TIDMSBO
RNS Number : 5772T
Schroder British Opportunities Tst.
21 March 2023
Schroder British Opportunities Trust plc
Announcement of Net Asset Value as at 31 December 2022
Schroder British Opportunities trust plc (the "Company") today
announces its unaudited net asset value ("NAV") as GBP75.9 million
or 102.8 pence per share as at 31 December 2022, following the
quarterly valuation of the Company's private equity holdings. This
represents an increase of 2.2% based on the NAV per share as at 30
September 2022 (100.6 pence per share). The Company's daily NAV
calculation re-values the public asset holdings on a daily basis,
and the private equity holdings quarterly post period end.
This 2.2% comprised:
o Public holdings: 1.6%
o Private holdings including cash received due to the closing of
the merger between Waterlogic and Culligan: 0.9%
o Gain on share buybacks 0.1%
o Operating expenses: -0.4%
Economic backdrop
UK equities rose over the quarter, helped in part by the country
emerging from its September 'mini-budget' crisis. A new Prime
Minister and the decision by the Bank of England to reduce the pace
of interest rate hikes helped the market recover from the
mid-autumn low.
Portfolio
As at 31 December 2022, the Company had 34 holdings; 9 private
and 25 public companies. During the period, the Company exited its
positions in Euromoney and Genuit Group.
Financial performance
Attribution Analysis Public Private Cash Other NAV
(GBPm)
Value at 30.09.2022 26.3 45.5 5.1 (2.3) 74.6
------ ------- ----- ----- -----
Investments 0.6 - (0.6) - -
------ ------- ----- ----- -----
Realisations for cash (2.4) (2.4) 4.8 - -
------ ------- ----- ----- -----
Fair value gains 1.2 0.4 - - 1.6
------ ------- ----- ----- -----
Costs and other movements - - (0.3) - (0.3)
------ ------- ----- ----- -----
Value at 31.12.2022 25.7 43.5 9.0 (2.3) 75.9
------ ------- ----- ----- -----
Source: Schroders
The Company's public holdings grew in value by 4.6% (GBP1.2m).
The main contributors were Volution and Watches of Switzerland,
offset by reductions in GB Group and MaxCyte.
The Company's private holdings saw an increase in value of 0.9%
(GBP0.4m). A major contributor was Waterlogic due to the completion
of the merger between Waterlogic and Culligan International in
November, which led to the Company receiving a GBP2.4m cash
dividend. Another positive contributor was EasyPark, which had
record transaction and monthly active user volumes in Q4.
Detractors were Cera Care and Rapyd. Cera Care continues to execute
well, closing on a number of bolt-on acquisitions, however,
like-for-like revenue was marginally weaker in the quarter
resulting in a valuation write down. Rapyd continues to deliver
strong revenue growth and is well capitalised but multiple
compression in its comparator group weighed heavily on its
quarterly valuation.
Investment activity
During the period, we exited two of our public equity holdings;
Euromoney (subject to a takeover approach) and Genuit Group. We
also reduced positions in Judges Scientific and Keywords Studios,
whilst adding to existing positions in Volution and Sosandar. There
is a strong pipeline of private investments identified.
Top 10 holdings
Holding Fair value % of total Fair value % of total
as at 31 December investments as at 30 September investments
2022 (GBP'000) 2022 (GBP'000)
Rapyd 9,260 13.4 10,102 14.1
------------------ ------------ ------------------- ------------
Cera Care 7,021 10.1 8,131 11.3
------------------ ------------ ------------------- ------------
Pirum 5,568 8.0 5,568 7.8
------------------ ------------ ------------------- ------------
Waterlogic 4,579 6.6 6,973 9.7
------------------ ------------ ------------------- ------------
Mintec 4,653 6.7 4,360 6.1
------------------ ------------ ------------------- ------------
EasyPark 4,035 5.8 2,814 3.9
------------------ ------------ ------------------- ------------
CFC 3,512 5.1 2,576 3.6
------------------ ------------ ------------------- ------------
Learning Curve 2,503 3.6 2,505 3.5
------------------ ------------ ------------------- ------------
Graphcore 2,326 3.4 2,506 3.5
------------------ ------------ ------------------- ------------
Watches of Switzerland 1,919 2.8 1,574 2.2
------------------ ------------ ------------------- ------------
Source: Schroders
Outlook
The current economic environment is challenging and many company
valuations are trading close to historic lows. In a number of cases
there is a disconnect between an investment company's share price
and the value of its portfolio holdings, and that is certainly the
case here. Many of the companies in our portfolio are performing
well but the impact of the economic environment, where growth
capital is out of favour due to interest rate uncertainty, has
resulted in the Company continuing to trade at a significant
discount to NAV. In the view of the Board and the Portfolio
Managers, this discount is unjustly high.
