TIDMSBO
RNS Number : 1168F
Schroder British Opportunities Tst.
06 July 2023
Schroder British Opportunities Trust plc
Annual Report & Accounts for the year ended 31 March
2023
Schroder British Opportunities Trust plc ("SBO" or the
"Company") hereby submits its final results for the year ended 31
March 2023.
Financial highlights
-- Net asset value ("NAV") per share increased 3.1% to 107.32
pence (31 March 2022: 104.14 pence)
-- Strong aggregate performance of private equity allocation,
which now represents 65% of total investments (31 March 2022: 42%),
and resilient NAV performance since inception against challenging
market backdrop
-- Available cash for future investments as at 31 March 2023 of GBP7.8 million
Portfolio highlights
-- Portfolio focus remains on high growth small and mid-sized companies
-- Profitable* companies make up 74% of total investments as at 31 March 2023
-- Private equity allocation focused on the 'growth capital' and 'buyout' areas of the market
o Portfolio seeing significant EBITDA development, driven by
strong organic and inorganic growth
o 65% of total investments are now in private companies
o Eight of nine unquoted investments performing well with
uplifts to their original valuations and are already profitable or
have a clear pathway to profitability, that have in aggregate grown
sales 40% over the past 12 months
o New investments into Mintec, CFC and Pirum
o First cash distribution (GBP2.4 million) from private equity
holdings received, following combination of Culligan and
Waterlogic
-- Public holdings decreased in value slightly as UK small and
mid-cap stocks were affected by the macro factors impacting the
market, but with substantial re-rating potential when markets
recover
o Added Bytes Technology and exited holdings in Euromoney, EMIS
and Ideagen - sold after they received takeover bids, illustrating
the Portfolio Manager's ability to identifying undervalued
businesses
*Based on EBITDA profitability
Investor Presentation
The Company's Portfolio Managers are hosting an annual results
presentation for investors on Tuesday, 11 July 2023 at 10.00 a.m.
Investors can register for the event at:
https://registration.duuzra.com/form/SBOAnnualResults23.
Neil England, Chairman of Schroder British Opportunities Trust
plc commented:
"In certain areas of the private equity market there has been
significant downwards revaluation, although this has generally not
been the case in the part of the market that we focus on.
Our differentiated public-private equity strategy enables us to
continue to invest without boundaries, thus providing access to a
broader investable universe. Our current portfolio of growing and
innovative British companies are expected to perform well. The
patient investor that can look beyond the recent and current
environment should be well rewarded."
The Company's Report and Accounts for the period ended 31 March
2023 are also being published in hard copy format and an electronic
copy will shortly be available to download from the Company's
website www.schroders.com/sbo. Please click on the following link
to view the document:
http://www.rns-pdf.londonstockexchange.com/rns/1168F_1-2023-7-5.pdf
Enquiries:
Schroder Investment Management Limited
Augustine Chipungu (Press) 020 7658 6000
Paula Lockwood (Company Secretary) 020 7658 6000
John Spedding 020 7658 6000
Schroder British Opportunities Trust plc
Chairman's Statement
I am pleased to present your Company's third report and accounts
since the launch of the Company in 2020. This report covers the
year ended 31 March 2023.
Investment policy
Your Company invests in a diversified mix of public and private
companies, either based in the UK or generating a significant
proportion of their revenue in the UK. We seek to invest in
companies with potential for high growth and with strong ESG
credentials, particularly where we believe these to be undervalued
by the market. Our objective is to deliver long term and
sustainable capital growth for shareholders.
Performance
Shareholders will be fully aware of the significant market
volatility throughout the year under review. The war in Ukraine,
inflation, rising interest rates after a prolonged period of close
to free money, highly priced US technology stocks falling in value
and the contagion from that, have all been contributing factors.
Fast growing companies that need cash to fuel their growth have
generally been out of favour, but this sentiment has also hit other
growth companies that are profitable already or have cash reserves
that will fund them through to that point.
In certain areas of the private equity market there has been
significant downwards revaluation, although this has generally not
been the case in the part of the market that we focus on. We are
not venture investors. We focus on the growth and the buyout
sector. Of the Company's portfolio of nine private businesses,
diversified across sectors, eight are either profitable or on a
clear path to profitability. These companies have an average of
c.40% revenue growth and good margins. Our decision to focus on
this area of the private equity market has proved to be the right
one in this environment. Our private portfolio contributed 10% to
the Company's NAV during the period under review.
The Company's public holdings fell slightly in value as UK small
and mid-cap stocks were badly affected by the macro factors
affecting the market.
Despite this difficult environment, it is pleasing to report
that your Company's NAV increased by 3.1% during the period (from
104.14p to 107.32p). This positive overall result highlights the
benefit of blending public and private companies together in one
portfolio.
Unfortunately, this robust NAV performance did not produce a
commensurate improvement in our share price, which suffered a
decline of -18.5%. The discount to NAV widened during the period
under review from --19.3% to -36.2% as at 31 March 2023. The share
price falling to this higher discount correlates with market
sentiment towards growth stocks and private equity investment
companies in particular. It is frustrating when our share price
does not reflect the performance or the potential of the Company's
portfolio.
Further comment on performance and portfolio activity can be
found in the Portfolio Managers' review.
Valuations
The portfolio has a mix of public and private equities. Public
investments are obviously valued at the prevailing market price.
Shareholders in investment companies with a private portfolio are
often sceptical of valuations when they don't see them change as
much or as rapidly as they do in many public companies. Your Board
considers its governance role in the private equities valuations
process to be of utmost importance. We are fortunate to have a
specialist valuations team within Schroders, who are independent of
the Portfolio Managers, and who report their findings directly to
the Board. The results we are reporting reflect their in-depth
analysis and a discursive and challenging valuations process. In
all cases, we use public market comparables.
In December 2022, revised international private equity and
venture valuations (IPEV) guidelines were issued, built on industry
best practice. Shareholders will be comforted to learn that the
Company's valuation process was already fully compliant with these
guidelines.
Discount management
The Board monitors the Company's discount levels and regularly
reviews its share buyback policy. The Board instigated a highly
accretive buyback, seeking to convey to the market our confidence
in the value of the portfolio. 1,100,000 shares were purchased by
the Company and are being held in treasury. These shares can be
reissued when the share price recovers to a premium to NAV.
Dividend
No dividend has been declared or recommended for the year. Your
Company is focused on providing capital growth and has a policy to
only pay dividends to the extent that it is necessary to maintain
the Company's investment trust status.
Portfolio Managers
The Company's portfolio has been co-managed by Rory Bateman
(Schroders' Co-Head of Investment and Head of Equities), and Tim
Creed (Schroders Capital's Head of Private Equity Investments). In
view of recognising talent within the team, Uzo Ekwue and
Peraveenan ('Pav') Sriharan will additionally join them as
Co-Managers of the portfolio. Uzo is a Fund Manager within
Schroders' UK Equity team, where she manages assets across the
market cap spectrum. She joined Schroders in November 2020 and has
been working closely alongside Rory since the Company's inception.
Pav covers Schroders Capital's private equity investment activities
in Europe and forms part of the technology and consumer sector
groups. He started at Schroders in September 2012 and joined the
private equity team in January 2022, and has been working closely
with Tim on the Company's private investments since then.
Board
Chris Keljik, a non-executive Director since our IPO, resigned
in February for personal reasons. We thank him and wish him well.
The Board decided not to replace Chris immediately, conscious of
our relatively small size and expense ratio. Chris's role as Chair
of the Management Engagement Committee has been taken by current
non-executive Director, Professor Tim Jenkinson. We believe the
Board has adequate resources to manage workloads at this time but
expects to recruit a replacement in due course. We will seek to add
diversity to the Board when doing so.
The Board completed an evaluation of its performance during the
year, taking input from Directors and related parties. It was
concluded that Board performance was either at or above the
standard in all areas measured.
Presentation from the Portfolio Managers
Our Portfolio Managers will be presenting at a webinar on
Tuesday, 11 July 2023 from 10-11 am to provide some insight into
their decision making and the current portfolio. Shareholders are
encouraged to register for the event at:
https://registration.duuzra.com/form/SBOAnnualResults23.
Regular news about the Company can be found on the Company's
website:
https://www.schroders.com/en/uk/private-investor/fundcentre/funds-in-focus/investment-trusts/schrodersinvestment-trusts/never-miss-an-update
AGM
Our AGM will be held on Wednesday, 27 September 2023 at 1.00 pm
at 1 London Wall Place, London EC2Y 5AU.
Your Board welcomes shareholders' comments and questions for
them or for the Portfolio Managers. A short presentation will be
given by the investment management team at the meeting. Please
contact us via our Company Secretary's email:
amcompanysecretary@schroders.com or, if you prefer to write in, to:
The Company Secretary, Schroder British Opportunities Trust plc, at
the above address. We will endeavour to get your questions answered
at or prior to the AGM and will be providing answers to commonly
asked questions on our webpage.
Shareholders are encouraged to cast their votes by proxy to
ensure that they are counted. The Directors consider that all of
the resolutions listed are in the best interests of the Company and
its shareholders and therefore recommend a vote in favour of each,
as the Directors intend to do in respect of their own holdings.
Why invest in SBO today?
I am often asked by private investors and wealth managers why
they should invest in SBO at this time. If asked that question
today, my response would be:
-- 65% of our investments are in private companies.
-- Eight of these nine investments are already profitable or
have a clear pathway to profitability, that have in aggregate grown
sales 40% over the past 12 months.
-- We have had nine successive quarters of an increase in the
valuation of the private portfolio.
-- We also have some interesting positions in UK small to
mid-cap public companies, which we expect to benefit from a
re-rating when markets recover.
