Schroder BSC Social - Annual Financial Report
24/10/2022 07:00
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RNS Number : 7770D Schroder BSC Social Impact Trust 24 October 2022
ANNUAL REPORT AND ACCOUNTS
Schroder BSC Social Impact Trust plc (the "Company") hereby submits its Report
and Accounts for the year ended 30 June 2022, as required by the Financial
Conduct Authority's Disclosure Guidance and Transparency Rule 4.1.
Highlights
Resilient shareholder returns since inception on 22 December 2020 in a
volatile market, with the Company continuing to offer a source of
diversification for investors, along with the opportunity to make a positive
difference to communities across the UK.
· NAV of 105.39 pence per share as at 30 June 2022.
· NAV total return per share of 1.6% in the financial year ended 30
June 2022, during a period of sharp downturns for the wider market.
· NAV total return per share of 7.8% since inception (5.1%
annualised), mainly driven by the performance of more seasoned investments in
their mature phase.
· Dividend of 1.30p per share for the year, increasing from 0.57p
per share for the period since inception to 30 June 2021.
· £85m of capital committed to date to support 160 frontline
organisations, benefitting more than 160,000 people, at least 90% of whom are
disadvantaged or vulnerable.
· 100% of investments align with the UN Sustainable Development
Goals, with the majority of the portfolio targeting SDG 1 (No Poverty) and SDG
10 (Reduced Inequalities).
· The Company remains well positioned to lead and benefit from
further growth of the social impact investment market with an expanding and
maturing pipeline of investment opportunities.
The Portfolio Manager will be presenting at a webinar on 24 October 2022 at
14:00. This is open to all existing and potential shareholders, who can sign
up for the webinar at:
https://registration.duuzra.com/form/BSCSocialImpactOct22
(https://registration.duuzra.com/form/BSCSocialImpactOct22)
The Company's Report and Accounts for the year ended 30 June 2022 is 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/sbsi
(http://www.schroders.com/sbsi)
Please click on the following link to view the document:
http://www.rns-pdf.londonstockexchange.com/rns/7770D_1-2022-10-21.pdf
(http://www.rns-pdf.londonstockexchange.com/rns/7770D_1-2022-10-21.pdf)
The Company has also submitted its Report and Accounts to the National Storage
Mechanism. It will shortly be available for inspection
at: https://data.fca.org.uk/#/nsm/nationalstoragemechanism
(https://data.fca.org.uk/#/nsm/nationalstoragemechanism)
Enquiries:
Kerry Higgins
Schroder Investment Management Limited
Tel: 0207 658 6189
Chair's Statement
I am pleased to present the second annual report of Schroder BSC Social Impact
Trust plc, for the year ended 30 June 2022.
As we publish this report, we are starting to see the impact of the multiple
crises experienced since the launch of the Company in 2020. The Covid-19
pandemic caused significant disruption in global supply chains, and Russia's
invasion of Ukraine earlier this year has and continues to inflict
far-reaching damage not only to the people directly involved, but also across
markets, with punishing spikes in energy and food prices. Some of the fiscal
and monetary measures put in place to mitigate the short-term impact of the
crises are now amplifying inflationary pressures, and we are currently
experiencing the highest inflation in the UK in forty years.
This environment of elevated geopolitical tensions, security and climate
change threats, inflation and rising interest rates has proven challenging for
traditional public market portfolios since the start of the year. The Board
believes the Company should offer investors a valuable source of
diversification, through access to a unique mix of private market investments,
with the dual objectives of providing long term capital growth and income and
serving as a source of permanent funding for organisations dedicated to
positive social impact.
Financial performance
The Company has delivered resilient shareholder returns since inception on
22 December 2020, in a highly volatile market. NAV total return for the year
ended 30 June 2022 was 1.6% (2021: 6.09%)(1), during a period of sharp
downturns for the wider market. NAV total return since inception was 7.8%
(5.1% annualised). Overall, the Company's Net Asset Value per share rose from
104.30p to 105.39p, as a result of investment income and valuation gains and
after fees and expenses and an interim dividend payment of 0.57p per share on
3 December 2021.
In November 2021, the Company raised £10.8m through the issuance of 10.3m new
shares through a secondary offering to a mix of new and existing shareholders.
The proceeds of the equity issuance were fully committed by February 2022,
ahead of target, to one new and two follow-on investments.
A more detailed analysis of performance is included in the Portfolio Manager's
Report.
Social impact performance
I am delighted to highlight that the Company published its inaugural Impact
Report in June 2022, providing an in-depth review of the impact performance
across the portfolio, and outlining the Company's priorities for continued
enhancement of our impact management and reporting in future years.
As of the date of the report, the Company had committed £85m, financing 160
organisations and reaching 160,000 people, of whom at least 90% are from
disadvantaged and vulnerable backgrounds. The Company's investments helped
fund over 10,000 affordable homes through the high impact housing asset class
and generated over £55m of near-term value as savings for government and
households. The report received an independent verification from BlueMark, an
industry-leading, third-party assurance provider.
More detail can be found in the Impact Report section on pages 25 to 27 of
the full annual report and accounts, and the full report is available for
download on the Company's website. We would welcome your feedback on the
report, to help guide our communications with shareholders about the frontline
work of our investees and our impact management methodology.
Promotion and premium/discount management
During the year ended 30 June 2022, the Company traded at an average discount
to NAV of 0.5%, ending the financial year at a 1.1% premium.
As at 20 October 2022, the Company is trading at a discount of 8.44%,
following recent weakness in the Company's share price, coinciding with a
turbulent period for UK equities.
The Company has shareholder authority to issue up to 10% of the issued share
capital on a non-pre-emptive basis, and a proposal for authority to purchase
up to 14.99% of the Company's issued share capital will be put forward at the
Company's 2022 AGM.
Should the Company's shares reach a sufficient premium to NAV, the Board would
seek to issue shares to new and existing investors, thereby raising additional
capital to commit to impactful investments. The Company can play an important
role by providing permanent capital to finance well-run, sustainable social
enterprises and charitable organisations. It is our aspiration to expand the
contribution we can make by growing, through attracting new investors and
issuing shares above NAV to raise funds to take advantage of the pipeline of
attractive investment opportunities seen by our Portfolio Manager, Big Society
Capital.
