Schroder British Opportunities Trust plc
Net Asset Value as at 31
December 2023
Schroder British Opportunities Trust
plc (the "Company") announces its unaudited net asset value ("NAV")
as at 31 December 2023 was £82.9 million or 112.23p per share (30
September 2023: £77.3 million or 104.66p
per share), following the quarterly valuation of the Company's
private equity holdings. This represents an increase of 2.21p per
share (+2.0%) compared with the NAV reported at the quarter end,
and a +7.2% uplift for the quarter, of which +5.8% is attributable
to the Company's public equity sleeve. The private equity sleeve
also performed well with a £1.2 million fair value uplift, the 12th
consecutive quarter that the Company's private equity allocation
has seen an increase in value (net of investments and
distributions).
The Company's daily NAV calculation
re-values the public company holdings on a daily basis, and the
private equity holdings quarterly post period end. This latest
quarterly valuation of the private equity holdings will be
reflected in the daily unaudited NAV per share as of 22 March 2024,
which will be published later today.
Portfolio
As at 31 December 2023, the Company
had 30 portfolio company positions comprising 9 private and 21 public
companies.
Financial performance for the three
months ended 31 December 2023 (unaudited)
Attribution analysis (£m)
|
Public equity
|
Private equity
|
Money market funds
|
Net
(debt)/ cash
|
Other
|
NAV
|
Value as at 30.09.2023
|
21.0
|
50.4
|
7.3
|
0.8
|
(2.2)
|
77.3
|
+ Investments
|
-
|
0.3
|
3.9
|
-4.2
|
-
|
-
|
- Realisations
|
(4.5)
|
-
|
-
|
4.5
|
-
|
-
|
+/- Fair value gains /
(losses)
|
4.5
|
1.2
|
0.2
|
-
|
-
|
5.9
|
+/- Costs and other
movements
|
-
|
-
|
-
|
-
|
(0.3)
|
(0.3)
|
Value as at 31.12.2023
|
21.0
|
51.9
|
11.4
|
1.1
|
(2.5)
|
82.9
|
The Company's private equity
holdings saw an aggregate fair value gain of £1.2 million over the
quarter ended 31 December 2023; the private equity allocation of
the portfolio has increased in value every quarter since the
Company's inception. The main contributors over this quarter were
the investments in technology-enabled home care company, Cera Care,
and the global leading price reporting agency for non-exchange
traded commodities, Mintec. Cera Care announced the successful
delivery of 7.5 million home care visits over the winter period,
saving the NHS an estimated £100 million. This is 2.5 million more
than the initial 5 million visits planned last October, and was
delivered through Cera Care's AI-powered care model. At the same
time the company continued its buy and build strategy with an
acquisition in November 2023. Mintec achieved EBITDA growth during
the quarter whilst making good progress integrating
AgriBriefing.
The Company's public equity holdings
performed particularly well, with performance equivalent to the top
quartile of the IA UK Smaller Companies peer group for both the
quarter and the 12 months to 31 December 2023[1]. The public equities sleeve saw an aggregate fair
value gain of £4.5 million over the quarter ended 31 December 2023.
The main contributor was pub operator City Pub Group, which
received a take-over bid from Young & Co's Brewery. Our holding
in Ascential also did well following the announced sales of its
Digital Commerce division and its WGSN marketing business.
Detractors to performance included online
womenswear brand, Sosandar, following its announcement that its
revenues would be lower than expected due to its new focus on
reducing the level of discounting. Whilst the share price reaction
was disappointing, we support the move to a multi-channel concept
focussed on higher margin customers. Another detractor was our
holding in mortgage provider, LendInvest, which reported pressure
on its revenues resulting from sustained higher interest rates.
Whilst market conditions were challenging in 2023, the firm
de-risked its balance sheet, cut costs, and built further
relationships with financial partners - the benefits of which we
believe should be seen going forward once interest rates begin to
fall.