Outlook
The current economic environment is challenging and many company
valuations are trading close to historic lows. In a number of cases
there is disconnect between an investment company's share price and
the value of its portfolio holdings, and that is certainly the case
here. Your Board and the Portfolio Managers view our current
discount as unjustly high and expect to see this start to close in
the coming months.
Having avoided a recession, the UK's economy is showing some
positive signs with inflation seemingly peaked, which in turn
should limit further interest rate rises. Small and mid-cap stocks
are expected to be early beneficiaries from any recovery.
The Company had GBP7.8 million in cash as at 31 March 2023, and
therefore is well positioned to take advantage of new attractive
investment opportunities.
Our differentiated public-private equity strategy enables us to
continue to invest without boundaries, thus providing access to a
broader investable universe. Our current portfolio of growing and
innovative British companies are expected to perform well. The
patient investor that can look beyond the recent and current
environment should be well rewarded.
Neil England
Chairman
5 July 2023
Portfolio Managers' Review
Introduction
Summary
The investment case
At present, there are many instances where there is a disconnect
between an investment company's share price and the value of its
portfolio holdings, and we believe this is certainly the case with
the Company. We believe the investment case is currently enhanced
by two forms of discount.
Firstly, the UK is among the lowest valued of any regional stock
markets at present, with a notable valuation discount to global
peers. This provides investors with the opportunity to invest in UK
assets at a discount to what they would be worth if they were
listed, in say, the US.
Furthermore, listed UK small and mid- cap companies (the focus
of the portfolio's public equity allocation) have notably
underperformed UK large caps over the past year, as fast-growing
small and mid-cap businesses in new and emerging industries were
shunned for most of the period in preference for large companies
able to return cash today. We are confident that UK small and
mid-caps are poised to do well from here, which we discuss in the
outlook section.
Secondly, the Company's shares are priced at a discount to NAV,
which we believe is driven by exogenous factors. To demonstrate
this, in early 2022 the shares reached a modest premium to NAV
until unexpected geopolitical factors and negative sentiment around
the private equity asset class drove the Company's shares to trade
at a discount. While the discount grew throughout the course of the
year, it has recently stabilised for several months at the
low-to-mid 30% region. While other private equity-exposed
investment trusts have also slipped to a discount, the operational
performance of the Company's unlisted holdings has, in aggregate,
been very positive since inception and momentum remains generally
strong.
EBITDA = earnings before interest, taxes, depreciation and
amortization. EBITDA margin is a measure of a company's operating
profit as a percentage of its revenue. Weighted averages using
latest last 12 month figures available.
We believe this operational performance reflects the resilient
characteristics we are seeking to invest in and the maturity of our
portfolio companies, which are already at profitability (74% as at
31 March 2023(1) ) or approaching it, while growing revenues
quickly. In short, we believe the combination of these two
discounts provides a window of opportunity for investors to buy a
quality, fast-growing portfolio of predominantly UK businesses at a
wide discount.
Additionally, the winding-up resolution, a feature of the
Company since its inception, should act as a catalyst to the
closing of the discount(2) . While only an illustration, assuming a
recent discount of 33% to net asset value remains, this may imply
that investors could see an approximate 8.5% annualised return on
their investment from now until 31 May 2028 (assuming a
hypothetical crystallisation of all investments on 31 May 2028).
While only illustrative, we believe this is a notable return
profile. If the discount exacerbates, the return increases further.
While it may be argued that this annualised return is only
achievable if we realise par, we are confident this is achievable
as cash is tradeable at cash, the public equity portfolio is valued
at market and the private equity portfolio is valued above cost
despite turbulent markets.
Market
Over the 12 months to end March 2023, UK small and mid-cap
stocks performed poorly as their valuations were negatively
impacted by rising interest rates, as Russia's invasion of Ukraine
looked set to prolong the inflation problem facing developed
economies. UK mid-caps and UK small caps (represented by the FTSE
250 and FTSE Small Cap indices) saw total returns of -7.9% and
-9.0% respectively, while UK large caps (represented by the FTSE
100) returned +5.4%.(3) The UK small and mid-cap area of the market
has a larger contingent of fast-growing businesses in new and
emerging industries, which were shunned for most of 2022 in
preference for large companies able to return cash today. At the
same time, higher interest rates threatened to further squeeze
consumers also struggling to cope with soaring energy and food
costs, weighing heavily on quoted retailers, as well as the travel
and leisure and home construction sectors. These and other
domestically focused companies are well represented in UK small and
mid-cap indices. Valuations reached very depressed levels in the
autumn when some ill-advised policies from the Liz Truss government
spooked markets. A collapse in sterling and soaring market interest
rates threatened to heap further pressure on consumers and
businesses, although a new government was able to restore
confidence and stability to asset prices relatively quickly. More
broadly, hopes built towards the back end of 2022 that central
banks might 'pivot' to cutting interest rates in late 2023 also
contributed to a recovery in UK small and mid-caps. Domestically
focused companies recovered particularly well during this phase as
the UK economy performed much more resiliently than feared as
European wholesale energy prices fell back very sharply.
While private equity valuations have held up better than those
of public markets, the asset class has not been immune to global
economic headwinds, inflation and increased interest rates. Our
focus is on the small to mid-market area of the UK private equity
landscape, but we believe the following provides useful insight
into recent activity to contextualise the period under review.
Following a stellar year in 2021, deal volumes in the UK mid-market
private equity segment fell by 19% year-on-year in 2022 (from 843
deals to 680 deals), while the total deal value fell 6% (from
GBP49.1bn to GBP46.0bn). Despite these year-on-year decreases, this
was still a relatively strong year for private equity deals in the
context of the last five years. Additionally, exit volumes fell by
nearly 23% year-on-year in 2022 (from 189 exits to 146 exits),
while the total exit value fell 55% (from GBP19.1bn to
GBP8.6bn).(4) Conspicuously there were no IPO exits over the year,
which is most likely explained by uncertainty in markets.
Portfolio performance
Since the Company's IPO in December 2020, the net asset value
has been resilient despite a volatile market backdrop. The
portfolio's combined exposure to both public and private equity
markets has provided NAV stability since inception, with the
portfolio's listed holdings driving returns in the Company's first
reporting period to 30 June 2021, while strong performance of the
unquoted portfolio allocation provided a substantial cushion to
falls in asset prices over the 9 month reporting period to the end
of March 2022, before also driving the Company's positive NAV
development over the past 12 months to the end of March 2023.
Indeed, eight out of the nine unquoted holdings are performing well
with uplifts to their original valuations.
Below, we focus on the past 12 months and discuss what has
driven the increase in the Company's net asset value.
Attribution analysis (GBPm) for 12 months to 31 March 2023
Quoted Unquoted Net cash Other NAV
Value as at 31 March 2022 37.3 27.4 15.5 (2.1) 78.1
------------------------------ ------ -------- -------- ----- -----
+ Investments 4.7 15.1 (19.8) - -
------------------------------ ------ -------- -------- ----- -----
- Realisations at value (11.2) (2.4) 13.6 - -
------------------------------ ------ -------- -------- ----- -----
+/- Fair value gains/(losses) (4.6) 7.8 - - 3.2
------------------------------ ------ -------- -------- ----- -----
+/- Costs and other movements - - (1.5) (0.5) (2.0)
------------------------------ ------ -------- -------- ----- -----
Value as at 31 March 2023 26.2 47.9 7.8 (2.6) 79.3
------------------------------ ------ -------- -------- ----- -----
Key positive and negative performers over the 12 months to 31
March 2023
Top 5 contributors Contribution %
------------------------------- --------------
Mintec 2.9
------------------------------- --------------
Cera 2.6
------------------------------- --------------
EasyPark 2.1
------------------------------- --------------
CFC 1.9
------------------------------- --------------
Culligan (formerly Waterlogic) 1.7
------------------------------- --------------
Bottom 5 contributors Contribution %
---------------------- --------------
Graphcore -1.8
---------------------- --------------
National Express -1.0
---------------------- --------------
GB Group -1.0
---------------------- --------------
Ascential -0.9
---------------------- --------------
Genuit -0.7
---------------------- --------------
Source: HSBC, as at 31 March 2023. Numbers have been rounded
The net asset value increased 1.5% over the period,(5) which
comprised:
-- Quoted holdings: -5.9%
-- Unquoted holdings: +10.0%
-- Buybacks: -1.0%
-- Costs and other movements: -1.6%
In a challenging environment, the portfolio's private equity
(unquoted) holdings have continued to perform well in aggregate and
the overall resilience of the private equity holdings has been
particularly pleasing. We believe that the Company's private equity
focus on the 'growth capital' and 'buyout' areas of the private
equity landscape, in contrast to venture capital and pre-IPO areas,
which have been more negatively impacted by rising inflation and
interest rates, has contributed to the resilience of the NAV.
Looking closer at the past 12 months, transactional activity (e.g.
add-on transactions and financing rounds) and trading gains of the
unquoted holdings in aggregate have driven strong performance,
despite multiple contraction which demonstrates the prudent
valuation approach applied.
The Company's private equity allocation has seen significant
EBITDA(6) development, driven by strong organic and inorganic
growth. Transformational add-on acquisitions executed by Waterlogic
(combination with Culligan) and Mintec (with its acquisition of
Agribriefing for example) have enhanced total EBITDA.
We like companies that employ market consolidation strategies
(often referred to as "Buy and Build") as these often allow
companies to consolidate fragmented markets and smaller
competitors, and complementary business can be bought, typically at
lower multiples, leading to immediate multiple accretion. Our
companies have been very active in employing this strategy.