Dividend
The Board has considered the amount available to distribute to investors and
has declared that the Company will pay out substantially all of its income as
a dividend, resulting in a dividend of 1.30p per share, payable on 6 December
2022 to shareholders on the Company's share register as at 4 November 2022.
This is consistent with the target dividend communicated to investors at IPO.
All of this dividend payment should be treated by shareholders as an interest
distribution.
Proposed changes to the investment policy
To optimise returns as the Company grows and in response to the current high
inflationary environment, the Portfolio Manager has proposed the following
amendments to the investment policy, with an aim to enhance the return
generating potential of the portfolio and mitigate cash drag:
(1) Within the Debt for Social Enterprises asset class, the Company
may have up to 10 per cent. of Net Assets (calculated at the time of
commitment) invested in equity interests via mixed debt and equity impact
funds. The Board requests investor approval for increasing this limit to 30
per cent. of Net Assets, which could be invested in equity interests via
funds. Should this change be approved, the asset class will be re-named as
Debt and Equity for Social Enterprises, and
(2) In order to allocate the Company's capital most efficiently whilst
holding significant levels of cash to meet anticipated fund drawdowns, the
Company may make short and medium term liquid investments. These will include
social bond funds, closed-ended listed funds and other liquid environmental,
social and governance ("ESG") investments, that the Portfolio Manager
considers are consistent with the Company's liquidity requirements, investment
policy, investment guidelines and risk profile. The Company may invest up to
20 per cent. of Net Assets in Liquid ESG Investments, measured at the time of
investment. The Board requests investor approval for increasing this limit to
30 per cent. of Net Assets. The Company intends to only utilise the full 30
per cent. allocation immediately after a fundraise and at most times no more
than 20 per cent. of Net Assets shall be invested in Liquid ESG Investments.
Both proposals have been duly considered and approved by the Board and the
AIFM, and the Board recommends these for shareholder approval.
AGM
The AGM will be held on Friday, 2 December 2022 at 12.00 noon at the offices
of Schroders at 1 London Wall Place, London, EC2Y 5AU. A presentation from the
Portfolio Manager will be given at the AGM, and attendees will also be able to
ask questions in person. The presentation will be made available on the
Company's website following the meeting. Details of the formal business of the
meeting are set out in the Notice of Meeting on pages 89 to 91 of the full
annual report and accounts.
All shareholders are recommended to vote by proxy in advance of the AGM and to
appoint the Chairman of the meeting as their proxy. This will ensure that
shareholders' votes will be counted even if they (or any appointed proxy) are
not able to attend.
If shareholders have any questions for the Board, please write to the
Company's registered office address: Company Secretary, Schroder BSC Social
Impact Trust plc, 1 London Wall Place, London, EC2Y 5AU, or email:
amcompanysecretary@schroders.com (amcompanysecretary@schroders.com) . Any
questions and answers will be published on the Company's website before the
AGM.
For regular news about the Company, shareholders are also encouraged to sign
up to the Manager's investment trusts update by visiting the Company's
website:
https://www.schroders.com/en/uk/private-investor/fund-centre/funds-in-focus/investment-trusts/schroders-investment-trusts/never-miss-an-update/
(https://www.schroders.com/en/uk/private-investor/fund-centre/funds-in-focus/investment-trusts/schroders-investment-trusts/never-miss-an-update/)
Outlook
The environment remains challenging, and the UK government's fiscal proposal
in September 2022 led to significant disruption in the markets, alongside
concerns that the announced budget will lead to increasing pressure on public
sector finances.
Rapid increases in food prices and expected substantial increases in energy
bills over the winter (despite significant subsidy by Government) will
continue to affect the lower income groups and most vulnerable members of
society disproportionately. In this context, the focus on social needs and the
positive impact strategies of the Company's investments are more vital than
ever. Some of the investments in the portfolio, such as Agility Eco in the
Bridges Evergreen portfolio, offer direct solutions to the most vulnerable
people affected by rising energy costs. Investments in community renewable
assets contribute to an equitable transition to a low-carbon future in the UK
and align with the global de-carbonisation trends. Investments in High Impact
Housing continue to contribute to increasing the availability of much-needed
affordable homes, built and maintained with respect for the dignity of the
people living in them.
We recognise that increasing costs and the volatile inflation environment also
bring risks to the Company's investments, as the charities and social
enterprises the Company invests in may experience changes to government
funding or policies, pressures on margins and potential labour and supply
chain disruptions. Big Society Capital, the Portfolio Manager, is actively
working with the portfolio companies to understand and mitigate the risks
specific to this environment. Big Society Capital performed a similar exercise
with its portfolio companies in early 2020, at the start of the pandemic, and
the close ongoing dialogue between the Portfolio Manager and portfolio
companies allows for rapid responses and interventions. One example of such an
intervention in response to the pandemic was the rapid mobilisation of capital
for the Resilience and Recovery Loan Fund (RRLF), an emergency response fund
offering loans alongside grants to social enterprises and charities
experiencing disruption due to Covid-19. Big Society Capital invested £25m of
its own capital in the fund, which benefitted from Government guarantees under
the Coronavirus Business Interruption Loan Scheme (CBILS), with the grants
provided by other partners.
Whilst we recognise the heightened level of risk in the current environment,
we are reassured by the long track record of the organisations the Company
invests in, and their demonstrated ability to navigate challenging market
conditions in the past. The Company's portfolio organisations offer solutions
for areas of high social need which are a priority across the political
spectrum, and their interventions lead to significant savings in government
expenditure; both of these factors contributed to revenue resilience of the
portfolio organisations through the cycle, including through past austerity
periods. Furthermore, the Company targets charities and social enterprises
with conservative balance sheets, providing further resilience in times of
market instability.
The challenging fiscal environment means the Company expects to see inflation
passing through to its investments with a lag or only partially (for example
as a result of the current government consultation to cap social rent
increases to 5%). The Portfolio Manager has been continuing to adjust the
asset allocation for the current environment, including increasing the
allocation to investments that stand to benefit from inflation over time.
