11 July 2024
SCHRODER BRITISH
OPPORTUNITITES TRUST PLC
("the
"Company")
ANNUAL FINANCIAL RESULTS FOR
THE YEAR ENDED 31 MARCH 2024
Schroder
British Opportunities Trust plc announces its financial results for
the year ended 31 March 2024.
· NAV
per share increased 2.5% from 107.32p to 110.05p during the year
under review. This follows an increase in the previous year of 3.1%
and 12.3% since inception.
· Over
the past 12 months, positive NAV growth has been driven by fair
value gains in the private equity (unquoted) portfolio which
has continued to perform well. The Company has benefited from its
focus on the growth capital and buyout areas of the market, rather
than early stage or pre-IPO.
· The
Company's public equity holdings detracted from performance despite
being helped by a take-over bid for City Pub Group by Young &
Co's Brewery.
· The
discount to NAV narrowed during the year under review from 36.2% to
27.8%.
· A core
focus of our portfolio companies has been executing business
transformation through robust organic growth and acquisitions. 7
out of the 9 private equity holdings are in line or exceeding
performance expectations.
· Justin
Ward and Jemma Bruton have joined the Board as independent
non-executive Directors. Justin Ward will replace Neil England as
Chairman after the AGM on 18 September 2024, following a handover
period.
Investor Presentation
The Company's Investment Managers
are hosting an annual results presentation for investors on
Tuesday, 16 July 2024 at 09.00 a.m. Investors can register for the
event at: https://www.schroders.events/SBO24.
Neil England, Chairman of Schroder
British Opportunities Trust plc commented:
"The current portfolio of innovative, predominantly UK
companies are growing strongly, the majority in line or ahead of
expectations. The patient investor that can look beyond the recent
market environment should be well rewarded".
The Company's Report and Accounts
for the year ended 31 March 2024 are also being published in hard
copy format and an electronic copy will shortly be available to
download from the Company's website
www.schroders.com/sbot.
Enquiries:
Katherine Fyfe
Schroder Investment Management
Limited
|
020 7658 6000
|
Andy Pearce
Schroder Investment Management
Limited
|
020 7658 6000
|
Annual Report and Financial Statements for the year ended 31
March 2024
Performance Summary
Net
asset value ("NAV") per share return
2.5%
Year ended 31 March 2023:
3.1%
Share price return
16.1%
Year ended 31 March 2023:
-18.5%
Share price discount to NAV per share*
27.8%
Year ended 31 March 2023:
36.2%
Shares in issue
73,900,000
Year ended 31 March 2023:
73,900,000
Ongoing charges ratio*
1.40%
Year ended 31 March 2023:
1.47%
Share price
79.50p
Year ended 31 March 2023:
68.50p
Net
Cash*^
11,585,000
Year ended 31 March 2023:
7,759,000
^Includes
investment in liquidity fund.
Some of the financial measures are
classified as Alternative Performance Measures ("APMs"), as defined
by the European Securities and Markets Authority and are indicated
with an asterisk (*). Definitions of these performance measures,
and other terms used in this report, are given on pages 80 and 81
together with supporting calculations, where
appropriate.
Investment objective
Schroder British Opportunities Trust
plc (the "Company") seeks to deliver long-term total returns
throughout the life of the Company by investing in a diversified
public equity and private equity portfolio of predominantly UK
companies.
Investment policy
The Company will invest in a
diversified portfolio of both public equity investments and private
equity investments consisting predominantly of UK Companies with
strong long-term growth prospects. It is anticipated that the
Company's portfolio will typically consist of 30 to 50 holdings and
will target companies with an equity value between approximately
£50 million and £2 billion at the time of initial investment. The
Company will focus on companies which the Portfolio Managers
consider to be sustainable from an environmental, social and
governance perspective, supporting at least one of the goals and/or
sub-goals of the United Nations' Sustainable Development Goals
("SDGs"), or which the Portfolio Manager considers would benefit
from their support in helping them incorporate SDGs into their
business planning and/or in reporting their alignment with SDGs.
The Company may, from time to time, use borrowings for investment
and efficient portfolio management purposes. Gearing will not
exceed 10% of Net Asset Value, calculated at the time of drawdown
of the relevant borrowing.
Why invest in the
Company?
l A best of British
portfolio
With high corporate governance standards and an
entrepreneurial heritage, there are a wealth of innovative
opportunities among British businesses, which can offer strong
long-term growth potential.
l Highly experienced
managers
Combining Schroder's public equity and private equity
investment expertise in a uniquely compelling investment
proposition.
l A broader UK opportunity
set
Taking full advantage of both public and private equity
markets means access to an enhanced UK investment universe of high
quality, high growth companies, maximising the opportunity for
value creation.
Chairman's Statement
"The current portfolio of innovative, predominantly UK
companies are growing strongly, the majority in line or ahead of
expectations. The patient investor that can look beyond the recent
market environment should be well rewarded."
I am pleased to present your
Company's fourth annual report and financial statements since the
launch of the Company in 2020. This report covers the year ended 31
March 2024.
Investment strategy
Your Company invests in a
diversified mix of public and private companies, either based in
the UK or generating a significant proportion of their revenue in
the UK. We seek to invest in companies with potential for high
growth. Our objective is to deliver long-term and sustainable
capital growth for shareholders. We are not venture investors. We
focus on the growth and later stage buyout sector where earnings
are more predictable but strong growth is still
available.
On 28 November 2023, the FCA
published its final policy statement (PS23/16) on Sustainability
Disclosure Requirements and investment labels and, as a result, the
Board is reviewing both the Company's investment policy and the disclosures it makes in its
reporting.
Market
The UK equity market, and investment
companies in particular, remains largely out of favour with
investors and UK pension funds. Growth companies who require cash
to fuel that growth saw their ratings suffer as interest rates
increased and that has sustained in many cases, despite forecasts
of lower rates as UK inflation falls back into a lower and more
normal range. The market appears not to discriminate effectively
between companies that need cash and those that don't. The majority
of the companies in your Company's private portfolio are already
profitable with positive operating cash flows or are funded through
to that point.
Many commentators predict a market
recovery but differ in their opinion on the likely timing of this.
Macro-economic factors such as the Federal Reserve's approach to
managing the US economy, where growth is stronger than Europe and
there is less reason to reduce rates, and the conflicts in Europe
and the Middle East, may well be influential.
Performance
I am pleased to report that your
Company's NAV per share increased 2.5% from 107.32p to 110.05p
during the year under review. This follows an increase in the
previous year of 3.1% and 12.3% since inception. This steady growth
is despite portfolio valuations being affected by market sentiment
towards growth companies and, in the case of the private portfolio,
lower multiples in the comparator groups used.
Private portfolio
The Company's private equity
portfolio has continued to perform well, in part due to our focus
on growth capital and buyout areas of the market in contrast to
venture capital and pre-IPO areas, which have been more negatively
impacted by rising inflation and interest rates. Of the Company's
portfolio of nine private businesses as at 31 March 2024, seven are
exceeding or in line with performance expectations. In aggregate,
the companies are demonstrating strong sales growth (24% LTM sale
growth) 1 and robust margins (46% EBITDA margin)
2, whilst being valued at a discount to public
comparables.
The private portfolio represented
65% of the Company's NAV as at 31 March 2024 and produced a
fair value gain of 6.3% over the year.
1Weighted average sales growth of all of the Company's private
equity portfolio companies (except Graphcore) for the last twelve
months (LTM).
2Weighted average EBITDA (earnings before interest, taxes,
depreciation and amortizatio) margin of all of the Company's
private equity portfolio companies valued on an EBITDA basis (CFC,
Culligan, Learning Curve, Mintec and Pirum).
Public portfolio
Unfortunately the Company's public
equity holdings detracted from performance despite being
helped by a take-over bid for City Pub
Group by Young & Co's Brewery, which represents the sixth
quoted portfolio company to be bid for since the Company's
inception. Not only does this endorse the strength and potential of
some of our portfolio holdings but it also demonstrates external
interest in growing UK companies.
The public portfolio represented
23.9% of the Company's NAV as at 31 March 2024 and produced a fair value loss of 2.3% over the
year.
Further comment on performance and
investment activity can be found in the Investment Managers'
Review.
Valuations
Your Board considers its governance
role in the valuations process to be of utmost importance.
Public investments are valued at the prevailing market price and
the private portfolio is subject to a valuations process led
by independent non-executive Director Professor Tim Jenkinson, an
acknowledged expert of private equities valuation metrics. Your
Board understands that shareholders are often sceptical of private
equity valuations when they can't be readily verified. The Company
is fortunate to have a specialist valuations team within Schroders,
which is independent of the Investment Managers, and who report
their findings directly to the Board. The results reported reflect
their in-depth analysis and a discursive and challenging valuations
process. In all cases, public market comparables are
used.
Discount management
The discount to NAV narrowed during
the year under review from 36.2% to 27.8%. Given your Board's
confidence in the valuations process, there is little logic to this
discount applying to your Company other than to cite market
sentiment to private equity investment companies generally. It
certainly does not reflect the aggregate operational performance of
the Company's unquoted holdings since inception.
Buy-backs are one of several
mechanisms your Board actively considers to reduce this discount.
The use of cash reserves is a matter of regular review. We aim
to balance the benefits of highly accretive buy-backs when
discounts are high against ensuring that we hold appropriate
reserves to fund potential follow-on investments in the private
portfolio and capture the best of the new investment opportunities
that we continue to see. Given the current pipeline, particularly
from companies that want to stay private for longer and taking into
consideration the current size of the Company, we have chosen not
to buy back throughout the year.
Company size
Your Company successfully launched
in 2020 when the IPO market was very challenging. Indeed, two other
investment company IPOs were withdrawn from the market shortly
before the Company was launched. This impacted the amount raised
and your Board is considering several options to increase the size
of the Company to increase its appeal to wealth managers and
to improve its liquidity.
Dividend
No dividend has been declared or
recommended for the year. Your Company is focused on providing
capital growth and has a policy to only pay dividends to the extent
that it is necessary to maintain the Company's investment trust
status.
Board
There have been no changes to the
Board during the year. For cost reasons, we have operated with just
three Directors since losing Christopher Keljik last year, but
this was not optimal. Additionally, I have decided to retire
and will not be offering myself for re-election at
the forthcoming AGM. We have therefore recently completed an
extensive recruitment process using a specialist Board recruitment
firm to bring Board strength back to four following my
retirement.
I am pleased to welcome Justin Ward
and Jemma Bruton to the Board as independent non-executive
Directors. Justin will replace me as Chairman after the AGM on 18
September 2024, following a handover period.
Justin is a Director and active
investment professional with extensive private equity experience.
He is currently a non-executive Director and Committee Chairman at
Hargreave Hale AIM VCT and at The Income & Growth VCT;
following a career at CVC Capital Partners and as
a partner at Hermes Private Equity and Bridgepoint Development
Capital.
Jemma is currently co-managing
director of Salica Investments Advisory LLP (formerly Hambro Perks
Advisory LLP) and formerly an executive Director at Goldman Sachs.
She also has extensive experience in the private equity segments
targeted by our Company.
It has been my pleasure to Chair
your Company since its IPO in 2020 and I extend my grateful thanks
to shareholders for their support and to my Board colleagues for
their diligence and hard work, particularly over the period where
we were such a small team.
Biographical details for each of the
Directors can be found on pages 34 and 35.
Presentation from the Investment
Managers
The Investment Managers will be
presenting at a webinar on Tuesday, 16 July 2024 from 09:00am -
10:00am to provide some insight into their decision making and the
current portfolio. Shareholders are encouraged to register for the
event at: https://www.schroders.com/sbot.
Regular news about the Company can
be found on the Company's website: https://www.schroders.com/sbot.
Annual General Meeting
("AGM")
The AGM will be held on Wednesday,
18 September 2024 at 1.00pm at 1 London Wall Place, London EC2Y
5AU.
Your Board welcomes shareholders'
comments and questions for it or for the Investment Managers. A
short presentation will be given by the investment management team
at the AGM. Please contact us via our Company Secretary's email:
amcompanysecretary@schroders.com or, if you prefer to write in, to:
The Company Secretary, Schroder British Opportunities Trust plc, at
the above address.
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 Chairman of the meeting as their proxy. Information on
voting can be found in the Notice of Annual General Meeting on page
77. The Directors consider that all of the resolutions listed are
in the best interests of the Company and its shareholders and
therefore recommend a vote in favour of each, as the Directors
intend to do in respect of their own holdings.
Outlook
The current economic environment
continues to be challenging with many company valuations trading at
close to historic lows. The UK stock market represents one of the
cheapest equity markets in the world and the UK mid-cap sector
looks particularly attractive. Interest rates remain stubbornly
high for now but UK inflation numbers are better which suggests a
more positive medium-term outlook for growth companies. Your Board
and the Investment Managers view the Company's current discount as
unjustly high and at some point we expect this to start to close.
The Bank of England may well provide the trigger for this event in
the coming months.
The Schroders Capital team has an
extensive general partner ("GP") network providing an unrivalled
access to a range of private company investments. Your Company
offers the public market investor a unique opportunity to gain
exposure to these companies during their growth phase.
As at year end, the total for the Company's cash
and liquidity fund investment was £11.6 million. This financial
position enables the Company to be well positioned to take
advantage of opportunities in the pipeline.
The number of companies listed on the London stock exchange has
steadily fallen in recent years as an increasing number of
businesses have been taken private or have sought private equity
finance in preference to a UK listing. The Company has full access
to the rich universe of UK public and private investment
opportunities and is not limited to the shrinking investment pool
faced by investment companies focusing solely on UK listed
companies.
The current portfolio of innovative,
predominantly UK companies are growing strongly, the majority in
line or ahead of expectations. The patient investor that can look
beyond the recent market environment should be well
rewarded.
Neil England
Chairman
10 July 2024
Investment Managers'
Review
Summary
Market
In the summer months of 2023, the US
Federal Reserve and the Bank of England both concluded their
interest rate hiking cycles. Since then, central banks have
maintained a tight monetary policy without the need for further
interest rate increases. This is due to easing inflationary
pressures, with goods and energy prices moderating while services
and wage inflation have remained relatively stable. However,
initial expectations of early and significant interest rate cuts in
2024 have been pushed further into the future and are expected to
be more modest in scale.
After exceeding expectations of weak
economic growth in the first half of 2023, the UK economy
experienced a slowdown in the second half, entering a shallow
recession with two consecutive quarters of economic contraction.
However, recent data for the early months of 2024 suggests a return
to economic growth, indicating that the recession may be relatively
short-lived. While forecasts anticipate improved UK economic
activity, the level of growth is expected to remain modest.
Furthermore, UK inflation moderated in the second half of the year,
aligning the country more closely with other developed
markets.
While the Company's private equity
portfolio has continued to perform well in aggregate, private
equity markets have not been immune to economic headwinds over the
past year. As a reminder, our focus is on the small to mid-market
area of the UK private equity landscape, and we hope the
following provides useful insight into recent activity to
contextualise the period under review. According to KPMG's UK
mid-market PE snapshot for 2023, deal volumes in this area declined
by 10%, with only 675 transactions completed in 2023, compared to
the 748 completed in 2022. However, the UK private equity market as
a whole saw a greater decline of nearly 20%, with total deals
falling from 1,802 in 2022 to 1,451 in 2023. Additionally, UK
mid-market exit volumes remained depressed, with 2023's 181 exits
representing the lowest annual amount for six years. However,
2024 has already brought some optimism, with stabilised rates and
tamed inflation bringing increased certainty, giving dealmakers
more reason to increase activities.
Portfolio performance
Since the Company's IPO in December
2020, the NAV has been resilient despite a volatile market
backdrop. The portfolio's combined exposure to both public and
private equity markets has provided NAV stability since inception.
Over the past 12 months, positive NAV growth has been driven by
fair value gains in the portfolio's private equity (unquoted)
allocation, which is illustrated below.
Attribution analysis (£m) for 12
months to 31 March 2024
|
|
|
Money
|
|
|
|
|
Quoted
|
Unquoted
|
Market
Funds
|
Net cash
|
Other
|
NAV
|
Value as at 31 March 2023
|
26.2
|
47.9
|
0.0
|
7.8
|
(2.6)
|
79.3
|
+ Investments
|
1.1
|
2.0
|
11.6
|
(14.7)
|
-
|
0.0
|
- Realisations at value
|
(7.3)
|
0.0
|
(1.1)
|
8.4
|
-
|
0.0
|
+/- Fair value
(losses)/gains
|
(0.6)
|
3.0
|
0.3
|
-
|
-
|
2.7
|
+/- Costs and other
movements
|
-
|
-
|
-
|
(0.7)
|
0.0
|
(0.7)
|
Value as at 31 March 2024
|
19.4
|
52.9
|
10.8
|
0.8
|
(2.6)
|
81.3
|
Key positive and negative performers
over the 12 months to 31 March 2024
Top
5 contributors
|
Contribution
%
|
|
Bottom 5 contributors
|
Contribution
%
|
EasyPark
|
2.0
|
|
Learning Curve
|
-1.9
|
Cera
|
1.2
|
|
Rapyd
|
-1.9
|
Culligan
|
1.2
|
|
Watches of Switzerland
|
-1.5
|
Mintec
|
1.2
|
|
Sosandar
|
-0.6
|
City Pub Group
|
1.2
|
|
Learning Technologies
|
-0.5
|
The net asset value increased 2.5%
from £79.3 million to £81.3 million over the period, which
comprised:
• Quoted
holdings: -0.8%
• Unquoted
holdings: 3.8%
• Money
Market Funds 0.4%
• Costs and
other movements: -0.9%
Private equity holdings
The portfolio's private equity
(unquoted) holdings have continued to perform well in aggregate,
with 7 out of the 9 private equity holdings exceeding or in line
with performance expectations. We believe that the Company's
private equity focus on the 'growth capital' and 'buyout' areas of
the private equity landscape, in contrast to venture capital and
pre-IPO areas, which have been more negatively impacted by rising
inflation and interest rates, have contributed to the resilience of
the NAV. Looking closer at the past 12 months, trading gains and
transactional activity (company events, such as add-on transactions
and financing rounds) at the portfolio companies have driven gains,
despite noticeable valuation multiple contraction that demonstrates
the prudence of the valuation approach applied.
Private equity allocation
attribution - 12 months to 31 March 2024
Trading gains and transaction
activity have driven performance
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.
Source: Schroders Capital,
2024.
The portfolio's private equity
companies (excluding Graphcore) have seen >1.3x greater sales
growth than publicly listed comparable companies, delivering 24%
sales growth vs 18% for public comparables over the past 12 months.
At the same time, the portfolio's private equity companies valued
on an EBITDA basis are demonstrating stronger profitability from
operations than public comparables (46% vs 22%). Despite these
favourable metrics, these portfolio companies are being valued at a
discount to public comparators, as illustrated below.
Strong sales growth with strong
profitability from operations…
…while valued at a discount to
public comparables
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.
Source: Schroders Capital, using
latest available data as at 31 March 2024.
1For all SBO private equity portfolio companies, except
Graphcore, and their relevant peer group sector-specific public
comparables.
2For SBO private equity portfolio companies valued on an EBITDA
basis (CFC, Culligan, Learning Curve, Mintec and Pirum) and their
relevant peer group sector-specific public comparables. EBITDA
margin is a measure of a company's operating profit as a percentage
of its revenue.
3For SBO private equity portfolio companies valued on an EBITDA
basis (CFC, Culligan, Learning Curve, Mintec and Pirum) and their
relevant peer group sector-specific public comparables. EV/EBITDA =
Enterprise Value/Earnings Before Interest, Tax, Depreciation, and
Amortisation. EBITDA is a measure of core corporate profitability.
EV/EBITDA is a valuation metric used to compare relative value of
different businesses.
Turning to individual private equity
portfolio companies, the most significant contributor over the year
was parking tech company, EasyPark, which has continued
its impressive global growth strategy focused on acquisitions,
strategic partnerships and organic growth. One considerable
milestone was EasyPark's announcement of its intention to acquire
Flowbird Group, a deal that will be highly complementary to its
existing business, while extending the group's global
reach.
Digital-first healthcare-at-home
company, Cera, has continued to make
substantial progress over the past year. The company completed the
successful delivery of 7.5 million home care visits over the 2023
winter period. This was underpinned by Cera's AI-powered care
model, in which patient symptoms and health data are used to
predict deterioration of patient condition 30 times quicker than
typical methods, enabling Cera to deliver more effective care in
the home and reduce hospitalisation rates by up to 70%, alleviating
further burden on already-overstretched
NHS services.
Another important contributor was
hydration solutions business, Culligan. Culligan's vision is
to create a global player in water and, in combination with
Waterlogic, is present globally
across point-of-use water coolers, bottle water coolers,
conditioning and filters, supported by a sophisticated suite
of technology. The company is focused on driving organic growth in
household and commercial sectors globally through investment in
strong premium branding, leveraging experience and expertise across
the group, while expanding retail channels to drive penetration in
homes. As most transformative acquisitions have now been completed,
the ongoing buy and build strategy will be focused on
accretive add ons to strengthen market position.
Independent provider of global
commodity price data and market intelligence, Mintec, has focused on the development
of technological capabilities with regards to forecasting. This
includes more than 500 new price forecasts for commodities, which
will enable their clients to better understand future prices and
inform their buying and investment decisions. Additionally, the
company has released version 4.5 of Mintec Analytics, which
includes cost model forecasts. In addition to technological
capabilities, the company has progressed with new hires, including
the appointment of a Chief Product Officer and Chief Revenue
Officer, which will strengthen product innovation and
growth.
On the more challenging side, the
valuations for both holdings in Learning Curve
and Rapyd
have come down over the past year. The valuation
of private UK training and education specialist, Learning Curve
Group, was reduced due to some short-term demand weakness. We
believe the longer-term outlook remains positive. Meanwhile, Rapyd
continues to grow its customer base, principally fuelled by its
small and medium-sized customers, while in July 2023,
it announced the acquisition of a substantial part of PayU
Global Payment Organisation, enabling further global expansion
across Central and Eastern Europe and Latin America. While the
company continues to perform, the investment landscape in the
payments sector remains challenging, with comparable listed
businesses amending their long-term growth outlooks. As a result,
the valuation multiple applied as at 31 March 2024 has been
reduced, offsetting the company's positive financial performance,
leading to a reduction in valuation over the period.
Public equity (quoted)
holdings
Performance was held back by a
disappointing calendar Q1 2024 thanks to a combination of extended
rate expectations and some stock specific events. Regarding the
former, short-term volatility is expected due to the portfolio's
concentration in economically/rate sensitive parts of the market,
such as consumer discretionary, industrial, and technology
sectors.
Looking closer at the performers
over the past 12 months, City Pub Group
was a standout contributor, as shares were boosted
after the company received a take-over bid from Young & Co's
Brewery. This represents the sixth quoted portfolio company to be
bid for since the Company's inception. Not only does this endorse
the strength and potential of some of our portfolio holdings but it
also demonstrates external interest in growing UK companies.
Meanwhile, shares of value-added reseller Bytes
Technology, online review
platform Trustpilot and train and coach
app Trainline did well, following
strong financial results.
Detractors to performance
included Watches of Switzerland, whose
shares were initially impacted by the news of Rolex's acquisition
of luxury watch retailer Bucherer and then by a profit warning in
early 2024. We continue to monitor the investment closely.
Meanwhile, shares in women's fashion brand Sosandar
fell after the company announced that revenues
would be lower than expected due to its new focus on reducing the
level of discounting of its products. While the share price
reaction was disappointing, we support the move to a multi-channel
concept focussed on higher margin customers.
Portfolio diversification
While having notable exposure to
software, the portfolio is well-diversified across a number of
growing industry sectors.
Portfolio breakdown by industry as %
of total equity investments (as at 31 March 2024)
Portfolio changes
Over the year, we continued to scour
both private and public markets for the brightest growth prospects,
focusing on small and mid-sized companies.
Private equity activity
A core focus of our portfolio
companies has been executing business transformation through robust
organic growth and acquisitions. To this end, we made a £1.0
million follow-on investment in CFC
to help support the acquisition of Solution
Underwriting (an Australian managing general agent) and aid
continued organic growth efforts, including product innovation. We
also made a £0.7 million follow-on in Learning Curve to bolster its balance
sheet.
Public equity activity
We exited our small holding
in Velocys in
September due to concerns over its balance sheet. As mentioned
earlier, we also sold our position in City Pub Group in October
following its bid by competitor Young & Co's Brewery
Plc.
Post period end
In June 2024, we announced a new
private equity investment in HeadFirst, an international HR tech
service provider, operating in 15 European countries. This
represents the tenth private equity investment made by the Company
since inception. The capital invested will be used to finance
HeadFirst's acquisition of managed services and specialist staffing
provider Impellam Group (previously UK AIM listed), to create
a world leader in workforce solutions for STEM (science,
technology, engineering, and mathematics) talent. The Company
gained exposure to HeadFirst via Schroders' long-standing
investment partner IceLake. We are pleased to be investing at this
important development milestone for HeadFirst as we believe the
combined business has the potential for significant growth over the
coming years.
Outlook
Expectations of the timing of Bank
of England interest rates have been pushed further out, which has
likely contributed to the underperformance of listed UK small and
mid-caps relative to large caps so far in 2024. This is important
to note as the Company's public equity portfolio is focused in this
area of the UK market while also having notable exposure to the
consumer discretionary sector, which is sensitive not only to
interest rate sentiment but also consumer confidence. However, we
believe that when clearer signs of a sustained economic recovery
materialise and market sentiment substantially improves, both small
and mid-caps, and the consumer sectors of the market, should be
amongst the first areas of the UK market to re-rate. Additionally,
we believe that the UK Chancellor's recent Spring Budget and the
announcement of the creation of a tax-free British ISA, represents
a positive development and could help to narrow the discount at
which UK listed companies trade in aggregate.
Aside from the relative valuation
opportunity, with UK equities remaining unloved relative to world
markets in an historical context, they are also attractive due to
their strong balance sheets in aggregate. 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
(illustrated below).
UK attractively valued versus other
developed markets
FY2 Free Cash Flow Yield
Source: Schroders, Fact set. FY2
Free Cash Flow Yield of the FTSE All-Share Index and MSCI All
Country World Index as at 31 March 2024.
As reported in last year's annual
report and financial statements, our analysis shows that 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 Index:
UK small cap performance vs. FTSE
100
Buying on weakness had given the
best long-term returns
Source: Schroders, returns are shown
for the Numis Small Cap plus AIM ex IT index vs FTSE 100 index.
Based on rolling 12-month performance from 31 March 1991 to 31
March 2024.
Our public equity holdings could be
well poised to take advantage of the subsequent outperformance
observed in the past. Furthermore, with these holdings valued at a
27% discount to their 5-year historic averages, as measured by
their forward price to earnings, they are also attractively valued
on a relative basis (illustrated below).
