Net Asset Value(s)

RNS Number : 8078Y

Schroder British Opportunities Tst.

08 September 2022

 

Schroder British Opportunities Trust plc

Announcement of Net Asset Value as at 30 June 2022

Schroder British Opportunities Trust plc (the "Company") today announces its unaudited net asset value ("NAV") (cum income) as at 30 June 2022 was £75.7 million or 101.11 pence per share, following the quarterly valuation of the Company's private equity holdings. The Company's daily NAV calculation re-values the public asset holdings on a daily basis, with the private equity holdings revalued quarterly post period end. The unaudited NAV per ordinary share announced today of 101.11 pence represents an increase of 5.0% based on the estimated net asset value (cum income) as at 30 June 2022 of 96.34 pence, released on 1 July 2022.

Summary

· The NAV announced today of 101.11 pence per share as at 30 June 2022 reflects a 5.0% increase compared with the estimated NAV per share as at 30 June 2022 published on 1 July 2022  and a decrease of 2.9% compared with the NAV as at 31 March 2022, the date of the last report and accounts.

· The NAV return for the three months ended 30 June 2022, of -2.9%, comprised:

o  Quoted holdings: -6.0%

o  Unquoted holdings: +3.8%

o  Costs and other movements: -0.7%

· Since the last period end, the Company has completed private equity investments in Mintec, CFC and Pirum.

· The Company is c.97% invested and is well diversified and positioned for the future.

Introduction

Economic backdrop

UK equities fell over the quarter. Economically sensitive areas of the market performed poorly towards the end of the period amid rising recessionary risks. Large cap companies held up relatively well as traditionally defensive areas of the market outperformed, including the telecoms, healthcare and consumer staples sectors.

In contrast, UK small and mid caps (SMIDs) were negatively impacted by a relatively high weighting to UK consumer-focused companies, where fears around the impact of high inflation and cost of living crisis on future earnings weighed heavily on stock valuations.

Consumer discretionary sectors, such as retailers and housebuilders, performed particularly poorly, in line with the trend seen across many developed markets grappling with high levels of consumer price inflation (CPI). In tandem with this, many UK SMIDs suffered severe valuation declines in line with the general trend of growth companies suffering against the backdrop of rising interest rates.

Portfolio composition and valuation reviews

As at 31 March 2022, the Company had 37 portfolio holdings, including 6 unquoted holdings and 31 quoted holdings. During the period to 30 June 2022, the number and composition of holdings was impacted by the following events:

· New investment in Mintec

· New investment in CFC

· New investment in Pirum

· Follow-on investment in Cera Care

As at 30 June 2022, the Company had 39 holdings, including 9 unquoted holdings and 30 quoted holdings.

Financial performance

Attribution Analysis (£m)	Quoted	Unquoted	Net (debt)/cash	Other	NAV
Value at 31.03.2022	37.3	27.4	15.5	(2.1)	78.1
+ Investments	1.5	12.7	(14.2)	-	-
- Realisations at value	(1.3)	-	1.3	-	-
+/- Fair value gains/(losses)	(4.7)	3.0	-	-	(1.7)
+/- Costs and other movements	-	-	-	(0.7)	(0.7)
Value at 30.06.2022	32.8	43.1	2.6	(2.8)	75.7

Source: Schroders as at 30 June 2022

Portfolio

The Company's quoted holdings saw a decline in value of 12.6%, contributing -6.0% to the quarterly change in NAV. The largest negative contributors were holdings in Watches of Switzerland and Ascential, which contributed -0.9% and -0.7% respectively.

The Company's unquoted holdings saw an increase in value of 10.9%, contributing +3.8% to the quarterly change in NAV. The most substantial positive contributor was Cera Care, which added 3.3% following a further funding round. Elsewhere, the unquoted portfolio experienced increases largely due to foreign exchange movements. Meanwhile, EasyPark was revalued slightly down due to multiple compression.

Cash and net current assets

As at 30 June 2022, the Company held £2.6 million in cash.

