Final Results

Schroders Capital Global Innovation

28 March 2024

Schroders Capital Global Innovation Trust plc

Final results for the year ended 31 December 2023

Schroders Capital Global Innovation Trust plc ("INOV" or "the Company"), is pleased to publish its final results for the year ended 31 December 2023.

Tim Edwards, Chair of the Company, commented:

"The increase in net asset value in the last quarter of the year and the positive news flow from the portfolio since the end of the year, both indicate that momentum is beginning to turn in favour of growth in the new investments in the portfolio".

Key highlights

· During the year, the net asset value ("NAV") per share decreased by 11.2%, from 28.52p per share to 25.32p per share. However, importantly the NAV per share at 31 December 2023 represents a 7.9% increase on the 30 September valuation (23.46p per share).

· The negative performance during the first three quarters of the year can largely be attributed to a fall in the value of holdings in AMO Pharma, BenevolentAI, Atom Bank and the largest public holding, Oxford Nanopore.

· The strong performance during the final quarter was driven by the Company's holding in Autolus Therapeutics, which achieved a share price increase of 239.5% over the year, Carmot Therapeutics which announced its acquisition by Roche and the first milestone payment following the sale of Kymab to Sanofi.

· The share price decline was more muted at 5.3%, from 15.47p in the previous year to 14.65p.

· As at 31 December 2023, the Company had £12.6 million in cash and liquid money market funds and £54.6 million in liquid public equity investments, enabling further share buybacks and new investments, in addition to covering the funding requirements of the existing portfolio.

· During the 12 months to 31 December 2023, the Company completed six new investments; (AgroStar, Carmot Therapeutics, Securiti, Bizongo, AI software company (MMC SPV 3 LP) and Memo Therapeutics), across the three strategies: venture, growth and life sciences.

· The Board successfully repurchased 45,124,212 shares equal to 5% of the Company's issued share capital in the period September to December 2023, at an estimated weighted average discount to the last reported NAV at 30 September 2023 of 36.3%.

· The Company has already begun its programme for 2024 in order to meet its commitments for the year, and as at 27 March 2024, the Company has repurchased 17,500,000 shares for cancellation.

The Company's Annual Report and Accounts for the year ended 31 December 2023 are being published in hard copy format and an electronic copy will shortly be available to download from the Company's web pages www.schroders.com/inov.

The Annual Report and Accounts, including the Notice of Annual General Meeting, will shortly be uploaded to the Financial Conduct Authority's National Storage Mechanism and will be available for inspection at: https://data.fca.org.uk/#/nsm/nationalstoragemechanism. A separate announcement will be released once this has taken place.

Page numbers and cross references in the following announcement refer to page numbers and cross references in the Annual Report and Accounts for the year ended 31 December 2023.

Enquiries:

Schroder Investment Management Limited

Augustine Chipungu 020 7658 2106

Shilla Pindoria 020 7658 6000

John Spedding 020 7658 3206

Chair's Statement

Performance

For most of 2023, the macroeconomic backdrop of rising inflation and tightening central bank policy proved challenging for the Company and investor sentiment towards the areas of the market your Company invests in was significantly depressed.

The Company's net asset value ("NAV") per share for the year to 31 December 2023 fell by 11.2% and the share price by 5.3% but importantly the NAV per share at 31 December 2023 had recovered by 7.9% relative to the 30 September valuation.

Performance during the first three quarters of the year was primarily driven by a fall in value of the holdings in AMO Pharma, BenevolentAI, Atom Bank, and our largest public holding, Oxford Nanopore. In contrast, stronger performance in the last quarter of the year was driven by our holding in Autolus Therapeutics, whose share price increased by 239.5% over the year reflecting encouraging results from clinical trials and pipeline developments.

Against the difficult macroeconomic background, the Company continued to make progress with the strategy agreed with the Investment Manager:

- Work closely with the management of portfolio companies to support growth and map a path to profitability;

- Optimise liquidity to facilitate the execution of the buyback programme and the continued investment in private assets;

- Maximise the sale proceeds from holdings; and

- Complete new investments in line with the investment strategy already announced.

During the year, the Company made realisations of equities totalling £32.8 million, acquired 46.9 million of its shares, equivalent to 5.2% of our outstanding share capital, and made six new investments in innovative private companies across the three strategies of venture, growth, and life sciences which align with the Investment Manager's successful 25-year track record.

As at 31 December 2023, the Company had £12.6 million in cash and liquid money market funds and £54.6 million in liquid public equity investments to meet the funding requirements of the existing portfolio, to continue to execute the buyback programme and to target a select number of new investments.

The Company has announced positive news at the start of 2024; we have received a further milestone payment of £4.5 million from the sale of Kymab and proceeds of £4.5 million, an uplift of 219.2% on the 30 September valuation from the sale of Carmot Therapeutics which was only announced earlier in 2024.

The Board expects that future returns will likely continue to be driven by the performance of new investments.

Capital Discipline policy

The cancellation of the share premium account and rectification measures in respect of share repurchases undertaken in 2022 and up to the end of February 2023 were approved by shareholders at the Annual General Meeting ("AGM") on 21 June 2023 and the court on 18 July 2023.

This allowed the Company to begin a share repurchase programme in September 2023 as part of its Capital Discipline policy and we restated the intention "to repurchase shares equal to at least 5% of the Company's issued share capital in each of the calendar years 2023 and 2024, and in addition such number of shares in order to ensure that over the period to the 2025 AGM, the Company has undertaken share repurchases in an amount equating to 25% of all net cash realisations from the portfolio inherited from the previous portfolio manager."

The Board believes this programme demonstrates the Investment Manager's discipline around capital allocation; underlines the Board's confidence in the long-term prospects of the Company, its cash flows and NAV; will enhance the NAV per Share; and over time may reduce the volatility of the Company's discount and increase its trading liquidity.

The Board successfully repurchased 45,124,212 shares equal to 5% of the Company's issued share capital in the four-month period September to December 2023, at an estimated weighted average discount to the last reported NAV on 30 September 2023 of 36.3%. The Company has already begun its programme for 2024 in order to meet its commitment for the year, and as at 27 March 2024, the Company has repurchased 17,500,000 shares for cancellation. No shares are held in treasury. Accordingly, the total number of voting rights in the Company as at 27 March 2024 was 839,860,026. In aggregate the buybacks from September 2023 to date represent a capital return of £9.1 million to date.

The discount to net asset value which was trading at 47.9% immediately before the start of the share repurchase programme finished the year at 42.1% and as at 25 March 2024, stood at 43.9%. The Directors continue to examine options available to it to address the discount level.

The Board has continued to monitor realisations since 17 April 2023 to ensure its commitment to return 25% of net cash realisation is being fulfilled.

Valuation process for private investments

The valuation of private investments continues to be an area of considerable focus by the market.

The private investments are valued by a Schroders in-house valuation team which resides in Schroders Capital Fund Operations and Services team and is separate from the investment function.

The Company's AIFM maintains and applies effective organisational and administrative arrangements with a view to taking all reasonable steps designed to identify, prevent, manage and monitor conflicts of interests in relation to the unquoted valuation process. The Schroders Capital valuation process and governance structure is intended to ensure independence, accountability and segregation of duties in the oversight functions.

Valuations are calculated using established methodologies and public market comparators in accordance with International Private Equity and Venture Capital guidelines.

Valuations of the entire portfolio are reviewed on a quarterly basis by the Board and annually by the Auditor and clearly communicated to the market.

Comprehensive details of the valuation methodology and process can be found in the Strategic Report on pages 30 and 31.

Valuation frequency

In the past, the Board has published an indicative NAV each day in addition to the complete NAV calculations contained in the annual results, the interim results and as part of two quarterly NAV updates. In view of the current composition of the portfolio and the future investment strategy centred around investment in private companies, the Company will cease to publish an indicative NAV every business day from 2 April 2024 and the Company will focus on its quarterly NAV reporting schedule. The private portfolio now accounts for approximately 81% of the equity portfolio and this level will likely increase during 2024. Full quarterly valuation of all holdings and quarterly updates on the whole portfolio will provide a more definitive valuation basis for investors. The current daily indicative NAV does not include revaluation of the private holdings other than to account for foreign exchange movements and the relevance of the daily update is questionable when the quarterly valuation process for the private investments is taken into account.

The first NAV to be published under the new reporting regime will be the 31 March 2024 NAV which is expected to be published before the end of June 2024. In addition, the Company will continue to make announcements arising from developments within portfolio companies that have a material impact on the NAV, as well as new private investments and realisations of any nature in private investments (including partial realisations). The Board believes this quarterly NAV reporting cycle will provide shareholders with a clear framework for the release of information on the portfolio.

Change of Company Name, Auditor and Registrar

On 20 April 2023, the Company rebranded as Schroders Capital Global Innovation Trust plc and at the Company's AGM held on 21 June 2023, Ernst & Young LLP, was appointed as the Company's new Auditor. Additionally, the change of registrar to Equiniti Limited "Equiniti" was finalised on 30 June 2023.

Board composition

The Board noted the departure of Raymond Abbott, who retired from the Board at the AGM in June 2023 and, again, thank Raymond for his valuable contribution to the Company.

Lamia Baker joined the Board as an independent non-executive Director with effect from 22 June 2023. With more than 20 years of experience in business and technology, Lamia brings expertise in areas such as intellectual property, sales, innovation, entrepreneurship, venture capital investment, and board representation. Currently, Lamia holds the position of managing director (UK) at Dennemeyer & Co Limited and serves as the Head of Commercial (EMEA) for Dennemeyer Group.

A resolution to appoint Lamia as a Director of the Company will be proposed at the forthcoming AGM.

Scott Brown, who has served on the Board since 2015, will retire following the conclusion of the forthcoming AGM in May 2024. On behalf of the Board, I would like to thank Scott for his considerable contribution to the Company and wish him well for his future plans.

AGM

The AGM will be held at 12.30pm on Wednesday, 22 May 2024 at 1 London Wall Place, London EC2Y 5AU. The Board looks forward to welcoming shareholders to attend and participate in the meeting. Shareholders will also have the opportunity to hear a presentation from the portfolio managers, Tim Creed and Harry Raikes and light refreshments will be served. Please note that all voting will be on a poll and we encourage all shareholders to exercise their votes by means of registering them with the Company's registrar ahead of the meeting, online or by completing paper proxy forms, and to appoint the Chair of the meeting as their proxy. Information on voting can be found in the Notice of Annual General Meeting on pages 85 to 87. In the event that shareholders have a question for the Board, please email amcompanysecretary@schroders.com in advance of the AGM.

Continuation vote in 2025

Shareholders will have the opportunity to vote on the continuation of the Company at its AGM in 2025 and every five years thereafter.

Packaged Retail Insurance and Investment Products ("PRIIPs") legislation

There is a view that the UK's Listed Investment Companies have been shunned by investors and investment platforms because of the UK's unique interpretation of the PRIIPs regulations in the Markets in Financial Instruments Directive ("MiFID") which remain on the UK statute book.

In the House of Lords on Friday, 1 March 2024, Peers from all sides of the House agreed that a simple change to the interpretation in line with Baroness Altmann's Alternative Investment Fund Designation Bill would bring the UK into line with the rest of the world and was urgently needed in the interest of the country. We support this Bill and believe it would be a helpful legislative change.

Results webinar

Please join the Investment Manager for a webinar in which they will report on the year ended 31 December 2023 and outline their thoughts on the future direction of the portfolio. The presentation will be followed by a live Q&A session. The webinar will take place on 28 March 2024 at 2pm. Register for the event at https://www.schroders.events/INOV24

Outlook

The increase in net asset value in the last quarter of the year and the positive news flow from the portfolio since the end of the year, both indicate that momentum is beginning to turn in favour of growth in the new investments in the portfolio.

This progress is not currently reflected in the Company's share price and sentiment towards the private equity sector remains muted. The Investment Manager is finding exciting new investments and rebalancing the portfolio and the Board is encouraged by the portfolio taking shape under their direction. Shareholders can see this potential in the Investment Managers' Review. The Board's continued implementation of its Capital Discipline policy will underpin the Investment Manager's efforts and, in time, the share price and discount should begin to respond positively.

Tim Edwards

Chair

27 March 2024

Investment Manager's Review

"The progress achieved in 2023 has been against a difficult macroeconomic backdrop with investor focus primarily on rising inflation and the policy response from major central banks."

Summary

- The Company reported a net asset value ("NAV") of 25.32p per share as of 31 December 2023, a decrease of 11.2% relative to the NAV share per share as of 31 December 2022 (28.52p) but an increase of 7.9% relative to the NAV per share of 23.46p as of 30 September 2023.

- The main detractors from performance over the 12-month period, which have been previously discussed, included holdings in AMO Pharma, BenevolentAI, Oxford Nanopore and Atom Bank. On the positive side, positions in Autolus Therapeutics, Carmot Therapeutics and Ada Health provided bright spots, while the Company also notably benefited from the first milestone payment following the sale of Kymab to Sanofi, and an additional deferred cash consideration received following the sale of assets to Rosetta Capital.

- It has been a busy year with six new investments completed (AgroStar, Carmot Therapeutics, Securiti, Bizongo, AI software company (MMC SPV 3 LP), Memo Therapeutics) across our three strategies: venture, growth and life sciences.

- During the 12 months to 31 December 2023 the Company made realisations totalling £32.8 million, with positions in Oxford Nanopore and Immunocore reduced, while Johnson Matthey, Spirent Communications, Petershill Partners and IDEX Biometrics were exited.

- During the year, the Company purchased 46.9 million shares, equivalent to 5.2% of the outstanding share capital as of 31 December 2022.

- As of 31 December 2023, the Company had £2.9 million in cash (2022: £16.1 million), along with an investment of £9.7 million in the Schroder Special Situations - Sterling Liquidity Plus Fund (2022: nil), a daily liquidity money-market fund and £54.6 million in liquid public equity investments1 (2022: £83.7 million) to meet the funding requirements of the existing portfolio, continue to execute the buyback programme and target a select number of new investments.

Source: Schroders.

Introduction

Progress made in 2023

In the half year report and accounts, we discussed our four key strategic areas as Investment Manager. Here, we discuss the progress made this year towards our long-term investment strategy of pursuing opportunities in innovative, private companies globally across three key strategies: venture, growth and life sciences.

1. Work closely with portfolio management teams, co-investors, and other stakeholders to support business growth and a path to profitability

As Investment Manager, we take an active approach to engagement with the management teams of portfolio companies, with some examples provided in the engagement section later in this report. During 2023, the portfolio made significant progress in terms of both growth and profitability. The below figures offer a snapshot of progress by strategy as of 31 December 2023.

11 of 12 life sciences portfolio companies have reached clinical stage

2 new venture portfolio companies added in the past 12 months

80% average sales growth for growth portfolio companies*

Source: Schroders Capital, 2024.

*As at 31 December 2023, the weighted average sales growth over the last 12 months for all growth investments valued using a market-based approach, and excluded HP Environmental Technologies Fund.

Meanwhile, we are encouraged by the aggregate health of the portfolio in terms of estimated cash runway 67% of equity investments (by value) as at 31 December 2023 are profitable, fully funded or have more than 24 months of expected cash runway, as described in the below table.

Expected cash runways for portfolio companies

Expected cash runway	Fair value	% of equities
<12 months	£24.1m	12.0%
12-24 months	£43.0m	21.5%
>24 months	£63.6m	31.7%
Unprofitable (fully funded)	£11.8m	5.9%
Profitable (incl. milestones)	£57.9m	28.9%
Total equities	£200.4m	100.0%

Source: Schroders Capital, 2024. These figures represent forecasts and may not be realised. % of total investments as at 31 December 2023.