SBO's public equity valuations, 31
March 2024
Forward Price to Earnings (P/E) of
SBO public equity sleeve vs historic average
Source: Schroders, LSEG Workspace.
Analysis reflects 17 of the 22 public equity holdings that have a
positive P/E ratio. 'Historic average' means either 5 years or the
duration the stock has been a listed company, if
shorter.
In terms of market activity, we are
currently witnessing small-cap companies being acquired for large
premiums, with some of those premiums perhaps undervaluing a
company's long-term grown prospects. Meanwhile, the demand for
regional equities has been waning and UK small-cap chief executives
have grown frustrated with their depressed share prices, leading to
an increase in share buy-backs. As Investment Managers, we
encourage these actions, particularly when rates remain elevated,
and the market appears to respond positively to such behaviours. We
also believe that a significant aspect of the issue lies in
perception, where there may be some simplistic views regarding the
UK equity market or UK capital markets as a whole that tend to
dominate the conversation. It is worth noting that the UK is home
to a diverse range of over 1000 listed companies. However, it is
often the top 10 or 20 companies that receive the most attention
and heavily influence the commentary on the market as a
whole.
In private equity markets, with
financial engineering unlikely to propel returns in the near term
due to increased interest rates, inflation and macroeconomic
uncertainty, we continue to believe that 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. An example from the portfolio is Mintec, a highly
profitable software price reporting agency business. In recent
years, acquisitions (e.g. AgriBriefing) have significantly expanded
Mintec's profits while accelerating international growth prospects.
Meanwhile, recent additional C-suite hires have further
strengthened the company's senior workforce.
Despite the economic backdrop, we
are seeing significant deal flow across a breadth of opportunities.
We have established a formidable network in the UK (as well as
globally) with hard-to-access investment partners, and strongly
believe we are well positioned to seek out the best opportunities
for the Company going forward. We believe the recently announced
investment in HeadFirst, alongside our long-standing investment
partner IceLake Capital, is a good example of this.
The Company's differentiated
public-private equity strategy enables us to continue to invest
without boundaries, providing access to a broader investable
universe which differentiates us from other investment
trusts.
Schroder Investment Management
Limited
10 July 2024
Investment Approach and
Process
Investment approach
The Company was launched in December
2020 to invest, initially, in companies impacted by the Covid-19
pandemic. The focus was on investing in (i) high growth UK
companies looking to maximise their potential as well as in (ii)
mispriced growth opportunities where equity was required to return
businesses to their previous growth trajectory following the
disruption caused by the pandemic. Although the impact of Covid-19
is substantially diminished, there continues to be no shortage of
British companies which fit into the categories of high or
mispriced growth investment opportunities and the Company's
business model continues to be appropriate. The Company combines
Schroders' extensive public and private equity investment
experience to access UK company growth across the life cycle,
focusing on small and medium-sized businesses. The Company is
philosophically ownership-agnostic in the sense that its strategy
is to invest in both public and private companies. Furthermore, the
Company believes that investors are best served by an offering that
considers a comprehensive UK equity universe, as publicly
listed small and mid-caps only represent a fraction of company
growth in the UK economy.
The Company's portfolio has been
constructed from the bottom up, with investments focused on
quality, growing and predominantly profitable companies, that have
strong balance sheets and that can sustainably compound their
earnings over the long run. Typically, these businesses will
exhibit considerable pricing power (which is particularly
beneficial in times of higher inflation), strong management teams,
and will already be delivering strong revenue growth. Where
portfolio companies have not yet reached profitability, the
investment team seek out companies that are well-funded and possess
a clear route towards profitability.
Given the high-growth nature of the
opportunities targeted, the portfolio will have notable exposure to
software and IT services areas of the market. However, the
portfolio is well-diversified to include other sectors, such as
consumer services, healthcare, leisure and financial
services.
The Investment Managers place a high
priority on the price paid as a crucial factor in determining
long-term investment returns. To ensure they do not overpay for
growth opportunities, they maintain discipline in the valuation
process. The portfolio focuses on high-growth names that have
robust business models and are well-positioned to benefit from
secular tailwinds. These companies are expected to be either at or
near profitability and exhibit strong growth characteristics, such
as increasing customer numbers or expanding market
share.
The team is also aware that market
inefficiencies often result in significant disparities between
underlying public equity company fundamentals and market estimates,
which is referred to as the 'growth gap'. Consequently, the team
actively seeks opportunities to exploit this growth gap. They
believe that markets tend to overlook future prospects, rely too
heavily on extrapolating historical growth trends, and overreact to
short-term news. When evaluating potential investments, the team
looks for companies that demonstrate a positive growth gap compared
to consensus estimates, along with catalysts that could lead to a
re-rating of the shares, strong valuation support, attractive
risk-reward profiles, and good governance.
In terms of the portfolio's
investment strategy, the team aims to invest in UK small and
medium-sized businesses with a market capitalisation range between
£50 million and £2 billion. These companies have the potential to
provide primary capital to support growth. Leveraging Schroders'
extensive research capabilities and long track record in listed
equities, particularly in the small and mid-cap space, the Company
is well-positioned to identify and capitalise on these
opportunities.
In terms of the portfolio's private
equity allocation, the investment team focuses on direct and
co-investment opportunities that span the growth capital and
small/mid-market buyout areas, where it believes numerous companies
exist with considerable transformation potential, while avoiding
areas that the team believe pose heightened valuation risk (see
figure below). The Company's private equity allocation leverages
Schroders Capital's more than 25 years' experience in private
equity investing and 100+ specialist General Partner relationships
to create strong deal flow for high selectivity of direct and
co-investments. Schroders Capital has c.£14 billion of private
equity assets under management (as at 31 December 2023) and
was awarded "Co-investor of the Year" at the RealDeals Private
Equity Awards 2023.
The Company does not invest in
venture, large/mega buyout or turnaround companies as it believes
such companies involve too much risk; in particular, late-stage
venture and large/mega buyout companies have experienced the
greatest volatility. One example was the increase in late-stage
venture valuations in the dotcom boom which was followed by a
significant drop (or bust) in 2003. A further example was seen in
large/mega buyouts between 2006 and 2010, where an increase in
valuations prior to the global financial crisis of 2008 was
followed by a significant drop.
Source: Schroders. *Where we denote
valuation risk as the risk around the perceived value of an
underlying asset whereas investment risk encompasses a broader set
of risks beyond valuation including but not limited to factors such
as market dynamics, economic conditions and industry specific
risks.
The Company's private equity
allocation by stage:
Source: Schroders.
Investment process
The Company's portfolio is managed
by the Investment Managers, who employ a collaborative, team-based
approach, creating a combination of Schroders' public and private
equity capabilities with oversight in place. The Company believes
that it is appropriate for the Portfolio Managers to separate the
investment process between private and public equity investments to
reflect the clear differences in executing individual investments
in the private versus public equity markets. However, portfolio
construction and first-line risk management are the joint
responsibility of the private equity and public equity investment
teams within the Investment Managers, alongside the Alternative
Investment Fund Manager, who has responsibility for the risk
management of the Company, delegated from the Board.
Private equity investment
process
The private equity investment
process is illustrated below.
The investment team believes that
high-quality deal sourcing is fundamental to long-term success and
spends considerable time on this activity by working closely with
its extensive network of specialist GP relationships. Sourcing
efforts are further enhanced by technology, including advanced
proprietary tools, internal databases and third-party information
services. An assessment of whether the investment opportunity meets
the key criteria for inclusion in the Company is undertaken early
to ensure a proposal is suitable and conforms to the investment
policy and objectives.
The comprehensive due-diligence
process undertaken will include an assessment of the following for
a particular company:
Public equity investment
process
The Investment Managers select
public equity stocks for the Company based principally on ideas
generated by Schroders' in-house research capability, but also by
making selective use of Schroders' network of contacts, and of
sell-side research.
The Investment Managers conduct an
initial screen to narrow down the universe into high-growth names
that have robust business models and are well-positioned to benefit
from secular tailwinds. These companies are expected to be either
at or near profitability and exhibit strong growth characteristics,
such as increasing customer numbers or expanding market share. The
universe is typically characterised by small and medium-sized
businesses with a market capitalisation range between £50 million
and £2 billion.
The management team actively seeks
opportunities to exploit the 'growth gap' created by market
inefficiencies that create significant disparities between
underlying company fundamentals and market estimates. Inefficient
markets tend to overlook future prospects, rely too heavily on
extrapolating historical growth trends, and overreact to short-term
news. This allows the team to invest in companies that demonstrate
a positive growth gap along with catalysts that could lead to a
re-rating of the shares, strong valuation support, attractive
risk-reward profiles, and good governance.
The public equity stock selection
process is outlined in the image below.
Source: Schroders. 1UK
listed and/or UK domiciled companies. The 'company earnings' line
in the graph represents the investment team's forecast (as opposed
to the consensus estimates). The team base forecasts on
expectations and beliefs and on reasonable assumptions within the
bounds of what information is available at the time. However, there
is no guarantee that any forecasts or opinions will be
realised.
Public equity investments may
include the following:
Top 10 Equity Investments
The Company's top 10 equity
investment holdings as of 31 March 2024 are set out below, with
overviews of each company and recent updates regarding their
businesses set out on the subsequent pages.
Top 10 equity investments
|
|
Fair value as
of
|
% of total
|
Fair value as
of
|
% of total
|
|
Quoted/
|
31 March
2023
|
equity
|
31 March
2024
|
equity
|
Holding
|
unquoted
|
(£'000)
|
investments
|
(£'000)
|
investments
|
Mintec1
|
Unquoted
|
8,614
|
11.6
|
9,591
|
13.3
|
Cera EHP
|
Unquoted
|
6,986
|
9.5
|
8,046
|
11.1
|
Pirum Systems1
|
Unquoted
|
6,087
|
8.2
|
6,884
|
9.5
|
Rapyd Financial
Network1
|
Unquoted
|
8,399
|
11.3
|
6,837
|
9.5
|
EasyPark1
|
Unquoted
|
4,492
|
6.1
|
6,171
|
8.5
|
CFC
Underwriting1
|
Unquoted
|
4,098
|
5.5
|
5,661
|
7.8
|
Culligan1
|
Unquoted
|
5,053
|
6.9
|
5,585
|
7.7
|
Graphcore
|
Unquoted
|
1,778
|
2.4
|
2,533
|
3.5
|
Trainline
|
Quoted
|
1,408
|
1.9
|
2,097
|
2.9
|
Learning
Curve1
|
Unquoted
|
2,455
|
3.3
|
1,556
|
2.2
|
Source: Schroders.
1The fair value disclosed for the following investments
represents the Company's investment in an intermediary
vehicle:
- Mintec held via Synova
Merlin LP.
- Pirum Systems held via
Bowmark Investment Partnership LP.
- Rapyd Financial Network held
via Target Global Fund.
- EasyPark held via Purple
Garden Invest (D) AB).
- CFC Underwriting held via
Vitruvian Investment Partnership.
- Culligan held via EPIC-1b
Fund.
- Learning Curve held via
Agilitas Boyd 2020 Co-Invest Fund.
Mintec
(unquoted holding)
Leading provider of food-related
commodity pricing and analytics, serving the global supply chain
through its SaaS platform
Mintec enables the world's largest
food and manufacturing brands to implement more efficient and
sustainable procurement strategies. They do this through their
cutting-edge Software as a Service platform, Mintec Analytics,
which delivers market prices and analysis for thousands of
commodities, food ingredients and associated materials. Their data
and tools empower their customers to understand prices better,
analyse their spend and negotiate with confidence.
Latest updates:
• The
integration of Agribriefing, which Mintec acquired in 2023 to
create a leading global provider of data on agricultural and food
markets, has progressed well with the combination of their
extensive, proprietary range of unique data and market
intelligence.
• In terms
of product development, Mintec has launched new algorithmic
commodity price forecasts that cover 533 commodities,
expanding clients' capabilities to understand future prices and
inform their buying and investment decisions, while also enhancing
Mintec's credentials as a leading data software business with
growing capability in cutting-edge data science.
•
Furthermore, the company has released version 4.5 of Mintec
Analytics, its commodity price data and insights platform, which
now provides clients with precise cost model forecasts to enhance
their cost management strategies. The addition of this capability
revolutionises how businesses navigate the impact of future market
volatility on their costs, offering unparalleled precision in
predicting and adapting their strategy to raw material price
fluctuations.
Cera
(unquoted holding)
Europe's largest provider of
digital-first home healthcare
Cera is Europe's largest provider of
digital-first home healthcare. They are transforming healthcare by
moving services such as care, nursing, telehealth and repeat
medications out of hospitals and into people's own homes through
technology. In combining pioneering technology with their community
of professional carers and nurses, Cera are empowering people to
live longer, better, healthier lives in their own homes.
Latest updates:
• During the
2023 winter period, Cera delivered 7.5 million home care visits (an
important metric of progress), saving the NHS an estimated £100
million. In just seven years, the company has now delivered 50
million at-home patient visits.
• The
company has continued to make product developments utilising
artificial intelligence. A pilot of its fall prediction AI
platform, which takes information about patients logged by carers
on a smartphone app and assesses their risk of having a fall,
demonstrated a 20% reduction in falls.
•
Furthermore, Cera launched an AI scheduler platform that matches
patients to community care up to 5x faster. The technology also
pairs patients with carers to better suit their needs and reduces
average carer travel time between patients by up to 50%.
Pirum
(unquoted holding)
A leading provider of post-trade
automation and collateral management technology for the global
securities industry
Pirum has created a set of
award-winning, highly innovative and flexible services which are
tailored to fully support the complexities of financial
institutions around the world. Pirum provides a secure processing
hub which seamlessly links market participants, allowing them to
electronically process and verify key transaction details. Through
easy integration with their services, Pirum's clients have
increased processing efficiency, reduced operational risk and
improved profitability by reducing manual processing.
Latest updates:
• Pirum has
continued to make considerable strides with product development. A
key milestone was the introduction of their Securities Financing
Transactions Regulation (SFTR) solution, in collaboration with
S&P Global Market Intelligence Cappitech. This service ensures
compliance with SEC reporting requirements and enhances operational
transparency. The new reporting solution, which has been adopted by
over 150 institutions worldwide, leverages Pirum's existing
connectivity with the securities finance, repo and collateral
management ecosystems.
•
Furthermore, Pirum launched a borrower automation solution,
enabling full automation of the recall lifecycle with its first
clients well ahead of the May 2024 deadline of T+1 settlement in
the US, Canada and Mexico.
• Pirum also
successfully tested a distributed ledger technology (DLT) extension
of their securities lending and repo post-trade solution. This DLT
innovation would aim to provide clients with a distributable
golden-record of their trades.
Rapyd
(unquoted holding)
Integrates the world's many payment
networks and technologies into a single platform
Rapyd is the fastest way to power
local payments anywhere in the world, enabling companies across the
globe to access markets quicker than ever before. By utilising
Rapyd's payments network and Fintech-as-a-Service platform,
businesses and consumers can engage in local and cross-border
transactions in any market. The Rapyd platform is unifying
fragmented payment systems worldwide by bringing together 900-plus
payment methods in over 100 countries.
Latest updates:
• In July
2023, Rapyd announced the acquisition of a substantial part of PayU
Global Payment Organisation for $610 million. The company expects
the acquisition to provide a richer technology stack, expanded
geographic licensing and broader market reach.
• The
combined business is expected to deliver transactions in over
100 countries, service over 250,000 merchant clients globally and
expand Rapyd's payments network to over 1,200 payment
methods.
EasyPark
(unquoted holding)
Parking tech company that helps
drivers to find, manage and pay for both parking and electric
vehicle charging
EasyPark's technology supports its
users, cities and parking operators with parking administration,
planning and management. The company has a unique market coverage
with presence in over 20 countries and more than 3,200
cities.
Latest updates:
• In
November 2023, EasyPark announced its intention to acquire Flowbird
Group, a global mobility player providing integrated parking and
transportation solutions, as it continues its global growth
strategy. The deal will extend EasyPark's global reach and be
highly complementary to its existing business.
• Flowbird
Group operates under the brands Flowbird, YourParkingSpace, TPARK,
Extenso Cloud, and Yellowbrick and offers multiple mobility
solutions, covering equipment and services such as pay and display
machines, software, and park & charge. Flowbird Group also
offers transportation solutions, both within ticketing and open
payments for debit and credit cards, as well as mobile
wallets.
CFC
(unquoted holding)
Technology-driven global insurance
business
For over 20 years, CFC has built
market-leading solutions to some of the insurance industry's
biggest challenges. The company uses technology and data science to
stay one step ahead. From developing cutting-edge insurance
products, pioneering autonomous underwriting, deploying advanced
threat intelligence, to offering unparalleled service to its
partners and customers, CFC is re-imagining the world of specialist
insurance.
Latest updates:
• In April
2024, CFC announced the acquisition of Australian managing general
agent, Solution Underwriting, expanding its footprint in Australia.
Solution is a specialist insurance underwriter with a focus on
financial lines insurance products.
• In terms
of product innovations, recent highlights have included the first
ever embedded transaction liability insurance product and a
groundbreaking carbon delivery insurance policy.
• CFC also
announced a significant upgrade to its packed insurance policies
for professional services businesses. With many SMEs buying a
professional liability policy for the first time due to contractual
obligations with their business partners, CFC's cyber add-on makes
it easy for SMEs to also benefit from market-leading cyber
protection at a price they can afford.
Culligan
(unquoted holding)
Water systems treatment company for
homes and businesses across the globe
Culligan is an innovative brand in
consumer-focused, sustainable water solutions and services. It was
established in 1936 as a provider of water softening solutions for
residences in Northbrook, Illinois, and has since grown to become a
worldwide leader in water treatment needs, from the simplest
filtration system to complex industrial water solutions.
Latest updates:
• Since its
combination with UK-headquartered Waterlogic in 2022 to create a
leader in clean and sustainable drinking water solutions and
services, Culligan has made progress both operationally and through
further acquisitions.
• In January
2024, Culligan announced the acquisition of the majority of Primo
Water's businesses in EMEA, excluding those in the UK,
Portugal and Israel. This transaction enhances the company's scale
and capacity within the EMEA region, broadening its footprint in 12
countries where it already operates, while entering markets in
Poland, Latvia, Lithuania and Estonia.
Graphcore
(unquoted holding)
Developer of new processors for
machine intelligence
Graphcore has developed the
Intelligence Processing Unit (IPU), a new type of
microprocessor specifically designed from the ground up to meet the
needs of current and next-generation artificial intelligence ("AI")
applications. Graphcore's proprietary technology combines its
advanced semiconductor hardware, the world's most complex
processor, with its powerful software tools, to dramatically
outperform legacy technologies such as graphic processing
units.
Latest updates:
• Graphcore
has continued to focus on developing its proprietary technology and
expanding its partnerships.
• In July
2023, the company announced a partnership with cloud computing
provider, Gcore, to open a new AI cloud cluster in Newport, Wales.
Gcore is an international leader in public cloud and edge
computing, content delivery, hosting, and security solutions. The
cluster will increase the number of Graphcore Intelligent
Processing Units (IPUs) available to Gcore customers. Since then,
the offering has been extended into the US.
Trainline
(quoted holding)
Europe's leading independent rail
platform
Trainline enable millions of
travellers to seamlessly search, book and manage their journeys
through their highly rated Trainline website, mobile app and B2B
partner channels.
Latest updates:
• Trainline
is a home-grown British tech success that has scaled beyond
domestic borders to become Europe's most downloaded rail
app.
• The
company is growing strongly in the UK and across the continent,
with international consumer net ticket sales of more than £1
billion (FY 2024).
• Growth is
fastest in Spanish domestic travel, with market share continuing to
rise on key routes like Madrid-Barcelona, which is the company's
third most popular route across all countries, including the
UK.
Learning Curve
(unquoted holding)
UK training and education
specialist
Learning Curve works with further
education providers, employers and learners to help them achieve
success. Since 2004, the company has grown both organically and
through acquisition to become one of the largest and most diverse
providers in the country.
Latest updates:
• Learning
Curve has made progress with product development in launching an
AI-powered career planning platform (CareersPro) to support careers
guidance, complementing the growth of the company's existing
Ed-Tech solutions. CareersPro is designed to provide individuals,
young or old, with the tools and resources to make informed choices
about their education and career paths.
Investment Portfolio
as at 31 March 2024
|
|
Country of
|
|
|
|
|
|
incorporation
|
|
|
|
|
|
(of
underlying
|
|
|
Total
|
|
Quoted/
|
holding where
|
Industry
|
Fair value
|
investments
|
Holding
|
unquoted
|
applicable)
|
Sector
|
£'000
|
%
|
Schroder Special Situations
Fund
|
|
|
|
|
|
Sterling Liquidity Plus
|
Quoted
|
Luxembourg
|
Collective - SICAV
|
10,795
|
13.0
|
Mintec1
|
Unquoted
|
United Kingdom
|
Software
|
9,591
|
11.6
|
Cera EHP S.à r.l.
|
Unquoted
|
United Kingdom
|
Health Care Technology
|
8,046
|
9.7
|
Pirum Systems1
|
Unquoted
|
United Kingdom
|
Software
|
6,884
|
8.3
|
Rapyd Financial
Network1
|
Unquoted
|
United Kingdom
|
IT Services
|
6,837
|
8.2
|
EasyPark1
|
Unquoted
|
Sweden
|
Software
|
6,171
|
7.4
|
CFC
Underwriting1
|
Unquoted
|
United Kingdom
|
Insurance
|
5,661
|
6.8
|
Culligan (formerly
Waterlogic)1
|
Unquoted
|
United Kingdom
|
Diversified Consumer
Services
|
5,585
|
6.7
|
Graphcore
|
Unquoted
|
United Kingdom
|
Semi-conductors &
Equipment
|
2,533
|
3.0
|
Trainline
|
Quoted
|
United Kingdom
|
Hotels, Restaurants &
Leisure
|
2,097
|
2.5
|
Learning
Curve1
|
Unquoted
|
United Kingdom
|
Diversified Consumer
Services
|
1,556
|
1.9
|
Dalata Hotel
|
Quoted
|
Ireland
|
Hotels, Restaurants &
Leisure
|
1,501
|
1.8
|
SSP
|
Quoted
|
United Kingdom
|
Hotels, Restaurants &
Leisure
|
1,443
|
1.7
|
Trustpilot
|
Quoted
|
United Kingdom
|
Interactive Media &
Services
|
1,378
|
1.7
|
Volution
|
Quoted
|
United Kingdom
|
Building products
|
1,376
|
1.7
|
Watches of Switzerland
|
Quoted
|
United Kingdom
|
Specialty Retail
|
1,326
|
1.6
|
Discoverie
|
Quoted
|
United Kingdom
|
Electrical Equipment
|
1,183
|
1.4
|
GB
|
Quoted
|
United Kingdom
|
Software
|
1,058
|
1.3
|
OSB
|
Quoted
|
United Kingdom
|
Financial Services
|
1,053
|
1.3
|
On the Beach
|
Quoted
|
United Kingdom
|
Hotels, Restaurants &
Leisure
|
919
|
1.1
|
Judges Scientific
|
Quoted
|
United Kingdom
|
Machinery
|
899
|
1.1
|
Ascential
|
Quoted
|
United Kingdom
|
Media
|
849
|
1.0
|
MaxCyte
|
Quoted
|
United States
|
Life Sciences Tools &
Services
|
799
|
1.0
|
Learning Technologies
|
Quoted
|
United Kingdom
|
Professional Services
|
655
|
0.8
|
Bytes Technology
|
Quoted
|
United Kingdom
|
Software
|
641
|
0.8
|
Sosandar
|
Quoted
|
United Kingdom
|
Textiles, Apparel & Luxury
Goods
|
594
|
0.7
|
Mobico
|
Quoted
|
United Kingdom
|
Ground Transportation
|
516
|
0.6
|
Luceco
|
Quoted
|
United Kingdom
|
Electrical Equipment
|
513
|
0.6
|
Victorian Plumbling
|
Quoted
|
United Kingdom
|
Specialty Retail
|
362
|
0.4
|
Invinity Energy Systems
|
Quoted
|
Jersey
|
Electrical Equipment
|
147
|
0.2
|
Lendinvest
|
Quoted
|
United Kingdom
|
Financial Services
|
124
|
0.1
|
Total
investments2
|
|
|
|
83,092
|
100.0
|
The
fair value disclosed for the following investments represents the
Company's investment in an intermediary vehicle:
Mintec (held via Synova Merlin
LP)
Rapid Financial Network (held via
Target Global Fund)
Pirum Systems (held via Bowmark
Investment Partnership LP)
Culligan (held via Epic-1b
Fund)
EasyPark (held via Purple Garden
Invest (D) AB)
CFC Underwriting (held via Vitruvian
Investment Partnership LLP)
Learning Curve (held via Agilitas
Boyd 2020 Co-invest Fund)
2Total investments
comprise:
|
£'000
|
%
|
Unquoted
|
52,864
|
63.6
|
Quoted on FTSE 250
|
11,862
|
14.3
|
Collective investment scheme - money
market instruments
|
10,795
|
13.0
|
Listed on AIM
|
4,638
|
5.6
|
Quoted on FTSE Allshare
|
1,432
|
1.7
|
Listed on a recognised stock
exchange overseas
|
1,501
|
1.8
|
Total
|
83,092
|
100.0
|
Business Review
Purpose, values and
culture
Purpose
The Company's purpose is to provide
all investors with access to high quality public and private equity
companies focused on sustainable growth, resulting in long-term
shareholder value, in line with the investment objective. The
Board's focus is on long-term growth rather than providing
shareholders with dividend income.
Values
The Company's culture is driven by
its values: excellence, integrity and transparency, with collegial
behaviour and constructive, robust challenge. The values are all
centred on achieving returns for shareholders in line with the
Company's investment objective. As the majority of the Directors
are shareholders in the Company, the Directors' interests are
aligned with those of other shareholders in this regard. The Board
is responsible for promoting strong relationships with the Manager
and other service providers, as well as maintaining constructive
relationships with shareholders, in order to promote their best
interests.
Culture
The Board is committed to
encouraging and actively creating a culture that is responsive to
the views of shareholders and its wider stakeholders. As the
Company has no employees and acts through its service providers,
its culture is represented by the values and behaviour of the Board
and third parties to which it delegates. The Board encourages a
culture of constructive challenge with all key suppliers and
transparency with all stakeholders. The Board is responsible for
embedding the Company's culture in its operations.
The Board engages with its
outsourced service providers to safeguard the Company's interests
and ensure our service providers meet the standards expected by the
Company. As part of this ongoing monitoring, the Board receives
reporting from its service providers with respect to their
anti-bribery and corruption policies; Modern Slavery Act 2015
statements; diversity policies; and greenhouse gas and energy usage
reporting, to ensure they are in line with expectations.