Investment activity

During the period, three of our public equity holdings received takeover approaches: Euromoney Institutional Investor (in progress), EMIS Group (in progress) and Ideagen (delisted).

Elsewhere, as reported in the Report and Accounts for the period ended 31 March 2022 published in July, the Company made 3 new private equity investments:

Mintec

In May 2022, the Company made a £6.5 million commitment into Mintec, the leading provider of food-related commodity pricing, via Schroders long standing investment partner Synova. Synova first invested in Mintec in December 2017 and has supported the Company through a period of rapid growth, technological development, and international expansion. Synova's investment helped Mintec launch their proprietary data strategy and to become the world's first food-focused, IOSCO-compliant, Price Reporting Agency. In 2021, Mintec further enhanced its value proposition by acquiring commodity price forecasting specialist, Kairos, to create the world's most advanced integrated pricing intelligence platform for food industry procurement and risk managers globally.

CFC

In May 2022, the Company made a £6 million commitment into VIP SIV I LP, a fund managed by Vitruvian Partners, which invested in CFC, a leading technology-driven global insurance business. CFC is a specialist insurance provider, pioneer in emerging risk and market leader in cyber, serving more than 100,000 businesses in over 90 countries.

Pirum

In June 2022, the Company made a £5.8 million investment into Pirum Systems Limited ("Pirum"). Pirum is a leading provider of post-trade automation and collateral management technology for the global securities finance industry. The Company invested via Schroders' long-standing investment partner Bowmark Capital, a UK-based technology and services investor. Pirum was founded in 2000 to provide advanced, centralised and secure reconciliation services for financial market participants. Pirum's software provides a secure processing hub which seamlessly links industry participants, allowing them to process and verify key transaction details electronically.

Cera Care

Finally, in August 2022, the Company made a follow-on investment 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.

Top 10 Holdings

The Company's top 10 holdings as at 30 June 2022 compared with the respective holding as at 31 March 2022 were:

Holding	Quoted/ unquoted	Fair value as at 30 June 2022 (£'000)	% of total investments	Fair value as at 31 March 2022 (£'000)	% of total investments
Rapyd Financial Network	Unquoted	9,285	12.2	8,565	13.2
Cera	Unquoted	6,977	9.2	4,509	7.0
Waterlogic	Unquoted	5,979	7.9	6,045	9.3
Pirum	Unquoted	5,568	7.3	-	-
Mintec	Unquoted	4,360	5.7	-	-
Graphcore	Unquoted	3,339	4.4	3,178	4.9
EasyPark	Unquoted	2,686	3.5	2,775	4.3
CFC	Unquoted	2,576	3.4	-	-
Learning Curve	Unquoted	2,317	3.1	2,336	3.6
Euromoney	Quoted	2,296	3.0	1,449	2.2

Source: Schroders as at 30 June 2022

Outlook

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 and the subsequent downturn in tech stocks, has contributed to the resilience of the NAV.

Central banks around the world are hiking interest rates to battle rising inflation. The new interest rate regime means that recessions are now expected in the US, UK and Europe in the next year. As a result, while the current economic environment remains challenging, we believe that this represents one of the most opportune times to be an investor, where falling valuations for many businesses do not reflect the underlying positive fundamentals. We expect to see more attractive public and private investment opportunities emerging and will continue to look for factors such as pricing power, business transformation potential and robust technological enablement. We anticipate that our differentiated public-private equity strategy will enable us to continue to invest without boundaries, whilst broadening our investable universe.

Past performance is not a guide to future performance and may not be repeated. The value of investments and the income from them may go down as well as up and investors may not get back the amounts originally invested. The securities shown above are for illustrative purposes only and are not to be considered a recommendation to buy or sell.

Enquiries:

Schroder Investment Management Limited	0207 658 6000
Paula Lockwood (Company Secretary)
Augustine Chipungu   (Press)

Peel Hunt (Broker) Liz Yong, Luke Simpson, Huw Jeremy (Investment Banking) Alex Howe, Chris Bunstead, Ed Welsby, Richard Harris (Sales)

020 7418 8900

 

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