2. Rebalance the portfolio ensuring the appropriate liquidity (cash and liquid public equities) to execute efficiently the buyback programme and support the portfolio

We made notable progress in altering the liquidity mix to ensure the Company is appropriately positioned to execute efficiently the buyback programme and support the portfolio. During the year, we reduced the exposure to certain public holdings with the goal of reducing concentration risk, and to position the portfolio to better align with the renewed focus on private equity. To this end, the Company realised £23.8 million over the 12 months to 31 December 2023, exiting public equity holdings in Johnson Matthey, Spirent Communications, Petershill Partners and IDEX Biometrics, as well as reducing the holdings in Oxford Nanopore and Immunocore. As of 31 December 2023, the Company had £2.9 million in cash (2022: £16.1 million), along with an investment of £9.7 million in the Schroder Special Situations - Sterling Liquidity Plus Fund (2022: nil), a daily liquidity money-market fund and £54.6 million in liquid public equity investments, which we believe to be sufficient to successfully continue the buyback programme in 2024, meet the funding requirements of the existing portfolio and selectively target new investments.

£12.6m in cash and money market funds

£54.6m invested in liquid public equity investments

3. Maximise the sale proceeds from holdings, both public and private, as part of the rebalancing exercise

The economic environment in 2023 of inflation and interest rate headwinds, recession fears, weaker business confidence, subdued equity capital markets and slow fundraising and M&A activity, made it difficult to achieve sales for private holdings in the portfolio. We will continue to explore sales options in 2024, which we expect to provide an increasingly favourable environment for exits in private markets. That said, through the sale of public equity holdings discussed in the investment activity section and new investments (see below), we have made considerable progress in rebalancing the portfolio, increasing the portfolio's weightings to venture, growth and life science investments while reducing the public equity exposure, which is illustrated in the below figure. In addition, and more recently, we have seen exits in Tessian (acquired by Proofpoint) and Carmot (acquired by Roche), as well as receiving an additional £2.9 million deferred cash consideration received following the sale of assets to Rosetta Capital and an additional £4.6 million distribution related to the first milestone of the Kymab sale to Sanofi.

4. Complete new investments that align with our new strategy

While ensuring the Company was in a position to successfully execute the buyback programme, we simultaneously made good progress with our long-term investment strategy, making six new investments in innovative, private companies globally (from the US to India) across venture, growth and life sciences. These are illustrated below.

Two new investments per strategy made in 2023

While we have made progress completing new investments, only 30% of total equities as of 31 December 2023 represent investments made since Schroders was appointed Investment Manager.

Economic and market backdrop

The progress achieved in 2023 has been against a difficult macroeconomic backdrop with investor focus primarily on rising inflation and the policy response from major central banks. There were fears that rising interest rates could lead to recession, although economic growth generally remained resilient.

In Europe, the ongoing war in Ukraine contributed to higher inflation as the region had to import liquified natural gas from more distant producers. However, warmer winter weather helped limit the impact of high gas prices. China's decision to abandon its strict lockdown measures at the end of 2022 enabled economic activity to pick up, however the recovery was weaker than many had hoped, with the property sector coming under pressure. Volatility heightened in March 2023 as several regional US banks - including Silicon Valley Bank - collapsed due to lack of liquidity. In Europe, this was followed by the takeover of Credit Suisse by UBS. Further uncertainty emerged amid concerns that the US would breach its debt ceiling. However, a deal to extend the debt ceiling was reached in early June 2023.

Towards the end of the period, inflation readings in major economies began to soften. The debate over the outlook for interest rates continued though, as resilient growth and strong US labour markets raised expectations that rates could remain elevated.

However, a definitive change appeared to come in November with the release of softer-than-expected US and eurozone inflation data. This was followed in December by comments from the US Federal Reserve suggesting that rates may not only have peaked, but that cuts could be coming in 2024.

Global shares posted strong gains over the 12-month period in aggregate, shrugging off concerns about higher interest rates and risks to growth. US shares were among the strongest performers. Gains were led by some of the mega cap technology and consumer stocks. Companies thought to be winners from the AI revolution saw particularly strong share price gains around mid-year as markets embraced the potential of AI with enthusiasm.

Against the backdrop of inflation, rate rises and macroeconomic headwinds, global venture capital deal activity fell in 2023, with a year-on-year decline of 42% by value (from $426 billion in 2022 to $248 billion in 2023) and 30% by volume (from 42,069 deals in 2022 to 29,303 deals in 2023). This sees a return to the levels of deal activity seen prior to the COVID-19 pandemic.

Meanwhile, investors have demonstrated greater selectivity of deals and have been reluctant to participate in large, late-stage rounds. The number of mega-rounds, which represent deals worth $100 million+, has fallen 58% year-on-year (from 933 in 2022 to 394 in 2023), while the aggregate value of these deals has fallen nearly 50% over the same period (from $192 billion in 2022 to $100 billion in 2023). Furthermore, while median deal sizes have come down across all stages over the past three years, it has been most pronounced in late-stage deals, which have fallen 58% since 2021 ($50 million in 2021 vs. $21 million in 2023).

The market cooling was also evident with only 71 new unicorns created in 2023, a reduction of 73% from 2022 (263 unicorns) - representing a seven-year low. The environment for exits also saw continued weakness. The number of M&A transactions, the predominant exit route for venture-backed businesses, declined 18% year-on-year (from 10,234 in 2022 to 8,351 in 2023). Initial public offerings were even further in decline, falling 48% year-on year (from 90 in 2022 to 47 in 2023).

Source for venture data: CB Insights, State of Venture 2023 Report.

Financial performance

2023 performance

The NAV as of 31 December 2023 was £217.1 million, a decrease of 15.8% compared with the NAV (£257.9 million) as of 31 December 2022. The NAV per share as of 31 December 2023 was 25.32p, a decrease of 11.2% compared with the NAV per share (28.52p) as of 31 December 2022.

This 11.2% decrease in NAV per share comprised:

- Public equity holdings: -5.8%

- Private equity venture holdings: -4.2%

- Private equity life science holdings: -1.9%

- Private equity growth holdings: -0.5%

- Repurchase and cancellation of the Company's own shares: 1.9%

- Costs and other movements: -0.7%

Attribution analysis (£m)

	Private equity
	Life sciences*	Venture	Growth	Public equity	Money market funds	Cash	Other	NAV
Fair value as at 31 December 2022	34.9	49.7	62.3	95.6	0.0	16.1	(0.7)	257.9
+ Investments	4.3	5.6	12.9	-	13.2	(36.0)	-	-
- Realisations at value	(3.1)	(5.2)	(0.7)	(23.8)	(3.6)	36.4	-	-
+/- Fair value gains/(losses)	(5.1)	(10.8)	(1.2)	(15.0)	0.1	-	-	(32.0)
+/- Reclassified holdings	-	-	-	-	-	-	-	-
- Repurchase & cancellation of the Company's own shares	-	-	-	-	-	(7.0)	-	(7.0)
+/- Costs & other movements	-	-	-	-	-	(6.6)	4.8	(1.8)
Fair value as at 31 December 2023	31.0	39.3	73.3	56.8	9.7	2.9	4.1	217.1

*Included £2.9 million of proceeds from Rosetta sale (sale of basket of life science assets to Rosetta Capital).

Public equity holdings

The Company's public equity holdings saw a fair value loss of -15.7% of the opening fair value, contributing -5.8% to the decrease in NAV per share over the 12-month period.

The listed share price of AI-enabled drug discovery and development company BenevolentAI declined 74.9% over the year. In April, the company announced the results of its Phase Ila study of BEN-2293, a treatment for Atopic Dermatitis, a common skin condition that causes patches of skin that are itchy, cracked and sore. The treatment was safe and well tolerated, however failed to demonstrate efficacy - the key requirement for further progression of the drug. In May, the company announced a new strategic plan to position itself going forward. This included streamlining its portfolio to focus on a narrower set of drug programmes, and changing its cost base and organisational structure, resulting in an extended cash runway to 2025. The company is reported as a public equity holding although fair value priced by the Company's AIFM, ("Schroder Unit Trusts Limited" or the "Manager"), due to a lack of liquidity in the listed shares. As of 31 December 2023, the holding in BenevolentAI is held at a discount of 33% to the listed share price (FY22: 19%).

Meanwhile, the share price of Oxford Nanopore Technologies ("ONT"), the Company's largest holding, fell 15.6% over the year, reflecting a mixed year in which underlying financial growth was insufficient to offset pessimistic market sentiment and continued valuation weakness. The share price declined 13.5% in the first half and 2.4% in the second half of the year. In September, ONT released its interim results for the six months ended 30 June 2023 detailing Life Science Research Tools ("LSRT") revenue growth of 22% year-on-year to £86 million - towards the mid-point of previous guidance, an adjusted EBITDA loss aligned with market consensus, whilst reiterating medium term guidance. During its capital markets day in October, ONT announced that bioMérieux, a leading company in the field of vitro diagnostics, planned to make a strategic investment of £70 million in ONT at 238p per share, while expecting to make further market share purchases, up to a further 3.5% of Oxford Nanopore's shares. Additionally, ONT announced a multi-year joint development collaboration with the Mayo Clinic, the renowned academic medical centre, to develop new clinical tests for diseases and improve patient care. After the period end, in January 2024, ONT released its FY23 trading update outlining LSRT revenue increased 15% year-on-year to £169 million, towards the lower end of previous guidance. Performance in the fourth quarter was impacted by slower than expected ramp-up of certain new customers, which management expect to fall into FY24, and a slowdown of growth in China and the Middle East following the issuance of the recent US trade rules further regulating sales of advanced AI semiconductors. The company also agreed to replace and supersede its existing purchase agreement with G42 Laboratories in support of the Emirati Genome Programme to remove the outstanding purchase commitment.

On the positive side, the share price of Autolus Therapeutics, the CAR T-cell therapy company, increased by 239.5% over the year. This increase reflects encouraging results from clinical trials and pipeline developments. The company presented positive results from a pivotal Phase 2 clinical trial for OBE-CELL, aimed at patients with relapsed/refractory adult B-cell Acute Lymphoblastic Leukaemia. These results were presented at the American Society of Hematology in May and December. In November, the company filed a Biologics License Application with the FDA, seeking US regulatory market approval. Elsewhere in the pipeline, in April, the company reported that AUTO1/22 showed complete responses and no antigen negative relapse in responding patients with Acute Lymphoblastic Leukaemia in a Phase I study. In June, the company reported that AUTO4 demonstrated responses in all four treated patients with relapsed/refractory TRBC1-positive Peripheral T-cell Lymphoma. AUTO4 was well tolerated with no dose-limiting toxicities. Two of these patients showed a complete metabolic response at the highest doses.

Private equity venture holdings

The Company's venture holdings saw a decrease in value of 21.7% contributing -4.2% to the decrease in NAV per share over the 12-month period.

The valuation of the Company's holding in Federated Wireless decreased as a result of slower sales growth than anticipated. The market that Federated Wireless is penetrating is large but relatively cautious in adopting new technologies. As such the company has taken a more cautious view on growth in these early years which is reflected in the valuation change. Additionally, the valuation of the Company's holding in Genomics was decreased over the period to reflect the terms of its £35 million fundraise which completed in early January 2024.

A key contributor over the period was innovative email cybersecurity company Tessian, which in November was announced to have entered into a definitive agreement to be acquired by Proofpoint - a people-centric cybersecurity and compliance company. The agreement closed in December 2023, with the Company receiving $6.7 million (£5.2 million), representing an increase of 32% compared to the valuation as of 31 December 2022 (£3.9 million).

Private equity life science holdings

The Company's life science holdings saw a decrease in value of 14.6% contributing -1.9% to the decrease in NAV per share over the 12-month period.

AMO Pharma, an emerging biopharmaceutical business developing new treatments for serious and debilitating diseases, including rare genetic disorders, was one of the main detractors over the year. In September, the company reported that its Phase 3 REACH-COM clinical trial for AMO-02, a clinical stage investigational medicine for the treatment of Congenital Myotonic Dystrophy, did not meet its primary efficacy endpoint.

On the positive side, we are delighted with the progress of two of the portfolio's more recent life science investments: clinical-stage biopharmaceutical companies Carmot Therapeutics and Anthos Therapeutics. In December 2023, it was announced that Carmot had entered into a definitive agreement to be acquired by Roche, a global pharmaceutical company, at a purchase price of $2.7 billion upfront and the potential for $400 million in milestone payments. The transaction closed on 29 January 2024. This news has been reflected in the latest valuation (£4.3 million), which represents an uplift of 216% from the value as at 30 June 2023 (£1.3 million). Post year end, the Company received a $5.6 million (£4.5 million) distribution from the completed sale.

Meanwhile, the valuation in Anthos has increased, driven by the positive result of its Phase 2 ANT-006 ("AZALEA") study designed to compare Abelacimab's safety to leading DOAC standard-of care (Rivaroxaban) in a high bleeding-risk cohort of atrial fibrillation patients. In September 2023, Anthos announced that the AZALEA study of 1,287 patients with atrial fibrillation at moderate-to-high risk of stroke met its primary efficacy endpoint. The study was stopped early by recommendation from the Data Monitoring Committee due to an overwhelming reduction in the composite of major and clinically non-major bleeding in patients taking Abelacimab compared with patients taking Rivaroxaban. Abelacimab is the first and only Factor XI inhibitor to demonstrate an unprecedented reduction in major bleeding compared to a direct oral anticoagulants which are the current standard of care.

Overall, we are strongly encouraged by the progress made by this area of the portfolio, out of the 12 life science portfolio investments (shown below), 11 have reached clinical stage, of which two have been acquired, five have shown clinical proof of concept and one has been approved.

Development of life science investments

The portfolio also notably benefitted from:

(1) An additional £2.9 million deferred cash consideration that was received as part of the sale of a basket of seven assets to Rosetta Capital which originally completed in March 2021.

(2) A revaluation of the holding in Kymab to reflect the first milestone payment following the sale of Kymab to Sanofi which originally completed in April 2021.

Private equity growth holdings

The Company's growth holdings saw a decrease in value of 1.9% contributing -0.5% to the decrease in NAV per share over the 12-month period.

In November 2023, it was announced that UK app-based bank, Atom Bank, had raised £100 million in new equity capital from existing shareholders BBVA, Toscafund and Infinity Investment Partners, to accelerate lending and balance sheet growth as the bank continues to scale. Following this news, the Company's AIFM revalued the holding in Atom Bank to £23.1 million. This revaluation, which represented a discount to the valuation of the fundraise, resulted in a negative fair value impact of £8.6 million relative to the holding value as of 30 June 2023 and 31 December 2022 (£31.7 million). Whilst the valuation impact of this fundraise is disappointing in the short term, this significant investment should be viewed as a good signal of confidence in Atom Bank. The company now has the capital to scale up and demonstrate the operating efficiency of its platform. Although much work remains, Atom Bank is one step closer to a planned future liquidity event.

On the positive side, the Company's holdings in Ada Health, Revolut and Back Market were revalued upwards. As detailed in the Top 10 holdings, all three companies reported solid progress over the year. Revolut continued its rapid international expansion, growing the number of retail customers to over 35 million across 38 countries, with the expectation to achieve $2 billion (£1.7 billion) in revenue in 2023, an increase of over 80% year-on-year (FY22 revenue £923 million). Ada Health had a successful year achieving record revenue and becoming profitable. The company announced collaborations with Pfizer, the global pharmaceutical company, and Jefferson Health, Greater Philadelphia's largest health system. Meanwhile, Back Market has achieved and maintained profitability in mature markets such as France and Spain, while it continues its global expansion journey, focusing on US, UK, Germany and Japan.

