerating, and we believe that that's going to continue.

Speaker 6

Yeah. In terms of the answer to the question on ICEYE, it was a combination of both, albeit I think the guidance we can provide as the biggest contributor was in relation to the underlying business, where we're looking at both trailing 12 months revenues and next 12 months revenues on a blended basis. Given some of these big contract wins, both of those metrics have increased really quite significantly quarter on quarter over the last six months. Albeit, a contributing factor was indeed that the multiples overall have increased. That's reflective of the trends in the market as a whole.

Speaker 1

Great. Thank you.

Speaker 3

Thank you. Now we'll hear the final question from Ash. If you could take yourself off mute, we'll hear from you now. Thank you.

Speaker 10

Yes. Hi there. I just have two relatively short questions, I hope. Earlier, you mentioned that you thought Xona was one of the highest potential companies in the portfolio. Obviously, that's just under 4% of NAV, so it's not in the top five. Slightly philosophical question here, but which of the portfolio companies, bar ICEYE, do you think will drive most of the NAV growth in the medium term? Then secondly, in the results announcement, you mentioned Quadsat was written down partially during Q4. I just wondered if you could explain the reasons why.

Speaker 6

Okay. I'll take that, and I'll deal with them in reverse. At Quadsat, it was only a very modest write-down, write-downs. Excuse me. They closed a new round of funding that was at a very, very slightly lower enterprise value than the previous rounds. Therefore, we adjusted fair value accordingly. Worth noting, as a business of potential future growth, we've got a significant stake in Quadsat. They are very, very well-aligned with some of the trends we've been talking about in terms of European security and sovereignty. Hope to be able to update you in forthcoming quarters on some very exciting developments there. In terms of what do we anticipate is going to drive future growth, clearly, I would say we love all of our children equally and think that they all have fantastic growth potential. That's why we've backed them.

Speaker 6

Those that logically we would think nearer term have the ability to move the needle at the fund level from an NAV perspective. Clearly, we do think that ICEYE is going to continue to appreciate in value. For similar reasons, we would hope to see increases in the value of the holding of HawkEye 360. As and when the impasse with the U.S. federal government that we've been talking about has resolved itself, we would hope that that would translate into some significant contracts awards for the likes of ALL.SPACE amongst others. I think within the top 10, those are the obvious candidates.

Speaker 6

We have, as we hope we will be talking about in upcoming quarters, a number of companies at a bit of an earlier stage in the portfolio that, like Xona, we believe are really approaching key inflection points that should start to see both appreciation in the carrying value, and through that, also potentially a bit of reduction in the concentration point that we have talked about.

Speaker 3

Perfect. Thank you very much for that question, Ash. I will now pass back to Mark for a closing comment, and we will end the webinar. Thank you very much for attending.

Speaker 1

Well, thank you, everybody. We have been signaling the changes in the space defense market for a number of years now, and now that is really coming through on all measures, including the dramatic uplift in ICEYE. We do not believe that this is a sort of one-off event. We believe that this is setting out evidence that we are going to see continued growth across different portfolio companies as their new contract wins in defense get translated through bookings into revenue. So, we believe that we are on a long-term growth cycle and that the fund is very well positioned in order to be able to grow through that period. So hopefully, this is now reflected in the way that we have presented today. Some of the new insights that we have provided that just show the consistent growth across the portfolio, KPI measures during the last three years.

Speaker 1

We believe that that is really going to start resulting in strong profitability for our shareholders and stakeholders.

Operator

Thank you, Mark.

Speaker 1

Sure.

Operator

Thank you, everybody. In the words of Brian Cox, the great physicist, space expert, and TV personality in his pop band days, "Things can only get better." Thank you very much, everybody.

Speaker 1

Well done, Will. That was fun. Way to end. Thanks, everyone. We will speak in a few minutes.

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