The broader environment also provides opportunities for the Company's
portfolio investments, such as the government's increased commitment to the
Energy Company Obligation scheme by £1bn in response to increases in fuel
poverty.
While we expect the volatile and uncertain environment to continue, the
Company remains committed to its goals of delivering high quality returns to
shareholders with low correlation to traditional quoted markets, alongside
providing significant social impact for the most vulnerable and disadvantaged
groups across the UK.
Susannah Nicklin
Chair
21 October 2022
1 The comparative figures for 2021 cover the period from the date of
incorporation on 24 September 2020 to 30 June 2021. The Company began
investing on 22 December 2020 ("launch date").
Portfolio Manager's Report
Market developments
The outlook for the UK economy and financial markets is particularly
uncertain, creating volatility and making it a very challenging investment
environment across asset classes. As a result, we expect the Company to face a
range of heightened risks, but also anticipate that our impact-driven and
diversified strategy should offer resilience in a recessionary environment and
continue to make a positive difference to communities across the UK.
The challenging environment is created by several factors coming together.
Supply chain blockages, labour shortages and unusual levels of fiscal and
monetary stimulus in most advanced economies were understandable responses to
the Covid-19 pandemic but they have built significant inflationary pressures.
These were then exacerbated by the Russian invasion of Ukraine causing a spike
in energy and food prices. As a result, UK inflation in the year to July 2022
was at the highest level (10.2%) for forty years. Forward expectations for
inflation are very uncertain, dependent to a significant degree on the nature
and effectiveness of government and central bank responses, but it is likely
that we will see much greater volatility in both inflation and interest rates
than have been the norm for the last decade. Rising costs and price volatility
are likely to suppress consumption and investment, especially for households
and sectors particularly exposed to energy prices.
In response to the current environment Big Society Capital has been actively
working with fund managers and across the social investment market to
understand and mitigate risks. Big Society Capital continues to be actively
involved in policy, including working with others to ensure full inclusion of
social enterprises and charities in the government's energy market
interventions and launching a report "Outcomes for All: 10 Years of Social
Outcomes Contracts" in the Houses of Parliament. Through the year under
review, Big Society Capital has continued to reposition the Company's liquid
investments for an inflationary and rising interest rate environment -
increasing exposure to renewable energy investment trusts and floating rate
securities.
Looking forward, there are risks and opportunities for the Company on both
social impact and financial returns. Looking first at the social impact risk,
many of the charities and social enterprises supported by the Company's
investments, and the vulnerable people who ultimately benefit from their
services, will be negatively affected by the current environment. Whilst
increasing the need for the positive impact of our investments it means that
in some cases that impact may be outweighed in overall terms by the rising
cost of living. On financial returns, we have aimed to build a portfolio with
a degree of inflation correlation. However, in a very volatile inflation
environment some of these correlations will be only partial and some may
operate with a time-lag. In particular, as the portfolio relies to a
significant extent on government backed revenues, government restrictions on
how fast inflation flows through into social housing rents and contract
payments will be important.
Looking at the opportunities for our investment strategy, the social impact
created by our investments is needed more than ever. Some investments, such as
AgilityEco in the Bridges Evergreen portfolio, are directly addressing the
energy price crisis. More broadly, the changing price environment means that
investments in energy efficiency and other measures to hasten a fair and
equitable transition to a low-carbon future are now more economically
attractive. We already have some investments in this category, such as
community solar projects in the Community Investment Fund, and we are well
positioned to explore more opportunities. On the financial side, we expect the
Company will continue to provide a valuable source of diversification in a
challenging investment environment. High and volatile inflation is strongly
negative for traditional public market equity and bond portfolios. We have
aimed for a unique mix of impact-focused private assets with diverse and
resilient revenue streams that has thus far protected capital and should
continue to do so in the event of further sharp market downturns.
More fundamentally, we do not see a slowing down of the wider move to invest
for impact. Decarbonisation as a trend has gained new urgency, not only from
increasing evidence of the consequences of global warming, but also since
Russia's invasion of Ukraine highlighted the security risks of our dependence
on oil and gas supplies. Meanwhile, the cost of living crisis emphasises the
importance of delivering that transition with greater fairness and equity.
More investors are recognising this underlying reality, as shown by our latest
measurement of the UK social impact investment market. Our market sizing
values the social investment market at £7.9bn as of the end of 2021, a 22%
increase from 2020. This represents an almost 10-fold increase in the social
investment market in the last 10 years, and we maintain our estimate of
continued growth to £10-15bn by 2025.
The continued growth of the social investment market allowed us to fully
commit the proceeds of our November 2021 fundraise within three months, into
attractive assets that are difficult for most investors to access. We are
confident that the Company remains well positioned to lead and benefit from
further market growth, as we continue to see an expanding and maturing
pipeline of investment opportunities.
Performance update(2)
The Net Asset Value (NAV) total return for the twelve-month ended 30 June
2022 was 1.60%. Overall, the Company's NAV rose from £78.2m to £89.9m at the
financial year end; the number of shares in issue increased from 75 million
to 85 million shares, following the £10.8m fundraise in November 2021.
The Company's NAV per share rose from 104.30p to 105.39p following an interim
dividend payment of 0.57p per share on 3 December 2021 based on the earnings
of the Company in the year to 30 June 2022, as set out in the NAV bridge on
page 11 of the full annual report and accounts..
In the 12 months to 30 June 2022, the Company recorded a gross revenue return
of £1.9m and net revenue after fees, costs and expenses of £1.1m, a net
revenue return per share of 1.37 pence. The Company also recorded gains on the
fair value of investments of £0.6m, resulting in a total gross return of
£2.5m, and total net return of £1.4m, or 1.77 pence per share on a weighted
average basis.
The Company will pay an interim dividend of 1.30p per share, or dividend yield
of 1.2% for the twelve-months ended 30 June 2022. This is in line with the
guidance in the IPO prospectus of an expected dividend yield in the region of
1-2% p.a., and represents an increase of 128% compared to the dividend per
share paid in the last financial period(3).