Furthermore, organic growth delivered through market expansion,
new product development, cross and upselling and curating strategic
partnerships were some of the levers employed to deliver strong
EBITDA accretion.
The growth seen by our profitable(7) private equity portfolio
companies, in both revenue and profit-based KPIs, is almost double
that of publicly listed comparables. Nonetheless, we are marking
these profitable companies at a c.25% discount(8) to public
comparables. This reiterates our valuation prudence.
Turning to individual private equity portfolio companies, a key
contributor over the year was Mintec, the world's leading
independent provider of global commodity price data & market
intelligence, which was added to the portfolio in the first half of
2022 and has seen its fair value almost double since. Over the
period, the company acquired French business CommoPrices, an
independent provider of commodity price data and analysis, and more
recently Agribriefing, which comprises multiple global brands
specialising in agri-food supply chains through its products and
proprietary data. These acquisitions complemented the company's
investment in Kairos, a provider of commodity market intelligence
and commodity risk management, bought in 2021. These acquisitions
have established Mintec as the largest agri-food-focused price
reporting agency and global information provider with a unique
portfolio of feed-to-food commodity prices, forecasts,
cost-modelling tools and fundamental market data, serving over
5,000 customers in 50 countries.
Cera Care, Europe's largest provider of digital-first home
healthcare, was a strong contributor over the year following a
further funding round to accelerate its growth in August 2022, in
which the Company made an additional investment. We were pleased to
have been able to participate in Cera's latest financing and help
them empower those in the care sector. Ageing populations,
post-pandemic recovery and major staff shortages have created a
series of issues facing healthcare providers and governments.
Cera's proposition is positioned to address these challenges. More
recently, the company has taken further steps to strengthen its
offering through the use of artificial intelligence, launching
"Cera Brain", a platform that helps to automate and power Cera's
care delivery operations. This is discussed in further detail in
the top 10 holdings section below.
The Company's holding in EasyPark, the parking tech company that
helps drivers to find, manage and pay for both parking and electric
vehicle charging, saw its valuation increase over the period. The
company continues to grow and strengthen its position as the
parking tech company with the widest coverage in the world. In
2022, EasyPark grew both in new and existing markets, adding new
cities such as Paris and Boston, as well as new countries, such as
Slovakia. From an operational perspective, the company continues to
deliver very strong transaction and monthly active user
volumes.
A further contributor was global designer, manufacturer,
distributor and service provider of purified drinking water
dispensers, Waterlogic, which completed its merger with Culligan
International - the innovative brand in consumer-focused,
sustainable water solutions and services. The merger led to the
Company receiving GBP2.4m in sales proceeds, which is a key
milestone considering the Company only launched in December 2020.
As at 31 March 2022, the Company's holding in Waterlogic was valued
at GBP6.0m. As at 31 March 2023, and following the GBP2.4m
distribution, the holding was valued at GBP5.1m.
The Company's holding in CFC, one of the world's most successful
technology-led insurance platforms and a global leader in the cyber
market, was another strong contributor over the year. CFC operates
a unique model in the insurance industry, and benefits from a
20-year track record of innovative insurance products. Cyber risk
is a fast-growing market and CFC are well positioned from an
insurance perspective in this space to increase market share.
On the more challenging side, Graphcore, which was added to the
portfolio towards the end of 2020 as part of a $222m Series E
funding round alongside Ontario Teachers' Pension Plan, Fidelity
International and existing Graphcore investors, has been revalued
downwards over the year. Graphcore, which has developed a next
generation processor for machine learning and AI applications, is
currently facing a challenging market environment given the long
sales cycles that surround such revolutionary technologies.
Additionally, the company has not been immune to the US Department
of Commerce's sweeping set of export controls to restrict China
from certain semi-conductor chips and chip-making equipment
announced in early October 2022. The scale of the artificial
intelligence and machine learning opportunity longer term remains
immense and Graphcore's technology continues to set new benchmarks
in performance. The situation is developing, and we continue to
monitor it closely.
As mentioned in the market section above, UK small and mid-caps
in the public equity market fared relatively poorly over the period
and, given the focus of the portfolio's public allocation of
investing in small and medium-sized businesses listed in the UK,
performance was challenging for this part of the portfolio in
absolute terms. In particular, the share price performance of
holdings in National Express, GB Group, Ascential and Genuit
weighed on returns. However, there were bright spots, with the
Company benefitting from M&A activity in the market, as
holdings in Euromoney, Ideagen and EMIS Group were all subject to
takeover bids over the period, with all three positions
subsequently exited. Meanwhile, shares in Volution Group, a leading
supplier of ventilation products, performed well. In March 2023,
the company reported a strong set of interim results, with half
year revenues and adjusted operating profits up 8.5% and 7.1%
respectively year-on-year, following on from strong annual results
published in October 2022.
Revenue growth and analysis
The public equity element of the portfolio has an aggregate
weighted average revenue growth of 71.5% over the last financial
year.(9)
We believe it is useful to contextualise the performance of the
portfolio's public equity allocation in the wider context of other
UK smaller-company investors. For illustrative purposes, when
comparing the Company's public equity allocation performance to the
IA UK Smaller Companies peer group, it ranks in the first quartile
over the 12 months to 31 March 2023.(10)
Portfolio positioning & activity
The portfolio is diversified across a number of industry
sectors. We believe that diversification is key to the protection
of capital. Whilst some areas of the market may be in favour in
certain periods, we believe that a diversified portfolio should
better protect investors in the long run, with more stable
investment returns.
The portfolio has been constructed from the bottom up, with a
focus on high growth businesses. The result is a portfolio that is
well-exposed to companies with a technology offering (notably in
software & IT services areas of the market), which reflects the
digitalisation age of today as well as our belief that this is
likely to continue. However, the portfolio is well diversified to
include other sectors, such as consumer services, media, hotels,
restaurants & leisure and financial services.
We invest in growing companies that have a number of attractive
characteristics that we believe should allow them to withstand
challenging economic environments and prosper. Whilst the
macroeconomic backdrop is expected to ebb and flow, our core focus
is to invest in quality, growth companies that have strong balance
sheets and that can sustainably compound their earnings over the
long run. These are typically companies that have considerable
pricing power, market leadership (or an opportunity to gain scale
via consolidation), attractive unit economics and strong management
teams. While there is exposure to the wider consumer discretionary
sector, which continues to face significant inflationary risk, we
believe the characteristics of our investments mean they are
well-positioned to navigate the current landscape and beyond.
Furthermore, our investments are typically profitable, with
profitable companies(11) making up 74% of total investments as at
31 March 2023.
Where we have invested in companies that have not yet reached
profitability, they are well-funded at point of investment and
possess a clear route towards profitability, and we expect them to
deliver substantial value over the long term.
The portfolio's private equity allocation is not focused on the
pre IPO or 'crossover' area and earlier-stage venture capital
companies that had witnessed notable negative impacts to valuations
during the downturn of late, putting some of them at funding risk.
In contrast, it is focused on growth capital and small/mid market
buyout-stage companies, where valuations have contracted in some
cases but declines have been moderate in comparison and notably
have been offset by robust growth in financial performance. The
businesses the Company is investing in have already cleared the
higher risk hurdles, and are now generating revenues, building
scale and either already profitable or close to it. That does not
mean they are risk free but the portfolio has already been
substantially de-risked and the individual businesses within it are
now focused on fulfilling their significant growth potential.
Following the resolutions of the Company's 2022 AGM in September
2022, the 50:50 public/private allocation guidance and the private
equity limit of 60% of the Company's gross asset value were
removed, providing us with greater flexibility to take advantage of
further private equity opportunities. Since then we have explored a
number of further investments for the portfolio but have rejected a
number, largely as a result of maintaining price discipline.
However, we have a healthy pipeline of potential private equity
investments across a breadth of opportunities. As at 31 March 2023,
private equity investments represented 65% of total investments,
compared to 42% as at 31 March 2022.
Over the year, the Company continued to take advantage of its
broad investment universe, scouring both private and public markets
for the brightest growth prospects in the UK, focusing on small and
mid-sized companies. We added a number of exciting companies to the
portfolio while also increasing portfolio concentration,
demonstrating our conviction in the portfolio's investments.
Private equity activity
We announced three new private equity investments over the
12-month period. In May 2022, we announced investments into Mintec
(through Synova), a leading provider of food-related commodity
pricing, and CFC (through Vitruvian Partners), a technology-driven
global insurance business. These were followed in June by the
announced investment into Pirum (through Bowmark Capital), a
leading provider of post-trade automation and collateral management
technology for the global securities industry. We had been tracking
these businesses for an extended period prior to investment through
our long-term relationships with private equity firms Synova,
Vitruvian Partners and Bowmark Capital, and were delighted to
complete investments in these strong, UK-based, market leaders.
Additionally, the Company made a follow-on investment in August
2022 into Cera Care, Europe's largest provider of digital-first
home healthcare, as part of a new funding round to accelerate the
company's growth and expand from servicing 15,000 to 100,000
at-home patients each day.
Furthermore, we were pleased to report the first cash generation
from our private equity holdings. Following the completion of the
merger in November 2022 between Waterlogic (a global designer,
manufacturer, distributor and service provider of purified drinking
water dispensers) and Culligan International (the innovative brand
in consumer-focused, sustainable water solutions and services), the
Company received GBP2.4m in sales proceeds. The Company remains
invested as we believe the combined business has considerable
potential for future growth.