Business model
The Company is a listed investment
trust, that has outsourced its operations to third party service
providers. The Company's strategy is to meet its investment
objective to deliver long-term returns throughout the life of the
Company by investing in a diversified public equity and private
equity portfolio of predominantly UK companies. The Articles of
Association of the Company require the Directors to put forward, at
a general meeting of the Company to be held in the year 2028 but in
any event no later than 31 May 2028, a winding-up resolution to
place the Company into voluntary liquidation, unless alternative proposals have been approved by
shareholders.
The Board has appointed the Manager,
Schroder Unit Trusts Limited, to implement the investment strategy
and to manage the Company's assets in line with the appropriate
restrictions placed on it by the Board, including limits on the
type and relative size of holdings which may be held in the
portfolio and on the use of gearing, cash, derivatives and other
financial instruments as appropriate. The terms of the appointment
are described more completely in the Directors' Report including
delegation to the Investment Managers. The Manager also promotes
the Company using its sales and marketing teams. The Board and
Manager work together to deliver the Company's investment
objective, as demonstrated in the diagram below.
Investment trust status
The Company carries on business as
an investment trust. Its shares are listed and admitted to trading
on the premium segment of the main market of the London Stock
Exchange. It has been approved by HM Revenue & Customs as an
investment trust in accordance with section 1158 of the Corporation
Tax Act 2010, by way of a one-off application and it is intended
that the Company will continue to conduct its affairs in
a manner which will enable it to retain this
status.
The Company is domiciled in the UK
and is an investment company within the meaning of section 833 of
the Companies Act 2006. The Company is not a "close" company for
taxation purposes.
Investment model
Investment objective
The Company's investment objective
is to deliver long-term total returns throughout the life of the
Company by investing in a diversified public equity and private
equity portfolio of predominantly UK Companies.
Investment policy
The Company will invest in a
diversified portfolio of both public equity investments and private
equity investments consisting predominantly of UK Companies with
strong long- term growth prospects.
It is anticipated that the Company's
portfolio will typically consist of 30 to 50 holdings and will
target companies with an equity value between approximately £50
million and £2 billion at the time of initial
investment.
The Company will focus on companies
which the Portfolio Managers consider to be sustainable from an
environmental, social and governance perspective, supporting at
least one of the goals and/or sub-goals of the United Nations'
SDGs, or which the Portfolio Managers consider would benefit from
their support in helping them incorporate SDGs into their business
planning and/or in reporting their alignment with SDGs.
The Company may, from time to time,
use borrowings for investment and efficient portfolio management
purposes. Gearing will not exceed 10% of Net Asset Value,
calculated at the time of drawdown of the relevant
borrowing.
In accordance with its investment
objective, the Company invests in a diversified portfolio with
the aim of spreading investment risk, which is monitored by the
Board and the Manager.
The key restrictions imposed on the
Manager, at the time of committment, are that:
(a) no more than 10% of NAV
may be invested in any investee company;
(b) the Company's portfolio
shall comprise no fewer than 30 holdings;
(c) no more than 20% of NAV
may be invested in investee companies which are not UK
Companies;
(d) the Company may not take a
controlling stake in any investee company, whether directly or
indirectly, and:
- in respect of
public equity investments, the Company may own no more than 10% of
the total voting rights of any investee company;
- in respect of
private equity investments, the Company may own no more than 20% of
the enterprise value of any investee company; and
(e) the Company will not
invest more than 10% in aggregate of gross assets in other listed
closed-ended investment funds, except that this restriction shall
not apply to investments in listed closed-ended investment funds
which themselves have stated investment policies to invest no more
than 15% of their gross assets in other listed closed-ended
investment funds. Additionally, the Company will itself not invest
more than 15% of its gross assets in other investment companies or
investment trusts which are listed on the Official List.
As set out on page 22, the
investment portfolio comprised 31 holdings at 31 March 2024.
The largest holding in an investee company was Mintec at 11.6%. The
Company currently holds most of its liquid assets in the Schroder
Special Situation Fund Sterling Liquidity Plus, which represented
13% of total investments at 31 March 2024.
Key Performance Indicators
("KPIs")
The Board reviews performance, using
a number of key measures, to monitor and assess the Company's
success in achieving its objective. Further comment on performance
can be found in the Chairman's statement. The following KPIs are
used:
• NAV
performance;
• Share
price discount and premium;
• Share
price total return; and
• Ongoing
charges ratio.
Some KPIs are Alternative
Performance Measures.
Further details can be found on the
inside cover and page 1 and definitions of these terms on pages 80
and 81.
NAV performance
The Directors regard the Company's
NAV performance as being the overall measure of value, delivered to
shareholders over the long-term. The Company's NAV per share at 31
March 2024 was 110.05p (31 March 2023:107.32p). During the
year the Company's NAV per share rose by 2.5%. Since IPO the NAV
per share has increased by 12.3%. A full description of performance
during the year under review is contained in the Investment
Managers' Review.
Share price discount and
premium
The Board recognises that it is in
the interests of shareholders to maintain a share price as close as
possible to the NAV per share, whilst acknowledging the challenge
this brings to a Company with a substantial portfolio of
unquoted investments. The Board regularly reviews the level of
discount/premium of the Company's share price to the net asset
value per share and considers ways in which share price performance
may be enhanced, including the effectiveness of share buy-backs,
where appropriate. The discount at which the Company's shares
traded to NAV improved by 8.4 percentage
points during the year from 36.2% at 31
March 2023 to 27.8% at 31 March 2024.
Share price total return
The Directors also regard the
Company's share price total return to be a key indicator of
performance. This reflects share price growth of the Company which
the Board recognises is important to investors. During the year the
Company's share price increased by 16.1% from 68.50p at 31 March
2023 to 79.50p at 31 March 2024.
Ongoing charges
The Company monitors operating
expenses on a regular basis. The ongoing charges at 31 March 2024
were 1.40% (31 March 2023: 1.47%). The calculation is shown in the
definition of terms and performance measures on page 81. The Board
seeks to manage and where possible to improve the ongoing charges
ratio and to this end the Management Engagement Committee regularly
reviews its service provider fee rates.
Promotion
The Company promotes its shares to a
broad range of investors including discretionary wealth managers,
private investors, financial advisers and institutions which have
the potential to be long-term supporters of the investment
strategy. The Company seeks to achieve this through its Manager and
Corporate Broker, which promote the shares of the Company through
regular contact with both current and potential
shareholders.
These activities consist of investor
lunches, one-on-one meetings, regional road shows and attendance at
conferences for professional investors. In addition, the Company's
shares are supported by the Manager's wider marketing of investment
companies targeted at all types of investors. This includes
maintaining close relationships with adviser and execution-only
platforms, advertising in the trade press, maintaining
relationships with financial journalists and the provision of
digital information on Schroders' website. The Board also seeks
active engagement with investors, and meetings with the Chairman
are offered to investors when appropriate.
Shareholders are encouraged to sign
up to the Manager's Investment Trusts update, to receive
information on the Company directly
https://www.schroders.com/en-gb/uk/individual/never-miss-an-update/.
Stakeholder engagement
Section 172 of the Companies Act
2006
During the year, the Board
discharged its duty under section 172 of the Companies Act 2006 to
promote the success of the Company for the benefit of its members
as a whole, having regard to the interests of its stakeholders. The
Board has identified its key stakeholders as the Company's
shareholders, the Investment Manager, other service providers and
the investee companies. The Board takes a long-term view of the
consequences of its decisions, and aims to maintain a reputation
for high standards of business conduct and fair treatment among the
Company's shareholders. The Board notes that the Company has no
employees and the impact of its own operations on the environment
and local community is through the impact its service providers or
investee companies have.
Fulfilling this duty naturally
supports the Company in achieving its investment objective and
helps to ensure that all decisions are made in a responsible
way. In accordance with the requirements of the Companies
(Miscellaneous Reporting) Regulations 2018, the Directors explain
below how they have individually and collectively discharged their
duties under section 172 of the Companies Act 2006 over the course
of the year and key decisions made during the year and related
engagement activities.
Stakeholder
|
Significance
|
Engagement
|
2023/24 application
|
Shareholders
|
Regular communication with existing
and prospective shareholders ensures that the Board is cognisant of
investor priorities and addresses any concerns raised.
Clear communication of the Company's
strategy and performance against its
investment objective can help maintain demand for
the Company's shares and promote an investor base that is
interested in a long-term holding in the Company.
|
-
AGM: The Company welcomes
attendance and participation from shareholders at the AGM.
Shareholders have the opportunity to meet the Directors and the
Investment Manager and ask questions at the AGM. The Board values
the feedback it receives from shareholders which is incorporated
into Board discussions.
-
Publications: The annual
and half year results presentations are available on the Company's
web pages with their availability announced via the London Stock
Exchange. Daily and quarterly NAV updates are issued to provide
shareholders with transparent information on the Company's
portfolio. Feedback and/or questions received from shareholders
enable the Company to evolve its reporting which, in turn, helps to
deliver transparent and understandable updates.
-
Shareholder communication: The Manager communicates with shareholders periodically. All
investors are offered the opportunity to meet the Chairman, Senior
Independent Director, or other Board members without using the
Manager or Company Secretary as a conduit, by writing to the
Company's registered office. The Board also corresponds with
shareholders by letter and email. The Board receives regular
feedback from its Broker on investor engagement and
sentiment.
-
Investor Relations updates: At every Board meeting, the Directors receive updates on share
trading activity, share price performance and any shareholders'
feedback, as well as any publications or comments in the press. To
gain a deeper understanding of the views of its shareholders and
potential investors, the Investment Manager also undertakes
investor roadshows throughout the year.
|
The AGM was held in person in 2023
and the Board, along with the Investment Manager, look forward to
meeting and interacting with shareholders at the forthcoming AGM in
September 2024.
The Company's web pages host the
annual and half year reports. The Company publishes quarterly fact
sheets which are available on the Company's web pages along with
the opportunity to view past webinars and sign up to receive a
newsletter to receive regular updates on the Company.
The Chairman of the Board met with
its major shareholders during the year and since the year end.
Their views were taken into consideration as part of the Board's
duty to ensure their interests were taken into account.
The Investment Manager engaged with
a number of its investors during the year and regular feedback
was provided to the Board. A number of promotional activities
were undertaken during the year including Investment Manager
interviews, a capital markets event, webinars and coverage in key
publications.
The Board continued to work with
Kepler on promoting the Company through its research notes which
are published twice a year (following the publication of the
Company's half year and annual results).
|
The Investment Manager
|
The Investment Manager is the most
significant service provider of the Company, and a description of
its role can be found in the Investment Manager's Review on pages 6
to 12.
The Investment Manager's performance
is critical for the Company to deliver its investment strategy
successfully and meet its objective to achieve long-term capital
growth through investing in a diversified global portfolio of
private and public equity companies.
Engagement with the Company's
Investment Manager is necessary to review whether it is achieving
the Company's objectives and adhering to the Company's policies and
to understand the risks and opportunities.
|
The Investment Manager attends all
Board and certain Committee meetings in order to update the
Directors on the performance of the investments and the
implementation of the investment strategy and objective.
Important components in the Board's
collaboration with the Investment Manager are:
-
Encouraging open discussion with the Investment
Manager;
-
Recognising that the interests of shareholders and
the Investment Manager (as well as of its other clients) are, for
the most part aligned, adopting a tone of constructive challenge,
balanced when those interests are not fully congruent by robust
negotiation of the Investment Manager's terms of engagement;
and
-
Drawing on Directors' individual experience to
support the Investment Manager by holding it to account regarding
investment strategy, and challenging where necessary.
|
Representatives of the Portfolio
Manager, including at least one of the Portfolio Managers, attended
each Board meeting to provide an update on the investment portfolio
along with presenting on macro-economic issues.
The Board held a strategy session at
which the Board and Investment Manager discussed key issues outside
the normal Board reporting framework.
The Management Engagement Committee
reviewed the performance of the Manager, its remuneration and the
discharge of its contractual obligations.
|
Other service providers
|
In order to operate as an investment
trust with a premium listing on the London Stock Exchange, the
Company relies on a diverse range of advisers and outsourced
service providers. To ensure the smooth operation of the Company,
the Board engages with key service providers to ensure they are
delivering their services in line with their contractual
obligations.
|
The Board maintains regular contact
with its key external providers, both through the Board and
Committee meetings, where service providers are periodically
invited to attend, as well as outside of the regular meeting cycle.
Their advice, as well as their needs and views, are routinely taken
into account and the need to foster business relationships with key
service providers is central to Directors' decision-making as the
Board of an externally managed investment trust.
|
The Board engaged regularly with
service providers as well as carrying out a review of the service
providers' business continuity plans and additional cyber security
provisions.
Under delegated authority from the
Board, the Management Engagement Committee reviewed all material
third party service providers and their fees. The Board considered
the ongoing appointments and fees of its service providers to be in
the best interests of the Company and its shareholders as
a whole and will continue to monitor their progress in the
year ahead.
The Directors were invited to attend
an internal controls briefing session which assessed the internal
controls of certain key service providers including the Company's
Depositary and Custodian, HSBC, the Company's Registrar, Equiniti,
and Schroders Group Internal Audit.
|
Investee companies
|
The Investment Manager focuses on
investing in those companies it believes can compound in value over
the long term.
As an investment trust with no
trading activity and an outsourced business model, the Company has
no direct social, community or environmental responsibilities,
however, the Board monitors activities of investee companies
through its delegation to the Investment Manager.
|
The Investment Management team
conducts face-to-face and/or virtual meetings with the management
teams of all investee companies to understand current trading and
prospects for their businesses, and to ensure that their investment
principles and approach are understood.
The Investment Manager has
discretionary powers to exercise the Company's voting rights on
resolutions proposed by the investee companies within the Company's
portfolio. The Investment Manager report to the Board on
stewardship (including voting) issues and the Board will question
the rationale for voting decisions made.
By active engagement and exercising
voting rights, the Investment Manager actively works with companies
to improve corporate standards, transparency and
accountability.
|
The Board received regular updates
on engagement with investee companies from the Investment Manager
at its Board meetings.
During the year, the Investment
Manager engaged with many of its investee companies and voted at
shareholder meetings.
|
Examples of stakeholder
consideration during the year
The Directors were particularly
mindful of stakeholder considerations in reaching the following key
decisions during the year ended 31 March 2024:
• the Board
and Management Engagement Committee undertook reviews of the
Investment Manager and the Company's third-party service providers
and agreed that their continued appointment and fees remained in
the best interests of the Company and its shareholders.
• the Board
continued to consider Board succession planning and undertook a
recruitment process, subsequent to year-end. Since the retirement
of Christopher Keljik, the Board has operated with
three Directors. However, as set out in the Chairman's
statement, Neil England intends to step down at the AGM and
the Board agreed that it would like to build Board strength
back up to four. Two Directors were appointed in July 2024 and are
being put forward for election at the upcoming AGM. The
appointments broaden the Board's composition and it is intended
that Justin Ward will replace Neil England as Chairman.
•
The Board decided to form a new Valuations
Committee. This decision recognised the importance of the Board's
oversight role on valuations and the need
for shareholders to have confidence in the outcomes.
Responsible investment
The Manager is compliant with the UK
Stewardship Code and its application with the principles therein is
reported on its website:
www.schroders.com/en/about-us/corporate-responsibility/sustainability/interpret/.
Corporate and social responsibility
The Board recognises the Company's
duty with respect to corporate and social responsibility and
engages with its outsourced service providers and other
stakeholders to safeguard the Company's interests. As part of this
ongoing monitoring, the Board receives reports from its service
providers with respect to their diversity policies; anti-bribery
and corruption policies; Modern Slavery Act 2015 statements;
financial crime policies; and greenhouse gas and energy usage
reporting.
Diversity policy
The Board has adopted a diversity
and inclusion policy which seeks to promote diversity of gender,
social and ethnic backgrounds, cognitive and personal strengths.
The Board recognises the value of diversity and when considering
new appointments, the Board endeavours to ensure that it has the
capabilities required to be effective and oversee the Company's
strategic priorities. This includes an appropriate range, balance
and diversity of skills, experience and knowledge. The Company is
committed to ensuring that any vacancies arising are filled by the
best qualified candidates and appointments will always be made on
merit alone.
Statement on Board diversity -
gender and ethnic background
The Board has made a commitment to
consider diversity when reviewing the composition of the Board and
notes the Listing Rules requirements (LR 9.8.6R(9) and (11))
regarding the targets on Board diversity:
• at least
40% of individuals on the Board are women;
• at least
one senior Board position is held by a woman; and
• at least
one individual on the Board is from a minority ethnic
background.
The FCA defines senior Board
positions as Chairman, Chief Executive Officer ("CEO"), Chief
Financial Officer ("CFO") or Senior Independent Director ("SID").
As an investment trust with no executive officers, the Company has
no CEO or CFO. The Board has reflected the senior positions of the
Chairman of the Board and the SID in its diversity tables
below.
The Board has chosen to align its
diversity reporting reference date with the Company's financial
year end and proposes to maintain this alignment for future
reporting periods. The following information has been provided by
each Director through the completion of
a questionnaire.
As at 31 March 2024, the Company met
one of the three criteria for at least one senior Board position to
be held by a woman. The target in relation to the number of women
on the Board has now been addressed with the appointment of Jemma
Bruton. The target for at least one individual on the Board to be
from a minority ethnic background was not met and the Board is
conscious that while the Directors are all independent and have a
diverse range of views and experience, its small composition will
make these targets challenging to fully implement.
The below tables set out the gender
and ethnic diversity composition of the Board as at 31 March
2024.
Gender identity
|
|
|
Number of
|
|
Number of
|
Percentage
|
senior
|
|
Board
|
of the
|
positions
on
|
|
members
|
Board
|
the Board
|
Men
|
2
|
66.66
|
1
|
Women
|
1
|
33.33
|
1
|
Not specified/prefer not
|
|
|
|
to say
|
-
|
-
|
-
|
Ethnic background
|
|
|
Number of
|
|
Number of
|
Percentage
|
senior
|
|
Board
|
of the
|
positions
on
|
|
members
|
Board
|
the Board
|
White British or other White
(including minority-white groups)
|
3
|
100
|
2
|
Mixed/Multiple Ethnic
Groups
|
-
|
-
|
-
|
Asian/Asian British
|
-
|
-
|
-
|
Black/African/Caribbean/Black
British
|
-
|
-
|
-
|
Other ethnic group, including
Arab
|
-
|
-
|
-
|
Not specified/prefer not to
say
|
-
|
-
|
-
|
Since the end of the period two
Directors have been appointed and information on their gender and
ethnic diversity will be included in the next annual report and
financial statements.
Financial crime policy
The Company continues to be
committed to carrying out its business fairly, honestly and openly
operates a financial crime policy covering bribery and corruption,
tax evasion, money laundering, terrorist financing and sanctions,
as well as seeking confirmations that the Company's service
providers' policies are operating soundly.
Modern Slavery Act 2015
As an investment trust, the Company
does not provide goods or services in the normal course of business
and does not have customers. Accordingly, the Directors consider
that the Company is not required to make any slavery or human
trafficking statement under the Modern Slavery Act 2015.
Climate
Greenhouse gas emissions and energy
usage
As the Company outsources its
operations to third parties, it consumed less than 40,000 kWh
during the year and so has no greenhouse gas emissions, energy
consumption or energy efficiency action to report.
Taskforce for Climate-Related
Financial Disclosures ("TCFD")
The Company, as an investment trust,
is exempt from the requirement to report against TCFD regulation.
However, the Company's Investment Manager produces an annual
product level disclosure consistent with the TCFD. This can be
found here:
https://mybrand.schroders.com/m/44863c680e83c467/original/TCFD-GB97406M-Schroder-British-Opportunities-Trust-20231231.pdf.
Principal and emerging risks and
uncertainties
The Board, through its delegation to
the Audit and Risk Committee, is responsible for establishing a
process for identifying, managing and monitoring emerging and
principal risks of the Company and monitoring the Company's
financial internal control systems. 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 and Risk
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. The above is
considered noting that the Company has no employees and has
delegated all operations to third party service
providers.
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 and Risk 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
and Risk
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
assessment at least annually. The last assessment took place in
February 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 evolving global environment
during the year; and the risks posed by volatile markets;
geopolitical uncertainty; and inflation and interest rates levels
which could affect the asset class. However, these are not factors
which explicitly impacted the Company's performance.
No significant control failings or
weaknesses were identified from the Audit and Risk Committee's
ongoing risk assessment throughout the financial year and up to the
date of this report. Having received the relevant reports, the
Board is satisfied that the internal controls operated by the
Company's service providers are operating effectively.
Actions taken by the Board and,
where appropriate, its Committees, to manage and mitigate the
Company's principal 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.
Risk
|
Mitigation and management
|
Change
|
Strategic
|
|
|
Investment objective and
promotion
The Company's investment objective
may become out of line with the requirements of investors, or the
Company's investment strategy may not be sufficiently
differentiated from other products resulting in the Company being
subscale and shares trading at a discount.
|
The appropriateness of the Company's
investment remit is regularly reviewed and the Board monitors the
success of the Company in meeting its stated objectives.
|
á
â
|
Company lifespan
The Articles of Association of the
Company require the Directors to put forward, at a general meeting
of the Company to be held in the year 2028 but in any event no
later than 31 May 2028, a winding-up resolution to place the
Company into voluntary liquidation, unless
alternative proposals have been approved by
shareholders.
In the event that no alternative
proposals are put forward to shareholders, or such proposals are
not approved by shareholders, the Company will commence winding up
in 2028. It could take several years until all of the Company's
private equity investments are disposed of and any final
distribution of proceeds made to shareholders.
|
The private equity Investment
Managers have extensive experience and a track record of accurately
timing the exits of private equity investments.
The Board will ensure that any
alternative proposals to be made to shareholders are put forward at
an appropriate time.
|
á
â
|
Market
|
|
|
Market volatility
Underlying investee companies within
the Company's portfolio may experience fluctuations in their
operating results due to fluctuations in the market or general
economic conditions (including changes to interest rates,
inflation, geopolitical and ESG related regulations, including
those related to climate change). These would in turn affect the
performance of the Company. In addition, market pricing risk
can affect the valuation of both the Company and investee company
share prices.
|
The Investment Managers adopt an
active management approach and focus on sustainable businesses
capable of generating long-term returns for
shareholders.
The Board receives quarterly reports
from the Investment Managers on the performance of the Company's
investments and the market outlook.
|
á
â
|
Regulatory
|
|
|
Change of regulation
The Company benefits from the
current exemption for investment trusts from UK tax on chargeable
gains. Any change to HMRC's rules or taxation of investee companies
could affect the Company's ability to provide returns to
shareholders.
|
The Board and Manager monitor
proposed changes to tax rules and report to the Board
thereon.
|
á
â
|
Investment
|
|
|
Valuation
Private equity investments are
generally less liquid and more difficult to value than publicly
traded companies. A lack of open market data and reliance on
investee company projections may also make it more difficult to
estimate fair value on a timely basis. Failure by the Company to disclose how the investment process
integrates consideration of ESG factors (including climate change)
could lead to potential valuation issues in the underlying investee
companies.
|
Contracts are drafted to include
obligations to provide information with regard to investee
companies in a timely manner, where possible.
The Manager has an extensive track
record of valuing privately held investments.
The Valuations Committee reviews all
valuations of unquoted investments on a quarterly basis and the
Audit and Risk Committee challenges methodologies used by the
Investment Managers.
The consideration of ESG factors
(including climate change) is integrated into the investment
process and reported at Board meetings.
|
á
â
|
Liquidity
Liquidity risks include those risks
resulting from holding private equity investments as well as not
being able to participate in follow-on fundraises through lack of
available capital which could result in dilution of an
investment.
|
Concentration limits are imposed on
single investments to minimise the size of positions.
The Investment Managers consider
liquidity risk when selecting investments.
The Investment Managers will seek to
manage cashflow such that the Company will be able to participate
in follow up fundraisings where appropriate. The Board receives
quarterly reports from the Manager on the portfolio's
liquidity.
|
á
â
|
NAV discount
The Company's shares may not trade
in line with NAV, depending on factors such as supply and demand
for the Company's shares, market conditions and general investor
sentiment. The operation of the Company's policy to manage any
discount could result in the Company's operating charges ratio
becoming excessive.
|
The Board monitors the NAV and
receives regular updates. Although the Company has not bought-back
any shares during the period the Board does have a discount/premium
policy and considers whether share buy-backs would be for the
benefit of the Company as a whole including its shareholders.
In order to consider a buy-back the Board would need to take
into account relevant factors and circumstances at the
time.
The Board monitors marketing and
distribution activity regularly.
|
á
â
|
Key person
The Company's investment portfolio
is managed by the Portfolio Managers and, in particular, is led by
four key individuals. Loss of an Investment Manager could affect
performance and market sentiment leading to a widening discount of
the share price compared with the NAV.
|
The Board regularly considers key
man risk and seeks assurances concerning the depth of expertise of
the investment management teams which manage the Company's
portfolio.
The Board receives assurances from
the Manager regarding the Investment Manager's incentive
arrangements and succession planning.
|
á
â
|
Operational
|
|
|
Reliance on service
providers
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.
The AIFM, the Investment Managers,
the Depositary, the Company Secretary and the Administrator perform
services that are integral to the operation of the Company and any
of the Company's service providers could terminate their
contract.
|
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 termination.
The Board receives regular reports
from its service providers and the Management Engagement Committee
reviews the performance of key service providers at least
annually.
The Audit and Risk Committee reviews
reports on the external audits of the internal controls of certain
key service providers.
|
á
â
|
Viability statement
The Directors have assessed the
viability of the Company over the five year period ending 31
March 2029, taking into account the Company's position at 31 March
2024 and the potential impact of the principal risks and
uncertainties it faces for the review period. This is further
detailed in the Chairman's Statement, Investment Manager's Review
and principal risks and uncertainties sections of this report. The
Board believes that a period of five years reflects a suitable time
horizon for strategic planning, the investment cycle of private
equity and the longer-term view taken by the Investment Managers
and investors; this period is in line with the Company's Key
Information Document. If no alternatives are proposed a resolution
to wind up the Company is required to be put to shareholders before
31 May 2028. However, there is no expectation that alternative
proposals regarding the continuation of the Company will not be put
forward to shareholders, or such proposals will not be approved by
shareholders in 2028.
In line with FRS102, investments are
valued at fair value, which for the Company are quoted bid prices
for investments in active markets at the statement of financial
position date and therefore reflect market participants' views of
emerging risks on the investments held. For private equity
valuations, market comparables are used which take into account the
risks affecting similar investments.
As an investment trust, the Company
is entitled to beneficial treatment with regard to chargeable
gains. Any change to such taxation arrangements could affect the
Company's viability as an effective investment vehicle. In their
assessment of the prospects for the Company over the next five
years, the Directors have assumed that the Company will continue to
adopt the same investment objective, that the Company's performance
will continue to be attractive to shareholders and that the Company
will continue to meet the requirements so as to retain its status
as an investment trust.