Investment activity
During the period the Company
realised £4.5 million of investments. The Company exited City Pub
Group following a take-over bid by Young & Co's Brewery and its
small holding in Velocys due to concerns over the latter's balance
sheet. Small follow-on investments were made in Learning Curve and
Cera Care, amounting to £0.3 million in total.
Top 10 holdings
Holding
|
Quoted/unquoted
|
30 September
2023
|
31 December
2023
|
Fair value
(£'000)
|
% of total
investments
|
Fair value
(£'000)
|
% of total
investments
|
Mintec
|
Unquoted
|
8,865
|
12.4
|
9,263
|
12.7
|
Cera
|
Unquoted
|
7,316
|
10.2
|
8,047
|
11.0
|
Rapyd
|
Unquoted
|
7,721
|
10.8
|
7,392
|
10.1
|
Pirum
|
Unquoted
|
7,166
|
10.0
|
7,193
|
9.9
|
EasyPark
|
Unquoted
|
6,245
|
8.7
|
6,238
|
8.6
|
Culligan
|
Unquoted
|
4,909
|
6.9
|
5,005
|
6.9
|
CFC
|
Unquoted
|
4,416
|
6.2
|
4,675
|
6.4
|
Learning Curve
|
Unquoted
|
1,918
|
2.7
|
2,099
|
2.9
|
Graphcore
|
Unquoted
|
1,801
|
2.5
|
1,986
|
2.7
|
Watches of Switzerland
|
Quoted
|
1,400
|
2.0
|
1,857
|
2.5
|
Note: money market funds excluded
from calculation of % of total investments
Outlook
Fundraising activity in the
small-mid cap buyout segment of the private equity market, one of
the key focus areas of our strategy, is at a 5-year low, creating
opportunities for attractive entry valuations in our deal pipeline.
Despite high interest rates, small-mid cap buyout exits have been
relatively stable when compared to 2019 levels and we expect the
easing of interest rates, forecast for later this year, to provide
a favourable backdrop for future exits. We continue to believe that
small and medium sized companies provide good investment
opportunities as they find it easier to achieve growth through
expansion of product lines or their geographic footprint and to
improve profit margins than larger companies, which have often been
through several rounds of private equity or institutional
ownership.
Interest rate cuts widely forecast
for later in 2024 are expected to benefit both the public and
private sleeves of the portfolio. As the public equity portion of
the portfolio is weighted towards the consumer discretionary
sector, which is sensitive not only to consumer confidence, but
also to interest rate sentiment, this is expected to be
particularly beneficial. Furthermore, when clearer signs of a
sustained economic recovery materialise and market sentiment
improves, we believe that both small and mid-caps and the consumer
sector should be amongst the first to re-rate. Our analysis shows
that such market underperformance in the past by UK small and
mid-cap companies has usually been followed by outperformance over
three to five-year periods relative to companies in the FTSE
100.
The Company's differentiated
public-private equity strategy enables us to invest without
boundaries, providing access to a broad investable universe.
British companies are trading on higher free cash flow yields than
those available in many other developed markets, making investing
in the UK a compelling investment opportunity. The Board is
confident that the Schroder British Opportunities Trust investor
will be well rewarded.
[1] Source:
Schroders, Morningstar, Aladdin. Rankings are based on the
performance of the public equity portion of the Company (excluding
cash). The IA UK Smaller Companies peer group median average
ongoing charge (0.90%) was applied to the Company's public equity
gross performance and compared against the IA UK Smaller Companies
peer group (net of fees).
Enquiries:
Schroder Investment Management Limited
Katherine Fyfe (Company
Secretarial)
Augustine Chipungu (PR)
|
020 7658 6000
|
Peel Hunt
Liz Yong, Luke Simpson, Huw
Jeremy (Investment Banking)
Alex Howe, Chris Bunstead, Ed
Welsby, Richard Harris (Sales)
|
020 7418 8900
|
|
|