Public equity activity
Three of our public equity holdings received takeover approaches
during the 12-month period to 31 March 2023. Shareholders approved
a bid by Becketts Bidco, a consortium of PE firms that comprised
Astorg and Epiris, for Euromoney Institutional Investor. In
addition, shareholders approved a GBP1.24bn all-cash takeover by
Optum Health Solutions UK Ltd, a subsidiary of UnitedHealth Group
Inc, for Emis Group. Furthermore, Ideagen was acquired by
Rainforest Bidco Limited, a wholly owned subsidiary of funds
managed by Hg. We are pleased that these bids and the resultant
exits of these positions benefited portfolio performance.
We added Bytes Technology Group, one of the UK's leading
resellers of software, security and cloud-based products, to the
portfolio in 2023. This is a high quality, cash-generative company,
and we expect it to be resilient across economic cycles due to its
sticky customer base and high renewal rates.
Elsewhere, we used periods of market weakness to increase
existing positions in stocks where we continue to have a high
conviction. These included online women's clothing retailer,
Sosandar, and business review platform, Trustpilot.
Outlook
The sell-off in UK small and mid-caps in 2022 was
indiscriminate, and not discerning between the "good" and "less
good" companies. We believe that when clearer signs of a sustained
economic recovery materialise and market sentiment substantially
improves, small and mid-caps should be the first to re-rate in
response. Our analysis shows that such market underperformance in
the past by UK small and mid-caps has usually been followed by
outperformance over three- to five-year periods relative to large
cap companies in the FTSE 100.
Aside from the relative valuation opportunity with UK equities
remaining unloved relative to world markets in an historical
context (as noted in the investment case section), in aggregate,
they are also attractive as a result of their strong balance
sheets, which has increased considerably since 2000.
The valuation opportunity can also be looked at through the lens
of free cash flow yields, with the UK having one of the highest
yields in the world, making the market a compelling investment
opportunity in our view. Free cash flow is the money a firm has
left over after paying its operating and capital expenses. The
yield is calculated as free cash flow divided by market value.
In private equity markets, with financial engineering unlikely
to propel returns in the near term due to increased rates,
inflation and macroeconomic uncertainty, we believe strategies
focused on identifying companies that exhibit strong underlying
financial performance are poised to do well. This may be achieved
by the expansion of product lines, geographic footprint, and
professionalising management to improve profit margins, for
example. This is all easier to do among small and medium-sized
companies, and typically harder to achieve at larger companies,
which have often been through several rounds of private equity or
institutional ownership. Portfolio company EasyPark, for example,
has evolved as a company in terms of product offering, maturity in
the marketplace and thorough geographical expansion. We believe buy
and build strategies are also positioned to do well, with
opportunities to buy smaller companies with the intention to
improve profitability and sell at higher multiples in the future.
Furthermore, despite the economic backdrop, we are seeing strong
significant deal flow across a breadth of opportunities. Given our
private equity team's established and formidable network in the UK
(as well as globally) with hard-to-access investment partners, we
are well positioned to seek out the best opportunities for the
Company going forward.
Our differentiated public-private equity strategy enables us to
continue to invest without boundaries, whilst providing access to a
broader investable universe to the benefit of shareholders. We
believe this differentiates the Company from other investment
trusts and provides us with an advantage when selecting attractive
investment opportunities. While we are pleased with the investments
in the portfolio at present, we continue to seek out high quality,
growth opportunities with the aim of delivering long-term total
returns. The investment team harnesses Schroders Capital's strong
network of co-investment partners developed over 25 years, giving
them access to unique investment opportunities. Meanwhile, our
extensive resources in both public and private equities work
together to the benefit of the Company, providing a more
comprehensive view of the landscape in which companies operate,
making us more informed investors that we believe contributes to
better investment decision-making.
We believe that the current cash position (GBP7.8m as at 31
March 2023) and prudent liquidity profile of the public equity
allocation of the portfolio provide us with an excellent
opportunity to make further investments in high growth companies
and/or initiate positions in mispriced growth companies.
Furthermore, following the approval from shareholders to remove the
50:50 public/private allocation guidance and the 60% private equity
limit provides us with greater flexibility to take advantage of
further private equity opportunities, and utilise our healthy
pipeline of potential private equity investments.
Schroder Investment Management Limited
5 July 2023
(1) On an EBITDA profitability view
(2) The Articles require the Directors to put forward, at a
general meeting of the Company to be held in the year 2028 but in
any event no later than 31 May 2028, a winding-up resolution to
place the Company into voluntary liquidation.
(3) Source: FTSE Russell, 12 months to 31 March 2023, in
GBP.
(4) Source for data: KPMG UK Mid-market PE review, February
2023.
(5) The net asset value increase of 1.5% differs to the 3.1%
increase in NAV per share over the period due to share buybacks
conducted over the period.
(6) EBITDA = earnings before interest, taxes, depreciation and
amortisation. It is used as a measure of a company's profitability,
specifically representing cash profit generated by a company's
operations.
(7) EBITDA-positive.
(8) Discount between the average of the respective portfolio
Company's EBITDA valuation multiple against the respective peer
group sector comparable averages, which has been elected by the
independent valuation team.
(9) Past performance is not a guide to future performance and
may not be repeated. Revenue growth calculated using the last two
financial year revenue figures for each public portfolio company.
Weighted averages calculated using each position as a proportion of
total public equity holdings in the portfolio.
(10) Source: Schroders, Morningstar, Aladdin. Rankings are based
on the performance of the public equity portion of the Company
(excluding cash). The IA UK Smaller Companies peer group median
average ongoing charge (0.90%) was applied to the Company's public
equity gross performance and compared against the IA UK Smaller
Companies peer group (net of fees).
(11) On an EBITDA profitability view.
The Company's top ten holdings as of 31 March 2023 are set out
below, with overviews of each company and recent updates regarding
their businesses.
Fair value Fair value
Quoted/ as of % of total as of % of total
Top 10 holdings 31 March 31 March
unquoted 2022 investments 2023 investments
(GBP'000) (GBP'000)
Mintec(1) Unquoted - - 8,614 11.6
Rapyd Financial Network(1) Unquoted 8,565 13.2 8,399 11.3
Cera Unquoted 4,509 7.0 6,986 9.5
Pirum(1) Unquoted - - 6,087 8.2
Culligan(1) Unquoted 6,045 9.3 5,053 6.9
EasyPark(1) Unquoted 2,775 4.3 4,492 6.1
CFC(1) Unquoted - - 4,098 5.5
Learning Curve Unquoted 2,336 3.6 2,455 3.3
Volution Quoted 1,192 1.8 2,012 2.7
Watches of Switzerland Quoted 1,721 2.7 1,908 2.6
Source: Schroders.
1. The fair value disclosed for the following investments
represents the Company's investment in an intermediary vehicle:
- Mintec (held via Synova Merlin LP).
- Rapyd Financial Network (held via Target Global Fund).
- Pirum (held via Bowmark Investment Partnership LP).
- Culligan (held via EPIC-1b Fund).
- EasyPark (held via Purple Garden Invest (D) AB).
- CFC (held via Vitruvian Investment Partnership).
- Learning Curve (held via Agilitas Boyd 2020 Co-Invest Fund).
Mintec
(unquoted holding)
The world's leading independent provider of global commodity
price data, price forecasts & market intelligence for the food,
CPG and capital goods supply chains
Mintec enables the world's largest food and manufacturing brands
to implement more efficient and sustainable procurement strategies.
They do this through their cutting-edge Software as a Service
platform, Mintec Analytics, which delivers market prices and
analysis for thousands of commodities, food ingredients and
associated materials. Their data and tools empower their customers
to understand prices better, analyse their spend and negotiate with
confidence.
Latest updates:
-- In May 2022, Mintec launched the latest version of its
multi-award-winning procurement and commodity price intelligence
platform (Mintec Analytics 4.1), including new features that
increase price visibility and improve efficiency for commodity
buying teams.
-- In December 2022, the company acquired French business,
CommoPrices, an independent provider of commodity price data and
analysis operating across similar sectors, to extend its coverage
of commodity price data and intelligence.
-- In January 2023, Mintec announced the acquisition of
AgriBriefing, which includes the brands Urner Barry, Strategie
Grains, FeedInfo and Tropical Research Services. Building on
previous acquisitions by Mintec (including Kairos Commodities in
2021 and the aforementioned CommoPrices), this established the
combined company as the largest agri-food-focused PRA and global
information provider with a unique portfolio of feed-to-food
commodity prices, forecasts, cost-modelling tools and fundamental
market data, serving over 5,000 customers in 50 countries.
Rapyd
(unquoted holding)
Integrates the world's many payment networks and technologies
into a single platform
Rapyd is the fastest way to power local payments anywhere in the
world, enabling companies across the globe to access markets
quicker than ever before. By utilizing Rapyd's payments network and
Fintech-as-a-Service platform, businesses and consumers can engage
in local and cross-border transactions in any market. The Rapyd
platform is unifying fragmented payment systems worldwide by
bringing together 900-plus payment methods in over 100
countries.
Latest updates:
-- In May 2022, the company announced the launch of "Virtual
Accounts", a product that empowers businesses to expand globally
while supporting local payments. This new offering allows
organizations anywhere in the world to securely and reliably accept
local bank transfers in 40 countries in more than 25 currencies,
including the US, UK, EU, and APAC regions.
-- Also in May 2022, Rapyd opened its first office in the Dubai
International Financial Centre. The UAE emerged as an attractive
fintech hub during the pandemic with increased digital adoption, a
booming eCommerce economy, and transformative digital marketing
initiatives.
-- In July 2022, it was announced that Rakuten Viber had
partnered with Rapyd to unlock instant cross-border peer-to-peer
payments.
-- In 2022, Rapyd was named an EMEA 60 Leader by PYMNTS, the
global leader in payments industry news and data analytics, as well
as being named on Forbes' Cloud 100 list - the list of the world's
top private cloud companies.