The Directors have considered each
of the Company's principal risks and uncertainties detailed on
pages 29 to 31. The Directors have also considered a significant
fall in equity markets on the value of the Company's investment
portfolio. The Directors have, furthermore, considered the
Company's projections of income and expenditure as well as any
commitments to provide funding to investee companies. They have
noted that the Company's investment portfolio will continue to
comprise a significant proportion of highly liquid listed equities
which can be readily realised and that a substantial proportion of
the Company's operating expenses vary with the value of the
investment portfolio. As stated in the Going Concern statement, the
Company is a closed-end investment trust and there is no
requirement to redeem or buy back shares. A stress test to evaluate
the consequences of a 50% reduction in the market value of the
Company's investments over the five year period has also been
evaluated.
Having considered all 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, over the next five
years.
Going concern
The Directors have assessed the
principal risks and uncertainties (including whether there were any
emerging risks) and the matters referred to in the viability
statement. The Directors have considered the liquidity of the
Company's portfolio of listed investments, the Company's cash
balances and the forecast income and expenditure flows as well as
commitments to provide further funding to the Company's private
equity investee companies; the Company currently has no borrowings.
A substantial proportion of the Company's expenditure varies with
the value of the investment portfolio. In the event that there is
insufficient cash to meet the Company's liabilities, one option
would be to liquidate the listed investments in the portfolio and
the Directors have reviewed the average days to liquidate the
listed investments.
By order of the Board
Schroder Investment Management
Limited
Company Secretary
10 July 2024
Neil England
Status: Independent
non-executive
Chairman and Chairman of the Nomination Committee
Length of service:
appointed as a Director and Chairman in November
2020.
Experience: Neil has held a number of leadership roles in various sectors
including food, FMCG (fast moving consumer goods), distribution,
technology and financial services. Neil was Vice President of Mars
Incorporated; Group Chief Executive at The Albert Fisher Group Plc
and Group Commercial Director at Gallaher Group plc. Neil has been
Chairman of a number of companies including ITE Group plc,
BlackRock Emerging Europe Plc and six private businesses. He is
currently the Chairman of Augmentum Fintech plc (a specialist
venture capital investment company) and a non-executive Director of
a private equity backed leisure business.
Neil has extensive international
business expertise in public and private companies varying in size
from start-ups to global corporations. He is an experienced
Chairman. Neil remained free from conflict and had sufficient time
available to discharge his duties effectively.
Committee membership:
Audit and Risk, Management Engagement, Valuations,
and Nomination (Chairman) Committees.
Current remuneration:
£44,500 per annum.
Number of shares held:
55,000
Diana Dyer Bartlett
Status: Senior Independent non-executive Director and Chairman
of the Audit and Risk Committee
Length of service: appointed as
a Director in November 2020.
Experience: After qualifying as
a chartered accountant with Deloitte Haskins & Sells, Diana
spent five years in investment banking with Hill Samuel. Since then
she has held a number of executive roles including as finance
Director of various venture capital and private equity backed
businesses and listed companies involved in software, financial
services, renewable energy and coal mining. She was also Company
Secretary of Tullett Prebon plc and Collins Stewart Tullett plc.
Diana is currently Chairman of Smithson Investment Trust plc and
Audit Committee Chairman of Mid Wynd International Investment Trust
plc.
Diana has a strong financial
background and her experience with both listed and unlisted
companies makes her a valuable member of the Board. Diana
remained free from conflict and had sufficient time available to
discharge her duties effectively.
Committee membership: Audit and
Risk (Chairman), Management Engagement, Valuations, and Nomination
Committees.
Current remuneration: £39,000
per annum.
Number of shares held: 46,345
Tim
Jenkinson
Status: Independent non-executive Director and Chairman of the
Management Engagement Committ and Valuations
Committee
Length of service: appointed as
a Director in November 2020.
Experience: Tim is Professor of
Finance at the Saïd Business School, University of Oxford, Director
of the Oxford Private Equity Institute and one of the founders of
the Private Equity Research Consortium. Tim's research has won many
awards. He is a Professorial Fellow at Keble College,
University of Oxford and a Research Associate of the European
Corporate Governance Institute. Tim is a partner at the European
economic consulting firm Oxera. He has previously held Board
positions in PSource Structured Debt Limited, the US financial
services firm DFC Global Corporation and the German utility
comparison firm, Verivox GmbH. Tim was a Specialist Advisor to
the Culture, Media and Sport Select Committee of the UK
Parliament.
Tim is an experienced researcher and
lecturer, teaching courses on private equity, entrepreneurial
finance, and valuation. Tim remained free from conflict and had
sufficient time available to discharge his duties
effectively.
Committee membership: Audit and
Risk, Management Engagement (Chairman), Valuations (Chairman), and
Nomination Committees.
Current remuneration: £39,000
per annum.
Number of shares held: 6,609
Jemma Bruton
Status: Independent non-executive Director
Length of service: appointed as
a Director in July 2024.
Experience: Jemma, an economics
graduate from Cambridge and an INSEAD MBA, held a number of
senior positions at Goldman Sachs, latterly as Executive Director,
Leveraged Finance. She is currently co-managing director at Salica
Investments Advisory LLP (formerly Hambro Perks Advisory LLP), and
leads their activities on origination, execution and portfolio
management. She has extensive experience in venture investing and
financing and works closely with a number of high growth private
companies in the UK and Europe.
Committee membership: Audit and
Risk, Management Engagement, Valuations, and Nomination
Committees.
Current remuneration: £33,000
per annum.
Number of shares held: Nil
Justin Ward
Status: Independent non-executive Director
Length of service: appointed as
a Director in July 2024.
Experience: Justin is a
Chartered Accountant with considerable investment experience and is
a private equity specialist. He led and managed growth equity and
private equity buyout transactions at CVC Capital Partners and as a
partner at Hermes Private Equity and Bridgepoint Development
Capital. He is an active angel investor and has served on the Board
of a number of private companies as a non-executive Director.
Justin is currently a non-executive Director and Chairman of the
Investment Committee at The Income & Growth VCT plc and a
non-executive Director and Chairman of the Audit Committee at
Hargreave Hale AIM VCT plc.
Committee membership: Audit and
Risk, Management Engagement, Valuations, and Nomination
Committees.
Current remuneration: £33,000
per annum.
Number of shares held: Nil
Directors' Report
The Directors submit their annual
report and financial statements of the Company for the year ended
31 March 2024.
Corporate governance
statement
The Company is committed to high
standards of corporate governance and has implemented a framework
for corporate governance which it considers to be appropriate for
an investment trust.
The Financial Conduct Authority
requires all UK listed companies to disclose how they have applied
the principles and complied with the provisions of the UK Corporate
Governance Code 2018 (the "UK Code") issued by the Financial
Reporting Council ("FRC"). The UK Code is available on the FRC's
website: www.frc.org.uk.
The Company is a member of the
Association of Investment Companies ("AIC"), which has published
its own Code of Corporate Governance to recognise the special
circumstances of investment trusts (www.theaic.co.uk) as endorsed
by the FRC. The Board has considered the principles and provisions
of the AIC Code of Corporate Governance 2019 (the "AIC Code"),
which addresses those set out in the UK Code, as well as setting
out additional provisions on issues that are of specific relevance
to the Company as an investment trust.
The AIC Code also includes an
explanation of how the principles and provisions set out in the UK
Code are adapted to make them relevant for investment
companies.
The Board considers that reporting
against the principles and provisions of the AIC Code provides more
relevant information to shareholders.
The Board confirms that the Company
has complied throughout the year under review with the relevant
principles and provisions of the AIC Code.
The UK Code includes provisions
relating to:
- the role of
executive Directors and senior management;
- executive
Directors' remuneration;
- the need for an
internal audit function;
- the requirement
to establish a Remuneration Committee.
All of the Company's day-to-day
management and administrative functions are outsourced to third
parties and the Company has no executive Directors, employees or
internal operations. The Company has not therefore reported further
in respect of these provisions.
The Nomination Committee fulfils the
function of the Remuneration Committee and considers any change in
the Directors' remuneration policy. As the Company does not have
any executive Directors it was not deemed appropriate to establish
a separate Committee. As permitted under the AIC Code, the Chairman
is a member of the Audit and Risk Committee. An explanation as to
why this is considered appropriate is set out in the Audit and Risk
Committee Report on page 39.
Directors and officers
Chairman
The Chairman is an independent
non-executive Director who is responsible for the leadership of the
Board and ensuring its effectiveness in all aspects of its role.
The Chairman's other significant commitments are detailed on page
34. Neil England will be stepping down at the forthcoming AGM and
Justin Ward will be appointed to replace him as Chairman. He has no
conflicting relationships.
Senior Independent Director
("SID")
The SID acts as a sounding board for
the Chairman, meets with major shareholders as appropriate,
provides a channel for any shareholder concerns regarding the
Chairman and takes the lead in the annual evaluation of the
Chairman by the independent Directors.
Company Secretary
Schroder Investment Management
Limited provides company secretarial support to the Board and is
responsible for assisting the Chairman with Board meetings and
advising the Board with respect to governance. The Company
Secretary also manages the relationship with the Company's service
providers, except for the Manager. Shareholders wishing to lodge
questions in advance of the AGM are invited to do so by writing to
the Company Secretary at the address given on the outside back
cover or by email to: amcompanysecretary@schroders.com.
Role and operation of the
Board
The Board is the Company's governing
body; it sets the Company's strategy and is collectively
responsible to shareholders for its long-term success. The Board is
responsible for appointing and subsequently monitoring the
activities of the Manager and other service providers to ensure
that the investment objective of the Company continues to be met.
The Board monitors that the Manager is adhering to the investment
restrictions set by the Board and acting within the parameters set
by it in respect of any gearing. The Business Review on pages 23
and 24 sets out further detail of how the Board reviews the
Company's strategy, risk management and internal controls and also
includes other information required for the Directors' Report, and
is incorporated by reference.
A formal schedule of matters
specifically reserved for decision by the Board has been defined
and a procedure adopted for Directors, in the furtherance of their
duties, to take independent professional advice at the expense of
the Company.
The Chairman ensures that all
Directors receive relevant management, regulatory and financial
information in a timely manner and that they are provided, on a
regular basis, with key information on the Company's policies,
regulatory requirements and internal controls. The Board meets at
least quarterly and receives and considers reports regularly from
the Manager and other key advisers and ad hoc reports and
information are supplied to the Board as required.
Matters considered by the Board
include: the setting and monitoring of investment strategy;
approval of borrowings and/or cash positions; review of investment
performance; the level of premium or discount of the Company's
shares to NAV per share and promotion of the Company; and services
provided by third parties. Additional meetings of the Board are
arranged as required.
The Board has approved a policy on
Directors' conflicts of interest. Under this policy, Directors are
required to disclose all actual and potential conflicts of interest
to the Board as they arise for consideration and approval. The
Board may impose restrictions or refuse to authorise such conflicts
if deemed appropriate. No Directors have any connections with the
Manager, shared directorships with other Directors or material
interests in any contract which is significant to the Company's
business.
Committees
In order to assist the Board in
fulfilling its governance responsibilities, it has delegated
certain functions to Committees. The roles and responsibilities of
these Committees, together with details of work undertaken during
the year under review, are outlined in the following
pages.
The reports of the Audit and Risk
Committee, Valuations Committee, Management Engagement Committee
and Nomination Committee are incorporated into and form part of the
Directors' Report. Each Committee's effectiveness was assessed, and
judged to be satisfactory, as part of the Board's annual review of
the Board and its Committees (apart from the Valuations Committee
which was established in September 2023).
Key service providers
The Board has adopted an outsourced
business model and has appointed the following key service
providers:
Manager
The Company is an Alternative
Investment Fund as defined by the AIFM Directive and has appointed
Schroder Unit Trusts Limited ("SUTL") as the Manager in line with
the terms of an Alternative Investment Fund Manager ("AIFM")
agreement. The AIFM agreement, which is governed by the laws of
England and Wales, can be terminated by either party on six months'
notice or on immediate notice in the event of certain breaches or
the insolvency of either party. As at the date of this report no
such notice had been given by either party.
SUTL is authorised and regulated by
the FCA and provides portfolio management, risk management,
accounting and company secretarial services to the Company under
the AIFM agreement. The Manager also provides general marketing
support for the Company and manages relationships with key
investors, in conjunction with the Chairman, other Board members or
the Corporate Broker as appropriate.
The Manager has delegated investment
management, accounting, administration and company secretarial
services to another wholly owned subsidiary of Schroders plc,
Schroder Investment Management Limited ("SIM"). The Company
Secretary has an independent reporting line to the Manager and
distribution functions within Schroders. The Manager has in place
appropriate professional indemnity cover.
Private investments are managed by
Schroders' specialist private equity team, Schroders Capital.
Schroders Capital has over 20 years' experience successfully
investing in companies, both directly via direct co-investment and
through funds. They manage over £94 billion of assets across
several specialist strategies.
The Schroders Group manages £760.4
billion (as at 31 March 2024) on behalf of institutional and retail
investors, financial institutions and high net worth clients from
around the world, invested in a broad range of asset classes across
equities, fixed income, multi-asset and alternatives.
Fees payable to the
Manager
The AIFM is entitled to receive from
the Company a management fee calculated and paid quarterly in
arrears, on the last Business Day of March, June, September and
December, at an annual rate of 0.6% per annum of the quarterly cum
income NAV. The AIFM will also be entitled to receive a performance
fee, the sum of which will be equal to 15% of the amount by which
the "PE Portfolio Total
Return" at the end of a
"Calculation Period" exceeds a hurdle of 10% per annum.
"PE
Portfolio" shall mean the Company's private
equity investments and any public equity investments which, at the
time of investment, constituted private equity
investments.
"PE
Portfolio Total Return" shall mean realised
and unrealised gains and losses on the PE Portfolio during the
Calculation Period, plus any dividends paid during the Calculation
Period, minus any management fee or dealing costs payable in
respect of the PE Portfolio during the Calculation Period,
expressed as a percentage of the time weighted invested capital of
the PE Portfolio.
If a performance fee shall be
payable in accordance with the above, it shall only be paid in full
if the "Payment Amount" is greater than the performance fee.
"Listed
Value Change" means the aggregate price
increase or decrease attributable to each PE Portfolio Investment
in listed shares that are held at the end of the relevant
Calculation Period.
"Payment
Amount" means the sum of: (i) aggregate net
realised profits on PE Portfolio Investments since the start of the
relevant Calculation Period; (ii) plus an amount equal to each IPO
Unrealised Gain where the IPO of the relevant PE Portfolio
Investment takes place during the relevant Calculation Period;
(iii) if Listed Value Change is positive in respect of the
Calculation Period, then plus an amount equal to the Listed Value
Change or, if Listed Value Change is negative in respect of that
Calculation Period, minus an amount equal to the
"Listed Value Change"; and (iv) plus the aggregate amount of all dividends or
other income received from PE Portfolio investments of the Company
in that Calculation Period. If the NAV has decreased any accrued
performance fee is carried forward and becomes payable in the next
period in which the NAV increases.
"Calculation
Period" means each financial period ending
on the Company's accounting reference date, except that: (i) the
first Calculation Period shall be the period commencing on Initial
Admission and ending on 30 June 2021; and (ii) the final
Calculation Period shall be the period commencing on the day after
the Company's then accounting reference date and ending on the
winding-up date.
The accrued performance fee shall
only be payable by the Company in respect of a Calculation Period
if the Company's net asset value per share has increased over that
Calculation Period.
The Company may make private equity
investments through underlying investment vehicles in respect of
which the AIFM or other members of the Schroders group may receive
fees. In such circumstances, the AIFM will not charge any fees to
the Company in respect of such investment. In addition, the AIFM
will take all reasonable steps to ensure that any fee charged by an
underlying investment vehicle does not exceed a fee that is
approximately 15% on gains over a hurdle that is, as far as
reasonably practicable, commensurate with the Performance Hurdle.
The AIFM shall also be entitled to a company secretarial and
administrative fee from the Company, equal to the lower of: (i)
0.2% per annum of the quarterly cum income Net Asset Value; and
(ii) £250,000 per annum, paid quarterly in arrears on the last
Business Day of March, June, September and December.
Details of all amounts payable to
the Manager are set out in note 18 to the accounts on page
69.
Depositary
HSBC Bank plc, which is authorised
by the Prudential Regulation Authority and regulated by the
Financial Conduct Authority ('FCA') and the Prudential Regulation
Authority, carries out certain duties of a Depositary
specified in the AIFM Directive including, in relation to the
Company:
- safekeeping of
the assets of the Company which are entrusted
to it;
- cash monitoring
and verifying the Company's cash flows; and
- oversight of the
Company and the Manager.
The Company, the Manager and the
Depositary may terminate the depositary agreement at any time by
giving 90 days' notice in writing. The Depositary may only be
removed from office when a new Depositary is appointed by the
Company.
Registrar
Equiniti Limited ("Equiniti") has
been appointed as the Company's Registrar. Equiniti's services to
the Company include share register maintenance (including the
issuance, transfer and cancellation of shares as necessary), acting
as agent for the payment of any dividends, management of company
meetings (including the registering of proxy votes and scrutineer
services as necessary), handling shareholder queries and
correspondence and processing corporate actions.
Share capital and substantial share
interests
As at 31 March 2024, the Company had
73,900,000 ordinary shares of 1p in issue. 1,100,000 shares were
held in treasury. Accordingly, the total number of voting rights in
the Company at 31 March 2024 was 73,900,000. Details of changes to
the Company's share capital during the year are given in note 13 to
the accounts on page 67.
The Board will be seeking approval
from shareholders to buy-back shares, reissue shares held in
treasury and issue new shares, as more particularly described in
the AGM notice and Annual General Meeting - Recommendations
section.
All shares in issue rank equally
with respect to voting, dividends and any distribution on winding
up.
The Company has received
notifications in accordance with the FCA's Disclosure Guidance and
Transparency Rule 5.1.2R of the below interests in 3% or more of
the voting rights attaching to the Company's issued share
capital.
The Company is reliant on investors
to comply with these regulations, and certain investors may be
exempted from providing these. As such, this should not be relied
on as an exhaustive list of shareholders holding above 3% of the
Company's voting rights.
|
|
%
|
|
As at
|
of total
|
|
31 March
|
voting
|
|
2024
|
rights
|
Schroders plc
|
21,151,994
|
28.62%
|
East Riding Of Yorkshire
Council
|
15,000,000
|
20.30%
|
Following the year end and at the
date of this report, there have been no changes.
Revenue, final dividend and dividend
policy
The net revenue loss for the year,
after finance costs and taxation, was £722,000, equivalent to a
revenue loss per ordinary share of 0.98 pence.
The Company's intention is to look
for overall return rather than seeking any particular level of
dividend income. Subject to the requirement to make distributions
to maintain investment trust status, any dividends and other
distributions paid by the Company will be made at the discretion of
the Board. The payment of any such dividends or other distributions
(if any) will depend on the Company's ability to generate realised
profits and to acquire investments which pay dividends, its
financial condition, its current and anticipated cash needs, its
costs and net proceeds on sale of its investments, legal and
regulatory restrictions and such other factors as the Board may
deem relevant from time to time. As such, investors should have no
expectation that dividends or distributions will be paid at
all.
The Company has adopted a policy of
allocating all operating costs to revenue reserves rather than
apportioning any to the capital reserve. This policy is expected to
result in a revenue loss being reported in most accounting
periods.
The Directors do not propose the
payment of a dividend in respect of the year ended 31 March 2024
(2023: nil).
Provision of information to the
Auditor
The Directors at the date of
approval of this report confirm that, so far as each of them is
aware, there is no relevant audit information of which the
Company's auditor is unaware; and each Director has taken all the
steps that he or she ought to have taken as a Director in order to
make himself or herself aware of any relevant audit information and
to establish that the Company's auditor is aware of that
information.
Directors' attendance at
meetings
The number of scheduled meetings of
the Board and its Committees held during the year and the
attendance of individual Directors is shown below.
|
|
Audit
|
Management
|
|
|
|
|
and Risk
|
Engagement
|
Nomination
|
Valuation
|
Director
|
Board
|
Committee
|
Committee
|
Committee
|
Committee
|
Neil England
|
4/4
|
3/3
|
1/1
|
2/2
|
2/2
|
Diana Dyer Bartlett
|
4/4
|
3/3
|
1/1
|
2/2
|
2/2
|
Tim Jenkinson
|
4/4
|
3/3
|
1/1
|
2/2
|
2/2
|
Directors' and officers' liability
insurance and indemnities
Directors' and officers' liability
insurance cover was in place for the Directors throughout the year.
The Company's Articles of Association provide, subject to the
provisions of UK legislation, an indemnity for Directors in respect
of costs which they may incur relating to the defence of any
proceedings brought against them arising out of their positions as
Directors, in which they are acquitted or judgment is given in
their favour by the court. This indemnity is a qualifying third
party indemnity policy and was in place throughout the year under
review for each Director and to the date of this report.
Company status
The Articles of Association require
the Directors to put forward, at a general meeting of the Company
to be held in the year 2028 but in any event no later than 31 May
2028, a winding-up resolution to place the Company into voluntary
liquidation, unless alternative proposals have been approved by shareholders.
Post balance sheet event
In June 2024 the Company announced
the completion of a new private equity investment in HeadFirst, an
international HR tech service provider. The invested capital will
be utilised to finance HeadFirst's acquisition of Impellam Group, a
managed services and specialist staffing provider.
By order of the Board
Schroder Investment Management
Limited
Company Secretary
10 July 2024
Audit and Risk Committee
Report
The responsibilities and work
carried out by the Audit and Risk Committee during the year are set
out below. The duties, which include monitoring the integrity of
the Company's financial reporting and internal controls, may be
found in the terms of reference which are set out on the Company's
webpages: https://www.schroders.com/sbot.
Due to the size of the Board, all
Directors are members of the Committee. Diana Dyer Bartlett is the
Chairman of the Committee. The Board has satisfied itself that at
least one of the Committee's members has recent and relevant
financial experience and that the Committee as a whole has
competence relevant to the sector in which the Company operates.
The AIC Code permits the Chairman of the Board to be a member of
the Audit Committee of an investment trust. As the Board is small,
having consisted, until July 2024, of only three members and
recognising Neil England's significant experience, it is
considered appropriate for the Chairman of the Board, who was
independent on appointment, to be a member of the
Committee.
Approach
|
Risk
management and internal controls
|
Financial
reports and valuation
|
Audit
|
Principal and emerging risks and
uncertainties
To establish a process for
identifying, assessing, managing and monitoring the principal and
emerging risks of the Company and to explain how these are managed
or mitigated.
The Committee is responsible for
reviewing the adequacy and effectiveness of the Company's internal
controls and the whistleblowing procedures operated by the AIFM and
other services providers.
|
Report and financial
statements
To monitor the integrity of the
report and financial statements of the Company and any formal
announcements relating to the Company's financial performance and
valuation.
|
Audit results
To discuss any matters arising from
the audit and recommendations made by the auditor.
|
|
Going concern and
viability
To review the position and make
recommendations to the Board in relation to whether it considers it
appropriate to adopt the going concern basis of accounting in
preparing its annual and half-yearly report and financial
statements.
The Committee is also responsible
for reviewing the disclosures made by the Company in the viability
statement.
|
Auditor appointment, independence
and performance
To make recommendations to the
Board, in relation to the appointment, re-appointment,
effectiveness, and any non-audit services by the auditor and
removal of the external auditor. To review their independence, and
to recommend to the Board their remuneration. To review the audit
plan and engagement letter.
|
ä
|
|
|
|
| |
The Committee identified no
significant internal control issues during the Committee's review
of the Company's principal risks and uncertainties. The below table
sets out how the Committee discharged its duties during the year
and up until the approval of this report. The Committee met three
times during the year. Further details on attendance can be found
on page 38. An evaluation of the Committee's effectiveness and
review of its terms of reference was performed in March 2024 and
the next will be completed as part of the Board and Committee
evaluation process in the next reporting year.
Application during the year
|
Risk
management and internal controls
|
Financial
reports
|
Audit
|
Service provider controls
The operational controls maintained
by the Manager, Administrator, Depositary and Registrar were
reviewed and included consideration of:
-
a summary, prepared by the AIFM, following review,
of the internal controls reports prepared bi-annually by HSBC in
respect of its European Traditional Fund Services, Global Custody
Services and Information Technology Services operations;
-
a summary, prepared by the AIFM following review,
of the internal controls reports prepared annually by SIM;
and
-
the Assurance Report on internal controls of
Equiniti Share Registration Services.
|
Valuation and existence of
holdings
Considered reports from the Manager
and Depository, including quarterly reports and one at the year
end. The Committee has reviewed the Valuation methodologies used
for both public and private investments which supports the work
undertaken by the Valuations Committee to review and report on the
revaluations undertaken on the unquoted holdings during the period
and challenge the considerations and key assumptions made where
appropriate, to ensure that the valuations are reliable.
The Committee continued to consider
the IPEV guidelines and their implications for the Company's
valuations.
|
Meetings with the auditor
The auditor attended meetings to
present their audit plan and the findings of the audit.
The Committee met the auditor
without representatives of the Manager present.
|
Internal controls and risk
management
Consideration of internal controls
at a briefing session which assessed the internal controls of
certain key service providers including the Company's Depositary
and Custodian, HSBC, the Company's Registrar, Equiniti, and
Schroders Group Internal Audit.
|
Recognition of investment
income
Reviewed consideration of dividends
received against forecast and the allocation of special
dividends.
The Committee took steps to gain an
understanding of the processes to record investment income so that
dividends paid by any investee companies held at any time during
the year, had been recorded and, where appropriate,
collected.
|
Effectiveness of the independent
audit process and auditor performance
Evaluated the effectiveness of the
independent audit firm and process prior to making a recommendation
that it should be re-appointed at the forthcoming AGM. Evaluated
the auditor's performance against agreed criteria including:
qualification; knowledge, expertise and resources; independence
policies; effectiveness of audit planning; adherence to auditing
standards; and overall competence was considered, alongside
feedback from the Manager on the audit process. Professional
scepticism of the auditor was questioned and the Committee was
satisfied with the auditor's replies.
|
Compliance with the investment trust
qualifying rules in S1158 of the Corporation Tax Act
2010
Consideration of the Manager's
report confirming compliance.
|
Calculation of the investment
management fee and performance fee
Confirmed that the performance and
management fees have been calculated in accordance with the AIFM
agreement. Consideration of methodology used to calculate the fees,
matched against the criteria set out in the AIFM
agreement.
|
Auditor independence
Ernst & Young LLP has provided
audit services to the Company since it was appointed on 19 May
2021. This is the fourth period that Ernst & Young LLP will be
undertaking the Company's audit.
The auditors are required to rotate
the senior statutory auditor every five years. This is the fourth
period that the senior statutory auditor, Caroline Mercer, has
conducted the audit of the Company's report and financial
statements. The auditors were appointed due to their
experience.
