Company Announcements

REPORT AND ACCOUNTS

Schroder British Opportunities Trust plc (the "Company") hereby submits its Report and Accounts for the period ended 31 March 2022, as required by the Financial Conduct Authority's Disclosure Guidance and Transparency Rule 4.1. 

The Company's Report and Accounts for the period ended 31 March 2022 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/sbo. Please click on the following link to view the document:

http://www.rns-pdf.londonstockexchange.com/rns/4125S_1-2022-7-13.pdf

The Company has submitted its Report and Accounts to the National Storage Mechanism and it will shortly be available for inspection at: https://data.fca.org.uk/#/nsm/nationalstoragemechanism.

Enquiries:

Paula Lockwood

Schroder Investment Management Limited 

Tel: 020 7658 6000

Chairman's Statement

I am pleased to present the Company's second Report and Accounts which covers the nine month period ended 31 March 2022. As set out in our first Report and Accounts, the Company has shortened its second accounting period to nine months to better align our reporting with periodic valuations of underlying private equity investments.

Since last reporting to investors, markets around the world have come under pressure as the war in Ukraine and other factors have resulted in higher inflation and monetary policy tightening in many economies. Public equities have suffered across the board and our public portfolio has not been immune to that. The market has marked down growth companies in particular, due to the cost of finance rising. The immediate effect of this on the Company has been for the share price discount to net asset value ("NAV") to widen as it has with many investment companies that hold private equity investments. Shareholders will read in the performance review below that this discount change is not driven by the underlying performance of the private companies we invest in. Quite the opposite in fact. Unfortunately, we cannot influence the market dynamics and the 'group think' that exists but we can state that the Company is well placed with its current portfolio.

Performance

The Company's NAV produced a negative return of -4.0% during the period. Whilst our private equity holdings demonstrated strong resilience, this was offset by weakness in our public equity holdings. The share price produced a disappointing negative return of -20.0%, as the discount significantly widened during the period from 3.2% at the beginning of the period to 19.3% at 31 March 2022.

Further comment on performance can be found in the Portfolio Managers' review. Despite current headwinds, there are lots of positive developments that support our rationale for investment.

Earnings and final dividend

The Company's objective is to provide long-term total returns to shareholders. The Company earnt investment income from the public equity holdings during the period but after deducting operating expenses there was a revenue loss. As a result, the Directors do not propose the payment of a final dividend. In line with current best practice, we will seek shareholder approval of this proposal at the forthcoming Annual General Meeting ("AGM").

Discount management

Your Board monitors the level of the Company's discount to NAV and regularly reviews its share buy back policy. At the time of the Company's flotation in 2020, the Board stated that it would utilise share buy backs to seek to maintain the price at which the ordinary shares trade relative to their prevailing NAV at no greater than a 5 per cent discount, measured over the long term and subject to normal market conditions. It is fair to say that current market conditions have seen high, unforeseen levels of volatility which the Board does not regard as normal. Nevertheless, after the end of the period, we utilised the authorities provided by shareholders to purchase 100,000 shares to be held in treasury to reissue when the Company regains its premium rating to NAV.

Your Board will seek shareholder approval to renew its standing authority to repurchase shares at the forthcoming AGM. We 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.

Portfolio activity

Further progress was made during the period in deploying capital into attractive investment opportunities to increase portfolio diversification. Details of these investments are available in the Portfolio Managers' Report. This was limited to public equities in the period as, despite detailed due diligence on a number of private equity opportunities, no new private investments were made. The investment team remained focused on pricing discipline in a highly competitive market. Good companies do not make good investments if the pricing is too high. I am pleased to report that since the period end, we have announced three new private equity investments into Mintec, CFC, and Pirum.

Following these investments private equity investment represented approximately 49%^[1] of Company's Gross Asset Value. This achieves the target that we set out at Initial Public Offering ("IPO"). In addition, the Company has made commitments to support portfolio companies in executing their growth strategies and has now fully utilised its allowed exposure to private investments.

Proposed change of investment policy

At IPO in December 2020, your Board indicated in its investment policy that it would aim to achieve approximately 50% of public equity investments and approximately 50% of private equity investments, once fully invested. We also set an investment restriction stating that private equity investments could account for no more than 60% of the Company's Gross Asset Value at the time of commitment. Following the commitment to the latest private investment, and taking into account existing commitments, the allocation to private equity is now fully utilised.