Cera
(unquoted holding)
Europe's largest provider of digital-first home healthcare
Cera is Europe's largest provider of digital-first home
healthcare. They are transforming healthcare by moving services
such as care, nursing, telehealth and repeat medications out of
hospitals and into people's own homes through technology. In
combining pioneering technology with their community of
professional carers and nurses, Cera are empowering people to live
longer, better, healthier lives in their own homes.
Latest updates:
-- In August 2022, the company raised c.GBP260m in an equity and
debt funding round, with the goal of increasing the number of
patients its serves from 15,000 to 100,000. We were pleased to have
been able to participate in this financing to accelerate the
company's growth and help Cera empower those in the care
sector.
-- Subsequently, Cera announced its expansion into nursing
services across its UK network, marking the company's first move
into additional healthcare services, as part of its overall
ambition to move more aspects of healthcare out of hospitals and
into people's own homes.
-- More recently, Cera launched its latest AI-powered
technology, Cera Brain, a platform that helps to automate and power
the company's care delivery operations. Using AI across key
features, Cera Brain should enhance the company's impact in the
sector, utilising technology to automate administrative tasks, more
efficiently match carers to patients, enable better regulatory
compliance checks, onboard patients faster and drive healthcare
workflow automation. This new technology should enable Cera to care
for more people, allowing carers to see an estimated 20% more
patients per day. It should also power a more efficient model of
care delivery, making the sector more sustainable by reducing
overhead costs, allowing carers and frontline staff to be paid
better.
-- Lastly, Cera has recently been ranked the Number 1 UK
HealthTech company in the HealthTech50 list for 2023, which is
testament to the company's continued technology-enabled growth.
Pirum
(unquoted holding)
A leading provider of post-trade automation and collateral
management technology for the global securities industry
Pirum has created a set of award-winning, highly innovative and
flexible services which are tailored to fully support the
complexities of financial institutions around the world. Pirum
provides a secure processing hub which seamlessly links market
participants, allowing them to electronically process and verify
key transaction details. Through easy integration with their
services, Pirum's clients have increased processing efficiency,
reduced operational risk and improved profitability by reducing
manual processing.
Latest updates:
-- In October 2022, Pirum expanded its Trade Risk Manager
service to provide visibility of the collateral status at a
transaction level.
-- Knowing the status of collateral prior to releasing an
instruction to market is a key step in reducing counterparty risk
and preventing fails and CSDR fines.
-- This expansion leverages Pirum's Loan Release service which
provides valuable automation for lenders to release their market
instructions on the back of the borrower collateralising the lender
and provides extensive prioritisation tools and controls to ensure
loans are released within market cut offs to increase settlement
rates and market efficiency.
Culligan
(formerly Waterlogic) (unquoted holding)
The leading provider of drinking water dispensers for businesses
across the globe
Culligan is an innovative brand in consumer-focused, sustainable
water solutions and services. It was established in 1936 as a
provider of water softening solutions for residences in Northbrook,
Illinois, and has since grown to become a worldwide leader in water
treatment needs, from the simplest filtration system to complex
industrial water solutions.
Latest updates:
-- In November 2022, Culligan International - the innovative
brand in consumer-focused, sustainable water solutions and services
- and Waterlogic Group Holdings - a global designer, manufacturer,
distributor and service provider of purified drinking water
dispensers - announced the completion of their merger, creating a
global leader in clean and sustainable drinking water solutions and
services.
-- As result of the merger agreement, the Company received
GBP2.4 million, representing the first cash generation from the
Company's private equity portfolio.
-- The Company remains a shareholder as the combined business
has considerable potential for future growth.
EasyPark
(unquoted holding)
Parking tech company that helps drivers to find, manage and pay
for both parking and electric vehicle charging
EasyPark's technology supports its users, cities and parking
operators with parking administration, planning and management. The
company has a unique market coverage with presence in over 20
countries and more than 3,200 cities.
Latest updates:
-- In 2022, EasyPark grew both in new and existing markets,
launching in new cities such as Paris in France and Boston in the
US, as well as in new countries, such as Slovakia.
-- The company launched support for the EasyPark app for Android Auto.
-- In a collaboration with French automobile manufacturer,
Renault, EasyPark launched direct in-car integration of the
EasyPark app in the New Renault Megane E-Tech infotainment
system.
-- Additionally, the company continued to expand collaborations
with both local and nationwide operators for electric car charging
in Sweden, Denmark, Finland, Norway and Slovenia.
CFC
(unquoted holding)
Technology-driven global insurance business
For over 20 years, CFC has built market-leading solutions to
some of the insurance industry's biggest challenges. The company
uses technology and data science to stay one step ahead. From
developing cutting-edge insurance products, pioneering autonomous
underwriting, deploying advanced threat intelligence, to offering
unparalleled service to its partners and customers, CFC is
re-imagining the world of specialist insurance.
Latest updates:
-- In July 2022, CFC enhanced its UK proposition, partnering
with legal services company, Farillio, to launch a digital platform
for its professional liability and management liability
policyholders. Designed for small business owners, the platform
delivers practical tools and expert resources to help customers
grow and scale their businesses.
-- Also in July 2022, the company announced the expansion of its
market-leading cyber threat analysis capability into North America
and Australia. CFC's cyber threat analysis, a critical component of
its proactive cyber insurance offering, focuses solely on
identifying new cyber threats and working with cyber customers to
prevent attacks before they happen.
-- In January 2023, CFC established a dedicated team to meet
increasing demand from fintechs, as part of its financial
institutions practice. Since launching its solution, built
specifically to cover the risks faced by organisations operating in
the fintech space in 2020, CFC has seen the volume of submissions
increase by more than 100% year-on-year over the past two years and
has grown its fintech book by 100% over the past year.
-- In March 2023, the company announced the expansion of its
"admitted product" suite with the addition of professional
liability and technology Errors & Omissions (E&O), having
traded its admitted solution for cyber since 2020.
Learning Curve
(unquoted holding)
UK training and education specialist
Learning Curve works with further education providers, employers
and learners to help them achieve success. Since 2004, the company
has grown both organically and through acquisition to become one of
the largest and most diverse providers in the country.
Latest updates:
-- In September 2022, Learning Curve announced the acquisition
of Yorkshire-based White Rose Beauty Colleges, one of the largest
beauty therapy training providers in the UK, in a move which will
complement its existing academy provision. The acquisition is
expected to see the addition of a further 3,500 learners each year
in nine new locations and 170 employees, confirming Learning
Curve's position as one of the largest providers of high-quality
beauty training in the country.
-- In February 2023, the company announced it is expanding its
successful Hair and Beauty training academies in the London region
with two brand-new, state-of-the-art salons.
Volution
(quoted holding)
A leading supplier of ventilation products
Volution is a market leader in residential and commercial
ventilation solutions, covering the UK, Continental Europe and
Australasia. They aim for their products to enhance customers'
experience of ventilation by reducing energy consumption, improving
indoor air quality and design and making them easier to use. The
company has primary markets in the UK, Continental Europe and
Australasia.
Latest updates:
-- Volution published a strong set of interim results (6 months
to 31 January 2023) in March 2023, driven in particular by strong
UK residential RMI (repair, maintenance and improvement) demand,
with the company successfully managing inflationary headwinds and
supply chain challenges through pricing discipline and inventory
optimisation.
-- The interim results showed that revenue was up 8.5% (7.3%
organic growth and 1.2% inorganic growth), while adjusted operating
margin stood at 21.1% above the company's long-term operating
margin target.
-- Volution has continued to execute on its acquisition strategy
(acquiring Bera in Germany in July 2022 and the remaining shares of
ERI Corporation UK Limited more recently). The company is
optimistic of being able to add further earnings-accretive
acquisitions in the future, given its strong pipeline of potential
candidates and strong balance sheet.
Watches of Switzerland
(quoted holding)
The UK's largest luxury watch retailer
Watches of Switzerland is the leading luxury watch specialist in
the UK, with a significant presence in the US with a complementary
jewellery offering. There are 15 Watches of Switzerland showrooms
across the UK, including dedicated Rolex and Jaeger-LeCoultre
boutiques. The company's success is based on strong, long-standing
partnerships with the most prestigious luxury watch brands,
supported by impactful marketing and powered by leading edge
technology to provide clients with a modern, distinctive luxury
experience.
Latest updates:
-- In December 2022, Watches of Switzerland released its H1 (26
weeks to 30 October 2022) results, revealing that group revenue had
increased 23% on a constant currency basis and 31% at reported
rates.
-- The luxury watches division's revenue grew 31% year-on-year
on a reported rates basis to GBP667m, representing 87% of total
group sales (unchanged from H1 FY 2022), with growth driven by
increases in average selling price and volume.
-- In terms of geography, its US revenues grew year-on-year 60%
and 80% on constant currency and reported rates bases respectively,
with revenue growth excluding acquisitions at +44% constant
currency.
-- Meanwhile, UK performance was driven by domestic clientele, with revenue of GBP454m up 8% year-on-year.
-- The company has continued to expand its retail network,
opening 20 showrooms across the UK, US and Europe in the first half
of FY23.
Business Review
Principal risks and uncertainties
The Board is responsible for the Company's system of risk
management and internal control, and for reviewing its
effectiveness. The Board has adopted a detailed matrix of principal
risks affecting the Company's business as an investment trust and
has established associated policies and processes designed to
manage and, where possible, mitigate those risks, which are
monitored by the audit and risk committee on an ongoing basis. The
Board has also adopted a risk appetite statement. This system
assists the Board in determining the nature and extent of the risks
it is willing to take in achieving the Company's strategic
objectives. Both the principal risks and the monitoring system are
also subject to regular, robust review. The last review took place
in March 2023.