As shown in the table below, portfolio returns to date have been driven by the
performance of more seasoned investments in their mature phase. Mature
investments have contributed 3.50% to the NAV total return per share in the
last twelve months and 10.42% since launch eighteen and a half months ago.
Assets still in their investment phase are earlier in their life cycle and
J-curves(4), and to date are producing returns in line with expectations.
Some of the Company's higher impact investments involve the staged deployment
of capital over multiple years; we aim to mitigate any cash drag on returns
through our Liquid ESG allocation. This is invested in assets with similar
financial risk and return characteristics as the core asset allocation, though
lower direct social impact given the lower availability of social
impact-focused assets in publicly listed markets. Liquid ESG investments have
detracted from performance during the year under review, with a negative
contribution of 0.71% in the year, mainly due to weakness in the credit
markets in particular in the second half of our financial year.
NAV total NAV total return
return contribution contribution
12m to 30 June 2022 since launch
Mature 3.50% 10.42%
Investment phase 0.22% 0.16%
Liquid Assets -0.71% -0.72%
Fees, expenses & other costs -1.41% -2.08%
1.60% 7.78%
The top three drivers of financial performance in the twelve-months to
30 June 2022 were:
• The Charity Bond Portfolio contributed 1.19p to NAV per share
growth predominantly from income and also the tender at a premium of the
Charities Aid Foundation (CAF) bond.
• Our holding in the Community Investment Fund contributed 1.12p to
NAV per share growth, following an uplift in value due to income and
unrealised capital gains, after our negotiated purchase of the secondary
stake.
• The Real Lettings Property Fund contributed 0.75p to NAV per
share growth from rental income and valuation gains in underlying properties.
The social impact performance of the portfolio was reported in the Company's
inaugural Impact report published in June 2022, highlighting that the
Company's investments are supporting 160 organisations, benefiting more than
160,000 people of whom at least 90% are disadvantaged or vulnerable. The
Impact Section of this report contains the key highlights from the report, as
well as details about our evolving approach to impact management and
reporting.
Portfolio cash flows and balance sheet
In November 2021, the Company raised £10.8m through the issuance of 10.3m new
shares through a secondary offering to a mix of new and existing shareholders.
Overall, in the financial year £21.8m was deployed into existing and new
investments in the High Impact Portfolio:
• The majority of the amount drawn (£12.8m) was deployed towards
delivering new affordable homes in the High Impact Housing allocation. The
Affordable Housing Fund drew down £5.8m during the year under review and is
now fully drawn; Man Community Housing Fund drew down £4.9m and Social and
Sustainable Housing drew down £2.2m over the financial year.
• In Debt for Social Enterprises £4.5m was drawn for the new
secondary investment in the Community Investment Fund and there have been
further investments into the secured co-investments with Charity Bank, mostly
to Sue Ryder, delivering high social impact in Health and Social Care.
• Within Social Outcomes Contracts further investment was made into
existing projects tackling children on the edge of care and homelessness, as
well as a new investment aiming to address the challenges of refugee
integration in UK communities.
During the financial year and post the November 2021 share issuance we have
been targeting new Liquid ESG investments in areas with low interest rate
duration and some inflation benefit, given our caution on fixed income
duration in a rising inflation environment. Following the share issue, we made
new investments into the renewable trusts Greencoat UK Wind Plc and Bluefield
Solar Income Fund Ltd, with an additional investment into the TwentyFour
Sustainable Enhanced Income (ABS) Fund. As outlined in the prospectus, the
Company does not charge management fees on the Liquid ESG allocation.
Portfolio Allocation
The Company's investment objective is defined as:
• Delivering measurable positive social impact as well as long
term capital growth and income, through investing in a diversified portfolio
of private market impact funds, co-investments alongside impact investors and
direct investments in order to gain exposure to private market social impact
investments.
• Aiming to provide NAV total return of CPI plus 2 per cent.
per annum (once the portfolio is fully invested and averaged over a rolling
three- to five-year period, net of fees).
• With low correlation to traditional quoted markets whilst
offering to address significant social issues in the UK.
A diversified asset allocation delivering local UK social impact
The Company delivers its investment objective through allocating to
best-in-class social impact managers in private markets - with proven track
records delivering high quality financial returns alongside measurable social
impact for more disadvantaged groups in the UK. Investments that are committed
but not yet drawn by private market funds are held in listed Liquid ESG
investments to mitigate cash drag during longer drawdown periods.
Providing access to a seasoned high impact portfolio
The Company has built a seasoned high impact portfolio that would be difficult
for shareholders to access directly - through a combination of a seed
portfolio and secondary investments from the Portfolio Manager's portfolio
relationships. This provides a greater allocation to more mature assets that
will help drive future financial and impact performance. The Portfolio
Manager's broader portfolio relationships offer additional fee benefits to
Company shareholders - with 33% of the Company's portfolio with no or
discounted management fees - from co-investments or fee discounts that the
Portfolio Manager has negotiated, often through their role as initial
cornerstone investor in funds.
Targeting inflation resilient returns
The Company aims to deliver an asset allocation that is resilient through
periods of rising prices through targeting two-thirds of its asset allocation
to assets that will benefit from inflation. These assets are:
• Property and renewables - with a mix of long dated inflation
linked leases, shorter property leases where value is more driven by property
prices, and smaller investments in renewables
• Mezzanine and equity investments - where the value is driven by
government contracts that have historically moved with inflation
• Floating rate instruments which will benefit from increases in
the base rate
As of 30 June 2022, the Company had committed 64% of its capital to these
assets. The remaining 36% was allocated to fixed income securities such as
charity bonds, social outcomes contracts or cash; the Company aims to minimise
the duration of these fixed income assets, to allow reinvestment over time
into a higher rate environment. The Company's invested amount in assets that
will benefit from inflation is 60% of its capital, due to the commitments to
newer housing funds that are still in their investment period.