There are no contractual obligations
restricting the choice of external auditors.
|
ä
|
Application during the year
|
Risk
management and internal controls
|
Financial
reports
|
Audit
|
|
Overall accuracy of the report and
financial statements
Consideration of the draft report
and financial statements and the letter from the Manager in support
of the letter of representation to the auditor.
|
Audit results
Met with and reviewed a
comprehensive report from the auditor which detailed the results of
the audit, compliance with regulatory requirements, safeguards that
have been established, and on their own internal quality control
procedures.
|
Principal risks
Reviewed the principal and emerging
risks together with key risk mitigations. The Committee considered
the Company's risk appetite statement.
|
Fair, balanced and
understandable
Reviewed the report and financial
statements to advise the Board whether it was fair, balanced and
understandable.
Reviewed whether performance
measures were reflective of the business, whether there was
adequate commentary on the Company's strengths and weaknesses and
that the report and financial statements, were taken as a whole and
consistent with the Board's view of the operation of the
Company.
|
Provision of non-audit services by
the auditor
The Committee has reviewed the FRC's
Guidance on Audit Committees and has formulated a policy on the
provision of non-audit services by the Company's auditor. The
Committee has determined that the Company's appointed auditor will
not be considered for the provision of certain non-audit services,
such as accounting and preparation of the report and financial
statements, internal audit and custody. The auditor may, if
required, provide other non-audit services which will be judged on
a case-by-case basis however, they did not do so during the
reporting period.
The Committee was satisfied that
this did not affect the independence or objectivity of the
auditor.
|
ä
|
Recommendations made to, and approved by, the
Board:
The
Committee recommended that the Board approve the half year report
and the annual report and financial statements. The Committee
recommended that the going concern presumption be adopted in the
report and financial statements and the explanations set out in the
viability statement.
As
a result of the work performed, the Committee has concluded that
the report for the year ended 31 March 2024, taken as a whole, is
fair, balanced and understandable and provides the information
necessary for shareholders to assess the Company's position,
performance, business model and strategy, and has reported on these
findings to the Board. The Board's conclusions in this respect are
set out in the Statement of Directors' Responsibilities on page
49.
Having reviewed the performance of the auditors as described
above, the Committee considered it appropriate to recommend the
firm's re-appointment. Resolutions to re-appoint Ernst & Young
LLP as auditor to the Company, and to authorise the Directors to
determine their remuneration will be proposed at the
AGM.
The
Committee considered and reviewed the Company's compliance with the
investment trust qualifying rules in s1158 of the Corporation
Tax Act 2010 noting that there was no requirement to pay a
dividend under this section.
Diana Dyer Bartlett
Audit and Risk Committee
Chairman
10 July 2024
Management Engagement Committee
Report
The Management Engagement Committee
is responsible for: (1) the monitoring and oversight of the
Manager's performance and fees, and confirming the Manager's
ongoing suitability, and (2) reviewing and assessing the Company's
other service providers, including reviewing their fees. All
Directors are members of the Committee. Tim Jenkinson is the
Chairman of the Committee. Its terms of reference are available on
the Company's webpage: https://www.schroders.com/sbot. The
Committee held one scheduled meeting during the year.
Approach
|
Oversight of the Manager
|
|
Oversight of the Manager
|
The Committee:
· reviews the Manager's performance, over the short and long
term.
· considers the reporting it has received from the Manager
throughout the year and the reporting from the Manager to the
shareholders.
· assesses management fees including the performance fee on an
absolute and relative basis, receiving input from the Company's
Broker, including peer group and industry figures, as well as the
structure of the fees.
· reviews the appropriateness of the Manager's contract,
including terms such as notice period.
· assesses whether the Company receives appropriate
administrative, accounting, company secretarial and marketing
support from the Manager.
|
|
The Committee reviews the
performance of the following service providers on at least an
annual basis:
· Depositary and Custodian;
· Corporate Broker; and
· Registrar.
The Committee receives a report from
the Company Secretary on ancillary service providers, and considers
any recommendations.
The Committee reviews all key
service providers other than the external auditor, whose
performance is reviewed by the Audit and Risk Committee.
|
ä
|
Application during the year
|
The Committee undertook a detailed
review of the Manager's performance and agreed that it has the
appropriate depth and quality of resource to deliver superior
returns over the longer term.
The Committee also reviewed the
terms of the AIFM agreement, including the fee
structure.
The Committee reviewed the other
services provided by the Manager and agreed they were
satisfactory.
|
|
The Committee conducted its annual
review of service providers who were deemed satisfactory. A
detailed review of the Depositary and Custodian took
place.
The Committee undertook an
evaluation of the Manager, Registrar, and Depositary and
Custodian's internal controls.
|
|
ä
|
|
Recommendations made to, and approved by, the
Board:
• That the ongoing appointment of the Manager on the
terms of the AIFM agreement, including the fee, was in the best
interests of shareholders as a whole.
• That the Company's service providers' performance and
fees remained satisfactory.
Nomination Committee
Report
The Nomination Committee is
responsible for: (1) the recruitment, selection and induction of
Directors; (2) their assessment during their tenure; (3) the
Board's succession planning; and (4) Directors' fee. All Directors
are members of the Committee. Neil England is the Chairman of the
Committee. Its terms of reference are available on the Company's
webpage: https://www.schroders.com/sbot. The
Committee held two scheduled meetings during the year.
Oversight of Directors
Approach
|
Selection and induction
|
Board evaluation and Directors'
fees
|
Succession
|
· Committee prepares a job specification for each role, and an
independent recruitment firm is appointed. For the Chairman of
Committees, the Committee considers current Board members
too.
· Job
specification outlines the knowledge, professional skills, personal
qualities and experience requirements.
· Potential candidates assessed against the Company's diversity
policy.
· Committee discusses the long list, invites a number of
candidates for interview and makes a recommendation to the
Board.
· Committee reviews the induction and training of new
Directors.
|
· Committee assesses each Director annually, and considers if an
external evaluation is appropriate.
· Evaluation focuses on whether each Director continues to
demonstrate commitment to their role and provides a valuable
contribution to the Board during the year, taking into account time
commitment, independence, conflicts and training needs.
· Following the evaluation, the Committee provides a
recommendation to shareholders with respect to the annual
re-election of Directors at the AGM.
· All
Directors retire at the AGM and their re-election is subject to
shareholder approval.
· Committee reviews Directors' fees, taking into account
comparative data and reports to shareholders.
· Any
proposed changes to the remuneration policy for Directors discussed
and reported to shareholders.
|
· The
Board's succession policy is that Directors' tenure will be for no
longer than nine years, except in exceptional circumstances, and
that each Director will be subject to annual re-election at the
AGM.
· Committee reviews the Board's current and future needs at
least annually. Should any need be identified the Committee will
initiate the selection process.
· Committee oversees the handover process for retiring
Directors.
|
ä
|
Approach
|
Selection and induction
|
Board evaluation and Directors'
fees
|
Succession
|
· Following a rigorous selection process using an independent
external recruitment agency, Nurole, Justin Ward and Jemma Bruton
were appointed to the Board with effect from 1 July 2024. Nurole
has no connection with the Company or any of the
Directors.
· The
Committee noted that, as part of the appointment process, the new
Directors would engage in an induction programme with the Manager
and its various operating functions as well as other key service
providers.
· Justin
Ward and Jemma Bruton will stand for election as Directors at the
forthcoming AGM, as set out in resolutions five and six of the
Notice of Annual General Meeting.
· Other
independent external recruitment agencies were also approached to
provide proposals.
|
The Committee assesses each Director
annually, and considers if an external evaluation is
appropriate.
· Evaluation focuses on whether each Director continues to
demonstrate commitment to their role and provides a valuable
contribution to the Board during the reporting period, taking into
account time commitment, independence, conflicts and training
needs.
· Following the evaluation, the Committee provides a
recommendation to shareholders with respect to the annual
re-election of Directors at the AGM.
· All
Directors retire at the AGM and their re-election is subject to
shareholder approval.
· Committee reviews Directors' fees, taking into account
comparative data and reports to shareholders.
· Any
proposed changes to the remuneration policy for Directors discussed
and reported to shareholders.
|
· In
anticipation of Neil England's retirement at the forthcoming AGM,
the Committee discussed appointing a suitable replacement having
regard to the current Board's composition, diversity and efficacy.
Following consideration, it was agreed that Justin Ward would be
a suitable candidate to act as Chairman upon Neil's
retirement.
· Following consideration the Board agreed that it was required
to strengthen numbers by increasing its number back to four
Directors.
· The
Committee believes it is important for the Board to have the
appropriate skills and diversity and will continue to review
composition and succession plans with these in mind.
· Jemma's appointment will aid in strengthening the Board and
will enable the Board to meet its gender diversity
target.
|
ä
|
Recommendations made to, and approved by, the
Board:
• That all Directors continue to demonstrate
commitment to their roles, provide a valuable contribution to the
deliberations of the Board, remuneration of the Directors remains
appropriate and Directors remain free from conflicts with the
Company and its Directors contribute to the long-term sustainable
success of the Company, and should all be recommended for election
or re-election by shareholders at the AGM. Neil England will step
down at the forthcoming AGM and will not be standing for
re-election.
• That Directors' fees be increased by 5% per
annum (rounded to the nearest £500).
• The Director's Remuneration Report and
Remuneration Policy be put to shareholders as ordinary resolutions
at the forthcoming AGM.
• That Nurole be engaged to assist in the search
for the new non-executive Director positions.
• That in order to strengthen the Board numbers to
four and in light of Neil England's imminent departure as Chairman,
that Justin Ward and Jemma Bruton be appointed as a non-executive
Directors with effect from 1 July 2024 and that their election as
non-executive Directors be proposed, and recommended to
shareholders for approval at the forthcoming AGM.
Valuations Committee
Report
During the financial year the Board
decided to form a Valuations Committee to take on some of the
valuation responsibilities previously undertaken by the Audit and
Risk Committee. This decision recognised the importance of the
Board's oversight role on valuations and the need for shareholders
to have confidence in the outcomes determined by the Committee. The
Committee was established in September 2023 and held two meetings
during the remaining period of the year.
The Valuations Committee is
responsible for reviewing, and where necessary, challenging the
valuations carried out by out by the specialist in-house valuations
team. This team operates independently to the Investment Management
team. Tim Jenkinson is the Chairman and the other Directors are
members of the Committee. Its terms of reference are available on
the Company's webpage: https://www.schroders.com/sbot.
Approach
|
Valuation and existence of
holdings
The Committee:
· meets
at least four times a year to consider the private equity quarterly
NAV revaluations. The Committee also considers the public equity
holdings (where necessary) to ensure complete oversight of the
entire portfolio;
|
· formulates valuation policies for investments of the Company,
considers whether independent valuation of the portfolio is
required and approves the valuations for both public and private
investments; and
· considered reports from the Manager at each
meeting.
|
ä
|
Application for the year
|
The Committee met with the Manager's
valuation team at each meeting and reviewed the basis on which each
investment had been valued.
The Committee reviewed and
recommended valuation inputs for quarterly NAV
calculations.
|
The Committee challenged the
multiples that had been used and reviewed the usage of market
comparables.
The Committee discussed the ongoing
progress of investee companies to understand how this would have an
effect on valuations.
|
ä
|
Recommendations made to, and approved by, the
Board:
The
Committee recommended that the Board approve the quarterly and half
year valuations. Post the period end the Committee also provided
recommendations in respect of the year end valuation to support the
annual report and financial statements.
Directors' Remuneration
Report
Introduction
The remuneration policy below is
currently in force and is subject to a binding vote every
three years. The next vote will take place at the forthcoming AGM
and the current policy provisions will apply until that date. An
ordinary resolution to approve the Directors' remuneration policy
will be put to shareholders at the AGM (no changes are proposed).
The Directors' report on remuneration is subject to an annual
advisory vote. An ordinary resolution to approve this report will
be put to shareholders at the forthcoming AGM.
At the AGM held on 30 November 2021,
99.99% of the votes cast (including votes cast at the Chairman's
discretion) in respect of approval of the Directors' Remuneration
Policy were in favour, while 0.01% were against and 10,000 votes
were withheld.
At the AGM held on 27 September
2023, 99.71% of the votes cast (including votes at the Chairman's
discretion) in respect of approval of the Director's Remuneration
Report were in favour, while 0.29% were against.
Directors' remuneration
policy
It is the Board's policy to
determine the level of Directors' remuneration having regard to
amounts payable to non-executive Directors in the industry
generally, the role that individual Directors fulfil in respect of
Board and Committee responsibilities, and time committed to the
Company's affairs, taking into account the aggregate limit of fees
set out in the Company's Articles of Association. This aggregate
level of Directors' fees is currently set at £500,000 per financial
year and any increase in this level requires approval by the Board
and the Company's shareholders.
The Chairman of the Board, the Chair
of the Audit and Risk Committee and the Chairman of the Valuations
Committee each receive fees to reflect their additional
responsibilities. Directors' fees are set at a level to recruit and
retain individuals of sufficient calibre, with the level of
knowledge, experience and expertise necessary, and to promote the
success of the Company in reaching its short and long-term
strategic objectives.
The Board and its Committees
comprise non-executive Directors. No Director past or present has
an entitlement to a pension from the Company and the Company has
not, and does not intend, to operate a share scheme for Directors
or to award any share options or long-term performance incentives
to any Director. No Director has a service contract with the
Company; however, Directors have a letter of appointment. Directors
do not receive exit payments and are not provided with any
compensation for loss of office. No other payments are made to
Directors other than the reimbursement of reasonable out-of-pocket
expenses incurred in attending to the Company's
business.
Any Director who performs services
which in the opinion of the Directors are outside the scope of the
ordinary duties of a Director, may be paid additional remuneration
to be determined by the Directors, subject to the previously
mentioned fee cap.
Implementation of policy
The terms of Directors' letters of
appointment are available for inspection at the Company's
registered office address during normal business hours and during
the AGM at the location of such meeting.
The Board did not seek the views of
shareholders in setting this remuneration policy. Any comments on
the policy received from shareholders would be considered on a case
by case basis.
As the Company does not have any
employees, no employee pay and employment conditions were taken
into account when setting this remuneration policy and no employees
were consulted in its construction.
Directors' fees are reviewed
annually and take into account research from third parties on the
fee levels of Directors of peer group companies, inflation, as well
as industry norms and factors affecting the time commitment
expected of the Directors. New Directors are subject to the
provisions set out in this remuneration policy.
Directors' report on
remuneration
This report sets out how the
remuneration policy was implemented during the year ended 31 March
2024.
Fees paid to Directors
The following amounts were paid by
the Company to Directors for their services in respect of the year
ended 31 March 2024. Directors' remuneration is all fixed; they do
not receive any variable remuneration.
|
Fees
|
Taxable
benefits1
|
Total
|
|
Year ended
|
Year ended
|
Year ended
|
Year ended
|
Year ended
|
Year ended
|
|
31 March
|
31 March
|
31 March
|
31 March
|
31 March
|
31 March
|
|
2024
|
2023
|
2024
|
2023
|
2024
|
2023
|
Directors
|
£
|
£
|
£
|
£
|
£
|
£
|
Neil England (Chairman)
|
43,250
|
42,003
|
-
|
-
|
43,250
|
42,003
|
Diana Dyer Bartlett
|
37,875
|
36,753
|
-
|
-
|
37,875
|
36,753
|
Tim Jenkinson
|
35,250
|
31,502
|
-
|
44
|
35,250
|
31,546
|
Christopher
Keljik2
|
-
|
28,827
|
-
|
-
|
-
|
28,827
|
|
116,375
|
139,085
|
-
|
44
|
116,375
|
139,129
|
1Comprise amounts reimbursed for expenses incurred in carrying
out business for the Company, and which have been grossed up to
include PAYE and NI contributions.
2Resigned from the Board on 28 February 2023.
The information in the above table
has been audited.
Consideration of matters relating to
Directors' remuneration
The determination of the Directors'
fees is considered by the Nomination Committee who make
recommendations to the Board and during the period recommended a 5%
increase (rounded to the nearest £500) to commence from 1 October
2023.
Directors' remuneration was last
reviewed by the Nomination Committee and the Board in September
2023. The members of the Board at the time that remuneration levels
were considered are set out on page 47. Although no external advice
was sought in considering the levels of Directors' fees,
information on fees paid to Directors of other investment companies
managed by Schroders and peer group companies provided by the
Manager and Corporate Broker was taken into consideration as was
independent third party research.
Change in annual remuneration payable
|
|
|
Change in
fee
|
|
Change in
annual
|
Change in
annual
|
over
the
|
|
fee over the
year
|
fee over the
year
|
nine month
period
|
|
ended 31
March
|
ended 31
March
|
ended 31
March
|
|
2024
|
2023
|
2022
|
Directors
|
%
|
%
|
%1
|
Neil England (Chairman)
|
3.0
|
2.5
|
2.6
|
Diana Dyer Bartlett
|
3.1
|
3.9
|
3.4
|
Tim Jenkinson
|
11.7
|
4.6
|
0.3
|
Christopher
Keljik2
|
-
|
-
|
(1.8)
|
1Calculated based on annualised fees for the nine months ended
31 March 2022 and seven months ended 30 June 2021.
2Resigned from the Board on 28 February 2023.
The table below compares the
remuneration payable to Directors, to distributions made to
shareholders during the year under review and the prior period. In
considering these figures, shareholders should take into account
the Company's investment objective.
Distributions to shareholders (share
buy-backs) vs Directors' remuneration
|
Year ended
|
Year ended
|
|
|
31 March
|
31 March
|
|
|
2024
|
2023
|
|
|
£'000
|
£'000
|
% Change
|
Remuneration payable to
Directors
|
116
|
139
|
(11.5)
|
Distributions paid to shareholders
(share buy-backs)
|
-
|
808
|
(100.0)
|
Performance graph since 1 December
2020 (launch date)
Share price return versus FTSE 250
ex-Investment Trusts Index1 total return for the period
from launch date on 1 December 2020, to 31 March
2024.
1Source: Morningstar. Rebased to 100 at 1 December 2020. The
FTSE 250 ex Investment Trusts Index has been selected as an
appropriate comparison as it best represents the companies that the
Manager uses to select investment opportunities. Companies within
this index represent the growth characteristics that the Manager
seeks to meet the long term investment objective of delivering
returns to shareholders.
Directors' share
interests
The Company's Articles of
Association do not require Directors to own shares in the Company.
The interests of Directors, who held office at the end of the year,
including those of connected persons, at the beginning and end of
the financial year under review, are set out below.
|
At 31 March
|
At 31 March
|
|
20241
|
20231
|
Neil England
|
55,000
|
55,000
|
Diana Dyer Bartlett
|
46,345
|
46,345
|
Tim Jenkinson
|
6,609
|
6,609
|
Christopher
Keljik2
|
-
|
172,601
|
1Ordinary shares of 1p each.
2Resigned from the Board on 28 February 2023.
The information in the above table
has been audited.
On behalf of the Board
Neil England
Chairman
10 July 2024
Statement of Directors'
Responsibilities
Directors'
Responsibilities
The Directors are responsible for
preparing the annual report and 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 prepared the report and 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, comprising FRS 102, have been
followed, subject to any material departures disclosed and
explained in the financial statements;
- notify the
Company's shareholders in writing about the use of disclosure
exemptions in FRS 102, used in the preparation of 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 webpage 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 34 and 35, 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 Strategic Report
contained in the report and financial statements 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
financial statements, 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
Neil England
Chairman
10 July 2024
Independent Auditors
Report
Opinion
We have audited the financial
statements of Schroder British Opportunities Trust plc for the year
ended 31 March 2024 which comprise the Statement of Comprehensive
Income, the Statement of Changes in Equity, the Statement of
Financial Position, the Cash Flow Statement and the related notes 1
to 24 including a summary of significant accounting policies. The
financial reporting framework that has been applied in their
preparation is applicable law and United Kingdom Accounting
Standards including FRS 102 "The Financial Reporting Standard
applicable in the UK and Republic of Ireland" (United Kingdom
Generally Accepted Accounting Practice).
In our opinion, the financial
statements:
•
give a true and fair view of the Company's affairs
as at 31 March 2024 and of its profit for the year then
ended;
•
have been properly prepared in accordance with
United Kingdom Generally Accepted Accounting Practice;
and
•
have been prepared in accordance with the
requirements of the Companies Act 2006.
Basis for opinion
We conducted our audit in accordance
with International Standards on Auditing (UK) (ISAs (UK)) and
applicable law. Our responsibilities under those standards are
further described in the Auditor's responsibilities for the audit
of the financial statements section of our report. We believe that
the audit evidence we have obtained is sufficient and appropriate
to provide a basis for our opinion
Independence
We are independent of the Company in
accordance with the ethical requirements that are relevant to our
audit of the financial statements in the UK, including the FRC's
Ethical Standard as applied to public interest entities, and we
have fulfilled our other ethical responsibilities in accordance
with these requirements.
The non-audit services prohibited by
the FRC's Ethical Standard were not provided to the Company and we
remain independent of Company in conducting the
audit.
Conclusions relating to going concern
In auditing the financial
statements, we have concluded that the directors' use of the going
concern basis of accounting in the preparation of the financial
statements is appropriate. Our evaluation of the directors'
assessment of the Company's ability to continue to adopt the going
concern basis of accounting included:
·
Confirming our understanding of the Company's
going concern assessment process and engaging with the Directors
and the Company Secretary to determine if all key factors that we
have become aware of during our audit were considered in their
assessment.
·
Inspecting the directors' assessment of going
concern, including the revenue forecast, for the period to 31 July
2025 which is at least twelve months from the date the financial
statements were authorised for issue.
·
Reviewing the factors and assumptions, including
the impact of the current economic environment and other
significant events that could give risk to market volatility, as
applied to the revenue forecast and the liquidity assessment of the
investments. We considered the appropriateness of the methods used
to calculate the revenue forecast and the liquidity assessment and
determined, through testing of the methodology and calculations,
that the methods, inputs and assumptions utilised were appropriate
to be able to make an assessment for the Company.
·
Considering the mitigating factors included in the
revenue forecasts that are within the control of the Company. We
reviewed the Company's assessment of the liquidity of investments
held and evaluated the Company's ability to sell those investments
in order to cover working capital requirements as a result of the
Company operating at a revenue loss.
·
Considering the commitments that have been made
with respect to the purchase of unquoted investments to ensure that
these have been appropriately taken account of when preparing the
forecast.
·
Reviewing the Company's going concern disclosures
included in the annual report in order to assess that the
disclosures were appropriate and in conformity with the reporting
standards.
Based on the work we have performed,
we have not identified any material uncertainties relating to
events or conditions that, individually or collectively, may cast
significant doubt on the Company's ability to continue as a going
concern for a period to 31 July 2025, which is at least 12 months
from when the financial statements are authorised for
issue.
In relation to the Company'
reporting on how they have applied the UK Corporate Governance
Code, we have nothing material to add or draw attention to in
relation to the directors' statement in the financial statements
about whether the directors considered it appropriate to adopt the
going concern basis of accounting.
Our responsibilities and the
responsibilities of the directors with respect to going concern are
described in the relevant sections of this report. However,
because not all future events or conditions can be predicted, this
statement is not a guarantee as to the Company's ability to
continue as a going concern.
Overview of our audit approach
Key audit matters
|
· Risk
of incorrect valuation or ownership of the investment
portfolio
· Risk
of incorrect calculation of the performance fee
|
Materiality
|
· Overall materiality of £0.81m (2023: £0.79m) which represents
1% (2023:1%) of shareholders' funds.
|
An
overview of the scope of our audit
Tailoring the scope
Our assessment of audit risk, our
evaluation of materiality and our allocation of performance
materiality determine our audit scope for the Company. This enables
us to form an opinion on the financial statements. We take into
account size, risk profile, the organisation of the company and
effectiveness of controls, the potential impact of climate change
and changes in the business environment when assessing the level of
work to be performed.
Climate change
There has been increasing interest
from stakeholders as to how climate change will impact Companies.
The Company has determined that the impact from climate change
could affect the Company's investment valuations and overall
investment process. This is explained in the principal risks and
uncertainties section on page 30 which forms part of the "Other
information," rather than the audited financial statements. Our
procedures on these unaudited disclosures therefore consisted
solely of considering whether they are materially inconsistent with
the financial statements or our knowledge obtained in the course of
the audit or otherwise appear to be materially
misstated.
Our audit effort in considering
climate change was focused on the adequacy of the Company's
disclosures in the financial statements as set out in Note 1c and
conclusion that there was no further impact of climate change to be
taken into account. The quoted investments are valued based on
market pricing as required by FRS 102 and the unquoted investments
are valued using a variety of techniques consistent with the
recommendations set out in the International Private Equity and
Venture Capital (IPEV) guidelines which also reflect each
investment's exposure to climate change risk. We also challenged
the directors' considerations of climate change in their assessment
of viability and associated disclosures.
Key
audit matters
Key audit matters are those matters
that, in our professional judgment, were of most significance in
our audit of the financial statements of the current period and
include the most significant assessed risks of material
misstatement (whether or not due to fraud) that we identified.
These matters included those which had the greatest effect on: the
overall audit strategy, the allocation of resources in the audit;
and directing the efforts of the engagement team. These matters
were addressed in the context of our audit of the financial
statements as a whole, and in our opinion thereon, and we do not
provide a separate opinion on these matters.
Risk
|
Our
response to the risk
|
Key
observations communicated to the Audit Committee
|
Incorrect valuation or ownership of the investment
portfolio (as described on page 40 in
the Audit and Risk Committee Report and as per the accounting
policy set out on page 62)
The value of the investment
portfolio at 31 March 2024 was £83.09m (2023: £74.13m) consisting
of quoted investments with an aggregate value of £30.23m (2023:
£26.17m) and unquoted investments with an aggregate value of
£52.86m (2023: £47.96m).
The valuation of the assets held in
the investment portfolio is the key driver of the Company's net
asset value and total return. Incorrect investment pricing, or a
failure to maintain proper legal title to the investments held by
the Company could have a significant impact on the portfolio
valuation and the return generated for shareholders.
The fair value of quoted investments
is determined by reference to bid prices which are at close of
business on the reporting date.
Unquoted investments are valued at
fair value by the Directors following a detailed review and
appropriate challenge of the valuations proposed by Schroder
Capital (the "Portfolio Manager"). The unquoted investment policy
applies methodologies consistent with the International Private
Equity and Venture Capital Valuation guidelines
('IPEV').
The valuation of the unquoted
investments, and the resultant impact on the unrealised
gains/(losses), is the area requiring the most significant
judgement and estimation in the preparation of the financial
statements and has been classified as an area of fraud risk as
highlighted below on page 57.
|
We
have performed the following procedures:
We obtained an understanding of the
Portfolio Manager's and the Administrator's processes and controls
surrounding legal title and valuation of quoted and unquoted
investments by performing walkthrough procedures.
For all quoted investments in the
portfolio, we compared the market prices and exchange rates applied
to an independent pricing vendor and recalculated the investment
valuations as at the year end.