Foreign exchange

Over the period, the fair value of investments denominated in United States Dollar, Euro and Norwegian Krone were negatively impacted by appreciation in the value of the British Pound Sterling. Meanwhile, the fair value of investments denominated in Swiss Franc were positively impacted by depreciation in the value of the British Pound Sterling relative to Swiss Francs.

Investment activity

Realisations

During the 12 months to 31 December 2023, the Company made realisations totalling £32.8 million. Public equity holdings in Johnson Matthey, Spirent Communications, Petershill Partners and IDEX Biometrics were exited, while positions in Oxford Nanopore and Immunocore were reduced.

Additionally, £5.2 million was received from the sale of Tessian, discussed above.

Furthermore, the Company received an additional deferred consideration of £2.9 million as part of the sale of a basket of seven assets to Rosetta Capital which completed in March 2021. The Company received total distributions of £0.7 million from the HP Environmental Technologies Fund following the successful sales of several portfolio companies in 2021 and 2022. The Company also sold its holding in healthcare company, Origin Inc, generating proceeds of less than £0.2 million. The holding was valued at zero as of 31 December 2022 resulting in a modest positive impact on performance.

After the period end, Roche's acquisition of Carmot completed (discussed below), while the Company also received a £4.6 million distribution related to the first milestone of the Kymab sale to Sanofi.

Investments

During the 12 months to 31 December 2023, the Company made investments totalling £22.8 million. These included six new holdings: two venture investments (Securiti and an AI software company (MMC SPV 3 LP)), two growth investments (AgroStar and Bizongo) and two life science investments (Carmot Therapeutics and Memo Therapeutics), as well as small follow-on investments or capital calls (£2.3 million) in iOnctura, Anthos Therapeutics and Epsilogen.

LIFE SCIENCES

Carmot Therapeutics

The Company completed a $1.7 million (£1.4 million) investment in US-based, clinical stage biopharmaceutical company, Carmot Therapeutics, Inc ("Carmot"), as part of its Series E financing round.

Carmot discovers and develops disease modifying therapies for people living with metabolic diseases. Utilising a pioneering drug discovery platform called Chemotype Evolution, Carmot identifies novel drug targets and develops a broad pipeline of experimental therapeutics with the aim of treating patients suffering from metabolic diseases, including obesity and diabetes.

The proceeds from the Series E round should support development of Carmot's broad clinical-stage metabolic pipeline including two Phase 2 trials of CT-388, a once weekly, injectable experimental therapeutic to treat patients with obesity and/or type 2 diabetes. In a phase I/II clinical trial, Carmot's lead therapeutic was found to be safe, well-tolerated, and produced more than 8% weight loss in four weeks in overweight and obese adults.

Deep Track Capital led a Series E financing round, which was also supported by a syndicate of new and existing healthcare investors including SAM Ventures, Franklin Templeton, Frazier Life Sciences, Janus Henderson Investors, RA Capital Management, Millennium Management, TCGX, The Column Group, Venrock Healthcare Capital Partners and Willett Advisors.

Carmot's pipeline of experimental therapeutics has the potential to significantly improve the quality of life for patients suffering from metabolic diseases, including obesity and diabetes. Schroders Capital's ability to access this restricted and oversubscribed funding round is testament to the network that our healthcare team has developed across the industry.

On 3 December 2023, it was announced that Carmot had entered into a definitive agreement to be acquired by Roche, a global pharmaceutical company, at a purchase price of $2.7 billion upfront and the potential for $400 million in milestone payments. Roche completed the acquisition of Carmot on 29 January 2024.

We chose to invest in Carmot based on its compelling assets, backed by robust clinical data and were delighted by the news of this sale, which has occurred earlier than expected, but which reflected the unique nature of Carmot's pipeline.

Memo Therapeutics

The Company made a commitment of CHF 0.9 million (£0.8 million) to Memo Therapeutics, a Switzerland-based clinical-stage biopharmaceutical company. The Company participated in Memo's Series C financing round, which raised CHF 25 million and was led by Pureos Bioventures. Existing investors Swisscanto, Vesalius Biocapital, Adjuvant Capital, Verve Ventures, GF Group, Fresenius Medical Care Ventures, and Red Alpine also joined the round. As of 31 December 2023, the Company had invested £0.5 million of its total commitment.

Memo develops novel therapeutic antibodies for patients with viral infections and cancer. Memo's unique antibody discovery and functional screening platform enables the identification, isolation, and selection of antibodies from patient samples or vaccinated animals. This technology helps Memo to discover antibodies with the potential to treat diseases using rare antibodies that other methods might miss.

The Series C funding should support Memo in completing the U.S. Phase II clinical development of their leading antibody, AntiBKV. This antibody is designed to neutralise BK virus (BKV) infection in kidney transplant recipients. BKV infection can have serious adverse effects on graft function and patient survival following a transplantation procedure. Currently there are no regulatory approved therapeutics to treat BVK infection in kidney transplant recipients. With Phase II clinical data expected in 2024, the funding should also enable Memo to prepare for large-scale manufacturing of AntiBKV for a Phase III study and potential market entry. Additionally, the investment should help Memo advance its pipeline of other experimental antibody therapeutics.

We believe Memo is a highly complementary addition to the company's portfolio. AntiBKV has solid pre-clinical efficacy and clinical safety data with near term Phase II clinical efficacy data expected in 2024. A positive phase II readout has the potential to drive a significant value inflection for Memo and may enable a material improvement in the quality of life for kidney transplant recipients with BKV infection.

VENTURE

Securiti

The Company made an $5.0 million (£3.9 million) investment in US-based cybersecurity company, Securiti. The company is the pioneer of the Data Command Center, a centralised platform that enables the safe use of data and GenAI. Its solution unifies controls for data security, privacy, governance and compliance in one place. This unification of data intelligence is revolutionising important but arduous processes, allowing organisations to retire disparate, legacy solutions which add cost and complexity.

Schroders Capital has known Securiti for a number of years, having been an investor since 2019 through our fund investments. We believe Securiti is playing a key role in transforming how organisations can innovate with vast quantities of data while meeting their data obligations.

AI software company (MMC SPV 3 LP)

The Company made an investment of $2.0 million (£1.7 million) into an early leader in an emerging segment of artificial intelligence (AI) software. The Company invested through its co-investment partner, MMC Ventures, via a single asset fund, MMC SPV 3 LP.

Schroders Capital has been investing in venture capital for over 25 years. Over that time, our team has seen various waves of technological innovation and witnessed first-hand the ripple effect through different sectors and regions. Our belief is that AI, most recently focused on the field of generative AI that has been enabled by the advent of large language models, has the potential for innovation and disruption on a scale comparable to the introduction of email, the internet and the smartphone. We see significant opportunity in the AI sector, justifying its position as one of our eight key global innovation themes. This investment, which forms part of our strategy of backing innovative venture-stage business, is in an access-restricted software company that is an early leader in an emerging application of AI. We are not currently able to name the company due to confidentiality, however, we believe it represents a highly complementary addition to the portfolio.

GROWTH

AgroStar

Over the period, the Company completed its first transaction in Asia with an $8.0 million (£6.6 million) investment in AgroStar (Ulink Agritech Pvt. Ltd.), one of India's foremost agricultural technology start-ups.

The investment formed part of the $25 million (~£20.6 million) total investment by Schroders Capital that led the $40 million (~£33.0 million) financing round. The round also saw participation from other existing investors including Accel, Chiratae Ventures, Evolvence, Aavishkaar Capital, Bertelsmann India Investments, Hero Enterprise, Rabo Frontier Ventures, British International Investments and IFC.

Founded in 2013, AgroStar uses technology, data, and agronomy knowledge to help Indian farmers. It provides an end-to-end solution that is solving three major problems for Indian farmers: limited access to good quality agricultural inputs, a knowledge gap (even among the most experienced farmers), and a lack of access to global markets to sell their produce. The company serves millions of farmers across multiple Indian states via an omnichannel approach, having built a highly engaged digital farmer network on the AgroStar app, with over 7.5 million users, and a rapidly expanding retail network of over 5,000 stores. Through the recent acquisition of INI Farms, India's largest exporter of fruits and vegetables, AgroStar is quickly scaling its business into the domestic and international food supply chains.

Schroders Capital has known AgroStar for several years, having been an investor since 2021, and we believe the company has demonstrated exceptional growth by combining technology with strong agronomy capabilities to play an important role in the Indian agricultural sector.

Bizongo

The Company also made an investment of $8.0 million (£6.3 million) in India-based vendor digitisation company, Bizongo. This investment formed part of the $50.0 million Series E funding round that was led by Schroders Capital with participation from other investors including IFC, BCap, Chiratae Ventures, and British International Investment.

Bizongo, which was founded in 2015, is transforming supply chain operations for large enterprises, as well as for micro, small and medium enterprises ("MSME's") in India, through its foundational vendor digitisation platform. Bizongo enables vendors to source raw materials across a broad range of categories, including steel, aluminium and textiles, and to optimise their procurement processes. Customers leverage the Bizongo vendor digitisation platform to source suppliers, optimise for cost, seamlessly place orders, all whilst managing invoicing and order tracking in real-time. Bizongo has a capital efficient, inventory-free operating model, that connects vendors directly with suppliers. The vendor digitisation platform has seen a three-fold rise in its gross merchandise value, the total value of sales through the platform, from ~$215 million in FY22 to ~$750 million in FY23.

With its platform, the company has also opened doors to embedded financing through its network of more than 40 partner banks and non-banking financial corporations, who can evaluate MSMEs based on deep transactional and behavioural insights, allowing them to take better financing calls, and enabling MSMEs to scale their growth through efficient working capital.

Schroders Capital has been an investor in Bizongo since 2019, over which time we have seen the company grow exponentially, achieve scale, and expand into more sectors. We believe the company is playing a transformational role in enabling vendors in India to digitalise their supply chain, which has accelerated since the COVID-19 pandemic. We are excited that the Company is now participating in Bizongo's future growth.

Outlook

The core tenets of the strategy pursued in 2023 remain unchanged in 2024. We continue to work closely with portfolio company management teams, co-investors, and other stakeholders to support business growth and a path to profitability. Below we look at the outlook across the four different strategies:

Growth

With an increasing percentage of the private equity portfolio, particularly within the growth strategy, now valued on a multiples-based approach as detailed in the Valuation Approach and Process section, we are hopeful that during the year the portfolio will benefit from underlying financial growth being more readily reflected in quarterly valuations. We are also cautiously optimistic that this effect will be compounded by improving market conditions giving rise to a more favourable valuation and exit environment.

Of the seven growth holdings in the portfolio: all generate scalable commercial revenues, four are profitable, five are fully funded based on their latest business plan, and none need to raise capital during 2024. We expect exits from this segment of the portfolio to start materialising from 2026 onwards, so the near-term focus is on capital efficient growth.

Atom Bank, the second largest holding, aims to focus on productively deploying the capital from its recent fundraise, accelerating mortgage and business lending, and expanding its deposit base. Atom operates in highly competitive markets dominated by large established banks, however this fresh capital is expected to allow the bank sufficient scale to demonstrate the operational efficiency of its digital-first model, a key requirement for any future potential liquidity event.

Key factors for success in 2024 will include Revolut and Back Market delivering against their ambitious international expansion plans, AgroStar and Bizongo, our latest growth-stage investments in India, leveraging recent funding rounds to expand domestically, investing in new product innovation and continuing to expand their services to customers, and Ada Health replicating the success of partnerships signed with Pfizer and Jefferson Health in 2023.

Venture

The venture segment of the portfolio by design is where we expect to see the highest level of risk and therefore widest dispersion of returns (excluding life sciences) and 2024 is likely to be no different. These holdings are the hardest to value, often requiring a milestone-based approach which, at times, can result in large swings in valuation.

Of the nine venture holdings in the portfolio: four generate scalable commercial revenues, all are unprofitable, two are fully funded based on their latest business plan and only one needs to raise further capital during 2024.

Key factors for success in 2024 are expected to include Reaction Engines commercialising spin-off technologies from its core heat exchanger programme, Nexeon making progress with building its first commercial scale production plant and Federated Wireless driving further commercial and federal traction enabling it to continue to scale.

Life sciences

We expect several portfolio biotech companies to experience value inflections based on their ongoing clinical trials and potential market approvals. Autolus, which is classified as a public company, is awaiting market approval in the US, EU, and UK for Obe-cel, a treatment for relapsed/refractory Acute Lymphocytic Leukaemia expected in Q2. Additionally, results from the Phase 1 clinical trial for Obe-cel in B-cell Non-Hodgkin Lymphoma and Chronic Lymphocytic Leukaemia are expected in Q4. Phase 1 clinical trials results are also expected in Q4 for Obe-cel in the treatment of primary CNS Lymphoma, allogenic Obe-cell for B-cell malignancies, and AUTO8 for multiple myeloma.

OcuTerra is conducting a Phase 2 clinical trial for OTT166 in adults with Diabetic retinopathy, and results from this trial are anticipated by Q2. Immunocore are seeking to release additional Phase 1 clinical data for IMC-F106C, a treatment for multiple solid tumour types between Q2 and Q4. Anthos, which received positive results in Q4 2023 from a Phase 2 clinical trial for its thrombosis prophylaxis Abelacimab we believe may lead to potential mergers and acquisitions during the year.

iOnctura's Phase 1 clinical trial for IOA-244 is expected to be completed by Q4. This trial aims to evaluate the efficacy of IOA-244 in treating patients with Uveal Melanoma, Cutaneous Melanoma, Mesothelioma, Myelofibrosis, Non-Hodgkin Lymphoma, and Non-Small Cell Lung Cancer ("NSCLC"). Memo Therapeutics may release data from its ongoing pivotal Phase 2/3 clinical trial for its therapeutic antibody AntiBVK for the treatment BK virus infection in kidney transplant recipients in Q4. Epsilogen is expected to initiate Phase 2 clinical trials for its lead therapeutic Mov18 in patients with advanced solid tumours. Lastly, A2 Bio may release Phase 1 data for A2B530, a treatment for CEA positive solid tumours by year end.

Public equities

We expect the public equity portfolio, principally Oxford Nanopore, to remain volatile as the valuation environment for loss-making, growth focused listed companies remains unforgiving. During 2024, Oxford Nanopore will focus on increasing LSRT sales, developing new clinical and applied applications of its technology, and winning new large scale genetic sequencing projects. The company aims to achieve greater than 30% growth in underlying LSRT revenue, expand gross margins through operating efficiency gains, demonstrate progress on its path to profitability and ease concerns of any further future capital needs that would be dilutive to shareholders.

Rebalancing & diversification

With only 30% of equities as of 31 December 2023 representing investments made by Schroders, we continue to seek to maximise the sale proceeds from holdings, both public and private, as part of the rebalancing exercise to ensure sufficient liquidity (cash and liquid public equities) to efficiently execute the buyback programme, support the portfolio and make new investments.

We expect diversification to be a key topic for 2024. As capital availability allows, we seek to target new investments that align with our three strategies (venture, growth and life sciences) with the aim of building a diversified portfolio which more appropriately balances the risk of each strategy. This goal remains a moving target with the requirements of the buyback programme and uncertain timing of potential future exits, however our direction of travel is clear. However, with private markets lagging those of public equities, we see a compelling opportunity to continue making new investments at attractive entry prices.

Schroders Capital remains committed to the Company and delivering long-term value for shareholders.

Tim Creed and Harry Raikes

Portfolio Managers

27 March 2024

Top 10 investments

The Company's top ten investments as of 31 December 2023 compared with the respective holdings as of 31 December 2022.

