TIDMSBO
RNS Number : 4448O
Schroder British Opportunities Tst.
03 October 2023
Schroder British Opportunities Trust plc
(the "Company" or "SBO")
Net Asset Value as at 30 June 2023
Schroder British Opportunities Trust plc today announces its
unaudited net asset value ("NAV") as GBP78.9 million or 106.71
pence per share as at 30 June 2023 (31 March 2023: GBP79.3 million
or 107.32 pence per share), following the quarterly valuation of
the Company's private equity holdings. The private equity
allocation of the Company's portfolio continues to perform well
with the latest private equity valuation resulting in a GBP1.7
million fair value uplift. The Company's investments in Pirum and
Cera Care were the main contributors to this increase. This
represents the tenth 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 asset
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 announcement as of 2 October 2023, which will be
published on 3 October 2023.
Portfolio
As at 30 June 2023, the Company had 33 holdings comprising 9
private and 24 public companies. During the quarter ended 30 June
2023, the Company exited its position in Keywords Studios, which is
discussed below.
Financial performance (unaudited)
Attribution Public Private Net (debt)/cash Other NAV
Analysis
(GBPm)
Value as
at 31.03.2023 26.2 47.9 7.8 (2.6) 79.3
------- -------- ---------------- ------ ------
Investments 0.6 0.2 (0.8) - -
------- -------- ---------------- ------ ------
Realisations
for cash (1.7) - 1.7 - -
------- -------- ---------------- ------ ------
Fair value
gains / (losses) (1.8) 1.7 - - (0.1)
------- -------- ---------------- ------ ------
Costs and
other movements - - (0.8) 0.5 (0.3)
------- -------- ---------------- ------ ------
Value as
at 30.06.2023 23.3 49.8 7.9 (2.1) 78.9
------- -------- ---------------- ------ ------
The above increase in fair value was not sufficient to offset
the fall in value during the quarter of the public equity
investments. The 0.5% decrease in NAV, from GBP79.3 million at 31
March 2023 to GBP78.9 million at 30 June 2023, comprised:
-- Public holdings: (2.27%)
-- Private holdings: +2.14%
-- Costs and other movements: (0.38%)
The Company's public equity holdings saw an aggregate decrease
in fair value of GBP1.8 million over the quarter ended 30 June
2023. The main detractor to performance was our holding in Watches
of Switzerland, which was driven by an earnings downgrade partly
due to higher costs incurred from its interest free credit service.
Other detractors included our position in Learning Technologies
Group, which experienced a tougher than expected macro environment
that also led to its earnings being downgraded. Meanwhile, positive
contributors included Bytes Technology and City Pub Group, which
both announced a strong set of financial results.
The Company's private equity holdings saw an aggregate fair
value increase of GBP1.7 million over the quarter ended 30 June
2023. The private equity allocation of the portfolio has increased
in value every quarter since the Company's inception. The main
contributors to the increase this quarter were the investments in
Pirum, a leading provider of post-trade automation and collateral
management technology for the global securities industry, and Cera
Care, a technology-enabled home care provider. Despite tough market
conditions, Pirum performed well, displaying strong year-on-year
growth in sales and EBITDA. Meanwhile, Cera Care benefited from
both organic and in-organic growth. In terms of detractors, the
valuation in Rapyd fell marginally over the quarter, despite its
run rate sales increasing, owing to a small contraction in its
valuation multiple, which reflected the movement in that of
comparable public companies.
Investment activity
During the period, the Company exited its position in video
games outsourcer, Keywords Studios, following concerns over the
visibility of its strategy in light of the potential disruption
from artificial intelligence. Meanwhile, periods of share price
weakness were used to increase the Company's positions in Watches
of Switzerland and GB Group.
Top 10 holdings
Holding Quoted / Fair value % of total Fair value % of total
unquoted as at investments as at investments
31 March 30 June
2023 (GBP'000) 2023 (GBP'000)
Mintec Unquoted 8,614 11.6 8,879 12.1
----------- ---------------- ------------- ---------------- -------------
Rapyd Unquoted 8,399 11.3 8,161 11.2
----------- ---------------- ------------- ---------------- -------------
Cera Unquoted 6,986 9.5 7,320 10.0
----------- ---------------- ------------- ---------------- -------------
Pirum Unquoted 6,087 8.2 7,092 9.7
----------- ---------------- ------------- ---------------- -------------
Culligan Unquoted 5,053 6.9 5,159 7.1
----------- ---------------- ------------- ---------------- -------------
EasyPark Unquoted 4,492 6.1 4,653 6.4
----------- ---------------- ------------- ---------------- -------------
CFC Unquoted 4,098 5.5 4,411 6.0
----------- ---------------- ------------- ---------------- -------------
Learning
Curve Unquoted 2,455 3.3 2,401 3.3
----------- ---------------- ------------- ---------------- -------------
City Pub Quoted 1,644 2.2 1,822 2.5
----------- ---------------- ------------- ---------------- -------------
Volution Quoted 2,012 2.7 1,767 2.4
----------- ---------------- ------------- ---------------- -------------
Outlook
Our Portfolio Managers believe that when clearer signs of a
sustained economic recovery materialise and market sentiment
substantially improves, small and mid-caps should be the first to
re-rate in response. Their analysis shows that such market
underperformance in the past by UK small and mid-caps has usually
been followed by outperformance over three- to five-year periods
relative to large cap companies in the FTSE 100. Aside from the
relative valuation opportunity with UK equities remaining unloved
relative to world markets in an historical context, in aggregate,
they are also attractive as a result of their strong balance
sheets. The valuation opportunity can also be looked at through the
lens of free cash flow yields, with the UK having a higher yield
than many other developed markets, making investing in the UK a
compelling opportunity.
In private equity markets, with financial engineering unlikely
to propel returns in the near term due to increased rates,
inflation and macroeconomic uncertainty, the Portfolio Manager
believes strategies focused on identifying companies that exhibit
strong underlying financial performance are poised to do well. This
may be achieved by the expansion of product lines, geographic
footprint, and professionalising companies to improve profit
margins, for example. This is all easier to do in small and
medium-sized companies, and typically harder to achieve at larger
companies, which have often been through several rounds of private
equity or institutional ownership. Furthermore, despite the
economic backdrop, the Portfolio Manager is seeing significant deal
flow across a breadth of opportunities. The Portfolio Manager's
private equity team has an established and formidable network in
the UK (as well as globally) with hard-to-access investment
partners, and the Board believes the Portfolio Managers are well
positioned to seek out the best opportunities for the Company going
forward.
The Company's differentiated public-private equity strategy
enables us to continue to invest without boundaries, providing
access to a broader investable universe. We believe this
differentiates Schroder British Opportunities Trust plc from other
investment trusts.
Enquiries :
Schroder Investment Management Limited
Paula Lockwood (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
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END
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