We confirmed with the Administrator
that there were no investments with stale prices for the quoted
investments as at the year end and therefore no stale pricing
report produced. We obtained the market prices, from an independent
pricing vendor, for 5 business days pre and post the year end date
and calculated the day-on-day movement and confirmed there are no
stale prices.
We compared the Company's quoted and
unquoted investment holdings at 31 March 2024 to independent
confirmations received directly from the Company's Custodian and
Depositary.
We obtained confirmations directly
from independent third parties with respect to the unquoted
investments held by the Company.
We engaged our team of valuation
specialists to review the valuations of all unquoted investments
which included completing the following procedures:
· Reviewing the valuation papers for the year ended 31 March
2024 to gain an understanding of, and comment on, the valuation
methodologies and assumptions used;
· Assessing whether the valuations have been performed in line
with general valuation approaches as set out in UK GAAP and the
International Private Equity and Venture capital ('IPEV')
guidelines;
· Assessing the appropriateness of data inputs and challenging
the assumptions used to support the valuations;
· Assessing other facts and circumstances, such as market
movements and comparative company information, that have an impact
on the fair market value of the investments; and
· Performing comparative calculations to assess whether the
valuation conclusions are reasonable and within an independently
calculated acceptable valuation range.
We recalculated the unrealised
gains/losses on unquoted investments as at the year-end using the
book-cost reconciliation and reviewed the fair value hierarchy
disclosure for consistency with our understanding of the
investments held.
For purchases of unquoted
investments made during the period, we obtained supporting
documents from the Portfolio Manager and agreed these to the
purchase cost per the accounting records and to bank
statements.
We corroborated a sample of inputs
used in the valuation to underlying supporting
information.
Where relevant, we obtained the most
recent reporting produced by the general partners and compared
these to the Company's valuations as at 31 March 2024 to ensure
consistencies in the assumptions or data inputs used.
|
The results of our procedures
identified no material misstatements in relation to the risk of
incorrect valuation or ownership of the investment
portfolio.
|
|
Incorrect calculation of the performance fee
(as described on
page 40 in the Audit and Risk
Committee Report and as per the accounting policy set out on page
63)
The Manager is entitled to a
performance fee, the sum of which will be equal to 15% of the
amount by which the Private Equity Portfolio Total Return at the
end of the calculation period exceeds the performance
hurdle.
The amount of performance fee
accrued as at 31 March 2024 was £1.67m (2024: £1.67m).
As the inputs to the performance fee
are dependent on the valuations of the unquoted investments, there
is a risk that the valuation of unquoted investments is overstated
resulting in a higher performance fee due to the Portfolio
Manager.
|
We
have performed the following procedures:
We obtained an understanding of the
Portfolio Manager's and the Administrator's processes surrounding
the calculation of performance fees by performing walkthrough
procedures.
We tested the mathematical accuracy
of the calculation and verified that the calculation was in
accordance with the Investment Management Agreement.
We verified the inputs used to
external support and audited valuations data.
We reviewed the payment conditions
of the performance fee and verified that no conditions were met
during the year. As such, there is no performance fee charge
for the current period.
|
The results of our procedures
identified no material misstatements in relation to the risk of
incorrect calculation of the performance fee.
|
There have been no changes to the
areas of audit focus raised in the above risk table from the prior
year.
Our
application of materiality
We apply the concept of materiality
in planning and performing the audit, in evaluating the effect of
identified misstatements on the audit and in forming our audit
opinion.
Materiality
The magnitude of an omission or misstatement that,
individually or in the aggregate, could reasonably be expected to
influence the economic decisions of the users of the financial
statements. Materiality provides a basis for determining the nature
and extent of our audit procedures.
We determined materiality for the
Company to be £0.81 million (2023: £0.79 million), which is 1%
(2023: 1%) of shareholders' fund. We believe that
Shareholders' funds provides us with materiality aligned to key
measure of the Company's performance.
Performance materiality
The application of materiality at the individual account or
balance level. It is set at an amount to reduce to an
appropriately low level the probability that the aggregate of
uncorrected and undetected misstatements exceeds
materiality.
On the basis of our risk
assessments, together with our assessment of the Company's overall
control environment, our judgement was that performance materiality
was 75% (2023: 75%) of our planning materiality, namely £0.61m
(2023: £0.59m).
Given the importance of the
distinction between revenue and capital for investment trusts, we
have also applied a separate testing threshold for the revenue
column of the Statement of Comprehensive Income which is usually
calculated as 5% of net revenue before tax. In the case of the
Company, as there is a net loss before tax, we have set our revenue
testing threshold in line with the reporting threshold which is
calculated as 5% of planning materiality and is £0.04m (2023:
£0.04m).
Reporting threshold
An
amount below which identified misstatements are considered as being
clearly trivial.
We agreed with the Audit Committee
that we would report to them all uncorrected audit differences in
excess of £0.04m (2023: £0.04m), which is set at 5% of planning
materiality, as well as differences below that threshold that, in
our view, warranted reporting on qualitative
grounds.
We evaluate any uncorrected
misstatements against both the quantitative measures of materiality
discussed above and in light of other relevant qualitative
considerations in forming our opinion.
Other information
The other information comprises the
information included in the annual report other than the financial
statements and our auditor's report thereon. The directors
are responsible for the other information contained within the
annual report.
Our opinion on the financial
statements does not cover the other information and, except to the
extent otherwise explicitly stated in this report, we do not
express any form of assurance conclusion thereon.
Our responsibility is to read the
other information and, in doing so, consider whether the other
information is materially inconsistent with the financial
statements or our knowledge obtained in the course of the audit or
otherwise appears to be materially misstated. If we identify such
material inconsistencies or apparent material misstatements, we are
required to determine whether this gives rise to a material
misstatement in the financial statements themselves. If, based on
the work we have performed, we conclude that there is a material
misstatement of the other information, we are required to report
that fact.
We have nothing to report in this
regard.
Opinions on other matters prescribed by the Companies Act
2006
In our opinion the part of the
directors' remuneration report to be audited has been properly
prepared in accordance with the Companies Act 2006.
In our opinion, based on the work
undertaken in the course of the audit:
•
the information given in the strategic report and
the directors' report for the financial year for which the
financial statements are prepared is consistent with the financial
statements; and
•
the strategic report and directors' reports have
been prepared in accordance with applicable legal
requirements;
Matters on which we are required to report by
exception
In the light of the knowledge and
understanding of the Company and its environment obtained in the
course of the audit, we have not identified material misstatements
in the strategic report or directors' report.
We have nothing to report in respect
of the following matters in relation to which the Companies Act
2006 requires us to report to you if, in our opinion:
· adequate accounting records have not been kept, or returns
adequate for our audit have not been received from branches not
visited by us; or
· the
financial statements and the part of the Directors' Remuneration
Report to be audited are not in agreement with the accounting
records and returns; or
· certain disclosures of directors' remuneration specified by
law are not made; or
· we
have not received all the information and explanations we require
for our audit.
Corporate Governance Statement
We have reviewed the directors'
statement in relation to going concern, longer-term viability and
that part of the Corporate Governance Statement relating to the
Company's compliance with the provisions of the UK Corporate
Governance Code specified for our review by the Listing
Rules.
Based on the work undertaken as part
of our audit, we have concluded that each of the following elements
of the Corporate Governance Statement is materially consistent with
the financial statements or our knowledge obtained during the
audit:
· Directors' statement with regards to the appropriateness of
adopting the going concern basis of accounting and any material
uncertainties identified set out on page 32
· Directors' explanation as to its assessment of the Company's
prospects, the period this assessment covers and why the period is
appropriate set out on page 32
· Director's statement on whether it has a reasonable
expectation that the Company will be able to continue in operation
and meets its liabilities set out on page 32
· Directors' statement on fair, balanced and understandable set
out on page 49
· Board's confirmation that it has carried out a robust
assessment of the emerging and principal risks set out on page
29
· The
section of the annual report that describes the review of
effectiveness of risk management and internal control systems set
out on page 40; and;
· The
section describing the work of the Audit and Risk Committee set out
on page 39
Responsibilities of directors
As explained more fully in the
directors' responsibilities statement set out on page 49, the
directors are responsible for the preparation of the financial
statements and for being satisfied that they give a true and fair
view, and for such internal control as the directors determine is
necessary to enable the preparation of financial statements that
are free from material misstatement, whether due to fraud or
error.
In preparing the financial
statements, the directors are responsible for assessing the
Company's ability to continue as a going concern, disclosing, as
applicable, matters related to going concern and using the going
concern basis of accounting unless the directors either intend to
liquidate the Company or to cease operations, or have no realistic
alternative but to do so.
Auditor's responsibilities for the audit of the financial
statements
Our objectives are to obtain
reasonable assurance about whether the financial statements as a
whole are free from material misstatement, whether due to fraud or
error, and to issue an auditor's report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a
guarantee that an audit conducted in accordance with ISAs (UK) will
always detect a material misstatement when it exists. Misstatements
can arise from fraud or error and are considered material if,
individually or in the aggregate, they could reasonably be expected
to influence the economic decisions of users taken on the basis of
these financial statements.
Explanation as to what extent the audit was considered capable
of detecting irregularities, including fraud
Irregularities, including fraud, are
instances of non-compliance with laws and regulations. We design
procedures in line with our responsibilities, outlined above, to
detect irregularities, including fraud. The risk of not detecting a
material misstatement due to fraud is higher than the risk of not
detecting one resulting from error, as fraud may involve deliberate
concealment by, for example, forgery or intentional
misrepresentations, or through collusion. The extent to which our
procedures are capable of detecting irregularities, including fraud
is detailed below.
However, the primary responsibility
for the prevention and detection of fraud rests with both those
charged with governance of the Company and management.
· We
obtained an understanding of the legal and regulatory frameworks
that are applicable to the Company and determined that the most
significant are Kingdom Generally Accepted Accounting Practice, the
Companies Act 2006, the Listing Rules, the UK Corporate Governance
Code, the Association of Investment Companies' (the 'AIC') Code of
Corporate Governance, the AIC's Statement of Recommended Practice,
Section 1158 of the Corporation Tax Act 2010 and The Companies
(Miscellaneous Reporting) Regulations 2018.
· We
understood how the Company is complying with those frameworks
through discussions with the Audit and Risk Committee and Company
Secretary and review of board and committee minutes and review of
papers provided to the Audit and Risk Committee.
· We
assessed the susceptibility of the Company's financial statements
to material misstatement, including how fraud might occur by
considering the key risks impacting the financial statements. We
identified fraud risks with respect to the incorrect valuation of
the unquoted investments and the resulting impact on unrealised
gains/(losses) and incorrect calculation of the performance fee.
Further discussion of our approach is set out in the section on key
audit matters above.
· Based
on this understanding we designed our audit procedures to identify
non-compliance with such laws and regulations. Our procedures
involved review of the reporting to the directors with respect to
the application of the documented policies and procedures and
review of the financial statements to ensure compliance with
reporting requirements of the Company.
A further description of our
responsibilities for the audit of the financial statements is
located on the
Financial Reporting Council's
website at https://www.frc.org.uk/auditorsresponsibilities.
This description forms part of our auditor's report.
Other matters we are required to address
Following the recommendation from
the Audit and Risk Committee, we were appointed by the Company on
19 May 2021 to audit the financial statements for the year ending
30 June 2021 and subsequent financial periods.
The period of total uninterrupted
engagement including previous renewals and reappointments is 4
years, covering the periods ending 30 June 2021 and 31 March 2022
to the year ending 31 March 2024.
The audit opinion is consistent with
the additional report to the Audit and Risk Committee.
Use
of our report
This report is made solely to the
Company's members, as a body, in accordance with Chapter 3 of Part
16 of the Companies Act 2006. Our audit work has been
undertaken so that we might state to the Company's members those
matters we are required to state to them in an auditor's report and
for no other purpose. To the fullest extent permitted by law,
we do not accept or assume responsibility to anyone other than the
Company and the Company's members as a body, for our audit work,
for this report, or for the opinions we have
formed.
Caroline Mercer (Senior statutory
auditor)
for and on behalf of
Ernst & Young LLP, Statutory
Auditor
Edinburgh
10 July 2024
Statement of Comprehensive
Income
for the year ended 31 March
2024
|
|
2024
|
2023
|
|
|
Revenue
|
Capital
|
Total
|
Revenue
|
Capital
|
Total
|
|
Note
|
£'000
|
£'000
|
£'000
|
£'000
|
£'000
|
£'000
|
Gains on investments held at fair
value through profit or loss
|
3
|
-
|
2,738
|
2,738
|
-
|
3,198
|
3,198
|
Gains on foreign exchange
|
|
-
|
-
|
-
|
-
|
16
|
16
|
Income from investments
|
4
|
267
|
-
|
267
|
392
|
-
|
392
|
Other interest receivable and
similar income
|
4
|
98
|
-
|
98
|
77
|
-
|
77
|
Gross return
|
|
365
|
2,738
|
3,103
|
469
|
3,214
|
3,683
|
Investment management fee
|
5
|
(432)
|
-
|
(432)
|
(458)
|
-
|
(458)
|
Performance fee
|
5
|
-
|
-
|
-
|
-
|
(555)
|
(555)
|
Administrative expenses
|
6
|
(655)
|
-
|
(655)
|
(650)
|
-
|
(650)
|
Transaction costs
|
10
|
-
|
-
|
-
|
-
|
(4)
|
(4)
|
Net (loss)/return before finance
costs and taxation
|
|
(722)
|
2,738
|
2,016
|
(639)
|
2,655
|
2,016
|
Finance costs
|
|
-
|
-
|
-
|
-
|
-
|
-
|
Net (loss)/return before
taxation
|
|
(722)
|
2,738
|
2,016
|
(639)
|
2,655
|
2,016
|
Taxation
|
7
|
-
|
-
|
-
|
-
|
-
|
-
|
Net (loss)/return after
taxation
|
|
(722)
|
2,738
|
2,016
|
(639)
|
2,655
|
2,016
|
(Loss)/return per share
|
9
|
(0.98)p
|
3.71p
|
2.73p
|
(0.86)p
|
3.57p
|
2.71p
|
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 return after taxation is also the total
comprehensive income for the year.
All revenue and capital items in the
above statement derive from continuing operations. No operations
were acquired or discontinued in the period.
The notes on pages 62 to 73 form an
integral part of these accounts.
Statement of Changes in
Equity
for the year ended 31 March
2024
|
Called-up
|
|
|
|
|
|
share
|
Special
|
Capital
|
Revenue
|
|
|
capital
|
reserve
|
reserves
|
reserve
|
Total
|
|
£'000
|
£'000
|
£'000
|
£'000
|
£'000
|
At 31 March 2022
|
750
|
72,765
|
5,598
|
(1,010)
|
78,103
|
Repurchase of the Company's own
shares into treasury
|
-
|
(808)
|
-
|
-
|
(808)
|
Net return/(loss) after
taxation
|
-
|
-
|
2,655
|
(639)
|
2,016
|
At 31 March 2023
|
750
|
71,957
|
8,253
|
(1,649)
|
79,311
|
Net return/(loss) after
taxation
|
-
|
-
|
2,738
|
(722)
|
2,016
|
At 31 March 2024
|
750
|
71,957
|
10,991
|
(2,371)
|
81,327
|
The notes on pages 62 to 73 form an
integral part of these accounts.
Statement of Financial
Position
at 31 March 2024
|
|
2024
|
2023
|
|
Note
|
£'000
|
£'000
|
Fixed assets
|
|
|
|
Investments held at fair value
through profit or loss
|
10
|
83,092
|
74,128
|
Current assets
|
|
|
|
Debtors
|
11
|
15
|
151
|
Cash and cash equivalents
|
11
|
790
|
7,759
|
|
|
805
|
7,910
|
Current liabilities
|
|
|
|
Creditors: amounts falling due
within one year
|
12
|
(900)
|
(1,543)
|
Net current liabilities
|
|
(95)
|
6,367
|
Total assets less current
liabilities
|
|
82,997
|
80,495
|
Creditors: amounts falling due after
more than one year
|
|
|
|
Performance fee
|
|
(1,670)
|
(1,184)
|
Net assets
|
|
81,327
|
79,311
|
Capital and reserves
|
|
|
|
Called-up share capital
|
13
|
750
|
750
|
Capital reserves
|
14
|
82,948
|
80,210
|
Revenue reserve
|
14
|
(2,371)
|
(1,649)
|
Total equity shareholders'
funds
|
|
81,327
|
79,311
|
Net asset value per share
|
15
|
110.05p
|
107.32p
|
The accounts were approved and
authorised for issue by the Board of Directors on 10 July 2024 and
signed on its behalf by:
Neil England
Chairman
The notes on pages 62 to 73 form an
integral part of these accounts.
Registered in England and Wales as a
public company limited by shares
Company registration number: 12892325
Cash Flow Statement
for the year ended 31 March
2024
|
|
2024
|
2023
|
|
Note
|
£'000
|
£'000
|
Net cash outflow from operating
activities
|
16
|
(743)
|
(662)
|
Investing activities
|
|
|
|
Purchases of investments
|
|
(14,658)
|
(19,840)
|
Sales of investments
|
|
8,432
|
13,601
|
Net cash outflow from investing
activities
|
|
(6,226)
|
(6,239)
|
Net cash outflow before
financing
|
|
(6,969)
|
(6,901)
|
Financing activities
|
|
|
|
Repurchase of Ordinary shares into
treasury
|
|
-
|
(808)
|
Net cash outflow from financing
activities
|
|
-
|
(808)
|
Net cash outflow in the
year
|
|
(6,969)
|
(7,709)
|
Cash at bank and in hand at the
beginning of the year
|
|
7,759
|
15,452
|
Net cash outflow in the
year
|
|
(6,969)
|
(7,709)
|
Exchange movements
|
|
-
|
16
|
Cash at bank and in hand at the end
of the year
|
|
790
|
7,759
|
Included under operating activities
are dividends received during the period amounting to £376,000
(year ended 31 March 2023: £362,000) and interest receipts
amounting to £111,000 (year ended 31 March 2023 :
£62,000).
The notes on pages 62 to 73 form an
integral part of these accounts.
Notes to the Financial
Statements
1. Accounting
period
The Company changed its accounting
date to 31 March, commencing 1 July 2021. Comparative figures are
provided for the full year, with reference to the previous
accounting period. References may be made to 2022, which
comparatives will only cover a nine-month period.
2. Accounting
policies
(a) Basis of
accounting
Schroder British Opportunities 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, United Kingdom.
The financial statements 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". The financial statements are prepared in accordance with
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 financial statements have been
prepared on a going concern basis under the historical cost
convention, with the exception of investments and derivative
financial instruments measured at fair value through profit or
loss. The Directors believe that the Company has adequate resources
to continue operating for the period to 31 July 2025, which is at
least 12 months from the date of approval of these financial
statements. In forming this opinion, the Directors have taken into
consideration: the controls and monitoring processes in place; the
Company's other payables; the level of operating expenses,
comprising largely variable costs which would reduce pro rata in
the event of a market downturn; the Company's revenue forecasts and
the liquidity of the Company's investments. In forming this
opinion, the Directors have also considered the Company's principal
risks, including climate change. Further details of Directors'
considerations are given in the Going Concern Statement, Viability
Statement and under the Principal and Emerging Risks heading on
page 39. The financial statements have been prepared on the
assumption that approval as an investment trust will continue to be
granted.
The financial statements are
presented in sterling and amounts have been rounded to the nearest
thousand.
The accounting policies applied to
these financial statements are consistent with those applied in the
financial statements for the year ended 31 March
2023.
(b) Use of
judgements, estimates and assumptions
The preparation of the financial
statements requires management to make 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 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 judgements, estimates and assumptions 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 21 on page 72.
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.
(c)
Valuation of investments
The Company's business is investing
in financial assets with a view to profiting from their total
return in the form of income and capital growth. This portfolio of
financial assets is managed and its performance evaluated on a fair
value basis, in accordance with a documented investment objective
and information is provided internally on that basis to the
Company's Board of Directors. Accordingly, upon initial recognition
the investments are recognised by the Company as "held at fair
value through profit or loss". Investments are included initially
at transaction price, excluding expenses incidental to purchase which are written
off to capital at the time of acquisition. Subsequently the
investments are valued at fair value, using the methodology below.
This valuation process is consistent with International Private
Equity and Venture Capital ("IPEV") guidelines issued in December
2022, which are intended to set out current best practice on the
valuation of Private Equity investments.
(i) Investments traded
in active markets are valued using quoted bid prices.
(ii) Investments which are not
traded in an active market are valued using the price of a recent
investment, where there is considered to have been no material
change in fair value.
(iii) Where (ii) 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.
(iv) In the absence of (iii), one of
the following methods may be used:
- Revenue or
EBITDA multiples, based on listed investments in the relevant
sector but adjusted for lack of marketability
- Recent
transaction prices adjusted for the company's performance against
key milestones.
- Option price
modelling.
(v) Investments in funds are
valued using the NAV per unit with an appropriate discount or
premium applied to arrive at a unit price.
Purchases and sales of quoted
investments are accounted for on a trade date basis. Purchases and
sales of unquoted investments are recognised when the related
contract becomes unconditional.
In line with FRS102 the Company's
listed investments are valued at fair value, which are quoted bid
prices for investments in active markets at the accounting date and
therefore reflect market participants view of climate change risk
on the investments held. The Company's unquoted investments at 31
March 2024 were valued using a variety of techniques consistent
with the recommendations set out in IPEV guidelines. Valuations of
all unquoted investments are cross-checked for reasonableness using
alternative methods such as: prices of recent transactions,
earnings multiples, probability weighted expected returns or option
pricing models as appropriate, and are therefore deemed to reflect
market participants view of climate change risk on the investments
held.
(d)
Accounting for reserves
Gains and losses on sales of
investments are included in the Statement of Comprehensive Income
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 Statement of
Comprehensive Income and in capital reserves within "Holding gains
and losses on investments".
Foreign exchange gains and losses on
cash and deposit balances are included in the Statement of
Comprehensive Income and in capital reserves.
(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
period 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 column of
the Statement of Comprehensive Income with the following
exceptions:
- Any performance
fee is allocated 100% 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 10 on page 66.
(g) Cash and
cash equivalents
Cash at bank and in hand 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.
(h)
Financial instruments
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
measured at transaction price, which is the proceeds received net
of direct issue costs. After initial recognition, subsequent
measurement is based on amortised cost.
(i)
Taxation
The tax charge for the period
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
the 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 financial statements 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, denominated in foreign currencies at the year end are
translated at the rates of exchange prevailing at 4.00 p.m. on
the accounting date.
(l)
Repurchases of shares into treasury and subsequent
reissues
The cost of repurchasing the
Company's own shares into treasury, including the related stamp
duty and transaction cost is dealt with in the Statement of Changes
in Equity. Share repurchase transactions are accounted for on a
trade date basis.
The sales proceeds of treasury
shares reissued are treated as a realised profit up to the amount
of the weighted average price of those shares and is transfered to
capital reserves. Any excess of sales proceeds over the purchase
price transferred to "share premium".
3. Gains/(losses) on
investments held at fair value through profit or loss
|
2024
|
2023
|
|
£'000
|
£'000
|
(Losses)/gains on sales of
investments based on historic cost
|
(1,282)
|
889
|
Amounts recognised in investment
holding gains and losses in the previous year in respect of
investments sold in the year
|
1,641
|
327
|
Gains on sales of investments based
on the carrying value at the previous balance sheet date
|
359
|
1,216
|
Unrealised gain recognised in
respect of investments continuing to be held
|
2,379
|
1,982
|
Gains on investments held at fair
value through profit and loss
|
2,738
|
3,198
|
4. Income from
investments
|
2024
|
2023
|
|
£'000
|
£'000
|
Income from investments
|
|
|
UK dividends
|
252
|
374
|
Overseas dividends
|
15
|
18
|
|
267
|
392
|
Other interest receivable and
similar income:
|
|
|
Deposit interest
|
98
|
77
|
|
98
|
77
|
Total income
|
365
|
469
|
5. Investment management
fee and performance fee
|
2024
|
2023
|
|
£'000
|
£'000
|
Revenue:
|
|
|
Investment management fee
|
432
|
458
|
Capital:
|
|
|
Performance fee
|
-
|
555
|
The bases for calculating the
investment management and performance fees are set out in the
Directors' Report on page 37 and details of all amounts payable to
the Manager are given in note 18 on page 69.
6. Administrative
expenses
|
2024
|
2023
|
|
£'000
|
£'000
|
Other administrative
expenses
|
233
|
185
|
Company secretarial and
administrative fee payable to Schroders
|
158
|
180
|
Directors'
fees1
|
116
|
139
|
Auditor's remuneration for the audit
of the Company's annual accounts2
|
148
|
146
|
|
655
|
650
|
1Full details are given in the remuneration report on pages 46
to 48.
2Includes VAT amounting to £24,000 (2023: £24,000).
7. Taxation
(a) Analysis
of tax charge for the period
|
2024
|
2023
|
|
Revenue
|
Capital
|
Total
|
Revenue
|
Capital
|
Total
|
|
£'000
|
£'000
|
£'000
|
£'000
|
£'000
|
£'000
|
Taxation
|
-
|
-
|
-
|
-
|
-
|
-
|
The Company has no corporation tax
liability for the year ended 31 March 2024 (period ended 31 March
2023: nil).
(b) Factors
affecting tax charge for the period
|
2024
|
2023
|
|
Revenue
|
Capital
|
Total
|
Revenue
|
Capital
|
Total
|
|
£'000
|
£'000
|
£'000
|
£'000
|
£'000
|
£'000
|
Net return before
taxation
|
(722)
|
2,738
|
2,016
|
(639)
|
2,655
|
2,016
|
Net return before taxation
multiplied by the Company's applicable rate of corporation tax for
the year of 25.0% (year ended 31 March 2023: 19.0%)
|
(181)
|
685
|
504
|
(121)
|
504
|
383
|
Effects of:
|
|
|
|
|
|
|
Capital gains on
investments
|
-
|
(685)
|
(685)
|
-
|
(569)
|
(569)
|
Income not chargeable to corporation
tax
|
(67)
|
-
|
(67)
|
(71)
|
-
|
(71)
|
Expenses not deductible for
corporation tax purposes
|
-
|
-
|
-
|
-
|
1
|
1
|
Unrelieved management
expenses
|
248
|
-
|
248
|
192
|
64
|
256
|
Taxation for the year
|
-
|
-
|
-
|
-
|
-
|
-
|
(c)
Deferred taxation
The Company has an unrecognised
deferred tax asset of £1,285,000 (2023: £983,000) based on a
prospective corporation tax rate of 25% (year ended 31 March
2023: 25%). The main rate of corporation tax has increased to 25%
for the fiscal year beginning on 1 April 2023. This 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.
8. Dividends
The Company has reported a revenue
loss after taxation of £722,000 (year ended 31 March 2023:
£639,000) for the year and accordingly there is no requirement to
pay a dividend under Section 1158 of the Corporation Tax Act
2010.