In the current double digit inflation environment driven by energy price
shocks, the Company sees significant risks in the ability of this asset
allocation to match short-term inflation movements. This is due to:
• Property and renewables: The presence of caps and collars in
property index linked leases, caps in housing benefit increases and expected
real falls in property prices
• Mezzanine and equity investments: Delays in the pass through of
inflation to government contracts in the current environment
• Floating rate instruments: Expected path of floating rates to
continue to lag inflation
• As well as the portion of the investment allocation (40% of
invested capital) in fixed income securities and social outcome contracts
where Company revenue will not benefit from inflation.
Targeting low correlation to mainstream markets
The Company's asset allocation aims to achieve low correlation to mainstream
markets by backing business models that are underpinned by government
expenditure and have been historically resilient through economic cycles. As
at 30 June 2022, 83% of the committed portfolio (67% invested) is underpinned
by government backed revenue streams. These revenue streams are themselves
diversified across policy areas, such as housing, clean energy and fuel
poverty, education, redressing inequalities/levelling up. This diversification
reduces exposure to individual policy risk, such as the risk that government
or budgetary changes would significantly reduce or withdraw payments. The
Company targets areas with a track record of delivering impact for more
disadvantaged groups and generating savings for the public purse which
provides additional revenue resilience.
Outlook
Subsequent to 30 June 2022 the challenging investment environment has
continued - with significant further moves in European power prices caused by
the war in Ukraine, rising inflation and interest rates all contributing to
ongoing weakness in financial markets. In the UK, the Chancellor's fiscal
statement to Parliament on 23 September 2022 has contributed to significant
increases in UK long dated interest rates - though some of these fiscal
measures were later reversed in mid-October. It is anticipated that government
spending will be cut in real terms, with resulting pressure on budgets across
the public sector.
The revenue of the Company's portfolio companies has been historically
resilient through cycles, including through the period of austerity government
spending cuts in the last decade, as they support the most vulnerable, where
savings to government of interventions are often many multiples of the cost.
At the time of writing there are no indications that this revenue resilience
will change, though the risks are heightened and considering policy risk
remains crucial for the Company's portfolio. In addition to targeting areas of
high government savings that are a priority across the political spectrum, the
Company aims to mitigate this by a diversified allocation across policy areas,
as well as investments that benefit from some element of asset backing. The
Company targets investments in charities and social enterprises with long
track records (28 years) and higher quality balance sheets. The Company's High
Impact Investments, including in the Housing allocation, use no fund leverage
at the time of writing, which provides some additional resilience.
The challenging fiscal environment means the Company expects to see inflation
passing through to its investments with a lag or only partially, for example
the current government consultation to cap increases in social housing rent to
5%. In addition, the high increases in mortgage rates are likely to cause
extended weakness in house prices in real terms. Alongside the Company's mixed
asset allocation this means short term financial performance is projected to
continue to deliver positive financial returns but not anticipated to keep up
with current high inflation rates. The Portfolio Manager has been continuing
to adjust the asset allocation for the current environment, including
increasing the allocation to investments that stand to benefit from inflation
over time.
The broader environment also provides opportunities for the Company's
investments, with the significant impact being delivered by the portfolio for
disadvantaged groups needed more than ever. The Resolution Foundation has
estimated that the expected falls in real earnings will push an additional
2.3 million people into poverty including 700,000 children. Responding to
this within a challenging fiscal environment will further increase the impetus
to bring in private capital to support investments in social infrastructure
and prevention. As a response to the increases in fuel poverty, in September
2022 the government announced an increased £1bn commitment to the Energy
Company Obligation scheme, which is expected to benefit the Company's
investments in that area.
The Company expects this volatile and uncertain environment to continue for an
extended period. Through it the goals of the Company remain the same: to
deliver for shareholders high quality returns with a low correlation to
traditional quoted markets alongside significant social impact for more
disadvantaged groups across the UK.
Jeremy Rogers, Hermina Popa
Big Society Capital
21 October 2022
2 All return figures in this report are quoted on a per share basis, using the
number of shares outstanding at the point returns were generated. Where
returns have been generated in a period in which equity was issued, these
returns have been pro-rated between the pre- and post-issuance period.
3 The first financial year of the Company represented trading from the IPO on
22 December 2020 until 30 June 2021.
4 The term J-curve is used to describe the typical trajectory of certain types
of investments, where low or negative returns in the early years of the
investments are followed by a steep rise in returns as investments mature. In
the case of the Company's investments, the J-curve effect is due to investing
in property purchases and developments, where the early years are
characterised by cost outlays, followed by a rise in returns as properties are
occupied, and rental yield and property valuation uplifts start to be
reflected in returns.
Extracts from the Strategic Report
Principal risks and uncertainties
The Board is responsible for the Company's system of risk management and
internal control and for reviewing its effectiveness. 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. Both the
principal and emerging risks and the monitoring system are also subject to
regular, robust review. The last review was completed in October 2022.
Although the Board believes that it has a robust framework of internal
controls 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 risks and uncertainties are set out in
the table below.
Risk Mitigation and management
Strategic risks
The Company's investment objectives may become out of line with the The appropriateness of the Company's investment remit is regularly reviewed
requirements of investors, or the Company's investment strategy might not lead and the success of the Company in meeting its stated objectives is monitored.
to the Company achieving its investment objective resulting in the Company
being subscale and shares trading at a discount.
The share price relative to NAV per share is monitored and the Board has
undertaken to facilitate a buy-back programme should this be appropriate.
If in the two-year period ending on 31 December 2023, and in any two-year The Portfolio Manager has extensive experience and a track record in
period following such date, the Ordinary Shares have traded, on average, at a accurately timing the exits of private equity investments. The Board will
discount in excess of 10 per cent. to Net Asset Value per Share, the Directors regularly monitor the position to ensure that any alternative proposals to be
will propose an ordinary resolution at the Company's next annual general made to shareholders are put forward at an appropriate time.
meeting that the Company continues its business as presently constituted (the
"Continuation Resolution").