After careful consideration and consultation with shareholders, given the strong pipeline of investment opportunities identified by our Portfolio Managers', your Board is proposing to remove the 50:50 allocation guidance and the private equity limit. This will give our Portfolio Managers more flexibility to take advantage of further private equity opportunities should they deem them attractive when weighed against opportunities available in public markets and vice versa. The investment restriction that the Company's portfolio must contain a minimum of 30 holdings is unchanged and it is the Board and the Portfolio Managers' intention that the portfolio will continue to contain a diverse range of public and private equity investments.

The amended investment policy is set out in the Notice of Meeting at the end of this report and accounts and the changes will be put forward to shareholders for approval at the AGM.

Webinar from the Portfolio Managers and shareholder communications

Our Portfolio Managers will be presenting at a webinar on Tuesday 19 July 2022 from 1.00 - 2.00 p.m. to provide some insight into their decision making and the current portfolio. Shareholders are encouraged to visit the website: https://www.schroders.com/sbo to sign up.

Regular news about the Company can be found on the website: https://www.schroders.com/en/uk/private-investor/fundcentre/funds-in-focus/investment-trusts/schrodersinvestment-trusts/never-miss-an-update

AGM

Our second AGM will be held on Monday, 5 September 2022 at 12.00 noon at 1 London Wall Place, London EC2Y 5AU. Our Portfolio Managers will provide a short presentation at this meeting to investors who attend in person.

Your Board welcomes shareholders' comments and questions for us or our Portfolio Managers. Please contact us via our Company Secretary: amcompanysecretary@schroders.com or write to us at The Company Secretary, Schroder British Opportunities Trust plc at the above address.

We will endeavour to get your questions answered and published prior to the AGM and will also provide answers to commonly asked questions on the Company's webpages.

Shareholders are also encouraged to cast their votes by proxy to ensure that they are counted. Your Directors consider that all of the resolutions being proposed are in the best interests of the Company and its shareholders and therefore recommend a vote in favour of each, as your Directors intend to do in respect of their own holdings.

Outlook

Despite the challenging economic environment, your Board is pleased with the diversified portfolio the Portfolio Managers have constructed since IPO across a broad range of leading UK businesses, both listed and privately owned, spanning a number of sectors. The Company continues to invest 'fresh' equity into small to mid-sized British businesses, facilitating and driving growth, in line with its IPO mandate.

Equity valuations are seemingly disconnected from fair value in many sectors and market sentiment is driving pricing rather than fundamentals. This creates opportunities for a smart investor and our Portfolio Managers aim to add attractively valued investments that display characteristics such as pricing power, business transformation potential and robust technological enablement. The Company has a strong pipeline of innovative British companies but will maintain its pricing discipline when assessing further additions.

Your Board is disappointed by market conditions reducing shareholder return over the period but remains confident in the medium term about the strength of the current portfolio and the further opportunities in consideration at the time of writing.

Neil England
Chairman

13 July 2022

Portfolio Managers' Review

Introduction

Summary

-              The Company reported a net asset value ("NAV") of 104.14p per share as of 31 March 2022, a decrease of 4.0% relative to the NAV as of 30 June 2021 (108.44p per share).

-          In a challenging environment, the private equity holdings have continued to perform strongly throughout the period. In this regard, the revaluation of our largest investment, Rapyd, and the overall resilience of the private equity holdings has been particularly pleasing. Meanwhile, turbulent markets and a progressively challenging economic environment largely contributed to weakness of the public equity holdings, with Victorian Plumbing and Trustpilot weighing on returns despite strong share price performance from positions in Watches of Switzerland and Blue Prism over the period.

-          We continued to seek to invest fresh equity, where attractive, into small to mid-sized British businesses, facilitating and driving their growth. We have now made a total of 15 primary equity investments (IPOs, rights issues or equity placings) since the Company's launch.

-          We continued to seek out attractive businesses that we believe exhibit strong growth trajectories and added five new holdings to the portfolio over the period (LendInvest, MaxCyte, Velocys, On The Beach Group and Sosandar), while we exited two, and another was disposed of following a take-over.

-          As at 31 March 2022, 83% of net assets were invested across public equities and private equities, of which 35% of net assets were invested in private companies.