9. Return/(loss) per
share
|
2024
|
2023
|
|
£'000
|
£'000
|
Revenue loss
|
(722)
|
(639)
|
Capital gain
|
2,738
|
2,655
|
Total return
|
2,016
|
2,016
|
Weighted average number of shares in
issue during the year
|
73,900,000
|
74,376,633
|
Revenue loss per share
|
(0.98)p
|
(0.86)p
|
Capital return per share
|
3.71p
|
3.57p
|
Total return per share
|
2.73p
|
2.71p
|
10.
Investments held at fair value through profit or loss
(a) Movement
in investments
|
2024
|
2023
|
|
£'000
|
£'000
|
Opening book cost
|
66,328
|
59,200
|
Opening investment holding
gains
|
7,800
|
5,491
|
Opening fair value
|
74,128
|
64,691
|
Purchases at cost
|
14,658
|
19,840
|
Sales proceeds
|
(8,432)
|
(13,601)
|
Gains on investments held at fair
value through profit or loss
|
2,738
|
3,198
|
Closing fair value
|
83,092
|
74,128
|
Closing book cost
|
71,272
|
66,328
|
Closing investment holding
gains
|
11,820
|
7,800
|
Closing fair value
|
83,092
|
74,128
|
(b) Material
revaluations of unquoted investments
Year ended 31 March 2024
|
Opening
|
|
|
|
Closing
|
|
valuation
|
|
|
|
valuation
|
|
2023
|
Purchases
|
Sales
|
Revaluation
|
2024
|
|
£'000
|
£'000
|
£'000
|
£'000
|
£'000
|
Investment
|
|
|
|
|
|
Rapyd Financial Network
|
8,399
|
-
|
-
|
(1,562)
|
6,837
|
Cera EHP S.à r.l.
|
6,986
|
51
|
-
|
1,009
|
8,046
|
Mintec
|
8,614
|
-
|
-
|
977
|
9,591
|
Pirum Systems
|
6,087
|
-
|
-
|
797
|
6,884
|
Culligan
|
5,053
|
26
|
-
|
506
|
5,585
|
EasyPark
|
4,492
|
50
|
-
|
1,629
|
6,171
|
CFC Underwriting
|
4,098
|
1,170
|
-
|
393
|
5,661
|
Learning Curve
|
2,455
|
675
|
-
|
(1,574)
|
1,556
|
Graphcore
|
1,778
|
-
|
-
|
755
|
2,533
|
|
47,962
|
1,972
|
-
|
2,930
|
52,864
|
Year ended 31 March 2023
|
Opening
|
|
|
|
Closing
|
|
valuation
|
|
|
|
valuation
|
|
2022
|
Purchases
|
Sales
|
Revaluation
|
2023
|
|
£'000
|
£'000
|
£'000
|
£'000
|
£'000
|
Investment
|
|
|
|
|
|
Rapyd Financial Network
|
8,565
|
-
|
-
|
(166)
|
8,399
|
Cera EHP S.à r.l.
|
4,509
|
407
|
-
|
2,070
|
6,986
|
Mintec
|
-
|
6,304
|
-
|
2,310
|
8,614
|
Pirum Systems
|
-
|
5,752
|
-
|
335
|
6,087
|
Culligan
|
6,045
|
38
|
(2,384)
|
1,354
|
5,053
|
EasyPark
|
2,775
|
30
|
-
|
1,687
|
4,492
|
CFC Underwriting
|
-
|
2,610
|
-
|
1,488
|
4,098
|
Learning Curve
|
2,336
|
8
|
-
|
111
|
2,455
|
Graphcore
|
3,178
|
-
|
-
|
(1,400)
|
1,778
|
|
27,408
|
15,149
|
(2,384)
|
7,789
|
47,962
|
(c)
Material disposals of unquoted investments
There were no disposals of unquoted
investments in the year ended 31 March 2024 (31 March 2023:
£2,384,000).
(d)
Transaction costs
The following transaction costs,
comprising stamp duty and brokerage commission and legal fees, were
incurred in the year:
|
2024
|
2023
|
|
£'000
|
£'000
|
On acquisitions
|
|
|
Stamp duty and brokerage
commission
|
5
|
18
|
Legal fees
|
-
|
4
|
On disposals
|
|
|
Brokerage commission
|
4
|
5
|
|
9
|
27
|
11. Current
assets
Debtors
|
2024
|
2023
|
|
£'000
|
£'000
|
Dividends and interest
receivable
|
11
|
133
|
Other debtors
|
4
|
18
|
|
15
|
151
|
The Directors consider that the
carrying amount of debtors approximates to their fair
value.
Cash and cash equivalents
The carrying amount of cash,
amounting to £790,000 (2023: £7,759,000), represents its fair
value.
12. Current
liabilities
Creditors: amounts falling due
within one year
|
2024
|
2023
|
|
£'000
|
£'000
|
Other creditors and
accruals
|
900
|
1,056
|
Performance fee payable
|
-
|
4871
|
|
900
|
1,543
|
1The performance fee payable at 31 March 2023 was included in
Creditors: amounts falling due within one year. This £487,000 has
been reclassified in the current year as Creditors: amounts falling
due after more than one year as there is a conditional deferment
for payment on these fees.
The Directors consider that the
carrying amount of creditors falling due within one year
approximates to their fair value.
13.
Called-up share capital
|
2024
|
2023
|
|
£'000
|
£'000
|
Ordinary Shares allotted, called up
and fully paid:
|
|
|
73,900,000 (2023: 75,000,000) shares
of 1p each:
|
739
|
750
|
Repurchase of nil (2023: 1,100,000)
shares into treasury
|
-
|
(11)
|
Subtotal of 73,900,000 (2023:
73,900,000) shares
|
739
|
739
|
1,100,000 (2023: 1,100,000) shares
held in treasury
|
11
|
11
|
Closing
balance1
|
750
|
750
|
1Represents 75,000,000 (2023: 75,000,000) shares of 1p each,
including 1,100,000 (2023: 1,100,000) held in treasury.
14.
Reserves
|
Capital
reserves
|
|
Special
|
Gains and
|
Investment
|
|
|
distributable
|
losses
|
holding
|
|
|
capital
|
on sales of
|
gains and
|
Revenue
|
|
reserve1
|
investments2
|
losses3
|
reserve4
|
|
£'000
|
£'000
|
£'000
|
£'000
|
At 31 March 2023
|
71,957
|
453
|
7,800
|
(1,649)
|
Gains on sales of investments based
on the carrying value at the previous balance sheet date
|
|
|
|
|
-
|
359
|
-
|
-
|
Unrealised gain recognised in
respect of investments continuing to be held
|
-
|
-
|
2,379
|
-
|
Transfer on disposal of
investments
|
-
|
(1,641)
|
1,641
|
-
|
Performance fee allocated to
capital
|
-
|
-
|
-
|
-
|
Retained revenue for the
year
|
-
|
-
|
-
|
(722)
|
At 31 March 2024
|
71,957
|
(829)
|
11,820
|
(2,371)
|
|
Capital
reserves
|
|
Special
|
Gains and
|
Investment
|
|
|
distributable
|
losses
|
holding
|
|
|
capital
|
on sales of
|
gains and
|
Revenue
|
|
reserve1
|
investments2
|
losses3
|
reserve4
|
|
£'000
|
£'000
|
£'000
|
£'000
|
At 31 March 2022
|
72,765
|
319
|
5,279
|
(1,010)
|
Gains on sales of investments based
on the carrying value at the previous balance sheet date
|
-
|
1,216
|
-
|
-
|
Net movement in investment holding
gains and losses
|
-
|
-
|
1,982
|
-
|
Transfer on disposal of
investments
|
-
|
(539)
|
539
|
-
|
Realised gains on foreign exchange
balances
|
-
|
16
|
-
|
-
|
Repurchase of the Company's own
shares into treasury
|
(808)
|
-
|
-
|
-
|
Performance fee allocated to
capital
|
-
|
(555)
|
-
|
-
|
Transaction costs
|
-
|
(4)
|
-
|
-
|
Retained loss for the
period
|
-
|
-
|
-
|
(639)
|
At 31 March 2023
|
71,957
|
453
|
7,800
|
(1,649)
|
The Company's Articles of
Association permit dividend distributions out of realised capital
profits.
1This 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.
2This is a realised (distributable) capital reserve and may be
distributed as dividends or used to repurchase the Company's own
shares.
3This reserve may include some holding gains/(losses) 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.
4A credit balance on the revenue reserve may be distributed as
dividends or used to repurchase the Company's own
shares.
15. Net
asset value per share
|
2024
|
2023
|
Net assets attributable to
shareholders (£'000)
|
81,327
|
79,311
|
Shares in issue at the year
end
|
73,900,000
|
73,900,000
|
Net asset value per share
|
110.05p
|
107.32p
|
16.
Reconciliation of total return on ordinary activities before
finance costs and taxation to net cash outflow from operating
activities
|
2024
|
2023
|
|
£'000
|
£'000
|
Net loss before taxation
|
2,016
|
2,016
|
Less capital return before
taxation
|
(2,738)
|
(2,655)
|
Increase/(decrease) in prepayments
and accrued income
|
122
|
(45)
|
Increase in other debtors
|
14
|
9
|
(Decrease)/increase in creditors and
performance fee payable
|
(157)
|
572
|
Performance fee and transaction
costs allocated to capital
|
-
|
(559)
|
Net cash outflow from operating
activities
|
(743)
|
(662)
|
17. Uncalled
capital commitments
At 31 March 2024, the Company had
uncalled capital commitments amounting to £3,726,000 (31 March
2023: £5,476,000) in respect of follow-on investments, which may be
called by investee companies, subject to their achievement of
certain milestones and objectives.
18.
Transactions with the Manager
Under the terms of the Alternative
Investment Fund Manager Agreement, the Manager is entitled to
receive a management fee, a company secretarial and administrative
fee, and a performance fee. Details of the bases of these
calculations are given in the Directors' Report on
page 37.
The management fee paid in respect
of the year ended 31 March 2024 amounted to £432,000 (year ended 31
March 2023: £458,000), and the whole of this amount was outstanding
at the year end. Any investments in funds managed or advised by the
Manager or any of its associated companies, are excluded from the
assets used for the purpose of the calculation and therefore incur
no fee. There were £10,795,000 held in such investments at the year
end (year ended 31 March 2023 : nil).
A performance fee provision
amounting to nil (year ended 31 March 2023: £555,000) has been
included in these accounts. No performance fee has been paid to
date and the whole amount of £1,670,000 (31 March 2023: £1,184,000)
is carried forward until such time as it may be paid under the
terms of the AIFM Agreement.
The company secretarial and
administrative fee payable for the year amounted to £158,000 (year
ended 31 March 2023: £180,000). Company secretarial and
administration fees amounting to £181,000 (31 March 2023: £420,000)
were outstanding at the year end.
No Director of the Company served as
a Director of any company within the Schroders Group at any time
during the year.
19. Related
party transactions
Details of the remuneration payable
to Directors are given in the Directors' Remuneration Report on
page 47 and details of Directors' shareholdings are given in the
Directors' Remuneration Report on page 48. Details of transactions
with the Manager are given in note 18 above. There have been no
other transactions with related parties during the year (period
ended 31 March 2023: nil).
20.
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.
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
2(b) on page 62 and 2(c) on pages 62 and 63. Level 3
investments have been valued in accordance with note 2(c) (i) -
(v).
The Company's unquoted investments
at 31 March 2024 were valued using a variety of techniques
consistent with the recommendations set out in the International
Private Equity and Venture Capital guidelines (IPEV). For
investments held directly or via an intermediary vehicle, the
Company has established its own estimate utilising widely accepted
valuation methods.
The determination of fair value by
the Manager involves key assumptions dependent upon the valuation
technique used. The Company uses the following techniques, which
are all consistent with the IPEV Guidelines. The primary technique
is the "Multiples" approach. This involves subjective inputs and
therefore presents a greater risk of over or under estimation,
particularly in the absence of a recent transaction. The key
assumption in the Multiples approach is that the selection of
comparable companies provides a reasonable basis for identifying
the relationship between enterprise value and revenue to apply in
the determination of fair value. Typically between 5 and 10
comparable companies will be selected for each investment depending
on how many relevant comparable companies are identified. The
resultant revenue or earnings multiples derived will vary depending
on how many relevant comparable companies are identified and the
industries they operate in and vary in the range of 2.5 times to
32.5 times (based on various enterprise valuation metrics). The
price of a recent investment may also be used as an appropriate
calibration for estimating fair value. Other judgements and
assumptions may include: discounts applied due to reduced
liquidity; probabilities assigned to potential exit via sale or
IPO; and judgements relating to the achievement of performance
targets and milestones.
Valuation techniques include the
following, along with the associated range of inputs where
relevant, and the total amount valued using each method.
|
2024
|
2023
|
|
Multiple
|
Value
|
Multiple
|
Value
|
|
range
|
£'000
|
range
|
£'000
|
Revenue multiple
|
2.5 to
10.8
|
21,054
|
2.4 to
12.1
|
19,877
|
EBITDA multiple
|
9.8 to
32.5
|
29,277
|
9.0 to
33.5
|
26,307
|
Probability Weighted Expected Return
Method ("PWERM")
|
n/a
|
2,533
|
|
|
Black-Scholes-Merton-Model
|
|
|
n/a
|
1,778
|
Total
|
|
52,864
|
|
47,962
|
Valuations are cross-checked for
reasonableness to alternative multiples-based, income approaches,
option pricing models or benchmark index movements as
appropriate.
At 31 March 2024, the Company's
investment portfolio and derivative financial instruments were
categorised as follows:
|
2024
|
|
Level 1
|
Level 2
|
Level 3
|
Total
|
|
£'000
|
£'000
|
£'000
|
£'000
|
Investments in equities -
quoted
|
19,433
|
10,795
|
-
|
30,228
|
Investments in equities -
unquoted
|
-
|
-
|
52,864
|
52,864
|
Total
|
19,433
|
10,795
|
52,864
|
83,092
|
The Level 2 asset relates to the
holding in Schroders Special Situations - Sterling Liquidity Plus
Fund.
At 31 March 2023, the Company's
investment portfolio and derivative financial instruments were
categorised as follows:
|
2023
|
|
Level 1
|
Level 2
|
Level 3
|
Total
|
|
£'000
|
£'000
|
£'000
|
£'000
|
Investments in equities -
quoted
|
26,166
|
-
|
-
|
26,166
|
Investments in equities -
unquoted
|
-
|
-
|
47,962
|
47,962
|
Total
|
26,166
|
-
|
47,962
|
74,128
|
There have been no transfers between
Levels 1, 2 or 3 during the year (period ended 31 March 2023:
nil).
Movements in fair value measurements
included in Level 3 during the period are as follows:
|
2024
|
2023
|
|
£'000
|
£'000
|
Opening fair value of Level 3
Investments
|
47,962
|
27,408
|
Purchases at cost
|
1,972
|
15,149
|
Sales proceeds
|
-
|
(2,384)
|
Net gains on investments
|
2,930
|
7,789
|
Closing fair value of Level 3
investments
|
52,864
|
47,962
|
Closing book cost
|
32,288
|
30,803
|
Closing investment holding
gains
|
20,576
|
17,159
|
Closing fair value of Level 3
investments
|
52,864
|
47,962
|
21.
Financial instruments' exposure to risk and risk management
policies
The Company's objectives are set out
on the inside front cover of this report. In pursuing these
objectives, 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 interest rate risk and other price risk),
liquidity risk and credit risk. The Directors' policy for managing
these risks is set out below. The Board has oversight of the
Company's risk management policy. The Company has no significant
exposure to foreign exchange risk on monetary items.
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;
- bank loans or
overdrafts for investment purposes and for efficient portfolio
management; and
- derivatives
used for investment purposes, efficient portfolio management or
currency hedging.
(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 two
elements: interest rate risk and other price risk. Information to
enable an evaluation of the nature and extent of these two elements
of market risk is given in parts (i) and (ii) of this note,
together with sensitivity analyses where appropriate. The Board
reviews and agrees policies for managing these risks. 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)
Interest rate risk
Interest rate movements may affect
the level of income receivable on cash balances and the interest
payable on any loans or overdrafts 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 Company may
borrow from time to time, but gearing will not exceed 10% of
net asset value at the time of drawing. Gearing is defined as
borrowings less cash, expressed as a percentage of net assets.
However, the Company has not used any loans or overdrafts during
the year (2023: nil).
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:
|
2024
|
2023
|
|
£'000
|
£'000
|
Exposure to floating interest
rates:
|
|
|
Cash at bank and in hand
|
790
|
7,759
|
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 is broadly
representative of the exposure to interest rates during the
year.
Interest rate sensitivity
The following table illustrates the
sensitivity of the return after taxation for the year and net
assets to a 0.25% 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 held at the accounting date with all other variables
held constant.
|
2024
|
2023
|
|
0.25%
|
0.25%
|
0.25%
|
0.25%
|
|
increase
|
decrease
|
increase
|
decrease
|
|
in rate
|
in rate
|
in rate
|
in rate
|
|
£'000
|
£'000
|
£'000
|
£'000
|
Income statement - return after
taxation
|
|
|
|
|
Revenue return
|
2
|
(2)
|
19
|
(19)
|
Capital return
|
-
|
-
|
-
|
-
|
Total return after
taxation
|
2
|
(2)
|
19
|
(19)
|
Net assets
|
2
|
(2)
|
19
|
(19)
|
(ii) Other
price risk
Other price risk includes changes in
market prices which may affect the value of investments.
Management of other 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 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 efficient portfolio
management.
Market price risk exposure
The Company's total exposure to
changes in market prices at the year end comprises the
following:
|
2024
|
2023
|
|
£'000
|
£'000
|
Investments held at fair value
through profit or loss
|
83,092
|
74,128
|
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 22. This shows a
concentration of exposure to economic conditions in the United
Kingdom. In addition, the Company's holds 9 investments (31 March
2023: 9) investments amounting to approximately £52.9 million (31
March 2023: £48.0 million), or 63.6% (31 March 2023: 58.8%) of NAV,
whose valuation is deemed to be potentially volatile, due to the
valuation techniques which have sensitive inputs.
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% 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. The sensitivity analysis is based on the Company's
exposure through equity investments and includes the impact on the
management fee and performance fee, but assumes that all other
variables are held constant.
|
2024
|
2023
|
|
20%
|
20%
|
20%
|
20%
|
|
increase in
|
decrease in
|
increase in
|
decrease in
|
|
fair value
|
fair value
|
fair value
|
fair value
|
|
£'000
|
£'000
|
£'000
|
£'000
|
Income statement - return after
taxation
|
|
|
|
|
Revenue return
|
(100)
|
100
|
(89)
|
89
|
Capital return
|
16,698
|
(16,698)
|
14,826
|
(14,826)
|
Total return after taxation and net
assets
|
16,598
|
(16,598)
|
14,737
|
(14,737)
|
Percentage change in net asset
value
|
20.3%
|
(20.3%)
|
18.6%
|
(18.6%)
|
(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
At the year end, the Company's
assets included quoted "public equity investments" amounting to
£30,228,000 (31 March 2023: £26,166,000), which can be sold to meet
ongoing funding requirements. Additionally, the Company had less
liquid, "private equity investments" amounting to £53,262,000 (31
March 2023: £45,047,000) and cash balances amounting to £790,000
(31 March 2023 : £7,759,000).
Liquidity risk exposure
Contractual maturities of financial
liabilities, based on the earliest date on which payment can be
required are as follows:
|
2024
|
2023
|
|
Three
|
More
|
|
Three
|
More
|
|
|
months
|
than one
|
|
months
|
than one
|
|
|
or less
|
year
|
Total
|
or less
|
year
|
Total
|
|
£'000
|
£'000
|
£'000
|
£'000
|
£'000
|
£'000
|
Creditors
|
|
|
|
|
|
|
Other creditors and
accruals
|
900
|
1,6701
|
2,570
|
1,543
|
1,184
|
2,727
|
|
900
|
1,670
|
2,570
|
1,543
|
1,184
|
2,727
|
1As above note 12, the performance fee payable in the prior
year of £487,000 has been reclassified in the current year as
Creditors: amounts falling due after more than one year as there is
a conditional deferment for payment on these fees.
(c)
Credit risk
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.
Cash
Counterparties are subject to daily
credit analysis by the Manager. Cash balances will only be
deposited with reputable banks with high quality credit
ratings.
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 statement
of financial position under debtors and cash at bank and in hand
represent the maximum exposure to credit risk at the year end. No
debtors are past their due date and none have been provided
for.
(d) Fair
values of financial assets and financial liabilities
All financial assets and liabilities
are either carried in the statement of financial position at fair
value, or at a reasonable approximation of fair value.
22. Capital
management policies and procedures
The Company's capital management
objectives are to ensure that it will be able to continue as a
going concern, and to maximise the income and capital return to its
equity shareholders.
The Company's capital structure
comprises the following:
|
2024
|
2023
|
|
£'000
|
£'000
|
Equity
|
|
|
Called-up share capital
|
750
|
750
|
Reserves
|
80,577
|
78,561
|
Total equity
|
81,327
|
79,311
|
The Board, with the assistance of
the Manager, monitors and reviews the broad structure of the
Company's capital on an ongoing basis. This review will
include:
- the possible use
of gearing, which will take into account the Manager's views on the
market;
- the potential
benefit of repurchasing the Company's own shares for cancellation
or holding in treasury, which will take into account the share
price discount;
- the opportunity
for issue of new shares; and
- the amount of
dividend to be paid, in excess of that which is required to be
distributed.
23. Post
balance sheet events
In June 2024 the Company announced
the completion of a new private equity investment in HeadFirst, an
international HR tech service provider. The invested capital will
be utilised to finance HeadFirst's acquisition of Impellam Group, a
managed services and specialist staffing provider.
24.
Disclosures regarding material unquoted holdings (comprising more
than 5% of the portfolio and/or included in the top ten
holdings)
Holding
|
Description of
its business
|
Class of
shares held
|
Cost of the
investment
£'000
|
Fair value
2024
£'000
|
Fair value
2023
£'000
|
Total
income
received in
the year
£'000
|
Mintec
|
Provides market intelligence,
commodity prices and price forecasts across the agri-food supply
chain
|
Ordinary
|
6,304
|
9,591
|
8614
|
-
|
Cera EHP S à r l
|
Provides home care services for
elderly people
|
Ordinary
|
3,450
|
8,046
|
8,046
|
-
|
Rapyd Financial Network
|
Global Fintech company
|
Ordinary
|
3,297
|
6,837
|
8,399
|
-
|
Pirum Systems
|
Provides a secure processing hub
which seamlessly links market participants together, allowing them
to electronically process and verify key transaction
details
|
Ordinary
|
5,752
|
6,884
|
6087
|
-
|
EasyPark
|
Digital parking, electrical vehicle
charging and mobility services
|
Ordinary
|
2,047
|
6,171
|
4,492
|
-
|
CFC Underwriting
|
Specialist in insurance for cyber
security and tech insurance for IT consultants
|
Ordinary
|
3,780
|
5,661
|
4098
|
-
|
Culligan
|
Global provider of purified
drinking water dispensers
|
Ordinary
|
1,820
|
5,585
|
5,053
|
-
|
Graphcore
|
Provider of training and education
services for adults
|
Ordinary
|
4,000
|
2,533
|
1,778
|
-
|
The Company has not included certain
disclosures required by paragraph 82(c) of the SORP. In particular,
turnover, pre-tax profit and attributable net assets, because it is
not publicly available.
Annual General Meeting -
Recommendations
The following information relates to
the notice of Annual General Meeting ("AGM") of the Company which
is convened for 18 September 2024 at 1.00 p.m. The formal Notice of
Meeting is set out on page 77.
The
following information is important and requires your immediate
attention. If you are in any doubt about the action you should
take, you should consult an independent financial adviser,
authorised under the Financial Services and Markets Act 2000.
If you have sold or transferred all of your ordinary shares in the
Company, please forward this document with its accompanying proxy
form at once to the purchaser or transferee, or to the stockbroker,
bank or other agent through whom the sale or transfer was effected,
for onward transmission to the purchaser or
transferee.
Ordinary business
Resolutions 1 to 11 are all ordinary
resolutions. Resolution 1 is a required resolution. Resolution 2
relates to the Directors' Remuneration
Policy. Resolution 3 concerns the Directors' Report on
Remuneration, on pages 46 to 48. Resolution 4
concerns the authorisation of the Directors
to determine that no final dividend for the
year ended 31 March 2024 will be paid. Resolutions 5 and 6
invite shareholders to elect Jemma Bruton
and Justin Ward as Directors of the Company
for the first time. Resolutions 7 and 8 invite shareholders to
re-elect Diana Dyer Bartlett and Tim Jenkinson as
Directors until the next AGM, following the
recommendations of the Nomination Committee, set out on page 44
(their biographies are set out on pages 34 and 35). Neil England
will not be standing for re-election so no
resolution has been proposed in this regard. Resolutions 9 and 10
concern the re-appointment and remuneration of the Company's
auditor, discussed in the Audit and Risk Committee
report on pages 39 to 41.
Special business
Resolution 11: Directors' authority
to allot shares (ordinary resolution) and resolution 12: power to
disapply pre-emption rights (special resolution)
The Directors are seeking authority
to allot a limited number of treasury shares and unissued ordinary
shares for cash without first offering them to existing
shareholders in accordance with statutory pre-emption
procedures.
Appropriate resolutions will be
proposed at the forthcoming AGM and are set out in full in the
Notice of AGM. An ordinary resolution will be proposed to authorise
the Directors to allot shares up to a maximum aggregate nominal
amount of £73,900 (being 10% of the issued share capital (excluding
any shares held in treasury) as at 10 July 2024).
A special resolution will be
proposed to authorise the Directors to allot shares up to a maximum
aggregate nominal amount of £73,900 (being 10% of the issued share
capital as at 10 July 2024) on a non pre-emptive basis. This
authority includes shares that the Company sells or transfers that
have been held in treasury. The Directors do not intend to allot
ordinary shares or sell treasury shares, on a non pre-emptive
basis, pursuant to this authority other than to take advantage of
opportunities in the market as they arise and only if they believe
it to be advantageous to the Company as a whole. Shares issued or
treasury shares reissued, under this authority, will be at
a price that is equal to or greater than the Company's NAV per
share, plus any applicable costs, as at the latest practicable date
before the allotment of such shares.
If approved, both of these
authorities will expire at the conclusion of the AGM in 2025 unless
renewed, varied or revoked earlier.
Resolution 13: authority to make
market purchases of the Company's own shares (special
resolution)
On 27 September 2023, a special
resolution was passed to give the Company authority to make market
purchases of up to 14.99% of the ordinary shares. So far, no shares
have been bought back under this authority.