		31 December 2022		31 December 2023
Portfolio company	Strategy	Value (£'000)	% of total equities	Value (£'000)	% of total equities
Oxford Nanopore	Public	56,529	23.3	41,669	20.8
Atom Bank	Growth	31,686	13.1	23,105	11.5
HP Environmental Technologies	Growth	10,700	4.4	10,918	5.4
Reaction Engines	Venture	12,500	5.2	10,625	5.3
Ada Health	Growth	7,122	2.9	9,638	4.8
Back Market	Growth	7,329	3.0	8,839	4.4
Autolus Therapeutics	Public	2,642	1.1	8,463	4.2
Revolut	Growth	5,436	2.3	7,888	3.9
AgroStar	Growth	-	-	7,279	3.6
Nexeon	Venture	6,505	2.7	7,039	3.5

Oxford Nanopore

Technology company at the forefront of next generation DNA sequencing instrumentation

Oxford Nanopore Technologies ("ONT") has developed a new generation of nanopore-based electronic systems for the analysis of single molecules, including DNA, RNA and proteins. The handheld MinION™ device, the high-throughput PromethION™ and the GridION™ system are used in scientific research, personalised medicine, crop science, security and defence and environmental applications.

ONT had a mixed 2023 with key highlights including:

- In September, ONT released its interim results for the six months ended 30 June 2023:

o LSRT revenue increased 22% year-on-year to £86 million.

o Underlying LSRT revenue growth, excluding revenue from the Emirati Genome Program ("EGP") and COVID-19 sequencing, expected to be ~46% on constant currency basis.

o Adjusted EBITDA loss of £39 million which aligned with market consensus.

- In October, ONT announced various updates as part of its Capital Markets Day including:

o Signing a multi-year joint development collaboration with Mayo Clinic, the renowned academic medical centre.

o Securing a strategic investment from bioMerieux, a leading company in the field of in vitro diagnostics.

o Progress advancing the technology from research into clinical and applied industrial markets targeted at 10-20% of revenue by FY26.

- After the period end, in January 2024, ONT released its FY23 trading update outlining:

o LSRT revenue increased 15% year-on-year to £169 million towards the lower end of previous guidance.

o Performance in the fourth quarter was impacted by slower than expected ramp-up of certain new customers, which management expect to fall into FY24, and a slowdown of growth in China and the Middle East following the issuance of the recent US semiconductor trade rule further regulating sales of advanced AI semiconductors.

o An agreement to replace and supersede its existing purchase agreement with G42 Laboratories in support of the EGP - the new agreement will remove the outstanding purchase commitment and extends the expiration date until 31 December 2026.

o Reiterated medium-term guidance including underlying revenue growth of more than 30% per annum (on a constant currency basis), gross margin of greater than 65% and the target for adjusted EBITDA breakeven by the end of 2026.

Atom Bank

Leading UK app-only challenger bank

Atom Bank is the UK's first bank built exclusively for mobile. It aims to redefine what a bank should be, making things easier, more transparent, and better value. Atom currently offers savings accounts, mortgages and business loans.

In July 2023, Atom Bank published its FY23 annual report for the 12-month period to 31 March 2023 reporting its first annual operating profit of £4.2 million. Key highlights included:

- Customer numbers increased 82% from 123,000 to 224,000 whilst maintaining industry leading customer reviews.

- Customer deposits increased 105% from £3.2 billion to £6.6 billion with rising interest rates incentivising UK consumers to switch into the company's competitively priced products.

- Loans under management increased 4% from £3.3 billion to £3.4 billion with new lending slowing through the middle of the year due to volatility in market rates.

- Net interest income increased 62% from £47 million to £76 million due to balance sheet growth and improving spreads against a backdrop of rapidly rising base rates.

- Net interest margin, calculated as net interest income divided by average total loans for the period over which it was generated, declined from 2.93% to 2.84%. Despite an improving yield on lending assets, the result was lower than the prior year due to the comparatively lower yield on cash.

In November 2023, Atom Bank announced it had raised £100 million in new equity capital from existing shareholders BBVA, Toscafund and Infinity Investment Partners. The funds are expected to be used to accelerate lending and balance sheet growth as the bank continues to scale. Whilst the valuation impact of this fundraise is disappointing in the short term, this significant investment is a good signal of confidence in Atom Bank. The company now has the capital to scale up and demonstrate the operating efficiency of its platform. Although much work remains, Atom Bank is one step closer to a planned future liquidity event.

HP Environmental Technologies

Fund that invests in emerging environmental technologies

The HP Environmental Technologies Fund invests in emerging environmental technologies working to solve some of the most important environmental challenges faced by the world today. The Fund was seeded through the secondary purchase of a portfolio of seven leading environmental technology companies and seeks primary investment opportunities that arise from efforts to reduce our impact on the planet and move towards solving important environmental challenges.

Key portfolio updates in 2023:

- Bluewater Bio

o Throughout 2023, Bluewater Bio continued to roll out its FilterClear technology across the UK as a core part of water companies' phosphorous removal programmes which are essential to maintaining the health of our streams, rivers and lakes.

o In addition, Bluewater's HYBACS (HYBrid ACtivated Sludge) technology continued to perform in the UK, Middle East and South Africa, providing millions of tonnes of water for reuse, saving energy and reducing pollution.

- P2i

o P2i protected over 100 million electronic devices with its nano-coating in 2023, enhancing the quality of these devices and at the same time reducing waste and the amount of rare earth metals used, and generating significant carbon savings.

o In March 2023, P2i was proud to be part of the official launch of the United Electronics Coating Association ("UECA"), whose formation P2i had spearheaded. The UECA was established to support, develop and deliver to markets sustainable electronic coating solutions in line with the principles of the Circular Economy, recyclable electronics, and re-usability.

- Iceotope

o In February 2023, Iceotope announced the availability of KUL Extreme, a fully integrated and standardised open radio access network architecture solution to support far edge computing across the entire telecommunications data centre estate. The product is a result of a close collaboration between Iceotope, Hewlett Packard Enterprise, Intel, and nVent to significantly reduce energy consumption and deliver a sustainable solution across distributed workloads, for both telco service providers and enterprises.

o In September 2023, BT Group announced that it aims to trial 'precision liquid cooled' networks switches using a solution provided by Iceotope and Juniper Networks QFX Series Switches, which are widely used in existing network cloud architectures.

Reaction Engines

Developer of engine technologies to enable space and hypersonic travel

Reaction Engines is pioneering space access and sustainable technologies. For over 30 years the company has been at the forefront of engineering innovation - including developing SABRE, a revolutionary new class of aerospace propulsion. SABRE enables Reaction Engines to go beyond the limits of flight both within and outside the atmosphere.

- In January 2023, Reaction Engines announced a further £40 million funding round led by Strategic Development Fund, the investment arm of UAE's Tawazun Council.

- In February 2023, the company announced that it had joined the Thermal Management for Hybrid Electric Regional Aircraft consortium, a pan-European consortium led by Honeywell, which is researching and developing thermal management components and architectures for next-generation narrow body and regional, hybrid-electric aircraft.

- In June 2023, the company announced its participation in projects RACHEL and LH2GT, two cutting-edge projects developing technologies for the use of liquid hydrogen fuel in aviation, led by Rolls-Royce and funded by the UK government's Aerospace Technology Institute.

- In August 2023, it was announced that the company had been awarded funding to further a UK/US collaboration under the UK Space Agency's International Bilateral Fund.

Ada Health

Global digital health company focused on improving human health at scale

Ada has developed a powerful AI-based health assessment and care navigation platform that helps users to understand their symptoms, identify and differentiate conditions with a high degree of medical accuracy, and navigate safely to the right care at the right time.

2023 was a very successful year for Ada Health, with the company achieving record revenues and becoming profitable at an EBITDA level. The year was marked by many highlights, including:

- In January 2023, it was announced that Ada Health and Pfizer were collaborating to launch a nationwide online COVID-19 Care Journey, operated by Ada, to help connect patients with timely treatment.

- In April 2023, Ada announced a new collaboration with Jefferson Health, Greater Philadelphia's largest health system comprised of 18 hospitals and more than 50 outpatient facilities across Pennsylvania and New Jersey.

- In June 2023, the company announced that it had secured €30 million to advance global growth. The agreement between Ada Health and IPF Partners represented up to €30 million of debt borrowing and reinforced Ada Health's financial runway through 2024 and beyond as the company steers toward profitability. The funding enabled continued investment in product enhancement and development, user growth, and commercial traction with leading health systems, governments, and life sciences organisations. Initially, Ada Health intend to only draw part of the committed funding.

- In September 2023, Ada Health launched a new collaboration to provide medical advice and care guidance for mothers across South Africa.

- In October 2023, the company launched a COVID-19 risk and therapy screener to help people across Germany understand their risks.

Back Market

Global marketplace for refurbished devices

Back Market is a leading online marketplace dedicated to refurbished devices. The company's mission is to make restored devices mainstream. Back Market works with professional refurbishers to guarantee that every device has been tested and restored to perfect working condition according to industry standards.

- In April 2023, Back Market announced that it had received B Corp status. This means that from their environmental impact to their hiring practice, they are working toward a more inclusive and sustainable economy. B Corp is a third-party certification for "businesses meeting high standards of verified performance, accountability, and transparency on factors from employee benefits and charitable giving to supply chain practices and input materials."

- Back Market now has over 1,500 professional sellers on the platform backed by a solid ranking system.

- Profitability has been achieved and maintained in mature markets such as France and Spain, with the company continuing on its global expansion journey, with focus on US, UK, Germany and Japan.

- Looking forward, Back Market aims to focus on diversifying into new categories, increasing buyback and recycling activity and furthering partnerships with telcos.

Autolus

Clinical-stage biopharmaceutical company developing next-generation, programmed T-cell therapies for the treatment of cancer

Autolus is a CAR T-cell therapy company. The company applies its extensive programming capabilities to develop advanced autologous T-cell therapies that have the potential to deliver life-changing benefits to cancer patients.

- The company presented positive results from a pivotal Phase 2 clinical trial for OBE-CELL, aimed at patients with relapsed/refractory adult B-cell Acute Lymphoblastic Leukaemia. These results were presented at the American Society of Hematology in May and December 2023.

- In November 2023, the company filed a Biologics License Application with the FDA, seeking US regulatory market approval.

- Elsewhere in their pipeline, the company reported in April 2023 that AUTO1/22 showed complete responses and no antigen negative relapse in responding patients with Acute Lymphoblastic Leukaemia in a Phase I study.

- In June 2023, the company reported that AUTO4 demonstrated responses in all four treated patients with relapsed/refractory TRBC1-positive Peripheral T-cell Lymphoma. AUTO4 was well tolerated with no dose-limiting toxicities. Two of these patients showed a complete metabolic response at the highest doses.

Revolut

Global neobank and financial technology company

Revolut is a fintech firm that provides banking and payment services. The company offers multi-currency cards and a mobile app that includes currency exchange, peer-to-peer payment and bank transfer solutions. It also offers personal and business banking solutions.

In December 2023, Revolut released its annual report for 2022 providing greater detail on progress in the prior year:

- Number of retail customers increased 60% year-on-year to 26.2 million, including a 55% increase in customers on paid plans, and during the course of 2023, the number of retail customers later surpassed 35 million customers across 38 countries.

- Number of monthly transactions increased 71% to 341 million.

- Deposits increased 71% to £12.6 billion.

- Revenue increased 45% to £923 million.

- Number of employees increased 112% to 5,913.

- During the year, Revolut continued to pursue its global expansion across a number of markets:

o North America: United States.

o Asia-Pacific: Australia, Singapore, Japan and New Zealand (launched in July 2023).

o Latin America: Brazil (launched in May 2023) and Mexico.

- The company reiterated its commitment to its ongoing UK banking licence application.

- Expects to hit $2 billion (£1.7 billion) in revenue and double-digit net profit margin for 2023.

AgroStar

One of India's foremost agricultural technology (AgTech) start-ups

AgroStar uses technology, data, and agronomy knowledge to help Indian farmers. It provides an end-to-end solution that is solving three major problems for Indian farmers: limited access to good quality agricultural inputs, a knowledge gap (even among the most experienced farmers), and a lack of access to global markets to sell their produce.

AgroStar made good progress in 2023. The private label business grew by 60% year-on-year and expanded into five new Indian states. The company added multiple new crops to the produce portfolio and forayed into new geographies with partnerships with marquee global brands. Key highlights included:

- Served more than 1.4 million farmers in 2023 across channels.

- Farmer App continues to be well rated on the app store and had >1.5 million new downloads in 2023.

- Expansion of footprint to five new Indian states including Bihar, Haryana, Karnataka, Andhra Pradesh and Telangana.

- Added over 3,000 new stores in CY23 and now have 7,000+ Saathi stores distributing AgroStar products across 10 Indian states.

- Export of over 80,000 metric tonnes of fresh produce from Indian farmers to global markets in 2023.

- Added new crops (guava and melons) to the offering in 2023.

Nexeon

Leader in engineered silicon materials for battery applications

Nexeon is a global leader in the development and manufacturing of ground-breaking, silicon-based anode materials, dramatically enhancing the performance of Lithium-Ion batteries.

- In July 2023, Nexeon announced that it had entered into a long-term partnership with Panasonic to supply its advanced silicon-based anode material, which has the potential to catapult the energy density of lithium-ion cells. This technology redefines the limits of energy density and enables a new era of enhanced battery performance.

- In August 2023, the company announced that it had signed an agreement for its first commercial volume production site and secured a raw material supply chain for silicon anodes. This represented a significant step towards delivery of cost-efficient silicon anode materials for energy dense batteries.

Investment Portfolio as at 31 December 2023

The 20 largest investments account for 91.1% of total investments by value (31 December 2022: 93.4%).

				Fair value	Total
Holding	Quoted/unquoted	Strategy	Industry sector	£'000	investments %
Equities
Oxford Nanopore¹	Quoted	Public	Health Care	41,669	19.8
Atom Bank¹	Unquoted	Growth	Financials	23,105	11.0
HP Environmental Technologies Fund¹	Unquoted	Growth	Industrials	10,918	5.2
Reaction Engines¹	Unquoted	Venture	Industrials	10,625	5.1
Ada Health	Unquoted	Growth	Health Care	9,638	4.6
Back Market²	Unquoted	Growth	Consumer	8,839	4.2
Autolus Therapeutics¹	Quoted	Public	Health Care	8,463	4.0
Revolut LLP³	Unquoted	Growth	Financials	7,888	3.8
AgroStar⁴	Unquoted	Growth	Technology	7,279	3.5
Nexeon¹	Unquoted	Venture	Industrials	7,039	3.4
Federated Wireless¹	Unquoted	Venture	Technology	6,392	3.0
Kymab¹	Unquoted	Life sciences	Health Care	6,370	3.0
Bizongo⁵	Unquoted	Growth	Technology	5,585	2.7
Genomics¹	Unquoted	Venture	Health Care	5,139	2.4
Cequr¹	Unquoted	Life sciences	Health Care	4,956	2.4
OcuTerra¹	Unquoted	Life sciences	Health Care	4,804	2.3
Immunocore¹	Quoted	Public	Health Care	4,437	2.1
Carmot Therapeutics	Unquoted	Life sciences	Health Care	4,262	2.0
Securiti	Unquoted	Venture	Technology	4,210	2.0
Attest Technologies	Unquoted	Venture	Business Services	2,870	1.4
Anthos Therapeutics	Unquoted	Life sciences	Health Care	2,440	1.2
BenevolentAl^1,6	Quoted	Public	Health Care	2,176	1.0
Epsilogen	Unquoted	Life sciences	Health Care	2,047	1.0
MMC SPV 3 LP⁷	Unquoted	Venture	Technology	1,651	0.8
Araris Biotech	Unquoted	Life sciences	Health Care	1,482	0.7
iOnctura	Unquoted	Life sciences	Health Care	1,399	0.7
AMO Pharma¹	Unquoted	Life sciences	Health Care	1,350	0.6
Industrial Heat¹	Unquoted	Venture	Industrials	1,306	0.6
A2 Biotherapeutics	Unquoted	Life sciences	Health Care	914	0.4
Memo Therapeutics	Unquoted	Life sciences	Health Care	558	0.3
Novabiotics¹	Unquoted	Life sciences	Health Care	457	0.2
Econic¹	Unquoted	Venture	Industrials	58	-
ARC Group¹	Quoted	Public	Business Services	34	-
Freevolt (formerly Drayson)¹	Unquoted	Venture	Technology	-	-
Just Benchmarks¹	Unquoted	Venture	Financials	-	-
Mafic¹	Unquoted	Venture	Industrials	-	-
Metaboards¹	Unquoted	Venture	Technology	-	-
Mereo BioPharma Group¹	Quoted	Life sciences	Health Care	-	-
EVOFEM Biosciences¹	Unquoted	Life sciences	Health Care	-	-
Halosource¹	Unquoted	Venture	Industrials	-	-
Bodle Technologies¹	Unquoted	Venture	Technology	-	-
Rutherford Health¹	Unquoted	Venture	Health Care	-	-
Lignia Wood¹	Unquoted	Venture	Industrials	-	-
Oxsybio¹	Unquoted	Life sciences	Health Care	-	-
Spin Memory¹	Unquoted	Venture	Technology	-	-
Kind Consumer¹	Unquoted	Venture	Consumer Staples	-	-
Total equities				200,360	95.4
Money market funds
Schroder Special Situations - Sterling
Liquidity Plus Fund	Quoted	Cash	Collectives	9,733	4.6
Total money market funds				9,733	4.6
Total investments⁸				210,093	100.0

¹ Assets inherited from the previous portfolio manager.