If the Continuation Resolution is not passed, the Directors will put forward
proposals for the reconstruction or reorganisation of the Company, bearing in
It could take several years until all of the Company's private equity mind the liquidity of the Company's Investments, as soon as reasonably
investments are disposed of and any final distribution of proceeds made to practicable following the date on which the Continuation Resolution is not
shareholders. passed. These proposals may or may not involve winding up the Company and,
accordingly, failure to pass the Continuation Resolution will not necessarily
result in the winding up of the Company.
Investment management risks
Risks relating to the social impact of investee companies The Portfolio Manager has extensive experience in selecting private social
impact investments and has a robust investment process to ensure that the
anticipated positive impact of investee companies is realistic and achievable.
Liquidity risk
Liquidity risks include those risks resulting from holding private equity Concentration limits are imposed on single investments to minimise the size of
investments as well as not being able to participate in follow-on fundraises positions.
through lack of available capital which could result in dilution of an
investment.
The Portfolio Manager can sell Liquid ESG Investments to meet investment
commitments and capital calls. The Portfolio Manager will monitor and manage
Risks relating to investment commitments and capital calls. cash flows and expected capital calls.
The Portfolio Manager will seek to manage cashflow such that the Company will
be able to participate in follow on fundraisings where appropriate.
Valuation risk
Private equity investments are generally less liquid and more difficult to Contracts with investee companies are drafted to include obligations to
value than publicly traded companies. A lack of open market data and reliance provide information to the Portfolio Manager in a timely manner, where
on investee company projections may also make it more difficult to estimate possible.
fair value on a timely basis.
The Portfolio Manager and AIFM have extensive track records of valuing
privately held investments.
A valuation policy has been agreed by the AIFM and Portfolio Manager and
includes a robust process for the valuation of assets, including consideration
of the valuations provided by investee companies and the methodologies they
have used. Any changes to this policy must be approved by the Audit and Risk
Committee.
The Audit and Risk committee reviews all valuations of unlisted investments
and challenges the methodologies used by the Portfolio Manager and AIFM. The
Audit and Risk Committee may also appoint an independent party to complete a
valuation of the Company's assets.
Cyber security risks
Each of the Company's service providers is at risk of cyber attack, data theft Experienced third party service providers are employed by the Company under
or disruption to their infrastructure which could have an effect on the appropriate terms and conditions and with agreed service level specifications
services they provide to the Company. These risks could lead to reputational in relation to cyber security and related procedures.
damage or the risk or loss control of sensitive information leading to a
potential breach of data protection law.
The Board receives regular reports from its service providers and the
Management Engagement Committee will review the performance of key service
providers at least annually.
The Audit and Risk Committee reviews reports on the external audits of the
internal controls operated by certain of the key service providers.
Emerging risks and uncertainties
In October 2022, the Board also discussed and monitored a number of emerging
risks and uncertainties that could potentially impact the Company's ability to
meet its strategic objectives. These were political risk, climate change risk,
COVID-19-related risks, inflation risk and UK political risks. The Board has
determined they are not currently material for the Company. The Board receives
updates from the Manager, Portfolio Manager, Company Secretary and other
service providers on other potential risks that could affect the Company.
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.
No significant control failings or weaknesses were identified from the Audit
and Risk Committee's ongoing risk assessment which has been in place
throughout the financial year and up to the date of this report. The Board is
satisfied that it has undertaken a detailed review of the risks facing the
Company.
A full analysis of the financial risks facing the Company is set out in note
20 to the accounts on pages 82 to 85 of the full annual report and accounts.
Viability statement
The Directors have assessed the viability of the Company over a five year
period, taking into account the Company's position at 30 June 2022 and the
potential impact of the principal and emerging risks and uncertainties it
faces for the review period. The Directors have assessed the Company's
operational resilience and they are satisfied that the Company's outsourced
service providers will continue to operate effectively, following the
implementation of their business continuity plans as required by COVID-19.
The Board believes that a period of five years reflects a suitable time
horizon for strategic planning, taking into account the investment policy,
liquidity of investments, potential impact of economic cycles, nature of
operating costs, dividends and availability of funding. In its assessment of
the viability of the Company, the Directors have considered each of the
Company's principal and emerging risks and uncertainties detailed above and in
particular the impact of a significant fall in regional equity and property
markets on the value of the Company's investment portfolio.
The Directors have also considered the Company's liquid 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, the liquid investments in the portfolio may be
realised. The Company has additionally performed stress tests which confirm
that a 50% fall in the market prices of the portfolio would not affect the
Board's conclusions in respect of going concern. The Directors have also
considered the continuation vote which the Company is required to put to
shareholders if, in the two-year period ending on 31 December 2023, and in
any two-year period following such date, the ordinary shares have traded, on
average, at a discount in excess of 10 per cent. to net asset value per share.
The Company has not traded at a discount of this level since launch in
December 2020 and the Directors therefore currently do not believe this
affects the viability of the Company over a five year horizon. Based on the
Company's processes for monitoring operating costs, the Board's view that both
the Manager and Portfolio Manager have the appropriate depth and quality of
resource to achieve superior returns in the longer term, the portfolio risk
profile, limits imposed on gearing, counterparty exposure, liquidity risk and
financial controls, the Directors have concluded that there is a reasonable
expectation that the Company will be able to continue in operation and meet
its liabilities as they fall due over the five year period of their
assessment.
Going concern
The Directors have assessed the principal risks, the impact of the emerging
risks and uncertainties and the matters referred to in the viability
statement. Based on the work the Directors have performed, they 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 the period assessed by the
Directors, being the period to 21 October 2023 which is at least twelve
months from the date the financial statements were authorised for issue.
By order of the Board
Schroder Investment Management Limited
Company Secretary
21 October 2022
Statement of Directors' Responsibilities
The Directors are responsible for preparing the annual report and accounts in
accordance with applicable law and regulations.
Company law requires the Directors to prepare financial statements for each
financial period. Under that law the Directors have prepared the financial
statements in accordance with United Kingdom Generally Accepted Accounting
Practice (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 website
dedicated to the Company. Legislation in the United Kingdom governing the
preparation and dissemination of financial statements may differ from
legislation in other jurisdictions.