The Directors will continue to
monitor the level of the discount and consider the merits of
further buy-backs, which should be accretive in nature when
discounts are wide.
However, any decision to buy back
shares will be influenced by such factors as: market conditions;
the small size of the Company; the illiquid nature of the private
equity holdings; the need to retain cash for investment
opportunities; and the level of the Company's borrowing, if any. A
special resolution will be proposed at the forthcoming AGM to give
the Company authority to make market purchases of up to 14.99% of
the ordinary shares in issue as at 10 July 2024 (excluding treasury
shares). The Directors will continue to monitor the level. The
Directors consider that any purchase would be for the benefit of
the Company and its shareholders. Any shares so purchased would be
cancelled or held in treasury for potential reissue.
If renewed, this authority will
lapse at the conclusion of the AGM in 2025 unless renewed, varied
or revoked earlier.
Resolution 14: notice period for
general meetings (special resolution)
Resolution 14 set out in the Notice
of AGM is a special resolution and will, if passed, allow the
Company to hold general meetings (other than annual general
meetings) on a minimum notice period of 14 clear days, rather
than 21 clear days as required by the Companies Act 2006. The
approval will be effective until the Company's next AGM to be held
in 2025. The Directors will only call general meetings on
14 clear days' notice when they consider it to be in the best
interests of the Company's shareholders and will only do so if the
Company offers facilities for all shareholders to vote by
electronic means and when the matter needs to be dealt with
expediently.
Recommendations
The Board considers that the
resolutions relating to the above items of business are in the best
interests of shareholders as a whole. Accordingly, the Board
unanimously recommends to shareholders that they vote in favour of
the resolutions to be proposed at the forthcoming AGM, as they
intend to do in respect of their own beneficial
holdings.
Notice of Annual General
Meeting
Notice is hereby given that the
Annual General Meeting of Schroder British Opportunities Trust plc
will be held on 18 September 2024 at 1.00 p.m. at 1 London
Wall Place, London EC2Y 5AU to consider the following resolutions,
of which resolutions 1 to 11 will be proposed as ordinary
resolutions, and resolutions 12 to 14 will be proposed as special
resolutions:
1. To receive the
Directors' Report and the audited accounts for the year ended 31
March 2024.
2. To approve the
Directors' Remuneration Policy.
3. To approve the
Directors' Report on Remuneration for the year ended 31 March
2024.
4. To authorise the
Directors to determine that no final dividend for the year ended 31
March 2024 will be paid.
5. To approve the
election of Jemma Bruton as a Director of the Company.
6. To approve the
election of Justin Ward as a Director of the Company.
7. To approve the
re-election of Diana Dyer Bartlett as a Director of the
Company.
8. To approve the
re-election of Tim Jenkinson as a Director of the
Company.
9. To re-appoint Ernst
& Young LLP as auditor to the Company.
10. To authorise the Directors
to determine the remuneration of Ernst & Young LLP as auditor
to the Company.
11. To consider, and if
thought fit, pass the following resolution as an ordinary
resolution:
"THAT in addition to all existing
authorities, the Directors be generally and unconditionally
authorised pursuant to section 551 of the Companies Act 2006 (the
"Act") to exercise all the powers of the Company to allot relevant
securities (within the meaning of section 551 of the Act) up to an
aggregate nominal amount of £73,900 (being 10% of the issued
ordinary share capital, excluding treasury shares, at 10 July 2024)
for a period expiring (unless previously renewed, varied or revoked
by the Company in general meeting) at the conclusion of the Annual
General Meeting of the Company in 2025, but that the Company may
make an offer or agreement which would or might require relevant
securities to be allotted after expiry of this authority and the
Board may allot relevant securities in pursuance of that offer or
agreement."
12. To consider and, if
thought fit, to pass the following resolution as a special
resolution:
"That, subject to the passing of
Resolution 11 set out above, the Directors be and are hereby
empowered, pursuant to Section 571 of the Act, to allot equity
securities (including any shares held in treasury) (as defined in
section 560(1) of the Act) pursuant to the authority given in
accordance with section 551 of the Act by the said Resolution 11
and/or where such allotment constitutes an allotment of equity
securities by virtue of section 560(2) of the Act as if Section
561(1) of the Act did not apply to any such allotment, provided
that this power shall be limited to the allotment of equity
securities up to an aggregate nominal amount of £73,900,
(representing 10% of the aggregate nominal amount of the share
capital in issue, excluding treasury shares at 10 July 2024); and
where equity securities are issued pursuant to this power they will
only be issued at a price which is equal or greater than the
Company's NAV per share as at the latest practicable date before
the allotment; and provided that this power shall expire at the
conclusion of the next Annual General Meeting of the Company but so
that this power shall enable the Company to make offers or
agreements before such expiry which would or might require equity
securities to be allotted after such expiry."
13. To consider and, if
thought fit, to pass the following resolution as a special
resolution:
"THAT the Company be and is hereby
generally and unconditionally authorised in accordance with Section
701 of the Companies Act 2006 (the "Act") to make market purchases
(within the meaning of Section 693 of the Act) of ordinary shares
of 1p each in the capital of the Company ("Share") at whatever
discount the prevailing market price represents to the prevailing
net asset value per Share provided that:
(a) the maximum number of
Shares which may be purchased is 11,077,610, representing 14.99% of
the Company's issued ordinary share capital as at 10 July 2024
(excluding treasury shares);
(b) the maximum price
(exclusive of expenses) which may be paid for a Share shall not
exceed the higher of;
i) 105% of the
average of the middle market quotations for the Shares as taken
from the London Stock Exchange Daily Official List for the five
business days preceding the date of purchase; and
ii) the higher of the
last independent bid and the highest current independent bid on the
London Stock Exchange;
(c) the minimum price
(exclusive of expenses) which may be paid for a Share shall be 1p,
being the nominal value per Share;
(d) this authority hereby
conferred shall expire at the conclusion of the next Annual General
Meeting of the Company in 2025 (unless previously renewed, varied
or revoked by the Company prior to such date);
(e) the Company may make a
contract to purchase Shares under the authority hereby conferred
which will or may be executed wholly or partly after the expiration
of such authority and may make a purchase of Shares pursuant to any
such contract; and
(f) any Shares so
purchased will be cancelled or held in treasury."
14. To consider and, if
thought fit, to pass the following resolution as a special
resolution:
"THAT a general meeting, other than
an annual general meeting, may be called on not less than 14 clear
days' notice."
By order of the Board
|
Registered
Office:
|
|
|
Schroder Investment Management
Limited
|
1 London
Wall Place,
|
Company Secretary
|
London
EC2Y 5AU
|
10 July 2024
|
Registered
Number: 12892325
|
Explanatory Notes to the Notice of
Meeting
1. Ordinary shareholders
are entitled to attend, speak and vote at the meeting and to
appoint one or more proxies, who need not be a shareholder, as
their proxy to exercise all or any of their rights to attend, speak
and vote on their behalf at the meeting.
A proxy form is enclosed.
Shareholders are encouraged to appoint the Chairman as proxy. If
you wish to appoint a person other than the Chairman as your proxy,
please insert the name of your chosen proxy holder in the space
provided at the top of the form. If the proxy is being appointed in
relation to less than your full voting entitlement, please enter in
the box next to the proxy holder's name the number of shares in
relation to which they are authorised to act as your proxy. If left
blank your proxy will be deemed to be authorised in respect of your
full voting entitlement (or if this proxy form has been issued in
respect of a designated account for a shareholder, the full
voting entitlement for that designated account). Additional forms
of proxy can be obtained by contacting the Company's Registrars,
Equiniti Limited, on +44 (0) 800 032 0641. (If calling from outside
of the UK, please ensure the country code is used), or you may
photocopy the attached proxy form. Please indicate in the box next
to the proxy holder's name the number of shares in relation to
which they are authorised to act as your proxy. Please also
indicate by ticking the box provided if the proxy instruction is
one of multiple instructions being given.
Completion and return of a proxy
form will not preclude a shareholder from attending the Annual
General Meeting and voting in person.
On a vote by show of hands, every
ordinary shareholder who is present in person has one vote and
every duly appointed proxy who is present has one vote. On a poll
vote, every ordinary shareholder who is present in person or by way
of a proxy has one vote for every share of which he/she is a
holder. Voting will be by poll.
The "Vote Withheld" option on the
proxy form is provided to enable you to abstain on any particular
resolution. However it should be noted that a "Vote Withheld" is
not a vote in law and will not be counted in the calculation of the
proportion of the votes 'For' and 'Against' a resolution. A proxy
form must be signed and dated by the shareholder or his or her
attorney duly authorised in writing. In the case of joint holdings,
any one holder may sign this form. The vote of the senior joint
holder who tenders a vote, whether in person or by proxy, will be
accepted to the exclusion of the votes of the other joint holder
and for this purpose seniority will be determined by the order in
which the names appear on the Register of Members in respect of the
joint holding. To be valid, proxy form(s) must be completed and
returned to the Company's Registrars, Equiniti Limited, Aspect
House, Spencer Road, Lancing, West Sussex BN99 6DA, in the enclosed
envelope together with any power of attorney or other authority
under which it is signed or a copy of such authority certified
notarially, to arrive no later than 48 hours before the time fixed
for the meeting, or an adjourned meeting. It is possible for you to
submit your proxy votes online by going to Equiniti's Shareview
website, www.shareview.co.uk, and logging in to your Shareview
Portfolio. Once you have logged in, simply click 'View' on the 'My
Investments' page and then click on the link to vote and follow the
on-screen instructions. If you have not yet registered for a
Shareview Portfolio, go to www.shareview.co.uk and enter the
requested information. It is important that you register for a
Shareview Portfolio with enough time to complete the registration
and authentication processes. Please note that to be valid, your
proxy instructions must be received by Equiniti no later than 1.00
p.m. on 16 September 2024. If you have any difficulties with
online voting, you should contact the shareholder helpline on
+44 (0) 800 032 0641. If calling from outside of the UK,
please ensure the country code is used.
If an ordinary shareholder submits
more than one valid proxy appointment, the appointment received
last before the latest time for receipt of proxies will take
precedence. Shareholders may not use any electronic address
provided either in this Notice of Annual General Meeting or any
related documents to communicate with the Company for any purposes
other than expressly stated.
Representatives of shareholders
that are corporations will have to produce evidence of their proper
appointment when attending the Annual General Meeting.
2. Any person to whom
this notice is sent who is a person nominated under section 146 of
the Companies Act 2006 to enjoy information rights (a "Nominated
Person") may, under an agreement between him or her and the
shareholder by whom he or she was nominated, have a right to be
appointed (or to have someone else appointed) as a proxy for the
Annual General Meeting. If a Nominated Person has no such proxy
appointment right or does not wish to exercise it, he or she may,
under any such agreement, have a right to give instructions to the
shareholder as to the exercise of voting rights.
The statement of the rights of
ordinary shareholders in relation to the appointment of proxies in
note 1 above does not apply to Nominated Persons. The rights
described in that note can only be exercised by ordinary
shareholders of the Company.
3. Pursuant to
Regulation 41 of the Uncertificated Securities Regulations 2001,
the Company has specified that only those shareholders registered
in the Register of members of the Company at 6.30 p.m. on 16
September 2024, or 6.30 p.m. two days prior to the date of an
adjourned meeting, shall be entitled to attend and vote at the
meeting in respect of the number of shares registered in their name
at that time. Changes to the Register of Members after 6.30 p.m. on
16 September 2024 shall be disregarded in determining the right of
any person to attend and vote at the meeting.
4. CREST members who
wish to appoint a proxy or proxies through the CREST electronic
proxy appointment service may do so by using the procedures
described in the CREST manual. The CREST manual can be viewed at
www.euroclear.com. A CREST message appointing a proxy (a "CREST
proxy instruction") regardless of whether it constitutes the
appointment of a proxy or an amendment to the instruction
previously given to a previously appointed proxy must, in order to
be valid, be transmitted so as to be received by the issuer's agent
(ID RA19) by the latest time for receipt of proxy
appointments.
5. If you are an
institutional investor, you may be able to appoint a proxy
electronically via the Proxymity platform, a process which has been
agreed by the Company and approved by the Registrar. For further
information regarding Proxymity, please go to www.proxymity.io.
Your proxy must be lodged by 1.00 p.m. on 16 September 2024 in
order to be considered valid. Before you can appoint a proxy via
this process you will need to have agreed to Proxymity's associated
terms and conditions. It is important that you read these carefully
as you will be bound by them, and they will govern the electronic
appointment of your proxy.
6. Copies of the terms
of appointment of the non-executive Directors and a statement of
all transactions of each Director and of their family interests in
the shares of the Company, will be available for inspection by any
member of the Company at the registered office of the Company
during normal business hours on any weekday (English public
holidays excepted) and at the Annual General Meeting by any
attendee, for at least 15 minutes prior to, and during, the Annual
General Meeting. None of the Directors has a contract of service
with the Company.
7. The biographies of
the Directors offering themselves for election and re-election and
are set out on pages 34 and 35 of the Company's report and
financial statements for the year ended 31 March
2024.
8. As at 10 July 2024,
75,000,000 ordinary shares of 1 pence each were in issue (1,100,000
were held in treasury). Therefore the total number of voting rights
of the Company as at 10 July 2024 was 73,900,000.
9. A copy of this Notice
of Meeting, which includes details of shareholder voting rights,
together with any other information as required under Section 311A
of the Companies Act 2006, is available from the Company's webpage,
https://www.schroders.com/sbot.
10. Pursuant to Section 319A
of the Companies Act, the Company must cause to be answered at the
Annual General Meeting any question relating to the business being
dealt with at the AGM which is put by a member attending the
meeting, except in certain circumstances, including if it is
undesirable in the interests of the Company or the good order of
the meeting that the question be answered or if to do so would
involve the disclosure of confidential information. Shareholders
are asked to send their questions by post or by email
(amcompanysecretary@schroders.com).
11. Members satisfying the
thresholds in section 527 of the Companies Act 2006 can require the
Company to publish a statement on its website setting out any
matter relating to:
(a) the audit of the Company's
Accounts (including the auditors report and the conduct of the
audit) that are to be laid before the Meeting; or
(b) any circumstance connected
with an auditor of the Company ceasing to hold office since the
last AGM, that the members propose to raise at the Meeting. The
Company cannot require the members requesting the publication to
pay its expenses. Any statement placed on the website must also be
sent to the Company's auditors no later than the time it makes its
statement available on the website. The business which may be dealt
with at the meeting includes any statement that the Company has
been required to publish on its website.
12. The Company's privacy
policy is available on its webpages.
https://www.schroders.com/sbot. Shareholders can contact Equiniti
for details of how Equiniti processes their personal information as
part of the AGM.
Definitions of Terms and Alternative
Performance Measures
The
terms and performance measures below are those commonly used by
investment companies to assess values, investment performance and
operating costs. Numerical calculations are given where relevant.
Some of the financial measures below are classified Alternative
Performance Measures ("APMs") as defined by the European Securities
and Markets Authority. Under this definition, APMs include a
financial measure of historical financial performance or financial
position, other than a financial measure defined or specified in
the applicable financial reporting framework. APMs have been marked
with an *.
Investment policy
The Company will invest in a
diversified portfolio of both public equity investments and private
equity investments consisting predominantly of UK Companies with
strong long-term growth prospects.
"Public
equity investments" mean any investments in
any of the following categories (a), (b) and (c) below (although it
is envisaged that the Company will predominantly focus on those of
an equity and/or quasi-equity nature as set out under categories
(a) and (b) below):
(a) ordinary shares or
similar securities issued by an issuer which are traded on any of
the following:
(i) any "regulated
market" as defined in MiFID II and as listed in the register of
regulated markets within the EEA maintained by the European
Securities and Markets Authority from time to time; or
(ii) any "recognised
investment exchange" as recognised by the FCA under Part XVIII of
FSMA; or
(iii) any "recognised overseas
investment exchange" as recognised by the FCA under Part XVIII of
FSMA;
(b) securities or other
instruments giving the right to acquire or sell any of the
securities referred to in (a) above, including without limitation
warrants, options, futures, convertible bonds and convertible loan
notes; and
(c) preference shares issued
by an issuer referred to in (a) above.
"Private equity
investments" mean any investments in
any of the following categories (w), (x), (y) and (z) below
(although it is envisaged that the Company will predominantly focus
on those of an equity and/or quasi-equity nature as set out under
categories (w) and (x) below):
(w) shares in companies and
other securities/units/interests equivalent to shares in companies,
partnerships (including limited partnership interests) or other
entities, provided that they are not already captured under the
definition of "public equity investments" above;
(x) securities, derivatives
or other instruments giving the right to acquire or sell any of the
shares/securities/units/ interests referred to in (w) above,
including without limitation warrants, options, futures, contingent
value rights, convertible bonds, convertible loan notes,
convertible loan stocks or convertible preferred equity;
(y) preference shares issued
by an issuer referred to in (w) above; and
(z) debt-based investments
not otherwise covered above, including loan stock, payment-in-kind
instruments and shareholder loans.
It is anticipated that the Company's
portfolio will typically consist of 30 to 50 holdings and
will target companies with an equity value between approximately
£50 million and £2 billion at the time of initial
investment.
The Company will focus on companies
which the Manager considers to be sustainable from an
environmental, social and governance perspective, supporting at
least one of the goals and/or sub-goals of the United Nations'
Sustainable Development Goals ("SDGs"), or which the Manager
considers would benefit from their support in helping them
incorporate SDGs into their business planning and/or in reporting
their alignment with SDGs.
"UK
Companies" means companies which are
incorporated, headquartered or have their principal business
activities in the United Kingdom, and companies headquartered
outside the United Kingdom which derive, or are expected to derive,
a significant proportion of their revenues or profits from the
United Kingdom.
Net asset value ("NAV") per
share
The NAV per share of 110.05p (31
March 2023: 107.32p) represents the net assets attributable to
equity shareholders of £81,327,000 (31 March 2023:
£79,311,000) divided by the 73,900,000 (31 March 2023: 73,900,000)
shares in issue at the year end.
Discount/premium*
The amount by which the share price
of an investment trust is lower (discount) or higher (premium) than
the NAV per share. If shares are trading at a discount, investors
would be paying less than the value attributable to the shares by
reference to the underlying assets. A premium or discount is
generally the consequence of supply and demand for the shares on
the stock market. The discount or premium is expressed as a
percentage of the NAV per share. The discount at the year end
amounted to 27.8% (31 March 2023: 36.2%), as the closing share
price at 79.5p (31 March 2023: 68.5p) was 27.8% (31 March
2023: 36.2%) lower than the closing NAV of 110.05p (31 March
2023: 107.32p).
Gearing/(net cash)*
The gearing percentage reflects the
amount of borrowings (that is, bank loans or overdrafts) that the
Company has used to invest in the market. This figure is indicative
of the extra amount by which shareholders' funds would move if the
Company's investments were to rise or fall. Gearing is defined as:
borrowings used for investment purposes, less cash
and investment in liquidity
fund, expressed as a percentage of net
assets. A negative figure so calculated is termed a "Net cash"
position.
At the year end, the Company had no
loans or overdrafts, and thus was in a net cash position,
calculated as follows:
|
31 March
|
31 March
|
|
2024
|
2023
|
|
£'000
|
£'000
|
Borrowings used for
investment
|
|
|
purposes, less cash
|
(11,585)
|
(7,759)
|
Net assets
|
81,327
|
79,311
|
Net cash
|
(14.2)%
|
(9.8)%
|
Ongoing charges*
The Ongoing Charges ("OGC") figure
is a measure of the ongoing operating cost of the Company. It is
calculated in accordance with the AIC's recommended methodology,
and represents total annualised operating expenses payable
including any management fee, but excluding any finance costs,
transaction costs and performance fee provision, expressed as a
percentage of the average daily net asset values during the year.
For the year ended 31 March 2024, operating expenses amounted to
£1,087,000 (year ended 31 March 2023: £1,108,000). This produces an
OGC figure of 1.40% (year ended 31 March 2023: 1.47%), when
expressed as a percentage of the average daily net asset values
during the year of £77.5 million (year ended 31 March 2023:
£75.3 million).
Leverage*
For the purpose of the UK
Alternative Investment Fund Managers (AIFM) Directive, leverage is
any method which increases the Company's exposure, including the
borrowing of cash and the use of derivatives. It is expressed as
the ratio of the Company's exposure to its net asset value and is
required to be calculated both on a "Gross" and a "Commitment"
method. Under the Gross method, exposure represents the sum of the
absolute values of all positions, so as to give an indication of
overall exposure. Under the Commitment method, exposure is
calculated in a similar way, but after netting off hedges which
satisfy certain strict criteria.
The Company's leverage ratio
calculation and exposure limits as required by the AIFMD are
published on the Company's webpages. The Company is also required
to periodically publish its actual leverage exposures. As at 31
March 2024 these were:
|
Maximum
|
Actual
|
Leverage exposure
|
ratio
|
ratio
|
Gross method
|
2.50%
|
0.99%
|
Commitment method
|
2.00%
|
1.00%
|
Shareholder Information
Webpages and share price
information
The Company has dedicated webpages,
which may be found at https://www.schroders.com/sbot. The webpages
have been designed to be used as the Company's primary method of
electronic communication with shareholders. They contain details of
the Company's share price and copies of annual reports and other
documents published by the Company as well as information on the
Directors, terms of reference of Committees and other governance
arrangements. In addition, the webpages contain links to
announcements made by the Company to the market, Equiniti's
shareview service and Schroders' website. There is also a section
entitled "How to Invest".
The Company releases its NAV per
share on both a cum and ex-income basis, diluted where applicable,
to the market on a daily basis.
Share price information may also be
found in the Financial Times and at the Company's
webpages.
Association of Investment
Companies
The Company is a member of the
Association of Investment Companies. Further information on the
Association can be found on its website,
www.theaic.co.uk.
Individual Savings Account ("ISA")
status
The Company's shares are eligible
for stocks and shares ISAs.
Non-Mainstream Pooled Investments
status
The Company currently conducts its
affairs so that its shares can be recommended by IFAs to ordinary
retail investors in accordance with the FCA's rules in relation to
non-mainstream investment products and intends to continue to do so
for the foreseeable future. The Company's shares are excluded from
the FCA's restrictions which apply to non-mainstream investment
products because they are shares in an investment trust.
Financial calendar
Results announced
|
July
|
Annual General Meeting
|
September
|
Half year results
announced
|
December
|
Financial year end
|
March
|
Alternative Investment Fund Managers
Directive ("AIFMD") disclosures
The AIFMD, as transposed into the
FCA Handbook in the UK, requires that certain pre-investment
information be made available to investors in Alternative
Investment Funds (such as the Company) and also that certain
regular and periodic disclosures are made. This information and
these disclosures may be found either below, elsewhere in this
annual report, or in the Company's AIFMD information disclosure
document published on the Company's webpages.
Remuneration disclosures
Quantitative remuneration
disclosures to be made in this annual report in accordance with FCA
Handbook rule FUND3.3.5 may also be found in the Company's AIFMD
information disclosure document published on the Company's web
pages.
Publication of Key Information
Document ("KID") by the AIFM
Pursuant to the Packaged Retail and
Insurance-based Products ("PRIIPs") Regulation, the Manager, as the
Company's AIFM, is required to publish a short KID on the Company.
KIDs are designed to provide certain prescribed information to
retail investors, including details of potential returns under
different performance scenarios and a risk/reward indicator. The
Company's KID is available on its webpages.
How to invest
There are a number of ways to easily
invest in the Company. The Manager has set these out at
www.schroders.com/invest-in-a-trust/.
Complaints
The Company has adopted a policy on
complaints and other shareholder communications which ensures that
shareholder complaints and communications addressed to the Company
Secretary, the Chairman or the Board are, in each case, considered
by the Chairman and the Board.
Warning to shareholders
Companies are aware that their
shareholders have received unsolicited telephone calls or
correspondence concerning investment matters. These are typically
from overseas-based 'brokers' who target UK shareholders, offering
to sell them what often turn out to be worthless or high risk
shares or investments.
These operations are commonly known
as 'boiler rooms'. These 'brokers' can be very persistent and
extremely persuasive.
Shareholders are advised to be wary
of any unsolicited advice, offers to buy shares at a discount or
offers of free company reports. If you receive any unsolicited
investment advice:
• Make sure you get the
correct name of the person and organisation
• Check that they are
properly authorised by the FCA before getting involved by visiting
https://register.fca.org.uk
• Report the matter to
the FCA by calling 0800 111 6768 or visiting
https://fca.org.uk/consumers/report-scam-unauthorised-firm
• Do not deal with any
firm that you are unsure about
If you deal with an unauthorised
firm, you will not be eligible to receive payment under the
Financial Services Compensation Scheme.
The FCA provides a list of
unauthorised firms of which it is aware, which can be accessed
at
https://www.fca.org.uk/consumers/unauthorised-firms-
individuals#list.
More detailed information on this or
similar activity can be found on the FCA website at
https://www.fca.org.uk/consumers/protect-
yourself-scams.
Information about the
Company
https://www.schroders.com/sbot
Directors
Neil England (Chairman)
Diana Dyer Bartlett
Jemma Bruton
Tim Jenkinson
Justin Ward
Registered Office
1 London Wall Place
London EC2Y 5AU
Advisers
Alternative Investment Fund Manager
(the "AIFM" or "Manager")
Schroder Unit Trusts
Limited
1 London Wall Place
London EC2Y 5AU
Investment Managers
Schroder Investment Management
Limited
1 London Wall Place
London EC2Y 5AU
Schroders Capital Management
(Switzerland) AG
Affolternstrausse 56,
CH-8050
Zurich, Switzerland
Company Secretary
Schroder Investment Management
Limited
1 London Wall Place
London EC2Y 5AU
Email:
amcompanysecretary@schroders.com
Depositary and Custodian
HSBC Bank plc
8 Canada Square
London E14 5HQ
Corporate Broker
Peel Hunt LLP
100 Liverpool Street
London EC2MY 2AT
Independent Auditors
Ernst & Young LLP
Atria One
144 Morrison Street
Edinburgh EH3 8EX
Registrar
Equiniti Limited
Aspect House
Spencer Road
Lancing
West Sussex BN99 6DA
Shareholder helpline: 0800 032
06411
Website:
www.shareview.co.uk
1Calls to this number are free of charge from UK
landlines.
Communications with shareholders are
mailed to the address held on the register. Any notifications and
enquiries relating to shareholdings, including a change of address
or other amendment should be directed to Equiniti Limited at the
above address and telephone number above.
Other information
Shareholder enquiries
General enquiries about the Company
should be addressed to the Company Secretary at the Company's
Registered Office.
Dealing Codes
ISIN:
GB00BN7JZR28
SEDOL:
BN7JZR2
Ticker:
SBO
Global Intermediary Identification
Number (GIIN)
QML9TQ.99999.SL.826
Legal Entity Identifier
(LEI)
5493003UY8LIHFW6HM02
Privacy notice
The Company's privacy notice is
available on its web pages.