Although the Board believes that it has a robust framework of
internal controls in place this can provide only reasonable, and
not absolute, assurance against material financial misstatement or
loss and is designed to manage, not eliminate, risk.
Actions taken by the Board and, where appropriate, its
committees, to manage and mitigate the Company's principal risks
and uncertainties are set out below.
Emerging risks and uncertainties
During the year, the Board continued to discuss and monitor a
number of risks which could affect the Company or the valuations of
investee companies. Two emerging risks were considered,
geopolitical risks and ESG risks. The Board receives updates from
the Portfolio Managers, Company Secretary and other service
providers on other potential risks that could affect the
Company.
Geopolitical risk includes the impact of regional tensions,
trade wars and sanctions against companies. During the year, the
Board noted that the Russian invasion of Ukraine impacted supply
chains, inflation and interest rates both in the UK and globally.
Increases in interest rates lead to increases in the discount rates
used to value growth companies. This has led to the Board
determining that the market risks faced by the Company have
increased in the last year.
ESG risks are increasing generally owing to greater awareness of
the long term cost of the environmental impact of corporate
activities as well as changes in investor requirements. This has
led to the Board considering the market risks affecting the pricing
of the Company's investments as having increased during the last
year.
Strategic Risks Mitigation and management Change trend
The Company's investment The appropriateness of the
objective may become out Company's investment remit
of line with the requirements is regularly reviewed and
of investors, or the Company's the Board monitors the success
investment strategy may of the Company in meeting
not be sufficiently differentiated its stated objectives.
from other products resulting The Company has a fixed
in the Company being subscale life which will only be
and shares trading at a extended if the Company
discount. continues to meet investor
requirements.
The Company has a fixed The private equity Portfolio
life. In the event that Managers have extensive
no alternative proposals experience and a track record
are put forward to shareholders, in accurately timing the
or such proposals are not exits of private equity
approved by shareholders, investments.
the Company will commence The Board will ensure that
winding up in 2028. It could any alternative proposals
take several years until to be made to shareholders,
all of the Company's private are put forward at an appropriate
equity investments are disposed time.
of and any final distribution
of proceeds made to shareholders.
Market Risks Mitigation and management Change trend
Underlying investee companies The Portfolio Managers adopt The increased risk
within the Company's portfolio an active management approach reflects concerns
may experience fluctuations and focus on sustainable around general
in their operating results businesses capable of generating economic conditions
due to fluctuations in the long-term returns for shareholders. following the ongoing
market or general economic The Board receives quarterly war in Ukraine
conditions (including changes reports from the Portfolio as well as higher
to interest rates, inflation, Managers on the performance inflation and interest
geopolitical and ESG related of the Company's investments rate rises.
regulations). These would and the market outlook.
in turn affect the performance
of the Company.
Changes to the framework The Company Secretary, Corporate
of regulation and legislation Broker, Portfolio Managers
(including rules relating and auditor appraise the
to listed closed-end investment Board of any prospective
companies or loss of the changes to the legal and
exemption for investment regulatory framework, so
trusts from UK tax on chargeable that requisite actions can
gains) within which the be planned.
Company operates could have
a material adverse impact
on the Company.
Operational Risks Mitigation and management Change trend
The Company's shares may The Board monitors the NAV The increased risk
not trade in line with NAV, and receives regular updates. reflects heightened
depending on factors such The Board has a discount/premium market volatility.
as supply and demand for policy and the Board consider
the Company's shares, market whether a buyback would
conditions and general investor be for the benefit of the
sentiment. The operation Company as a whole, its
of the Company's policy shareholders and take into
to manage any discount could account relevant factors
result in the Company's and circumstances at the
operating charges ratio time.
becoming excessive. The Board monitors marketing
and distribution activity
regularly.
The Company's investment The Board regularly considers
portfolio is managed by key man risk and seeks assurances
the Portfolio Managers and, concerning the depth of
in particular, is led by expertise of the investment
two key individuals. Loss management teams which manage
of a portfolio manager could the Company's portfolio.
affect performance and market The Board receives assurances
sentiment leading to a widening from the Manager regarding
discount of the share price the Portfolio Manager's
compared with the NAV. incentive arrangements and
succession planning.
Private equity investments Contracts are drafted to
are generally less liquid include obligations to provide
and more difficult to value information with regard
than publicly traded companies. to investee companies in
A lack of open market data a timely manner, where possible.
and reliance on investee The Manager has an extensive
company projections may track record of valuing
also make it more difficult privately held investments.
to estimate fair value on The audit and risk committee
a timely basis. reviews all valuations of
unquoted investments on
a quarterly basis and challenges
methodologies used by the
Portfolio Managers.
Liquidity risks include Concentration limits are
those risks resulting from imposed on single investments
holding private equity investments to minimise the size of
as well as not being able positions.
to participate in follow-on The Portfolio Managers consider
fundraises through lack liquidity risk when selecting
of available capital which investments.
could result in dilution The Portfolio Managers will
of an investment. seek to manage cashflow
such that the Company will
be able to participate in
follow up fundraisings where
appropriate. The Board receives
quarterly reports from the
Manager on the portfolio's
liquidity.
Operational Risks Mitigation and management Change trend
The Company has no employees Experienced third party
and the Directors have been service providers are employed
appointed on a non-executive by the Company under appropriate
basis. The Company is therefore terms and conditions and
reliant upon the performance with agreed service level
of third-party service providers. specifications. Service
Failure of any of the Company's level agreements include
service providers to perform clauses which set out the
in accordance with the terms notice periods for termination.
of its appointment, to protect The Board receives regular
against breaches of the reports from its service
Company's legal and regulatory providers and the management
obligations such as data engagement committee reviews
protection, or to perform the performance of key service
its obligations at all as providers at least annually.
a result of insolvency, The audit and risk committee
fraud, breaches of cyber reviews reports on the external
security, failures in business audits of the internal controls
continuity plans or other of certain key service providers.
causes, could have a material
detrimental impact on the
operation of the Company.
Failure to price sustainability
risks into an investment
by the Portfolio Manager
which could lead to future
losses.
The AIFM, the Portfolio
Managers, the Depositary,
the Company Secretary and
the Administrator perform
services that are integral
to the operation of the
Company and any of the Company's
service providers could
terminate their contract.
Risk assessment and internal controls review by the Board
Risk assessment includes consideration of the scope and quality
of the systems of internal control operating within key service
providers, and ensures regular communication of the results of
monitoring by such providers to the audit and risk committee,
including the incidence of significant control failings or
weaknesses that have been identified at any time and the extent to
which they have resulted in unforeseen outcomes or contingencies
that may have a material impact on the Company's performance or
condition.
No significant control failings or weaknesses were identified
from the audit and risk committee's ongoing risk assessment which
has been in place throughout the year and up to the date of this
report. The Board is satisfied that it has undertaken a detailed
review of the risks facing the Company.
An analysis of the financial risks facing the Company is set out
in note 22 to the accounts on pages 77 to 80 of the annual report
and accounts.
Going concern
The Directors have a reasonable expectation that the Company has
adequate resources to continue in operational existence until 31
July 2024 which is more than twelve months from the date when this
Report and accounts was signed and the Directors have accordingly
adopted the going concern basis in preparing this Report and
accounts.
In reaching this assessment the Directors have considered the
principal risks, the impact of the emerging risks and uncertainties
and the matters referred to in the viability statement. They have
additionally considered the liquidity of the Company's portfolio of
listed investments, the Company's cash balances and the forecast
income and expenditure flows as well as commitments to provide
further funding to the Company's private equity investee companies;
the Company currently has no borrowings. A substantial proportion
of the Company's expenditure varies with the value of the
investment portfolio. In the event that there is insufficient cash
to meet the Company's liabilities, the listed investments in the
portfolio may be realised and the Directors have reviewed the
average days to liquidate the listed investments. The Company is a
closed-end investment trust and there is no requirement to redeem
or buy back shares. The Company has additionally performed stress
tests which confirm that a 50% fall in the market prices of the
portfolio would not affect the Board's conclusions in respect of
going concern.
Viability statement
In accordance with the AIC Code the Board has considered the
longer term prospects for the Company beyond the twelve months
required to assess the Company's ability to continue as a going
concern. The Board believes that a period of five years reflects a
suitable time horizon for strategic planning, the investment cycle
of private equity and the longer term view taken by the Portfolio
Managers and investors; this period is in line with the Company's
Key Information Document. The Company has a fixed life. In the
event that no alternative proposals are put forward to
shareholders, or such proposals are not approved by shareholders,
the Company will commence winding up in 2028.
As an investment trust, the Company is entitled to beneficial
treatment with regard to chargeable gains. Any change to such
taxation arrangements could affect the Company's viability as an
effective investment vehicle.
In their assessment of the prospects for the Company over the
next five years, the Directors have assumed that the Company will
continue to adopt the same investment objective, that the Company's
performance will continue to be attractive to shareholders and that
the Company will continue to meet the requirements so as to retain
its status as an investment trust.
The Directors have considered each of the Company's principal
and emerging risks and uncertainties detailed on pages 34 to 36 of
the annual report and accounts. In particular, the Directors
concluded that the emerging geopolitical and ESG risks do not
materially impact the viability of the Company. The Directors have
also considered a significant fall in equity markets on the value
of the Company's investment portfolio. The Directors have,
furthermore, considered the Company's projections of income and
expenditure as well as any commitments to provide funding to
investee companies. They have noted that the Company's investment
portfolio will continue to comprise a significant proportion of
highly liquid listed equities which can be readily realised and
that a substantial proportion of the Company's operating expenses
vary with the value of the investment portfolio. As stated in Going
Concern above, the Company is a closed-end investment trust and
there is no requirement to redeem or buy back shares. A stress test
to evaluate the consequences of a 50% reduction in the market value
of the Company's investments over the five year period has also
been evaluated.