Each of the Directors, whose names and functions are listed on pages 48 and 49
of the full annual report and accounts, 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 accounts
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 accounts, 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
Susannah Nicklin
Chair
21 October 2022
Income Statement
For the year ended 30 June 2022
Year ended 30 June 2022 Period ended 30 June 2021(1)
Revenue Capital Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'000
Gains on investments held at fair value through profit or loss - 632 632 - 4,200 4,200
Income from investments 1,817 - 1,817 775 - 775
Other interest receivable and similar income 40 - 40 5 - 5
Gross return 1,857 632 2,489 780 4,200 4,980
Investment management fees (286) (286) (572) (121) (121) (242)
Administrative expenses (452) - (452) (224) - (224)
Transaction costs - (22) (22) - (30) (30)
Net return before taxation 1,119 324 1,443 435 4,049 4,484
Taxation - - - - - -
Net return after taxation 1,119 324 1,443 435 4,049 4,484
Return per share 1.37p 0.40p 1.77p 0.58p 5.40p 5.98p
(1)The comparative figures cover the period from the date of incorporation on
24 September 2020, to 30 June 2021. The Company began investing on
22 December 2020 (launch date).
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 period.
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 73 to 85 of the full annual report and accounts form an
integral part of these accounts.
Statement of Changes in Equity
For the year ended 30 June 2022
Year ended 30 June 2022
Called-up Special
share Share distributable Capital Revenue
capital premium reserves reserves reserve Total
£'000 £'000 £'000 £'000 £'000 £'000
At 30 June 2021 750 - 72,993 4,049 435 78,227
Issue of Ordinary Shares 103 10,729 - - - 10,832
Share issue costs - (158) - - - (158)
Net return after taxation - - - 324 1,119 1,443
Dividend paid in the year - - - - (428) (428)
At 30 June 2022 853 10,571 72,993 4,373 1,126 89,916
Period ended 30 June 2021(1)
Called-up Special
share Share distributable Capital Revenue
capital premium reserves reserves reserve Total
£'000 £'000 £'000 £'000 £'000 £'000
Issue of Management Shares 50 - - - - 50
Redemption of Management Shares (50) - - - - (50)
Issue of Ordinary Shares 750 74,250 - - - 75,000
Share issue costs - (1,229) (28) - - (1,257)
Cancellation of share premium - (73,021) 73,021 - - -
Net return after taxation - - - 4,049 435 4,484
At 30 June 2021 750 - 72,993 4,049 435 78,227
(1)The comparative figures cover the period from the date of incorporation on
24 September 2020, to 30 June 2021. The Company began investing on
22 December 2020 (launch date).
The notes on pages 73 to 85 of the full annual report and accounts form an
integral part of these accounts.
Statement of Financial Position
at 30 June 2022
As at As at
30 June 30 June
2022 2021
£'000 £'000
Fixed assets
Investments held at fair value 67,000 41,369
Investments held at amortised cost 21,832 21,142
88,832 62,511
Current assets
Debtors 206 221
Cash at bank and in hand 1,310 17,086
1,516 17,307
Current liabilities
Creditors: amounts falling due within one year (432) (1,591)
Net current assets 1,084 15,716
Total assets less current liabilities 89,916 78,227
Net assets 89,916 78,227
Capital and reserves
Called-up share capital 853 750
Share premium 10,571 -
Special reserve 72,993 72,993
Capital reserves 4,373 4,049
Revenue reserve 1,126 435
Total equity shareholders' funds 89,916 78,227
Net asset value per share 105.39p 104.30p
These accounts were approved and authorised for issue by the Board of
Directors on 21 October 2022 and signed on its behalf by:
Susannah Nicklin
Chairman
The notes on pages 73 to 85 of the full annual report and accounts form an
integral part of these accounts.
Registered in England and Wales as a public company limited by shares
Company registration number: 12902443
Cash Flow Statement
For the year ended 30 June 2022
Year ended Period ended
30 June 2022 30 June 2021(1)
£'000 £'000
Net cash inflow from operating activities 873 397
Investing activities
Purchases of investments (31,411) (57,245)
Sales of investments 4,516 191
Net cash outflow from investing activities (26,895) (57,054)
Net cash outflow before financing (26,022) (56,657)
Financing activities
Dividend paid (428) -
Issue of Management Shares - 13
Redemption of Management Shares - (13)
Issue of Ordinary Shares 10,832 74,843
Share issue costs (158) (1,100)
Net cash inflow from financing activities 10,246 73,743
Net cash (outflow)/inflow in the period (15,776) 17,086
Cash at bank and in hand at the beginning of the year 17,086 -
Net cash (outflow)/inflow in the year (15,776) 17,086
Cash at bank and in hand at the end of the year 1,310 17,086
(1)The comparative figures cover the period from the date of incorporation on
24 September 2020, to 30 June 2021. The Company began investing on
22 December 2020 (launch date).
Included in net cash inflow from operating activities are dividends received
amounting to £723,000 (period ended 30 June 2021: £285,000), income from
debt securities amounting to £1,039,000 (period ended 30 June 2021:
£283,000) and other interest receivable and similar income amounting to
£40,000 (period ended 30 June 2021: £5,000).
Purchases and sale of investments are shown net of non-cash movements relating
to accumulation dividends, securities purchased and sold awaiting settlement
and investment exchange transactions.
The notes on pages 73 to 85 of the full annual report and accounts form an
integral part of these accounts.
Notes to the Accounts
1. Accounting Policies
Schroder BSC Social Impact 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.
The accounts 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 accounts
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 included in
the top 10. This information has not been disclosed because it is not publicly
available. All of the Company's operations are of a continuing nature.