-          At the period end, the Company held a total of 37 holdings (six of which were private investments), all of which were made from a bottom-up, rather than top-down approach to investing. With that said, the portfolio was skewed towards investments in the IT Services and Commercial Services & Supplies sectors. After the end of the period, further progress with the portfolio was made, including three new exciting private equity investments in CFC, Mintec and Pirum. At the time of writing, the Company has reached its target allocation of c.50% per cent private equity investments, while delivering this within the deployment timeline of 6 to 24 months from IPO.

-          While the current economic environment may be challenging, we believe this is one of the most opportune times to be an investor, where falling valuations for many businesses are removed from their underlying positive fundamentals.

Market

The period was a game of two halves, especially for small and mid-cap areas of the market. UK public equities in aggregate rose over the last six months of 2021, punctuated by bouts of volatility driven by COVID-19 news. UK large, mid and small cap equity (FTSE 100, 250 and Smaller Companies respectively) indices posted positive returns. However, while UK equities overall were resilient in Q1 2022 as investors began to price in the additional inflationary shock of Russia's invasion of Ukraine, this resilience was driven by large cap oil, mining, healthcare and banking companies. Meanwhile, UK small and mid-cap stocks performed poorly; they were negatively impacted as consumer-focused sectors and a number of economically sensitive areas of the market underperformed. Companies offering high future growth potential lagged as the prospect of rising interest rates continued to heavily influence the investor mindset in favour of nearer-term returns. Given the portfolio's focus on investing in companies with strong long-term growth prospects, this was a challenging period.

In private markets, the second half of 2021 saw continued high levels of activity taking total deal volumes and deal numbers to record levels for the year in the UK. This reflected confidence returning to the market following a disrupted 2020. The final quarter of 2021, however, saw several headwinds emerge which caused a slight cooling in sentiment. The Omicron variant of Covid-19, combined with ongoing issues around supply chains, and the emergence of inflation, led to the reassessment of transactions. However, deals continued to complete as demand remained high. Despite the correction in public equity markets which started in the first quarter of 2022, private markets, particularly at the growth and buyout stage where the Company is most focused, remained buoyant as transactions negotiated over the preceding 3-9 months continued to come to fruition. The first signs of the downturn approaching were most evident in the valuations of venture-stage businesses in the technology sector, which saw steep mark-to-market corrections. Throughout this period of irrational exuberance, which resulted in more capital chasing after transactions, we continued to remain particularly cautious, maintaining our price discipline, and no new private investments were made during the period.

Portfolio performance

Source: Schroders, as of 31 March 2022. Numbers have been rounded.

The Company reported a net asset value ("NAV") of 104.14p per share as of 31 March 2022, a decrease of 4.0% relative to the NAV as of 30 June 2021 (108.44p per share).

The NAV return of -4.0% comprised:

-          Quoted holdings: -9.8%

-          Unquoted holdings: 8.2%

-          Costs and other movements: -2.4%

Watches of Switzerland performed very well following the announcement of an ambitious store expansion plan, which led it being the top performing stock in the FTSE 250 in 2021 and a key positive contributor to the Company's performance. However, the stock has weighed on returns in 2022 to date as its shares have been a casualty of the wider sell-off of the luxury goods sector witnessed this year. Elsewhere, OSB and Blue Prism also did well, with the latter's performance driven by it being sold to SS&C Technologies.

As mentioned earlier, as 2022 took shape, companies offering high future growth potential were negatively impacted in the public markets, as the prospect of rising interest rates continued to heavily influence the investor mindset in favour of nearer-term earnings. For example, the share prices of our holdings in MaxCyte and Trustpilot were impacted by the sell-off of risk assets. Although these are presently loss-making companies, upward momentum continues in the underlying businesses, and this drove us to use the market weakness as an opportunity to increase the size of our holdings in Q1 2022. Meanwhile, Victorian Plumbing has had a disappointing start since becoming a public company in June 2022, with its shares impacted during the period by downward revisions in its revenue growth guidance. After carefully reassessing our investment, we believe it is well placed relative to its peers to compete in the current environment, with its strong balance sheet anchoring our investment thesis. Lastly, our position in Luceco held performance back due to a combination of concerns about the resilience of growth in the RMI space, as well as higher than expected costs.