² Back Market is held via the Company's holding in Sprints Capital Ellison LP, a single asset fund.

³ Revolut is held via the Company's holding in Target Global Selected Opportunities, LLC - Series Space, a single asset fund.

⁴ AgroStar is held via the Company's holding in Schroders Capital Private Equity Asia Mauri VIII Ltd, a single asset fund.

⁵ Bizongo is held via the Company's holding in Schroders Capital Private Equity Asia Maurit V Ltd, a single asset fund.

⁶ BenevolentAI is quoted, but the market is inactive. Thus its valuation has been determined in accordance with the process followed for unquoted assets.

⁷ MMC SPV 3 LP is a single asset fund that holds an AI software company.

⁸ Total investments comprise:

	£'000	%
Unquoted	143,581	68.5
Listed on the London Stock Exchange	41,669	19.8
Listed on a recognised stock exchange overseas	15,110	7.1
Collective investment scheme	9,733	4.6
Total	210,093	100.0

Additional details of unquoted, including investments quoted in inactive markets, in the top 10 holdings


Holding	Description of business	Cost £'000	Fair value £'000	Turnover for the latest audited financial year £'000	Pre-tax profit/losses for the latest audited financial year £'000	Net assets/ (liabilities) at the latest audited balance sheet date £'000
Atom Bank	Leading UK app-only challenger
	bank	75,165	23,105	209,107	10,097	283,134
HP Environmental Technologies Fund	Portfolio of venture and growth-stage industrial companies	3,369	10,918	N/P¹	N/P¹	N/P¹
Reaction Engines	Developer of engine technologies to enable space and hypersonic travel	10,000	10,625	4,743	(28,744)	32,144
Ada Health	Develops an artificial intelligence
	powered personal health guide	10,028	9,638	N/P¹	N/P¹	N/P¹
Back Market	Online marketplace for
	refurbished devices	10,032	8,839	N/P¹	N/P¹	N/P¹
Revolut LLP	Provides a digital banking solution	9,849	7,888	922,547	25,418	1,171,333
AgroStar	Manufactures and distributes
	organic fertilisers	6,581	7,279	N/P¹	N/P¹	N/P¹
Nexeon	Develops silicon materials for	4,944	7,039	4,359	(7073)	99,282
	battery applications

¹ Information not publicly available.

Business Review

Principal and emerging risks and uncertainties

The Board, through its delegation to the Audit, Risk and Valuation Committee, 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, Risk and Valuation Committee on an ongoing basis. 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.

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, Risk and Valuation 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. The internal control environment of the Manager, the depositary and the registrar are tested annually by independent external auditors. The reports are reviewed by the Audit, Risk and Valuation Committee.

Although the Board believes that it has a robust framework of internal control 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 and emerging risks and uncertainties are set out in the table below.

Both the principal and emerging risks and uncertainties and the monitoring system are subject to robust assessment at least annually. The last assessment took place in March 2024.

During the year, the Board discussed and monitored a number of risks that could potentially impact the Company's ability to meet its strategic objectives. The Board receives updates from the Investment Manager, Company Secretary and other service providers on emerging risks that could affect the Company. The Board was mindful of the following emerging risks during the year; risks posed by the failure of the capital discipline mechanisms and/or the continuation vote at the AGM in 2025. These risks have been incorporated in the strategy risk section in the table below.

A significant control failing or weakness relating to share repurchases was identified during the year. Although the Company had a share premium account of £891 million, as this had not been cancelled, the Company did not have sufficient distributable profits to comply with the requirements of the Companies Act 2006. The Board worked with its service providers to rectify the matter which was approved by shareholders, filed section 838 interim accounts in July 2023 and has been given assurances that additional controls are now in place to tighten processes and avoid a recurrence. No other significant control failings or weaknesses were identified from the Audit, Risk and Valuation Committee's ongoing risk assessment throughout the financial year and up to the date of this report. The Board is therefore satisfied that it has undertaken a detailed review of the risks facing the Company and that the internal control environment continues to operate effectively.

Actions taken by the Board and, where appropriate, its Committees, to manage and mitigate the Company's principal and emerging risks and uncertainties are set out in the table below. The "Change" column on the right highlights at a glance the Board's assessment of any increases or decreases in risk during the year after mitigation and management. The arrows show the risks as increased, decreased or unchanged.

A full analysis of the financial risks facing the Company is set out in note 18 to the accounts on pages 80 and 81.

Risk

Mitigation and management

Change

Strategy

Investment objective and longer term growth

Investment objective is out of line with the requirements of investors or investors lose interest in listed closed end private equity as an asset class.

Discount widens to unacceptable levels.

Failure of capital discipline mechanisms and/or the continuation vote in May 2025.

The Board holds a strategy day each year to consider the investment objective and policy and the Company's longer term investment strategy.

The Board receives regular reports on the Company's investment performance against its stated objectives and peer group along with reports from discussions with its major shareholders. The Board also receives regular reports on marketing and promotional activity.

Following the cancellation of the share premium account, the Company appointed Winterflood Securities Limited in September 2023 to manage an irrevocable share repurchase programme: (i) to buy back up to 5% of the Company's shares in 2023 and 2024; (ii) to purchase such number of shares to ensure that to the period to the 2025 AGM, the Company has undertaken share repurchases in an amount equating to 25% of all net cash realisations from the portfolio inherited from the previous portfolio manager1. The Board continues to monitor these positions on an ongoing basis.

A continuation vote will be held at the 2025 AGM which will only be extended for a further five years if the Company continues to meet investor requirements.

The 5% target for share repurchases was achieved in 2023 and work continues on meeting the 2024 commitment.

Despite these positive efforts, the discount to NAV remains wide and the continued increased risk relates to market sentiment in line with the decline of popularity of the private equity sector.

Economic and market

The portfolio will normally be fully invested and as such will therefore inevitably be exposed to economic and market risk. Changes in general economic and market conditions, such as currency exchange rates, interest rates, inflation rates, industry conditions, tax laws, political events and trends can substantially and adversely affect the value of investments. Market risk includes the potential impact of events which are outside the Company's control, such as pandemics, civil unrest and wars.

The Investment Manager is experienced and has a long track record in successfully investing in private equity and venture.

The Investment Manager spreads investment risk by investing in high quality companies at various stages of their development. Having the flexibility to continue to hold these investments as they transition to public entities taps into the growth potential of businesses throughout their life cycle. The global mandate allows the Investment Manager to diversify the portfolio geographically and thus mitigate against challenging economic conditions of a single market or sector.

The Investment Manager will not normally hedge against foreign currency movements, but does take into account the risk when making investment decisions. Further details on financial risks and risk mitigation are detailed in note 18 to the accounts.

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Investment

Investment performance

There is always, for any investment portfolio, the generic risk of poor performance arising as a result of poor decisions in stock selection made by the Investment Manager. In addition, given the long-term nature of this investment strategy (up to 10 years) and the absence of a clear benchmark, it is not necessarily easy to make an evaluation of the Investment Manager based simply on returns over shorter periods.

This risk is mitigated by the Board monitoring the performance of the portfolio and the decisions made by the Investment Manager through detailed reporting at each board meeting.

The Audit, Risk and Valuation Committee reviews all private equity investments on a quarterly basis and challenges proposed revaluations and methodologies used by the Investment Manager at each meeting.

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Portfolio

Portfolio risk encompasses valuation, and concentration risks.

Private equity companies generally have greater valuation uncertainties and liquidity risks than public equity holdings.

The valuation of private equity early stage companies is inherently difficult. Valuation at a fixed point in time may not be representative of the medium or longer term. Particular events at a company or particular funding rounds may have a significant impact. Information may not be as widely available as with public companies and these companies may not yet have meaningful revenues or profits.

Investments quoted in inactive markets may also be subject to significant and abrupt volatility and liquidity discount.

The risk linked to any portfolio concentration might be compounded due to the nature of some of the businesses and the risks associated with both commercial and technical milestones.

Short term liquidity issues can become compounded by market events.

The AIFM, under delegated authority from the Board, has responsibility for the valuation of the assets in the portfolio. The AIFM, in turn, uses extensive research and input from S&P Global, the external valuation specialist provider. S&P Global conducts a regular rolling review of the valuation of all portfolio assets and also reviews their valuations in the event of any significant triggers at individual investee companies. They follow the widely respected and widely followed IPEVCV guidelines in executing these valuations; these processes are explained in the Valuation Approach and Process Report.

Valuations are considered and challenged by the Audit, Risk and Valuations Committee on a quarterly basis as well as on an ad hoc basis where required together with scrutiny by the Auditor on an annual basis.

The Board and the Investment Manager feel that undue concentration is not desirable in the longer term and continuously explore options to reduce this over time.

The Investment Manager conducts regular reviews of investee companies through regular engagement to monitor progress and ensure milestones are adequately met. Short term liquidity issues are mitigated over time when such companies deliver on their milestones and value is recognised.

During periods of higher interest rates and market volatility, inherent risks in valuations risk can rise.

In the year under review, the Investment Manager reduced the exposure to certain public holdings with the goal of reducing concentration risk. Further details can be found in the Investment Manager's Review.

Liquidity

Insufficient liquid resources to meet its ongoing financial demands.

The Company has no loan facility in place and its assets include readily realisable securities which can be sold to meet ongoing funding requirements. The Investment Manager manages its liquid investments to ensure that sufficient cash is available to meet contractual commitments. A cash buffer is also held to meet other short-term needs. The Company had cash of £2.9 million (2022: £16.1 million) as at 31 December 2023. In addition, the Company has a £9.7 million holding in the Schroder Special Situations - Sterling Liquidity Plus Fund, which is a money market fund with daily redemption terms. The Board reviews the Company's cash flow forecasts under various stressed scenarios on an ongoing basis.

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Key person dependency

The Manager operates a team approach to portfolio management and decision-making so the risk arising from the departure of one or more of the Manager's key investment professionals should not necessarily prevent the Company from achieving its investment objective.

The Manager's resources could become stretched through the launch of new products or team departures leading to a lack of focus on the Company's portfolio.

The Manager could terminate its contract with the Company. This event would have an impact on the management of the portfolio requiring renegotiation or substitution, likely on less favourable terms.

The Investment Manager has a compensation and incentive scheme to recruit and retain key staff including the portfolio managers, and has developed a suitable succession planning programme, which seeks to ease the impact that additional workload and/or the loss of a key investment professional may have on the Company's performance. The Investment Manager will notify any change in its key professionals to the Board at the earliest possible opportunity and the Board will be made aware of all efforts made to fill a vacancy.

Furthermore, investment decisions are made by a team of professionals, mitigating the impact of the loss of any key professional within the Investment Manager's organisation on the Company's performance.

The AIFM agreement includes clauses which set out the notice periods for termination from either party as detailed in the Directors' Report on page 47.

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ESG and climate change

Failure by the Investment Manager to identify potential ESG matters in an investee company, given their private nature, could lead to the Company's shares being less attractive to investors as well as potential valuation issues in the underlying investee company.

The Investment Manager integrates ESG considerations, including climate change, into the investment process. Case studies of engagement with a sample of the Company's portfolio companies are incorporated in the Investment Approach and Process section of the Strategic Report. The approach to conducting ESG-related analysis of private companies is complemented with a standard exclusions list, more bespoke assessments, dedicated ESG reference calls, and by integrating several external tools and data sources, including RepRisk, World- Check, the ESG Data Convergence Project and eFront's ESG Outreach module to further assess ESG risks and opportunities in private assets.

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Operational

The Company has no employees and the Directors have been appointed on a non-executive basis. The Company is therefore reliant upon the performance of third-party service providers.

Failure of any of the Company's service providers to perform in accordance with the terms of its appointment, to protect against breaches of the Company's legal and regulatory obligations such as data protection, or to perform its obligations at all as a result of insolvency, fraud, breaches of cyber security, failures in business continuity plans or other causes, could have a material detrimental impact on the operation of the Company.

Experienced third party service providers are employed by the Company under appropriate terms and conditions and with agreed service level specifications. Service level agreements include clauses which set out the notice periods for terminations.

The Board receives regular reports from its service providers and the Management Engagement Committee will review the performance of key service providers at least annually.

Directors are invited to a Manager hosted two-day annual internal controls briefing sessions which covers the internal controls of its key service providers including the Company's depositary and custodian, HSBC, the Company's registrar, Equiniti, and Schroders Group Internal Audit team. In addition, the Audit, Risk and Valuation Committee reviews reports on the external audits of the internal controls operated by certain key service providers.

A significant control failing or weakness relating to share repurchases was identified during the year under review. Although the Company had a share premium account of £891 million, as this had not been cancelled, the Company did not have sufficient distributable profits to comply with the requirements of the Companies Act 2006. The Board worked with its service providers to rectify the matter which was approved by shareholders, filed section 838 interim accounts in July 2023 and has been given assurances that additional controls are now in place to tighten processes and avoid a recurrence.

Information technology and information security

Each of the Company's service providers is at risk of cyber attack, data theft and service disruption.

While the risk of financial loss by the Company is probably small, the risk of reputational damage and the risk of loss of control of sensitive information is more significant, for instance a GDPR breach. Many of the Company's service providers and the Board often have sensitive information regarding transactions or pricing and information regarded as inside information in regulatory terms. Data theft or data corruption per se is regarded as a lower order risk as relevant data is held in multiple locations.

The Board receives controls reports from its key service providers which describe the protective measures they take as well as their business recovery plans. In addition, the Board receives an annual presentation from the Manager on cyber risk.

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Viability statement

The Board has assessed the prospects of the Company over the five-year period ending 31 December 2028. The Board considers a five-year period to be appropriate because it is the minimum holding period that it would recommend to a prospective investor considering purchasing shares in the Company.

The Board has considered the principal and emerging risks and uncertainties set out on pages 38 to 41, including climate-related risks, and detailed revenue and cashflow forecasts prepared by the Manager and stress case scenarios.