The conclusion of this review is that the Board has a reasonable
expectation that the Company will be able to continue in operation
and meet its liabilities as they fall due over the next five
years.
By order of the Board
Schroder Investment Management Limited
Company Secretary
5 July 2023
Statement of Directors' Responsibilities
The Directors are responsible for preparing the annual report,
and the Report and accounts in accordance with applicable law and
regulations.
Company law requires the Directors to prepare the Report and
accounts for each financial year. Under that law, the Directors
have prepared the Report and accounts in accordance with United
Kingdom Generally Accepted Accounting Practice (United Kingdom
Accounting Standards, comprising Financial Reporting Standard (FRS)
102 "The Financial Reporting Standard applicable in the UK and
Republic of Ireland" and applicable law). Under company law, the
Directors must not approve the Report and accounts unless they are
satisfied that they give a true and fair view of the state of
affairs of the Company and of the return or loss of the Company for
that year. In preparing these Report and accounts, the Directors
are required to:
- select suitable accounting policies and then apply them consistently;
- make judgements and accounting estimates that are reasonable and prudent;
- state whether applicable UK Accounting Standards, comprising
FRS 102, have been followed, subject to any material departures
disclosed and explained in the Report and accounts;
- notify the Company's shareholders in writing about the use of
disclosure exemptions in FRS 102, used in the preparation of the
Report and accounts; and
- prepare the Report and accounts on a going concern basis
unless it is inappropriate to presume that the Company will
continue in business.
The Directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the Company's
transactions and disclose with reasonable accuracy at any time the
financial position of the Company and enable them to ensure that
the Report and accounts and the Directors' Remuneration Report
comply with the Companies Act 2006. They are also responsible for
safeguarding the assets of the Company and hence for taking
reasonable steps for the prevention and detection of fraud and
other irregularities.
The Manager is responsible for the maintenance and integrity of
the webpage dedicated to the Company. Legislation in the United
Kingdom governing the preparation and dissemination of Report and
accounts may differ from legislation in other jurisdictions.
Each of the Directors, whose names and functions are listed on
page 38 of the annual report and accounts, confirm that to the best
of their knowledge:
- the Report and accounts, which have been prepared in
accordance with United Kingdom Generally Accepted Accounting
Practice (United Kingdom Accounting Standards and applicable law),
give a true and fair view of the assets, liabilities, financial
position and net return of the Company;
- the Strategic Report contained in the report and accounts
includes a fair review of the development and performance of the
business and the position of the Company, together with a
description of the principal risks and uncertainties that it faces;
and
- the annual report and accounts, taken as a whole, is fair,
balanced and understandable and provides the information necessary
for shareholders to assess the Company's position and performance,
business model and strategy.
On behalf of the Board
Neil England
Chairman
5 July 2023
Income Statement
For the year ended 31 March 2023
For the nine months ended
2023 31 March 2022(1)
Revenue Capital Total Revenue Capital Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Gains/(losses) on
investments held at
fair value through
profit or loss - 3,198 3,198 - (1,453) (1,453)
Losses on derivative
contracts - - - - (481) (481)
Gains on foreign exchange - 16 16 - - -
Income from investments 392 - 392 296 - 296
Other interest receivable
and similar income 77 - 77 - - -
-------------------------- ------- ------- ------- --------- -------- --------
Gross return/(loss) 469 3,214 3,683 296 (1,934) (1,638)
Portfolio management
fee (458) - (458) (372) - (372)
Performance fee - (555) (555) - (714) (714)
Administrative expenses (650) - (650) (500) - (500)
Transaction costs - (4) (4) - 1 1
-------------------------- ------- ------- ------- --------- -------- --------
Net return/(loss)
before finance costs
and taxation (639) 2,655 2,016 (576) (2,647) (3,223)
Finance costs - - - (1) - (1)
-------------------------- ------- ------- ------- --------- -------- --------
Net return/(loss)
before taxation (639) 2,655 2,016 (577) (2,647) (3,224)
Taxation - - - - - -
-------------------------- ------- ------- ------- --------- -------- --------
Net return/(loss)
after taxation (639) 2,655 2,016 (577) (2,647) (3,224)
-------------------------- ------- ------- ------- --------- -------- --------
Return/(loss) per
share (0.86)p 3.57p 2.71p (0.77)p (3.53)p (4.30)p
(1) The Company changed its accounting date to 31 March
commencing 1 July 2021. The comparative figures cover the nine
month period from 30 June 2021 to 31 March 2022.
The "Total" column of this statement is the profit and loss
account of the Company. The "Revenue" and "Capital" columns
represent supplementary information prepared under guidance issued
by The Association of Investment Companies. The Company has no
other items of other comprehensive income, and therefore the net
return/(loss) after taxation is also the total comprehensive
income.
All revenue and capital items in the above statement derive from
continuing operations. No operations were acquired or discontinued
in the year, or comparative period.
Statement of Changes in Equity
For the year ended 31 March 2023
Called-up
share Special Capital Revenue
capital reserve reserves reserve Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
At 31 March 2022 750 72,765 5,598 (1,010) 78,103
Repurchase of the Company's
own shares into treasury - (808) - - (808)
Net return/(loss) after taxation - - 2,655 (639) 2,016
--------------------------------- --------- ------- -------- ------- -------
At 31 March 2023 750 71,957 8,253 (1,649) 79,311
--------------------------------- --------- ------- -------- ------- -------
For the nine months ended 31 March 2022(1)
Called-up
share Special Capital Revenue
capital reserve reserves reserve Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
At 30 June 2021 750 72,765 8,245 (433) 81,327
Net loss after taxation - - (2,647) (577) (3,224)
------------------------ --------- ------- -------- ------- -------
At 31 March 2022 750 72,765 5,598 (1,010) 78,103
------------------------ --------- ------- -------- ------- -------
(1) The Company changed its accounting date to 31 March
commencing 1 July 2021. The comparative figures cover the nine
month period from 30 June 2021 to 31 March 2022.
Statement of Financial Position
at 31 March 2023
31 March 31 March
2023 2022(1)
GBP'000 GBP'000
Fixed assets
Investments held at fair value through profit or
loss 74,128 64,691
--------------------------------------------------- -------- --------
Current assets
Debtors 151 115
Cash at bank and in hand 7,759 15,452
--------------------------------------------------- -------- --------
7,910 15,567
--------------------------------------------------- -------- --------
Current liabilities
Creditors: amounts falling due within one year (1,543) (1,039)
--------------------------------------------------- -------- --------
Net current assets 6,367 14,528
--------------------------------------------------- -------- --------
Total assets less current liabilities 80,495 79,219
--------------------------------------------------- -------- --------
Creditors: amounts falling due after more than one
year
Performance fee (1,184) (1,116)
--------------------------------------------------- -------- --------
Net assets 79,311 78,103
--------------------------------------------------- -------- --------
Capital and reserves
Called-up share capital 750 750
Capital reserves 80,210 78,363
Revenue reserve (1,649) (1,010)
--------------------------------------------------- -------- --------
Total equity shareholders' funds 79,311 78,103
--------------------------------------------------- -------- --------
Net asset value per share 107.32p 104.14p
(1) Restated as detailed in note 13 on page 72 of the annual
report and accounts.
Cash Flow Statement
For the
nine
months
Year ended ended
31 March 31 March
2023 2022(1)
GBP'000 GBP'000
Net cash outflow from operating activities (662) (180)
Investing activities
Purchases of investments (19,840) (7,285)
Sales of investments 13,601 5,650
Cash outflow from derivative instruments - (693)
------------------------------------------------------- ---------- ---------
Net cash outflow from investing activities (6,239) (2,328)
------------------------------------------------------- ---------- ---------
Net cash outflow before financing (6,901) (2,508)
------------------------------------------------------- ---------- ---------
Financing activities
Repurchase of Ordinary shares into treasury (808) -
------------------------------------------------------- ---------- ---------
Net cash outflow from financing activities (808) -
------------------------------------------------------- ---------- ---------
Net cash outflow in the year/period (7,709) (2,508)
------------------------------------------------------- ---------- ---------
Cash at bank and in hand at the beginning of the
year/period 15,452 17,960
Net cash outflow in the year/period (7,709) (2,508)
Exchange movements 16 -
------------------------------------------------------- ---------- ---------
Cash at bank and in hand at the end of the year/period 7,759 15,452
------------------------------------------------------- ---------- ---------
Included under operating activities are dividends received
during the year amounting to GBP362,000 (period ended 31 March
2022: GBP230,000) and interest receipts amounting to GBP62,000
(period ended 31 March 2022: nil).
(1) The Company changed its accounting date to 31 March
commencing 1 July 2021. The comparative figures cover the nine
month period from 30 June 2021 to 31 March 2022.
Notes to the Accounts
1. Accounting period
The Company changed its accounting date to 31 March commencing 1
July 2021. The comparative figures cover the nine month period from
30 June 2021 to 31 March 2022.
2. Accounting policies
(a) Basis of accounting
Schroder British Opportunities Trust plc ("the Company") is
registered in England and Wales as a public company limited by
shares. The Company's registered office is 1 London Wall Place,
London EC2Y 5AU, United Kingdom.
