Results analysis from Kepler Trust Intelligence

Schroder British Opportunities Tst.

09 December 2024

 

Schroder British Opportunities (SBO)

09/12/2024

Results analysis from Kepler Trust Intelligence

·   Schroder British Opportunities (SBO) released its interim results for the six months ending 30/09/2024 where the trust saw NAV per share decrease by 2.4% on a total return basis.

·   The management team can invest in both private (unquoted) and public (quoted) equities. The unquoted holdings make up the majority and are long-term investments. Over the period, underlying performance was encouraging, leading to net positives from company performance and valuations, although this was offset by factors such as FX and transactional activity, meaning the unquoted portfolio as a whole detracted 2.7% from NAV. The portfolio is valued at 1.5x cost, despite the conservative valuation approach.

·    There have been two new private companies: Headfirst and Acturis, which was added post results. Despite being relatively new, Headfirst has already contributed positively to NAV.

·   The Graphcore sale was completed in the period at above the carrying value, arguably reflecting the conservative valuation approach. At period end, the portfolio consisted of nine private companies totalling 64% of NAV, with cash of 9% of NAV.

·   The public equity (quoted) portfolio was broadly flat with some positive recoveries, somewhat offset by weaker performers. There were two new quoted additions and one disposal following an M&A approach. The quoted portfolio consisted of 22 holdings totalling 27% of NAV.

·    The discount remained at 27.8% though the board has decided against share buybacks.

·    It was announced that one of the four strong management team is to retire in early 2025.

·    New Chairman Justin Ward commentated on the operational performance of the portfolio, saying "The current portfolio of innovative growth businesses is performing well and the pipeline for attractive investment opportunities remains strong".

Kepler View

Schroder British Opportunities (SBO) has released its half year results to the end of September 2024. The period saw a significant change in conditions, with falling inflation and lower interest rates which has arguably improved the outlook for small and medium-sized companies, potentially setting up the trust well for the second half of its year.

Operating performance of the private (unquoted) equities was encouraging, and helped drive an uplift in NAV. A disposal at above carrying value could be seen as an indication of the portfolio's potential in our opinion. These were offset by transactional activity and FX to deliver an aggregate -2.7% from NAV, however, we note this is short-term, and likely reflective of a conservative valuation approach. The managers remain positive on the outlook, and highlight the aggregate unquoted portfolio at 1.5x cost price, which make up nearly two-thirds of the portfolio and a key driver going forward.

In the unquoted portfolio, there was a new position in Headfirst, a HR tech service provider which has already contributed positively to NAV. The quoted equities saw new additions in Warpaint London and Forterra and one disposal, and now total 22 holdings at a weight of 27% of NAV.

The trust offers an attractive, unique portfolio of predominately private growth companies, with quoted holdings providing considerable flexibility. We believe the current discount arguably hasn't adjusted for the improving outlook for the asset class.

CLICK HERE TO READ THE FULL REPORT 

Visit Kepler Trust Intelligence for more high quality independent investment trust research.

Important information

This report has been issued by Kepler Partners LLP.  The analyst who has prepared this report is aware that Kepler Partners LLP has a relationship with the company covered in this report and/or a conflict of interest which may impair the objectivity of the research.

Past performance is not a reliable indicator of future results. The value of investments can fall as well as rise and you may get back less than you invested when you decide to sell your investments. It is strongly recommended that if you are a private investor independent financial advice should be taken before making any investment or financial decision.

Kepler Partners is not authorised to make recommendations to retail clients. This report has been issued by Kepler Partners LLP, is based on factual information only, is solely for information purposes only and any views contained in it must not be construed as investment or tax advice or a recommendation to buy, sell or take any action in relation to any investment.

The information provided on this website is not intended for distribution to, or use by, any person or entity in any jurisdiction or country where such distribution or use would be contrary to law or regulation or which would subject Kepler Partners LLP to any registration requirement within such jurisdiction or country. In particular, this website is exclusively for non-US Persons. Persons who access this information are required to inform themselves and to comply with any such restrictions.

The information contained in this website is not intended to constitute, and should not be construed as, investment advice. No representation or warranty, express or implied, is given by any person as to the accuracy or completeness of the information and no responsibility or liability is accepted for the accuracy or sufficiency of any of the information, for any errors, omissions or misstatements, negligent or otherwise. Any views and opinions, whilst given in good faith, are subject to change without notice.

This is not an official confirmation of terms and is not a recommendation, offer or solicitation to buy or sell or take any action in relation to any investment mentioned herein. Any prices or quotations contained herein are indicative only.  

Kepler Partners LLP (including its partners, employees and representatives) or a connected person may have positions in or options on the securities detailed in this report, and may buy, sell or offer to purchase or sell such securities from time to time, but will at all times be subject to restrictions imposed by the firm's internal rules. A copy of the firm's Conflict of Interest policy is available on request.

PLEASE SEE ALSO OUR TERMS AND CONDITIONS

Kepler Partners LLP is authorised and regulated by the Financial Conduct Authority (FRN 480590), registered in England and Wales at 70 Conduit Street, London W1S 2GF with registered number OC334771.

 

END