The Board believes that the portfolio will provide shareholders with satisfactory returns from the investment portfolio over a five-year period and, notwithstanding the Strategy risks mentioned in the principal risks and uncertainties section, there should be continued demand for the Company's shares.

The continuation of the Company will be subject to the approval of shareholders at the 2025 AGM. The Board has successfully repurchased shares equal to at least 5% of the Company's issued share capital in 2023. Work has commenced on the 2024 commitment of 5%. In addition, the Company continues to monitor share repurchases equating to 25% of all net cash realisations from the portfolio inherited from the previous portfolio manager. The Board believes the Manager is well placed to deliver on these proposals, generate long-term capital growth and has no reason to believe that the continuation vote will not be approved in 2025.

Having considered all of the Company's resources, strategy, risks and probabilities, the Board has a reasonable expectation that the Company will continue to operate and meet its liabilities as they fall due, during the five year period to 31 December 2028.

Going concern

The Board has considered the Company's principal risks and uncertainties (including whether there are any emerging risks); has scrutinised the detailed revenue and cashflow forecast prepared by the Manager; and considered their assessment of the likelihood and quantum of funds which could be raised from sales of investments. The Manager has also performed a range of stress tests, and demonstrated to the Board that even in an adverse scenario of depressed markets and restrictions on sales in the private equity market, the Company could still generate sufficient funds from sales of investments to meet its liabilities over the next 12 months. As a result, the Board is comfortable that the Company will have sufficient liquid funds to pay operating expenses.

On this basis, the Board considers it appropriate to adopt the going concern basis of accounting in the Company's accounts, and has not identified any material uncertainties to the Company's ability to continue as a going concern over a period of at least 12 months from the date of approval of these annual report and accounts.

By order of the Board

Schroder Investment Management Limited

Company Secretary

27 March 2024

Statement of Directors' Responsibilities

Directors' responsibilities

The Directors are responsible for preparing the annual report and the financial statements in accordance with applicable law and regulations.

Company law requires the Directors to prepare financial statements for each financial year. Under that law the Directors have elected to prepare the financial statements 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 financial statements 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 period. In preparing these financial statements, 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 have been followed, subject to any material departures disclosed and explained in the financial statements; and

- prepare the financial statements 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 financial statements 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 web pages dedicated to the Company. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

Directors' statement

Each of the Directors, whose names and functions are listed on pages 44 and 45, confirm that to the best of their knowledge:

- the financial statements, 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 annual 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

Tim Edwards

Chair

27 March 2024

Financial

Income Statement

for the year ended 31 December 2023

		2023			2022
		Revenue	Capital	Total	Revenue	Capital	Total
	Note	£'000	£'000	£'000	£'000	£'000	£'000
Losses on investments held at fair value through profit or loss		-	(32,015)	(32,015)	-	(175,669)	(175,669)
Net foreign currency gains		-	42	42	-	583	583
Income from investments	2	784	-	784	479	-	479
Gross return/(loss)		784	(31,973)	(31,189)	479	(175,086)	(174,607)
Management fee	3	(1,252)	-	(1,252)	(1,989)	-	(1,989)
Administrative expenses	4	(1,341)	-	(1,341)	(1,237)	-	(1,237)
Net loss before finance costs and taxation		(1,809)	(31,973)	(33,782)	(2,747)	(175,086)	(177,833)
Finance costs	5	(16)	-	(16)	(304)	-	(304)
Net loss before taxation		(1,825)	(31,973)	(33,798)	(3,051)	(175,086)	(178,137)
Taxation	6	-	-	-	-	-	-
Net loss after taxation		(1,825)	(31,973)	(33,798)	(3,051)	(175,086)	(178,137)
Loss per share (pence)	7	(0.20)	(3.57)	(3.77)	(0.34)	(19.30)	(19.64)

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 loss on ordinary activities after taxation is also the total comprehensive income for the year, therefore no separate Statement of Comprehensive Income has been prepared.

All revenue and capital items in the above statement derive from continuing operations. No operations were acquired or discontinued in the year.

The notes on pages 69 to 81 form an integral part of these accounts.

Statement of Changes in Equity

for the year ended 31 December 2023

		Called-up		Capital
		share	Share	redemption	Special	Capital	Revenue
	Note	capital	premium	reserve	reserve	reserves	reserve	Total
At 31 December 2021		9,086	891,017	-	-	(439,105)	(24,127)	436,871
Repurchase and cancellation of the Company's
own shares		(44)	-	44	-	(812)	-	(812)
Net loss after taxation		-	-	-	-	(175,086)	(3,051)	(178,137)
At 31 December 2022		9,042	891,017	44	-	(615,003)	(27,178)	257,922

Cancellation of share premium¹		-	(891,017)	-	891,017	-	-	-
Repurchase and cancellation of the Company's
own shares		(469)	-	469	(7,872)	812	-	(7,060)
Net loss after taxation		-	-	-	-	(31,973)	(1,825)	(33,798)
At 31 December 2023	11,12	8,573	-	513	883,145	(646,164)	(29,003)	217,064

¹ Following an application to the Court on 18 July 2023, the Company has cancelled its share premium and converted it to a distributable reserve.

The notes on pages 69 to 81 form an integral part of these accounts.

Statement of Financial Position

at 31 December 2023

		2023	2022
	Note	£'000	£'000
Fixed assets
Investments held at fair value through profit or loss	8	210,093	242,504
Current assets
Debtors	9	5,511	160
Cash and cash equivalents	9	2,913	16,122
		8,424	16,282
Current liabilities
Creditors: amounts falling due within one year	10	(1,453)	(864)
Net current assets		6,971	15,418
Total assets less current liabilities		217,064	257,922
Net assets		217,064	257,922
Capital and reserves
Called-up share capital	11	8,573	9,042
Share premium	12	-	891,017
Capital redemption reserve	12	513	44
Special reserve	12	883,145	-
Capital reserves	12	(646,164)	(615,003)
Revenue reserve	12	(29,003)	(27,178)
Total equity shareholders' funds		217,064	257,922
Net asset value per share (pence)	13	25.32	28.52

These accounts were approved and authorised for issue by the Board of Directors on 27 March 2024 and signed on its behalf by:

Tim Edwards

Chair

The notes on pages 69 to 81 form an integral part of these accounts.

Registered in England and Wales as a public company limited by shares

Company registration number: 09405653

Cash Flow Statement

for the year ended 31 December 2023

	2023	2022
	£'000	£'000
Operating activities
Net loss before finance costs and taxation	(33,782)	(177,833)
Adjustments for
Capital loss before taxation	31,973	175,669
(Increase)/decrease in debtors	(134)	11
Increase/(decrease) in creditors	514	(316)
Net cash outflow from operating activities	(1,429)	(2,469)
Investing activities
Purchases of investments	(35,999)	(17,422)
Sales of investments	31,178	40,148
Net cash (outflow)/inflow from investing activities	(4,821)	22,726
Financing activities
Repurchase and cancellation of the Company's own shares	(6,985)	(812)
Finance costs	(16)	(400)
Bank loan repaid	-	(22,000)
Net cash outflow from financing activities	(7,001)	(23,212)
Change in cash and cash equivalents	(13,251)	(2,955)
Cash and cash equivalents at the beginning of the year	16,122	19,077
Exchange movements	42	-
Cash and cash equivalents at the end of the year	2,913	16,122

Dividends received during the year amounted to £311,000 (2022: £425,000) and deposit interest receipts amounted to £376,000 (2022: £15,000).

The notes on pages 69 to 81 form an integral part of these accounts.

Notes to the Accounts

1. Accounting Policies

(a) Basis of accounting

Schroders Capital Global Innovation 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.

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", and with the 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 March 2025, which is at least 12 months from the date of approval of these accounts. In forming this opinion, the Directors have taken into consideration: the controls and monitoring processes in place; the Company's level of debt and other payables; the low level of operating expenses, comprising largely variable costs which would reduce pro rata in the event of a market downturn; the Company's revenue and cashflow forecasts and the liquidity of the Company's investments. The Directors have also considered any potential impact of climate change on the viability of the Company. Further details of directors' considerations regarding this are given in the Chair's Statement, Investment Managers' Review, Going Concern Statement, Viability Statement and under the principal and emerging risks and uncertainties.

In preparing these accounts the Directors have considered the impact of climate change on the value of the Company's investments. The Board has concluded that, for investments which are valued using quoted bid prices in active markets, the fair value reflects market participants' view of climate change risk. Unquoted investments are valued in accordance with the policy detailed below, using techniques which also reflect each investment's exposure to climate change risk.

The Company has adopted the provisions of Sections 11 and 12 of FRS 102 for measuring and disclosing its financial instruments.

The accounts are presented in sterling and amounts have been rounded to the nearest thousand.

The accounting policies applied to these accounts are consistent with those applied in the accounts for the year ended 31 December 2022.

Significant judgements, estimates and assumptions have been required in valuing the Company's investments and these are detailed below.

(b) Use of judgements, estimates and assumptions

The preparation of the accounts requires management to make judgements, 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 judgements, estimates and assumptions will, by definition, seldom equal the related actual results.

Judgements, 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 judgements, estimates and assumptions are described in note 17 on pages 76 and 77.

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.

Investments that are quoted on an exchange are valued using closing bid prices. If there has been no material trading in an investment, it will be valued using the process for unquoted investments, described below.

Investments in shares that are not quoted on any Stock Exchange (unquoted investments) represent a significant part of the Company's portfolio. Such investments are held at fair value, which requires significant estimation in concluding on their fair value. The Company's AIFM conducts valuations for the portfolio holdings on a quarterly basis. Each quarter, the Audit, Risk and Valuation Committee reviews a report on the revaluations undertaken on the unquoted holdings during the period and challenges the considerations and key assumptions made, where appropriate, to ensure that the valuations are reliable. Investments in shares that are not quoted on any stock exchange (unquoted investments) represent a significant part of the Company's portfolio and may include common stock, preferred stock, warrants and other option-like instruments. Those investments are carried at their estimated fair values, consistent with the UK accounting convention FRS 102 and the recommendations on best practices of the International Private Equity and Venture Capital ("IPEV") guidelines issued in December 2022. The following factors will be considered in determining the fair value of an unquoted asset:

(i) Investments which are not traded in an active market are valued using the price of a recent investment, where there are no factors observed to suggest a material change in fair value.

(ii) Where (i) is no longer considered appropriate, investments are valued at the price used in a material arm's length transaction by an independent third party, and where there is no impact on the rights of existing shareholders.

(iii) In the absence of (ii), one of the following methods may be used:

a. Revenue, Gross Profit or EBITDA multiples, based on listed investments and private market transactions in the relevant sector, adjusted for differences such as lack of marketability, size and growth profile.

b. Recent transaction prices adjusted for the company's performance against key milestones and the complexity of the capital structure.

c. Probability-weighted expected return scenarios, discounted at a risk-adjusted rate of return.

d. Discounted cash flows analyses based on estimate future cash flows with an appropriate discount rate.

e. Option price modelling.

(iv) Investments in funds (which are invariably comprised of unquoted investments) are valued using the NAV per unit with an appropriate discount or premium applied to arrive at a unit price.

Where models are used in valuing an investment, significant judgements are made in estimating the various inputs into the models and recognising the sensitivity of such estimates, especially in early-stage pre-revenue enterprises. Examples of the factors where significant judgement is made include, but are not limited to - the probability assigned to the relative success or failure of an enterprise; the probable future outcome paths; discount rates; growth rates; terminal value; selection of appropriate market comparable companies, the reliability of future revenue and growth forecasts and the likely exit scenarios for the investor company, for example, IPO or trade sale. In making judgements in regard to the probability of an investee outcome, it must be noted that due to the nature of the investee company's activity, its future outcome may, to a greater or lesser extent, be binary, for example, if an investee company is developing one particular drug and that fails its required trials then the outcome may be terminal for that enterprise. It should be noted that the most significant event that will drive valuation change in investee companies are company-specific events that would give rise to a valuation inflexion point (known also as a 'triggering event'). An example of a material inflexion point in a bio-pharma company would be the successful completion of a drug trial or its approval by a regulatory authority.

These valuation methods may lead to a company being valued on a suitable price-earnings ratio to that company's historic, current or forecast post-tax earnings before interest and amortisation. The ratio used will be based on a comparable sector but the resulting value will be adjusted to reflect points of difference identified when compared to the market sector (in which the investment would reside if it were it listed) including, inter alia, a lack of marketability.

(d) Accounting for reserves

Gains and losses on sales of investments are included in the Income Statement and in capital reserves within "Gains and losses on sales of investments". Increases and decreases in the valuation of investments held at the year end are included in the Income Statement and in capital reserves within "Net movement in investment holding gains and losses".

Foreign exchange gains and losses on cash and deposit balances are included in the Income Statement and in capital reserves.

Revenue reserve

The revenue reserve reflects all income and expenditure recognised in the revenue column of the Income Statement and any surplus is distributable by way of dividend.

(e) Income

Dividends receivable are included in revenue on an ex-dividend basis except where, in the opinion of the board, the dividend is capital in nature, in which case it is included in capital.

Overseas dividends are included gross of any withholding tax.

Deposit interest outstanding at the year end is calculated and accrued on a time apportionment basis using market rates of interest.

(f) Expenses

All expenses are accounted for on an accruals basis. Expenses are allocated wholly to revenue, except that:

- Any performance fee is charged wholly to capital.

- Expenses incidental to the purchase or sale of an investment are charged to capital. These expenses are commonly referred to as transaction costs and mainly comprise brokerage commission. Details of transaction costs are given in note 8 on page 74.

(g) Finance costs

Finance costs, comprising loan and overdraft interest, are charged wholly to revenue.

(h) Financial instruments

Cash and cash equivalents may comprise cash and demand deposits which are readily convertible to a known amount of cash and are subject to insignificant risk of changes in value.

Other debtors and creditors do not carry any interest, are short-term in nature and are accordingly stated at nominal value, with debtors reduced by appropriate allowances for estimated irrecoverable amounts.

Bank loans and overdrafts are initially measured at the transaction price and subsequently at amortised cost. They are recorded at the proceeds received net of direct issue costs.

(i) Taxation

The tax charge for the year includes a provision for all amounts expected to be received or paid. Deferred tax is provided on all timing differences that have originated but not reversed by the accounting date. Deferred tax liabilities are recognised for all taxable timing differences but deferred tax assets are only recognised to the extent that it is probable that taxable profits will be available against which those timing differences can be utilised. Deferred tax is measured at the tax rate which is expected to apply in the periods in which the timing differences are expected to reverse, based on tax rates that have been enacted or substantively enacted at the balance sheet date and is measured on an undiscounted basis.

(j) Value added tax ("VAT")

Expenses are disclosed inclusive of any related irrecoverable VAT.

(k) Foreign currency

In accordance with FRS 102, the Company is required to determine a functional currency, being the currency in which the Company predominantly operates. The board, having regard to the currency of the Company's share capital and the predominant currency in which its shareholders operate, has determined that sterling is the functional currency and the currency in which the accounts are presented.

Transactions denominated in foreign currencies are converted at actual exchange rates as at the date of the transaction. Monetary assets, liabilities and equity investments held at fair value, denominated in foreign currencies at the year end are translated at the rates of exchange prevailing at close of business on the accounting date.

(l) Share issues

Shares issued are recognised based on the proceeds or fair value received, with the excess of the amount received over their nominal value being credited to the share premium account. Direct issue costs are deducted from share premium.

(m) Repurchases of shares for cancellation

The cost of repurchasing the Company's own shares including the related stamp duty and transactions costs is charged to the "Special reserve" in the current year, and dealt with in the Statement of Changes in Equity. These costs were charged to the "Capital Reserve" in the prior year. Share repurchase transactions are accounted for on a trade date basis. The nominal value of share capital repurchased and cancelled is transferred out of "Called-up share capital" and into "Capital redemption reserve".