The accounts are prepared in accordance with the Companies Act
2006, United Kingdom Generally Accepted Accounting Practice ("UK
GAAP"), in particular in accordance with Financial Reporting
Standard (FRS) 102 "The Financial Reporting Standard applicable in
the UK and Republic of Ireland". The accounts are prepared in
accordance with Statement of Recommended Practice "Financial
Statements of Investment Trust Companies and Venture Capital
Trusts" (the "SORP") issued by the Association of Investment
Companies in July 2022, except for certain financial information
required by paragraph 82(c) regarding unquoted holdings with a
value greater than 5% of the portfolio or included in the top 10,
where information is not publicly available. All of the Company's
operations are of a continuing nature.
The accounts have been prepared on a going concern basis with
investments at fair value through profit or loss. The Directors
believe that the Company has adequate resources to continue
operating for the period to 31 July 2024, which is at least 12
months from the date of approval of this report and accounts. In
forming this opinion, the Directors have taken into consideration:
the controls and monitoring processes in place, the Company's other
payables, the level of operating expenses, comprising largely
variable costs which would reduce pro rata in the event of a market
downturn, the Company's cash flow forecasts and the liquidity of
the Company's investments. In forming this opinion, the Directors
have also considered the Company's principal risks, including
climate change. Further details of Directors' considerations
regarding this are given in the Chairman's Statement, Investment
Managers' Review, Going Concern Statement, Viability Statement and
under the Principal and Emerging Risks heading on page 34 of the
annual report and accounts. The accounts have been prepared on the
assumption that approval as an investment trust will continue to be
granted.
The accounts are presented in sterling and amounts have been
rounded to the nearest thousand.
(b) Use of judgements, estimates and assumptions
The preparation of the accounts requires management to make
estimates and assumptions that affect the application of accounting
policies and the reported amounts of assets, liabilities, income
and expenses. Actual results may differ from these estimates. The
resulting accounting estimates and assumptions will, by definition,
seldom equal the related actual results.
Estimates and underlying assumptions are reviewed on an on-going
basis. Revisions to accounting estimates are recognised in the
period in which the estimates are revised and in any future periods
affected.
The key estimates in the accounts are the determination of the
fair values of the unquoted investments by the Investment Manager
for consideration by the Directors. These estimates are key, as
they significantly impact the valuation of the unquoted investments
at the year end. The fair valuation process involves estimation
using subjective inputs that are unobservable (for which market
data is unavailable). The key estimates and assumptions are
described in note 21 on pages 75 and 76 of the annual report and
accounts.
Fair value estimates are cross-checked to alternative estimation
methods where possible to improve the robustness of the estimates.
The risk of an over or under estimation of fair values is greater
when methodologies are applied using more subjective inputs.
3. Gains/(losses) on investments held at fair value through profit or loss
Nine
Year months
ended ended
31 March 31 March
2023 2022
GBP'000 GBP'000
Gains/(losses) on sales of investments based on historic
cost 889 (274)
Amounts recognised in investment holding gains and
losses in the previous period in respect of investments
sold in the period 327 (310)
--------------------------------------------------------- -------- --------
Gains/(losses) on sales of investments based on the
carrying value at the previous balance sheet date 1,216 (584)
Net movement in investment holding gains and losses 1,982 (869)
--------------------------------------------------------- -------- --------
Gains/(losses) on investments held at fair value
through profit and loss 3,198 (1,453)
--------------------------------------------------------- -------- --------
4. Income from investments
Nine
Year months
ended ended
31 March 31 March
2023 2022
GBP'000 GBP'000
Income from investments:
UK dividends 374 233
Overseas dividends 18 63
---------------------------------------------- -------- --------
392 296
---------------------------------------------- -------- --------
Other interest receivable and similar income:
Deposit interest 77 -
Other income - -
---------------------------------------------- -------- --------
77 -
---------------------------------------------- -------- --------
Total income 469 296
---------------------------------------------- -------- --------
5. Investment management fee and performance fee
Nine
Year months
ended ended
31 March 31 March
2023 2022
GBP'000 GBP'000
Revenue:
Investment management fee 458 372
-------------------------- -------- --------
Capital:
Performance fee 555 714
-------------------------- -------- --------
The bases for calculating the investment management and
performance fees are set out in the Directors' Report on page 40 of
the annual report and accounts and details of all amounts payable
to the Manager are given in note 19 on page 75 of the annual report
and accounts.
6. Dividends
The Company has reported a revenue loss after taxation of
GBP639,000 (period ended 31 March 2022: GBP577,000) for the year
and accordingly there is no requirement to pay a dividend under
Section 1158 of the Corporation Tax Act 2010.
7. Return/(loss) per share
Nine
months
Year ended ended
31 March 31 March
2023 2022
GBP'000 GBP'000
Revenue loss (639) (577)
Capital return/(loss) 2,655 (2,647)
-------------------------------------------------- ---------- ----------
Total return/(loss) 2,016 (3,224)
-------------------------------------------------- ---------- ----------
Weighted average number of shares in issue during
the year 74,376,633 75,000,000
Revenue loss per share (0.86)p (0.77)p
-------------------------------------------------- ---------- ----------
Capital return/(loss) per share 3.57p (3.53)p
-------------------------------------------------- ---------- ----------
Total return/(loss) per share 2.71p (4.30)p
-------------------------------------------------- ---------- ----------
8. Called-up share capital
The issued share capital at the accounting date was as
follows:
Nine
months
ended
31 March 31 March
2023 2022
GBP'000 GBP'000
Ordinary Shares allotted, called up and fully paid:
75,000,000 shares of 1p each: 750 750
Repurchase of 1,100,000 (2022: nil) shares into treasury (11) -
--------------------------------------------------------- -------- ---------
Subtotal of 73,900,000 (2022: 75,000,000) shares 739 750
1,100,000 (2022: nil) shares held in treasury 11 -
--------------------------------------------------------- -------- ---------
Closing balance(1) 750 750
--------------------------------------------------------- -------- ---------
(1) Represents 75,000,000 (2022: 75,000,000) shares of 1p each,
including 1,100,000 (2022: nil) held in treasury.
During the year, the Company repurchased 1,100,000 of its own
shares, nominal value GBP11,000, to hold in treasury, representing
1.5% of the shares outstanding at the beginning of the year. The
total consideration paid for these shares amounted to GBP808,000.
The reason for these purchases was to seek to manage the volatility
of the share price discount to NAV per share.
9. Net asset value per share
31 March 31 March
2023 2022
GBP'000 GBP'000
Net assets attributable to shareholders (GBP'000) 79,311 78,103
Shares in issue at the year end 73,900,000 75,000,000
-------------------------------------------------- ---------- ----------
Net asset value per share 107.32p 104.14p
-------------------------------------------------- ---------- ----------
10. Transactions with the Manager
Under the terms of the Alternative Investment Fund Manager
Agreement, the Manager is entitled to receive a management fee, a
company secretarial and adminstrative fee, and a performance fee.
Details of the bases of these calculations are given in the
Directors' Report on page 40 of the annual report and accounts.
The management fee payable in respect of the year ended 31 March
2023 amounted to GBP458,000 (period ended 31 March 2022:
GBP372,000), and GBP458,000 (31 March 2022: GBP650,000) was
outstanding at the year/period end. Any investments in funds
managed or advised by the Manager or any of its associated
companies, are excluded from the assets used for the purpose of the
calculation and therefore incur no fee. There have been no such
investments during the year (period ended 31 March 2022: nil).
A performance fee provision amounting to GBP555,000 (period
ended 31 March 2022: GBP714,000) has been included in these
accounts. An amount of GBP487,000 is immediately payable and has
been included in these accounts as a creditor falling due within
one year. The remaining balance of GBP1,184,000 (31 March 2022:
GBP1,116,000) is carried forward until such time as it may be paid
under the terms of the AIFM Agreement.
The company secretarial and administrative fee payable for the
year amounted to GBP180,000 (period ended 31 March 2022:
GBP135,000). Company secretarial and administration fees amounting
to GBP420,000 (31 March 2022: GBP240,000) were outstanding at the
year end.
No Director of the Company served as a Director of any company
within the Schroder Group at any time during the year.
11. Events after the accounting date which have not been reflected in the accounts
A performance fee amounting to GBP487,000 payable to the
Manager, in relation to the partial disposal of Waterlogic, is
included in the Statement of Financial Position within creditors
falling due within one year. However since the year end, the Board
has accepted Schroders' offer to disregard the Payment Amount,
which would have triggered a performance fee pay-out in the year
ending 31 March 2024. This agreement will have the effect of moving
this performance fee into creditors falling due after more than one
year in the Statement of Financial Position. Schroders considers
this concession to be appropriate due to the disappointing
performance of the share price versus the net asset value.
Status of announcement
2022 Financial Information
The figures and financial information for 2022 are extracted
from the published Annual Report and Accounts for the period ended
31 March 2022 and do not constitute the statutory accounts for that
year. The 2022 Annual Report and Accounts have been delivered to
the Registrar of Companies and included the Report of the
Independent Auditors which was unqualified and did not contain a
statement under either section 498(2) or section 498(3) of the
Companies Act 2006.
2023 Financial Information
The figures and financial information for 2023 are extracted
from the Annual Report and Accounts for the year ended 31 March
2023 and do not constitute the statutory accounts for the year. The
2022 Annual Report and Accounts include the Report of the
Independent Auditors which is unqualified and does not contain a
statement under either section 498(2) or section 498(3) of the
Companies Act 2006. The 2023 Annual Report and Accounts will be
delivered to the Registrar of Companies in due course.
Neither the contents of the Company's webpages nor the contents
of any website accessible from hyperlinks on the Company's webpages
(or any other website) is incorporated into, or forms part of, this
announcement.
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