The Company had GBP7.6 million in cash as at 15 March 2023, and
therefore is well positioned to take advantage of attractive
investment opportunities.
Our differentiated public-private equity strategy enables us to
continue to invest without boundaries, thus providing access to a
broader investable universe. We believe this differentiates
Schroder British Opportunities Trust from other investment trusts
and provides us with an advantage.
Why invest in Schroder British Opportunities Trust?
Broad opportunity set
The trust takes full advantage of its broad investment universe.
The Portfolio Managers can scour both private and public markets
for the brightest growth prospects.
Profitability
The trust focuses on quality businesses that are profitable and
exhibit strong cash flow conversion. Those that are yet to reach
that milestone have strong balance sheets and healthy cash
runways.
Unrivalled access
The team's strong network of co-investment partners in the
private equity space developed over 25 years gives it unrivalled
access to the most attractive investment opportunities. More than
175 professionals work for Schroders in private equity and venture
capital investing, and they draw on a network of more than 100
specialist European general partners and private equity managers to
source the best private equity deals [i]
Unparalleled insight
In managing the Company, the public equities and private equity
teams do not invest in isolation. They have an open and ongoing
dialogue - sharing research, insight and experience - which gives
them a full view of the landscape in which companies operate and
makes them more informed investors. The wealth of knowledge that
exists across public and private equity teams aids better
investment decision-making.
Active ownership
Engaging with company management and co-investors allows the
team to support strategic planning and promote sustainability.
Schroders has long contended that responsible business practices
enhance the long-term value of investments and benefit all
stakeholders.
Double discount
The UK public equity market is cheap relative to history and
many international markets. At the same time, the discount at which
shares in the Company trade has recently widened in line with
higher-risk strategies in its peer group, significantly
undervaluing its private equity portfolio. At such depressed
levels, new investors in the Company have the potential to achieve
a double discount.
Private Equity Valuation Process
Whilst we are acutely aware of the healthy scepticism around
valuations of private investments, particularly at a time of
falling public equity valuations, the Company benefits from a
robust fully independent valuation process drawing on a dedicated
six person valuation team embedded in a 50+ FTE operations team set
across three continents. The valuation framework benefits from a
two layer valuation oversight structure and considers best
practices from International Private Equity & Venture Capital
valuation and the American Institute of Certified Public
Accountants Valuation Guidelines. Wherever possible valuations take
account of public market comparable valuation metrics and at 31
December 2022, 7 of the nine private investments were valued by
reference to public market metrics, with 2 of the more recent
investments referencing transaction valuations. The Company's
private investments are in the small and mid-size buyout and growth
space.The Company does not invest in large buyout, turnaround, seed
or venture capital areas of the market where valuations are
inherently more difficult to assess.
Enquiries :
Schroder Investment Management Limited
Paula Lockwood (Company Secretarial)
Augustine Chipungu (PR) 020 7658 6000
Peel Hunt
Liz Yong, Luke Simpson, Huw Jeremy, Tom Pocock (Investment
Banking)
Alex Howe, Chris Bunstead, Ed Welsby, Richard Harris
(Sales) 020 7418 8900
Past performance is not a guide to future performance and may
not be repeated. The value of investments and the income from them
may go down as well as up and investors may not get back the
amounts originally invested. The securities shown above are for
illustrative purposes only and are not to be considered a
recommendation to buy or sell.
[i] Figures as at 31 December 2022
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