2. Income

	2023	2022
	£'000	£'000
Income from investments
UK dividends	256	425
Interest from debt securities	166	20
Bank interest	362	34
	784	479

3. Management fee

	2023	2022
	£'000	£'000
Management fee	1,252	1,989
	1,252	1,989

Under the terms of the AIFM agreement, the Manager is entitled to a management fee and a performance fee, subject to achieving performance targets. Details of these calculations are set out in the Directors' Report on page 47. No performance fee is payable for the current or prior year and no provision is required at 31 December 2023.

Details of all transactions with the Manager are given in note 15 on page 76.

4. Administrative expenses

	2023	2022
	£'000	£'000
Other administration expenses¹	632	529
Legal and professional fees²	304	97
Valuation fees³	21	275
Directors' fees⁴	196	186
Auditor's remuneration⁵	188	150
	1,341	1,237

¹ Prior year fee adjusted to split out legal and professional fee and include irrecoverable VAT on Auditors renumeration.

² Legal and professional fees are disclosed on a separate line due to the size of the current years fee. The increase in fee is due to one off costs in relation to the revolving credit facility and the cancellation of the share premium reserve.

³ The valuation fees have reduced significantly in the current year due to an over accrual at the prior year end.

⁴ Details payable to the Directors are given in the Directors' Remuneration Report on pages 55 to 57.

⁵ No amounts are payable to the Auditor for non-audit services. In the prior year the audit fee was disclosed including VAT amounting to £30,000. For consistency with industry practice, the audit fee in the table above is shown excluding VAT with any irrecoverable VAT included as part of other administrative expenses and the comparative figure reflects this change.

5. Finance costs

	2023	2022
	£'000	£'000
Interest on bank loans and overdrafts	16	304
	16	304

6. Taxation

(a) Analysis of tax charge for the year

	2023	2022
	Revenue	Capital	Total	Revenue	Capital	Total
	£'000	£'000	£'000	£'000	£'000	£'000
Taxation on ordinary activities	-	-	-	-	-	-

The Company has no corporation tax liability for the year ended 31 December 2023 (2022: nil).

(b) Factors affecting tax charge for the year

	2023	2022
	Revenue	Capital	Total	Revenue	Capital	Total
	£'000	£'000	£'000	£'000	£'000	£'000
Net loss on ordinary activities before taxation	(1,825)	(31,973)	(33,798)	(3,051)	(175,086)	(178,137)
Net loss on ordinary activities before taxation multiplied by the
Company's applicable rate of corporation tax for the year
of 23.5% (2022: 19.0%)	(429)	(7,514)	(7,943)	(580)	(33,266)	(33,846)
Effects of:
Capital loss on investments	-	7,514	7,514	-	33,266	33,266
UK dividends which are not taxable	(60)	-	(60)	(81)	-	(81)
Disallowed expenses	7	-	7	24	-	24
Unrelieved loan relationship deficit	-	-	-	48	-	48
Unrelieved management expenses	482	-	482	589	-	589
Taxation on ordinary activities	-	-	-	-	-	-

The Company has an unrecognised deferred tax asset £8,042,000 (2022: £7,529,000) arising from unutilised tax losses of £32,169,000 (2022: £30,117,000) based on a prospective corporation tax rate of 25.0% (2022: 25%). In its 2021 budget, the government announced that the main rate of corporation tax would increase to 25% for the fiscal year beginning on 1 April 2023.

The deferred tax asset has arisen due to the cumulative excess of deductible expenses over taxable income. Given the composition of the Company's portfolio, it is not likely that this asset will be utilised in the foreseeable future and therefore no asset has been recognised in the accounts.

Given the Company's intention to meet the conditions required to retain its status as an Investment Trust Company, no provision has been made for deferred tax on any capital gains or losses arising on the revaluation or disposal of investments.

7. Return/(loss) per share

	2023	2022
	£'000	£'000
Revenue loss	(1,825)	(3,051)
Capital loss	(31,973)	(175,086)
Total loss	(33,798)	(178,137)
Weighted average number of shares in issue during the year	895,075,078	907,291,950
Revenue loss per share	(0.20)	(0.34)
Capital loss per share	(3.57)	(19.30)
Loss per share (pence)	(3.77)	(19.64)

The basic and diluted loss per share is the same because there are no dilutive instruments in issue.

8. Investments held at fair value through profit or loss

(a) Movement in investments

	2023	2022
	£'000	£'000
Opening book cost	581,253	622,857
Opening investment holding losses	(338,749)	(181,958)
Opening fair value	242,504	440,899
Purchases at cost	35,999	17,422
Sales proceeds	(36,395)	(40,148)
Losses on investments held at fair value through profit or loss	(32,015)	(175,669)
Closing fair value	210,093	242,504
Closing book cost	553,693	581,253
Closing investment holding losses	(343,600)	(338,749)
Closing fair value	210,093	242,504

The Company received £36,395,000 (2022: £40,148,000) from investments sold in the year. The book cost of the investments when they were purchased was £63,560,000 (2022: £59,026,000). These investments have been revalued over time and, until they were sold, any unrealised gains/losses were included in the fair value of the investments.

(b) Unquoted investments, including investments quoted in inactive markets

Material revaluations of unquoted investments during the year 2023

	Opening			Closing
	valuation at			valuation at
	31 December	Valuation	Purchases/	31 December
	2022	adjustment	(disposals)	2023
	£'000	£'000	£'000	£'000
Atom Bank	31,686	(8,581)	-	23,105
Ada Health	7,122	2,516	-	9,638
Revolut LLP	5,436	2,452	-	7,888
Federated Wireless	11,227	(4,835)	-	6,392
Kymab	1,831	4,539	-	6,370
Genomics	8,854	(3,715)	-	5,139
BenevolentAI	11,935	(9,679)	(80)	2,176
AMO Pharma	16,408	(15,058)	-	1,350

Material revaluations of unquoted investments during the year 2022

	Opening			Closing
	valuation at			valuation at
	31 December	Valuation	Purchases/	31 December
	2021	adjustment	(disposals)	2022
	£'000	£'000	£'000	£'000
Atom Bank	46,209	(14,523)	-	31,686
AMO Pharma	11,668	4,740	-	16,408
BenevolentAI	28,484	(16,549)	-	11,935
Revolut LLP	10,115	(4,679)	-	5,436

Material disposals of unquoted investments during the year 2023

				Gain based
		Carrying		on carrying
		value at		value at
		31 December	Sales	31 December
	Book cost	2022	Proceeds	2023
	£'000	£'000	£'000	£'000
Tessian	4,806	3,928	5,217	1,289

Material disposals of unquoted investments during the year 2022

				Gain based
		Carrying		on carrying
		value at		value at
		31 December	Sales	31 December
	Book cost	2021	Proceeds	2022
	£'000	£'000	£'000	£'000
Seedrs	10,470	11,272	12,000	728
Nexeon	1,059	7,788	1,552	(6,236)

The following transaction costs, comprising stamp duty and brokerage commission, were incurred in the year:

	2023	2022
	£'000	£'000
On acquisitions	-	-
On disposals	10	8
	10	8

9. Current assets

	2023	2022
Debtors	£'000	£'000
Securities sold awaiting settlement	5,217	-
Dividends and interest receivable	191	94
Other debtors	103	66
	5,511	160

The Directors consider that the carrying amount of accrued income and debtors approximate to their fair value.

Cash and cash equivalents

The carrying amount of cash, amounting to £2,913,000 (2022: £16,122,000) represents its fair value.

10. Creditors: amounts falling due within one year

	2023	2022
Creditors: amounts falling due within one year	£'000	£'000
Repurchase and cancellation of the Company's own shares awaiting settlement	75	-
Management fee payable	633	373
Other creditors and accruals	745	491
	1,453	864

The Directors consider that the carrying amount of creditors falling due within one year approximates to their fair value.

11. Called-up share capital

	2023	2022
	£'000	£'000
Ordinary shares of 1p each allotted, called up and fully paid:
Opening balance of 904,219,238 (2022: 908,639,238) shares	9,042	9,086
Repurchase and cancellation of 46,859,212 (2022: 4,420,000) shares	(469)	(44)
Closing balance of 857,360,026 (2022: 904,219,238) shares	8,573	9,042

During the year, the Company made market purchases of 46,859,212 of its own shares, nominal value £469,000, for cancellation, representing 5.2% of the shares outstanding at the beginning of the year. The total consideration paid for these shares amounted to £7,060,000. The reason for these purchases was to seek to manage the volatility of the share price discount to NAV per share.

12. Reserves

	Capital reserves
				Losses on	Investment
	Share	Capital	Special	sales of	holding	Revenue
	premium¹	redemption²	reserve³	investments⁴	losses⁵	reserve⁶
	£'000	£'000	£'000	£'000	£'000	£'000
At 31 December 2022	891,017	44	-	(275,594)	(339,409)	(27,178)
Losses on sales of investments based on historic cost	-	-	-	(27,164)	-	-
Net movement in investment holding gains and losses	-	-	-	-	(4,851)	-
Repurchase and cancellation of the Company's own shares	-	469	(7,872)	812	-	-
Exchange gains	-	-	-	42	-	-
Cancellation of share premium	(891,017)	-	891,017	-	-	-
Retained revenue loss for the year	-	-	-	-	-	(1,825)
At 31 December 2023	-	513	883,145	(301,904)	(344,260)	(29,003)
	Capital reserves
				Losses on	Investment
	Share	Capital	Special	sales of	holding	Revenue
	premium¹	redemption²	reserve³	investments⁴	losses⁵	reserve⁶
	£'000	£'000	£'000	£'000	£'000	£'000
At 31 December 2021	891,017	-	-	(256,487)	(182,618)	(24,127)
Losses on sales of investments based on historic cost	-	-	-	(18,878)	-	-
Net movement in investment holding gains and losses	-	-	-	-	(156,791)	-
Repurchase and cancellation of the Company's own shares	-	44	-	(812)	-	-
Exchange gains	-	-	-	583	-	-
Retained revenue loss for the year	-	-	-	-	-	(3,051)
At 31 December 2022	891,017	44	-	(275,594)	(339,409)	(27,178)

The Company's articles of association permit dividend distributions out of realised capital profits.

¹ The share premium reserve is a non distributable reserve and represents the amount by which the fair value of the consideration received from shares issued exceeds the nominal value of shares issued. Following an application to the Court on 18 July 2023, the Company has cancelled its share premium and converted it to a distributable reserve.

² The capital redemption reserve represents the accumulated nominal value of shares repurchased for cancellation. This reserve is not distributable.

³ This is a distributable capital reserve arising from the cancellation of the share premium, and may be distributed as dividends or used to repurchase the Company's own shares.

⁴ This is a realised (distributable) capital reserve and a positive balance may be used to repurchase the Company's own shares or distributed as dividends. However, the Company is not currently in a position to make such a distribution as the balance is negative.

⁵ This reserve may include some holding gains on liquid investments (which may be deemed to be realised) and other amounts which are unrealised. An analysis has not been made between those amounts that are realised (and may be distributed as dividends or used to repurchase the Company's own shares) and those that are unrealised. The Company is not currently in a position to make any distributions due to total net negative balances on its distributable reserves.

⁶ A positive balance on the revenue reserve may be distributed as dividends or used to repurchase the Company's own shares.

13. Net asset value per share

	2023	2022
Net assets (£'000)	217,064	257,922
Shares in issue at the year end	857,360,026	904,219,238
Net asset value per share (pence)	25.32	28.52

14. Uncalled capital commitments

At 31 December 2023, the Company had uncalled capital commitments amounting to £3,275,000 (2022: £5,121,000) in respect of follow-on investments, which may be called by investee companies, subject to their achievement of certain milestones and objectives.

15. Transactions with the Manager and Alternative Investment Fund Manager (AIFM)

Under the terms of the AIFM Agreement, the Manager is entitled to receive a management fee and a company secretarial fee. Details of the basis of the management fee calculation are given in the Directors' Report on page 47. A management fee amounting to £1,252,000 (2022: £1,989,000) is payable to Schroder Investment Management Limited for the year ended 31 December 2023, of which £633,000 (2022: £373,000) was outstanding at the year end.

Fees amounting to £165,000 (2022: £41,000) were payable to Schroder Unit Trusts Limited for services as AIFM, following its appointment as AIFM with effect from 1 October 2022, of which £206,000 (2022: £41,000) was outstanding at the year end.

There were no further fees paid to Link Fund Solutions Limited for services as AIFM (2022: £65,000).

Under the terms of the Alternative Investment Management Agreement dated 29 September 2022, Schroder Unit Trusts Limited may reclaim from the Company certain expenses which it has paid on behalf of the Company to HSBC in connection with accounting and administrative services provided to the Company. These charges amounted to £128,000 (2022: £17,000 for the three months ended 31 December 2022), of which £60,000 (2022: £17,000) was outstanding at the year end.

No Director of the Company served as a Director of any member of the Schroder Group or its affiliates at any time during the year.

16. Related party transactions

Details of the remuneration payable to Directors are given in the Directors' Remuneration Report on page 56 and details of Directors' shareholdings are given in the Directors' Remuneration Report on page 57. Details of transactions with the Manager, the AIFM and its associated companies are given in note 15 above. There have been no other transactions with related parties during the year (2022: nil).

17. Disclosures regarding financial instruments measured at fair value

The Company's financial instruments within the scope of FRS 102 that are held at fair value comprise its investment portfolio and derivative financial instruments.

FRS 102 requires that financial instruments held at fair value are categorised into a hierarchy consisting of the three levels below. A fair value measurement is categorised in its entirety on the basis of the lowest level input that is significant to the fair value measurement.

Level 1 - valued using unadjusted quoted prices in active markets for identical assets.

Level 2 - valued using observable inputs other than quoted prices included within Level 1.

Level 3 - valued using inputs that are unobservable.

Details of the Company's policy for valuing investments and derivative instruments are given in note 1(c) on page 70 and 1(g) on page 70. Level 3 investments have been valued in accordance with note 1(c)(i) - (iv).

The primary technique for investments with no expected short-term earnings or where the investment outcome is based on a discrete set of (often binary) scenarios and for which investments are funded for, is the milestone approach. This is typically the case for pre-revenue and clinical life science investments. The milestone approach is based on a set of agreed milestones at the time of the initial investment. These include various measurements depending on the type of investment, the industry as well as the key drivers of the investment company. Progress against these milestones is measured at each valuation date and drives fair value changes. If a milestone event was achieved or if it was failed to achieve, a variety of valuation techniques may be used to quantify the resulting fair value impact.

The primary technique for investments that are producing either maintainable revenues or earnings is the market approach. This approach determines the fair value of a company based on the market price of selected comparable companies or recent transactions (or a combination of both) and its relationship to relevant performance measures with the assumption that the relationship between the market price and the financial performance of the comparable company is similar. The relevant multiples can be subject to adjustments for general qualitative differences between the underlying portfolio company and the comparable companies. These adjustments may include, but are not limited to, differences due to size, marketability, growth profile or the market size of end-markets.

The primary technique for investments that have not yet or have just commenced to produce revenues and that possess material future earnings potential is the Probability-Weighted-Expected-Return-Method ("PWERM"). It involves estimating the expected cash flows of the company under different scenarios, such as best-case, base-case, and worst-case scenarios. Each scenario is assigned a probability based on the likelihood of its occurrence. The expected cash flows are then discounted back to their present value using an appropriate discount rate, which reflects the risk and uncertainty associated with each scenario. The PWERM approach also considers other factors such as changes in market conditions, industry trends, competitive landscape, regulatory changes, and other macroeconomic factors. Adjustments are made to the cash flow projections and discount rates to reflect these factors and their potential impact on the company's value.