The accounts have been prepared on a going concern basis under the historical
cost convention, as modified by the revaluation of investments held at fair
value. The Directors believe that the Company has adequate resources to
continue operating until 31 October 2023, which is at least 12 months from the
date of approval of these accounts. In forming this opinion, the Directors
have taken into consideration: the controls and monitoring processes in place;
the Company's level of debt and other payables; the low level of operating
expenses, comprising largely variable costs which would reduce pro rata in the
event of a market downturn; the Company's cash flow forecasts and the
liquidity of the Company's investments. In forming this opinion, the Directors
have also considered any potential impact of the COVID-19 pandemic, climate
change, and risk/impact of elevated and sustained inflation and interest rates
on the viability of the Company. The Company has additionally performed stress
tests which confirm that a 50% fall in the market prices of the portfolio
would not affect the Board's conclusions in respect of going concern. Further
details of Directors' considerations regarding this are given in the
Chairman's Statement, Portfolio Managers' Review, Going Concern Statement,
Viability Statement and under the Emerging Risks and uncertainties heading
above.
The accounts are presented in sterling and amounts have been rounded to the
nearest thousand.
The accounting policies applied to these accounts are consistent with those
applied in the accounts for the period ended 30 June 2021.
Certain judgements, estimates and assumptions have been required in valuing
the Company's investments and these are detailed in note 19 on page 81 of the
full annual report and accounts.
2. Income from investments
Year ended Period ended
30 June 2022 30 June 2021
£'000 £'000
Income from investments:
Distribution and dividend income 752 285
Overseas dividends 20 -
Interest income from debt securities and other financial assets 1,045 490
1,817 775
Other interest receivable and similar income:
Deposit interest 2 1
Other income 38 4
40 5
Total income 1,857 780
3. Investment management fees
Year ended 30 June 2022 Period ended 30 June 2021
Revenue Capital Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'000
Investment management fees 286 286 572 121 121 242
The bases for calculating the investment management fees are set out in the
Report of the Directors on pages 50 and 51 of the full annual report and
accounts and details of all amounts payable to the managers are given in note
17 on page 80 of the full annual report and accounts.
4. Return per share
Year ended Period ended
30 June 2022 30 June 2021
£'000 £'000
Revenue return 1,119 435
Capital return 324 4,049
Total return 1,443 4,484
Weighted average number of shares in issue during the year 81,387,804 75,000,000
Revenue return per share 1.37p 0.58p
Capital return per share 0.40p 5.40p
Total return per share 1.77p 5.98p
5. Dividends
Year ended Period ended
30 June 2022 30 June 2021
£'000 £'000
2021 dividend of 0.57p paid out of revenue profits as an interest distribution 428 -
Year ended Period ended
30 June 2022 30 June 2021
£'000 £'000
2022 dividend proposed of 1.30p (period ended 30 June 2021: 0.57p), to be paid 1,109 428
out of revenue profits as an interest distribution
The proposed interim dividend amounting to £1,109,000 (period ended 30 June
2021: £428,000) is the amount used for the basis of determining whether the
Company has satisfied the distribution requirements of Section 1158 of the
Corporation Tax Act 2010. The revenue available for distribution by way of
dividend for the year is £1,119,000 (period ended 30 June 2021: £435,000).
6. Called-up share capital
Year ended Period ended
30 June 2022 30 June 2021
£'000 £'000
Ordinary Shares of 1p each, allotted, called up and fully paid:
Opening balance of 75,000,000 (2021: nil) shares 750 -
Issue of 75,000,000 shares following a placing and offer for subscription - 750
Placing of 10,316,586 shares 103 -
Closing balance of 85,316,586 (2021: 75,000,000) shares 853 750
During the year 10,316,586 shares, nominal value £103,166 were issued by way
of a placing, at a price of 105p per share, for a total consideration of
£10,832,000.
The shares were issued on a on a non-pre-emptive basis pursuant to the
Company's placing programme set out in the Company prospectus dated 23
November 2020.
7. Net asset value per share
2022 2021
Net assets attributable to shareholders (£'000) 89,916 78,227
Shares in issue at the period end 85,316,586 75,000,000
Net asset value per share 105.39p 104.30p
8. Transactions with the Manager
Under the terms of the Alternative Investment Fund Manager Agreement, the
Manager is entitled to receive a management fee. Details of the basis of the
calculation are given in the Directors' Report on pages 50 and 51 of the full
annual report and accounts.
The fee payable to the Manager in respect of the year ended 30 June 2022
amounted to £512,000 (period ended 30 June 2021: £209,000), of which
£171,000 (2021: £209,000) 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.
Under the terms of the Investment Management Agreement, the Manager may
reclaim from the Company certain expenses paid by the Manager on behalf of the
Company to HSBC in connection with accounting and administrative services
provided to the Company. These charges amounted to £96,000 for the year ended
30 June 2022 (period ended 30 June 2021: nil), and the whole of this amount
was outstanding at the year end.
No Director of the Company served as a director of any company within the
Schroder Group at any time during the year, or prior period.
In accordance with the terms of a discretionary mandate, Rathbone Investment
Management Limited is entitled to receive a management fee for portfolio
management services relating to certain of the Company's investments. Details
of the basis of the calculation are given in the Directors' Report on pages 50
and 51 of the full annual report and accounts. The fee payable to Rathbone in
respect of the year ended 30 June 2022 amounted to £61,000, (period ended 30
June 2021: £33,000) of which £14,000 (30 June 2021: £16,000) was
outstanding at the year end.
Status of announcement
2021 Financial Information
The figures and financial information for 2021 are extracted from the
published Annual Report and Accounts for the period from incorporation on
24 September 2020 to 30 June 2021 and do not constitute the statutory
accounts for that year. The 2021 Annual Report and Accounts have been
delivered to the Registrar of Companies and included the Report of the
Independent Auditors which was unqualified and did not contain a statement
under either section 498(2) or section 498(3) of the Companies Act 2006.
2022 Financial Information
The figures and financial information for 2022 are extracted from the Annual
Report and Accounts for the year ended 30 June 2022 and do not constitute the
statutory accounts for the year. The 2022 Annual Report and Accounts include
the Report of the Independent Auditors which is unqualified and does not
contain a statement under either section 498(2) or section 498(3) of the
Companies Act 2006. The 2022 Annual Report and Accounts will be delivered to
the Registrar of Companies in due course.
Neither the contents of the Company's website nor the contents of any website
accessible from hyperlinks on the Company's website (or any other website) is
incorporated into, or forms part of, this announcement.
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