TIDMSBSI
Schroder BSC Social Impact Trust
30 October 2023
Schroder BSC Social Impact (SBSI)
30/10/2023
Results analysis from Kepler Trust Intelligence
Schroder BSC Social Impact (SBSI) has released its financial
results for the year ending 30/06/2023. Over the year, the trust
saw its NAV increase by 0.8% on a total return basis, which
compares to an average NAV total return of -5.8% for the AIC
Flexible sector.
The portfolio consists of investments in projects that are
designed to provide a meaningful impact on those otherwise
underserved. These are private, illiquid assets whose valuations
are affected by factors such as development milestones or revenue
changes and valued regularly. During the year, the board decided to
value the whole portfolio quarterly in future to provide more
clarity to investors, rather than semi-annually as before.
In the period, the key drivers of the NAV performance were
valuation gains in the high impact housing portfolio, and capital
and income gains in social outcomes contracts, though this was
somewhat offset from a write down in one holding. The period also
saw an increase in net revenue mostly because of higher interest
generation from floating rate loans and mature investments. This
improved revenue has led to a final dividend of 2.3p per share
versus 1.3p in 2022.
Chair Susannah Nicklin commented on the managers delivering both
NAV returns and a social impact, saying: "the social impact created
by the company's investments is needed more than ever". She also
highlighted that the "portfolio has shown resilience within a
turbulent market".
Kepler View
SBSI has shown good resilience with a stable NAV performance
which we believe demonstrates the benefits of social investment as
an asset class. The managers categorise the portfolio into
committed capital, called the high impact portfolio which are
divided into different maturities, and undrawn commitments. The
investment phase holdings contributed the most to returns in the
period, adding 1.58% to NAV, with the more mature holdings
contributing 0.17% and liquidity assets, which is capital invested
in best-in-class, liquid ESG funds in order to fund capital
commitments in future, contributing 0.16%.
The key drivers behind the performance in the period came from
the high impact housing portfolio. Two projects completed
development which meant they began producing income which has led
to valuation uplifts. A number of holdings in the social outcomes
contracts delivered a combination of both capital gains and income
for the trust. With the exception of a write-off in Skills Training
UK, the trust's holdings in the high impact portfolio contributed
positive returns in the period. This shows the performance has come
from across the portfolio, rather than any one holding driving
performance which we believe is evidence of diversification.
An increase in revenue has supported an increase in the dividend
for this year. The managers believe this improvement is sustainable
and have therefore upgraded the long-term guidance. We have
previously described the dividend as a positive, supplementary
feature of the investment case, though this change in policy could,
in our opinion, increase the attraction for potential
investors.
Despite the resilience shown, the trust has fallen to a wide
discount. The board has begun trying to narrow this with share
buybacks which we believe could be a turnaround catalyst. For
investors, this could prove a compelling entry point with the
discount around its widest level since inception.
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(END) Dow Jones Newswires
October 30, 2023 11:53 ET (15:53 GMT)
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