Once a company's value is established, it is allocated to the company's various share classes. Early-stage, venture and growth investments typically possess complex capital structures with varying rights and economic preferences attached to each share class. To assess the relative value of these individual share classes, either a qualitative scenario-analysis of the expected ultimate pay-off profile of each share class, or an option pricing model is utilised. The relative value of each share class is dependent on the expected time to exit, volatility, and other relevant quantitative or qualitative parameters.

The following table provides an overview of the select (primary) valuation techniques:

			% of
		Range of	unquoted
Valuation techniques	Key input	metric utilised	portfolio
Market approach
Arm's length transaction	Premium/(discount) to last negotiated price	(33.9)% to 7.3%	9.3
Adjusted transaction price			28.2
Multiples-based	Multiple of Sales	7.0x to 9.5x	33.3
	Multiple of Gross Profit	9.0x to 13.6x
Milestone approach	Discount rate	17.5% to 35.0%	8.3
Probability-weighted-expected return			13.5
Third-party fund NAV	N/A	N/A	7.5

^N/A No range utilised.

At 31 December, the Company's investment portfolio and any derivative financial instruments were categorised as follows:

	2023
	Level 1	Level 2	Level 3	Total
	£'000	£'000	£'000	£'000
Investments in equities - quoted	54,603	9,733	2,176	66,512
Investments in equities - unquoted	-	-	143,581	143,581
Total	54,603	9,733	145,757	210,093

The Level 2 asset relates to the holding in Schroders Special Situations - Sterling Liquidity Plus Fund. BenevolentAI is quoted, but the market is inactive. Thus its valuation has been determined in accordance with the process followed for unquoted assets and included in Level 3 above.

	2022
	Level 1	Level 2	Level 3	Total
	£'000	£'000	£'000	£'000
Investments in equities - quoted	83,711	-	11,935	95,646
Investments in equities - unquoted	-	-	146,858	146,858
Total	83,711	-	158,793	242,504

Movements in fair value measurements included in Level 3 during the year are as follows:

	2023	2022
	£'000	£'000
Opening book cost	458,690	482,416
Opening investment holding losses	(299,897)	(263,548)
Opening valuation	158,793	218,868
Purchases at cost	22,759	17,422
Sales proceeds	(6,056)	(19,289)
Transfer between Level 3 and Level 1	-	(19,152)
Net movement in investment holding gains and losses	(29,739)	(39,056)
Closing valuation	145,757	158,793
Closing book cost	473,660	458,690
Closing investment holding losses	(327,903)	(299,897)
Total level 3 investments held at fair value through profit or loss	145,757	158,793

The Company received £6,056,000 (2022: £19,289,000) from Level 3 investments sold in the year. The book cost of the investments when they were purchased was £7,789,000 (2022: £20,384,000). These investments have been revalued over time and, until they were sold, any unrealised gains/losses were included in the fair value of the investments.

18. Financial instruments' exposure to risk and risk management policies

The investment objective is set out on the inside front cover of this report. In pursuing this objective, the Company is exposed to a variety of financial risks that could result in a reduction in the Company's net assets or a reduction in the profits available for dividends. These financial risks include market risk (comprising currency risk, interest rate risk and market price risk), liquidity risk and credit risk. The Directors' policy for managing these risks is set out below. The board coordinates the Company's risk management policy.

The objectives, policies and processes for managing the risks and the methods used to measure the risks that are set out below, have not changed from those applying in the comparative year.

The Company's classes of financial instruments may comprise the following:

- investments in shares of quoted and unquoted companies which are held in accordance with the Company's investment objective;

- short-term debtors, creditors and cash arising directly from its operations; and

- forward foreign currency contracts, the purpose of which is to manage the currency risk arising from the Company's investment activities.

(a) Market risk

The fair value or future cash flows of a financial instrument held by the Company may fluctuate because of changes in market prices. This market risk comprises three elements: currency risk, interest rate risk and other price risk. Information to enable an evaluation of the nature and extent of these three elements of market risk is given in parts (i) to (iii) of this note, together with sensitivity analyses where appropriate. The board reviews and agrees policies for managing these risks and these policies have remained unchanged from those applying in the comparative year. The Manager assesses the exposure to market risk when making each investment decision and monitors the overall level of market risk on the whole of the investment portfolio on an ongoing basis.

(i) Currency risk

Certain of the Company's assets, liabilities and income are denominated in currencies other than sterling, which is the Company's functional currency and the presentational currency of the accounts. As a result, movements in exchange rates will affect the sterling value of those items.

Management of currency risk

The AIFM monitors the Company's exposure to foreign currencies on a daily basis and reports to the Board, which meets on at least four occasions each year. The Manager measures the risk to the Company of the foreign currency exposure by considering the effect on the Company's net asset value and income of a movement in the rates of exchange to which the Company's assets, liabilities, income and expenses are exposed.

Income denominated in foreign currencies is converted into sterling on receipt

It is currently not the Company's policy to hedge against currency risk, but the Manager may, with the board's consent and oversight, hedge against specific currencies, depending on their longer term view.

Foreign currency exposure

The fair value of the Company's monetary items that have foreign currency exposure at 31 December are shown below.

	2023
		Norwegian	Swiss	US
	Euro	Krone	Francs	Dollars	Total
	£'000	£'000	£'000	£'000	£'000
Cash and cash equivalents	11	-	3	583	597
Investments held at fair value through profit or loss	22,051	-	6,997	70,255	99,303
Total net foreign currency exposure	22,062	-	7,000	70,838	99,900
	2022
		Norwegian	Swiss	US
	Euro	Krone	Francs	Dollars	Total
	£'000	£'000	£'000	£'000	£'000
Cash and cash equivalents	6	-	-	3,618	3,624
Investments held at fair value through profit or loss	27,083	3,781	7,460	62,542	100,866
Total net foreign currency exposure	27,089	3,781	7,460	66,160	104,490

The above year end amounts are broadly representative of the exposure to foreign currency risk during the current and comparative year.

Foreign currency sensitivity

The following tables illustrate the sensitivity of net profit for the year and net assets with regard to the Company's monetary financial assets and financial liabilities and exchange rates. The sensitivity analysis is based on the Company's foreign and non-monetary currency financial instruments held at each accounting date and assumes a 10% (2022: 10%) appreciation or depreciation in sterling against all the currencies to which the Company is exposed, which is considered to be a reasonable illustration based on the volatility of exchange rates during the year.

If sterling had weakened by 10% this would have had the following effect:

	2023	2022
	£'000	£'000
Income Statement - return after taxation
Revenue return	17	-
Capital return	9,990	10,449
Total return after taxation	10,007	10,449
Net assets	10,007	10,449

Conversely if sterling had strengthened by 10% this would have had the following effect:

	2023	2022
	£'000	£'000
Income Statement - return after taxation
Revenue return	(17)	-
Capital return	(9,990)	(10,449)
Total return after taxation	(10,007)	(10,449)
Net assets	(10,007)	(10,449)

In the opinion of the directors, the above sensitivity analysis is broadly representative of the whole of the current and comparative year.

(ii) Interest rate risk

Interest rate movements may affect the level of income receivable on cash balances and the interest payable on the bank overdraft when interest rates are re-set.

Management of interest rate risk

Liquidity and borrowings are managed with the aim of increasing returns to shareholders. The board would not normally expect gearing to exceed 20% where gearing is defined as borrowings used for investment purposes, less cash, expressed as a percentage of net assets.

Interest rate exposure

The exposure of financial assets and financial liabilities to floating interest rates, giving cash flow interest rate risk when rates are re-set, is shown below:

	2023	2022
	£'000	£'000
Exposure to floating interest rates:
Cash and cash equivalents	2,913	16,122

The floating rate assets comprise cash deposits on call. Sterling cash deposits at call earn interest at floating rates based on Sterling Overnight Index Average rates ("SONIA").

The above year end amount may not be representative of the exposure to interest rates during the year, due to fluctuating cash balances.

Interest rate sensitivity

The following table illustrates the sensitivity of the return after taxation for the year and net assets to a 1.5% (2022: 1.5%) increase or decrease in interest rates in regards to the Company's monetary financial assets and financial liabilities. This level of change is considered to be a reasonable illustration based on observation of current market conditions. The sensitivity analysis is based on the Company's monetary financial instruments which are exposed to interest rate changes held at the accounting date, with all other variables held constant.

	2023		2022
	1.5% increase	1.5% decrease	1.5% increase	1.5% decrease
	in rate	in rate	in rate	in rate
	£'000	£'000	£'000	£'000
Income statement - return after taxation
Revenue return	44	(44)	242	(242)
Capital return	-	-	-	-
Total return after taxation	44	(44)	242	(242)
Net assets	44	(44)	242	(242)

Given the increase in UK interest rates, the interest rate sensitivity has been updated to 1.5%. The prior year disclosure has been updated to 1.5% to show a direct comparison in the sensitivity. In the prior year report, the sensitivity was calculated using 1.0%, which was representative of the market at 31 December 2022. As disclosed in the prior year annual report, an increase of 1.0% increased total return after taxation by £161,000 (a decrease of 1.0% had an equal and opposite effect).

(iii) Market price risk

Market price risk includes changes in market prices, other than those arising from interest rate risk, which may affect the value of investments.

Management of market price risk

The Board meets on at least four occasions each year to consider the asset allocation of the portfolio and the risk associated with particular countries and industry sectors. The investment management team has responsibility for monitoring the portfolio, which is selected in accordance with the Company's investment objective and seeks to ensure that individual stocks meet an acceptable risk/reward profile. The Board may authorise the Manager to enter derivative transactions for the purpose of protecting the portfolio against falls in market prices.

Market price risk exposure

The Company's total exposure to changes in market prices at 31 December comprises the following:

	2023	2022
	£'000	£'000
Investments held at fair value through profit or loss	210,093	242,504

The above data is broadly representative of the exposure to market price risk during the year.

Concentration of exposure to market price risk

A sector and geographical analysis of the Company's investments is given on page 20. This shows a concentration of exposure to economic conditions in the United Kingdom and to the Health Care sector. In addition, it is noted that as the Company's holds six (2022: five) investments amounting to approximately £28.6 million (2022: £61.5 million), representing 13.2% (2022: 23.8%) of NAV, whose valuation is deemed to be potentially volatile, as it is dependent on a number of factors including future funding and meeting of anticipated milestones.

Market price risk sensitivity

The following table illustrates the sensitivity of the return after taxation for the year and net assets to an increase or decrease of 20% (2022: 20%) in the fair values of the Company's investments. This level of change is considered to be a reasonable illustration based on observation of current market conditions.

	2023		2022
	20% increase	20% decrease	20% increase	20% decrease
	in fair value	in fair value	in fair value	in fair value
	£'000	£'000	£'000	£'000
Income statement - return after taxation
Revenue return	-	-	-	-
Capital return	42,019	(42,019)	48,501	(48,501)
Total return after taxation and net assets	42,019	(42,019)	48,501	(48,501)
Percentage change in net asset value	19.4	(19.4)	18.8	(18.8)

(b) Liquidity risk

This is the risk that the Company will encounter difficulty in meeting its obligations associated with financial liabilities that are settled by delivering cash or another financial asset.

Management of the risk

The Company's assets include readily realisable securities amounting to £64,336,000 (2022: £83,711,000), which can be sold to meet ongoing funding requirements. Additionally, the Company has level 3 investments valued at £145,757,000 (2022: £158,793,000) which are illiquid, but could be sold if required.

Liquidity risk exposure

Contractual maturities of financial liabilities, based on the earliest date on which payment can be required are as follows:

	2023				2022
		More than				More than
		three				three
		months				months
	Three	but not	More		Three	but not	More
	months	more than	than		months	more than	than
	or less	one year	one year	Total	or less	one year	one year	Total
	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000
Creditors: amounts falling due within
one year
Other creditors and accruals	1,453	-	-	1,453	864	-	-	864
Uncalled capital commitments	549	1,328	1,398	3,275	-	1,700	3,421	5,121
	2,002	1,328	1,398	4,728	864	1,700	3,421	5,985

Credit risk is the risk that the failure of the counterparty to a transaction to discharge its obligations under that transaction could result in loss to the Company.

Management of credit risk

This risk is not significant and is managed as follows:

Portfolio dealing

The credit ratings of broker counterparties is monitored by the AIFM and limits are set on exposure to any one broker.

Exposure to the custodian

The custodian of the Company's assets is HSBC Bank plc which has Long-Term Credit Ratings of AA- with Fitch and A1 with Moody's. The Company's investments are held in accounts which are segregated from the custodian's own trading assets. If the custodian were to become insolvent, the Company's right of ownership of its investments is clear and they are therefore protected. However the Company's cash balances are all deposited with the custodian as banker and held on the custodian's balance sheet. Accordingly, in accordance with usual banking practice, the Company will rank as a general creditor to the custodian in respect of cash balances.

Credit risk exposure

The amounts shown in the balance sheet under debtors and cash at bank and in hand represent the maximum exposure to credit risk at the current and comparative year ends. No debtors are past their due date and none have been provided for. There has been no stock lending during the year, or prior year.

(d) Fair values of financial assets and financial liabilities

All financial assets and liabilities are either carried in the balance sheet at fair value, or the balance sheet amount is a reasonable approximation of fair value.

19. Analysis of changes in net debt

	At		At
	31 December		31 December
	2022	Cashflows	2023
	£'000	£'000	£'000
Cash and cash equivalents
Cash and cash equivalents	16,122	(13,209)	2,913

20. Capital management policies and procedures

The Company's capital is represented by its net assets and borrowings, which are managed to achieve the Company's investment objective, as set out on page 33. The Board, with the assistance of the Manager, monitors and reviews the broad structure of the Company's capital on an ongoing basis. The Board intends to make an amount equating to 25% of all net cash realisations from the portfolio inherited from the previous portfolio manager received between now and the 2025 AGM available to be redeployed to make share repurchases by the Company.

The Board acknowledges that it is not possible to accurately forecast such realisations between now and 2025. In order to ensure that the Company remains active in buying back its stock, the Board intends in any event to purchase shares equal to at least 5% of the Company's issued share capital in each of the calendar years 2023 and 2024.

The Company's debt and capital structure comprises the following:

	2023	2022
	£'000	£'000
Equity
Called-up share capital	8,573	9,042
Reserves	208,491	248,880
	217,064	257,922
Total debt and equity	217,064	257,922

21. Post balance sheet events

On 14 March 2024, OcuTerra Therapeutics, Inc., one of the Company's life-science investments, published study results for its lead therapeutic candidate in Phase 2 of clinical development. The results from its Phase 2 clinical trial (DR:EAM), which evaluated the safety and efficacy of its single clinical stage experimental therapeutic OTT166 (nesvategrast) in patients with diabetic retinopathy, demonstrated OTT166 to be safe and well tolerated but the study did not meet its primary efficacy endpoint. The review of the full dataset from the DR:EAM trial to evaluate the future of OTT166 is ongoing.

The Company has assessed this development and considers this to be a non-adjusting event for these financial statements. It currently estimates a negative valuation adjustment to £1.5 million, a decrease of 1.5% on the 31 December 2023 net asset value. It is anticipated that the full magnitude of the valuation adjustment will be reflected in the quarterly net asset value as of 31 March 2024.

Status of announcement

2022 Financial Information

The figures and financial information for 2022 are extracted from the published Annual Report and Accounts for the year ended 31 December 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 December 2023 and do not constitute the statutory accounts for the year. The 2023 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 web pages nor the contents of any website accessible from hyperlinks on the Company's web pages (or any other website) is incorporated into, or forms part of, this announcement.

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