In a challenging environment, the private equity holdings have continued to perform strongly and the overall resilience of the private holdings has been particularly pleasing. The Company's unquoted holdings saw an increase in value of 32.4%, offsetting 8.2% of the full year decrease in NAV. Waterlogic was marked up towards the end of 2021, a valuation which was retained at the period end, to reflect substantial progress in its buy and build plan, including the transformational agreement to combine with Culligan International, creating a global leader in sustainable drinking water solutions and services. At the time of writing, the deal remains subject to receipt of regulatory approvals and the satisfaction of customary closing conditions, which are expected in the second half of 2022.

Another key contributor to performance was Rapyd, the world's largest local payments network, which increased in fair value by a total of 28% or £1.9m, reflecting the company's strong recent financial performance. Furthermore, while valuation multiples have been volatile over the recent past, some of Rapyd's close comparators continue to be resilient. One of the principal drivers of the company's growth was the self-service on-boarding tool. Rapyd remains the company's largest holding representing 13.2% of total investments.

Elsewhere across the portfolio, several other private equity investments have also seen uplifts thanks to positive underlying operational progress. London-based technology-enabled home-care company Cera has been marked up 39.0% in the period, following strong sales growth. Meanwhile, EasyPark, a leading, fast growing parking tech company that helps drivers find and manage parking spaces and charge their electrical vehicles, has also risen in value due to the company's positive integration with ParkNow and its continued geographic expansion.

Graphcore and Learning Curve have also continued to make good progress but remain broadly held at or near cost reflecting the relatively short time since the Company's initial investments.

Key positive and negative performers over the 9 months to end March 2022

Portfolio activity & review

The portfolio is diversified across a number of industry sectors, and in the chart below we show the split of the portfolio at the end of the period. We believe that diversification is key to the protection of capital. Whilst some areas of the market may be in favour in certain periods, we believe that an all-weather portfolio will better protect investors in the long run, with more stable investment returns.

Industry group as % of total investments

The portfolio has been constructed from the bottom up, with a focus on businesses with strong competitive advantages, large total addressable markets and strong management teams. The result is a portfolio that is well-exposed to companies with a technology offering (notably in software & services and semiconductors & semiconductor equipment areas of the market), which reflects the digitalisation age of today as well as our belief that this will continue. While there is exposure to the wider consumer discretionary sector, which is facing significant inflationary risk, we believe our investments are poised to navigate the current landscape and beyond due to a combination of strong pricing power, market leadership and/or high barriers to entry. Meanwhile, the energy sector is a relatively small component of the portfolio presently, which may or may not change over time.

Over the period, we continued to invest in attractive businesses which we believe exhibit strong growth trajectories underpinned by a range of factors including regulatory tailwinds, the opportunity to increase and benefit from competitors leaving the market. In the last six months of 2021, activity included participation in the IPO of buy-to-let mortgage lender LendInvest, and new investments in medical device company MaxCyte, sustainable fuels company Velocys and online travel agent On The Beach Group. While at the beginning of 2022, we invested in online clothing retailer Sosandar.

December 2021 saw one of our companies, Blue Prism, taken private by SS&C Technologies, making it the second company in our portfolio to have been divested following a take-over offer.

The end of 2021 also saw us continue to invest in fresh equity placings, this time in DiscoverIE, Velocys, GB Group, Invinity Energy Systems and Ideagen, taking the total number of primary equity investments since the Company's launch to 15. It was also the second time since the launch of the Trust that the latter two firms had raised equity to fund a pipeline of growth opportunities in their end markets. Perhaps indicative of its attractiveness, after the period-end Ideagen received a confirmed bid from Hg Capital, a European private equity firm, and the firm is now delisted from the stock market. As active investors, we are always pleased to see our portfolio companies make positive changes from an environmental, social and governance ("ESG") perspective following our engagements with them, especially where we are providing fresh equity to facilitate and drive their future growth. DiscoverIE is a good example. While we engaged with a number of portfolio companies on ESG matters over the period, we engaged with DiscoverIE in August 2021 with a focus on board diversity, remuneration and climate change. The firm subsequently announced the appointment of a female ethnic minority member on the board with effect from January 2022 and has since adopted a revised diversity policy which includes targeting a minimum 40% female board. Elsewhere it has prioritised reducing carbon emissions by 50% as a first step towards achieving its a 'net zero' target.

As 2022 gathered pace, public equity markets weakened from concerns over higher-than-expected inflation caused by a combination of supply chain disruptions and the war between Russia and Ukraine. The cash buffer that we held during such a volatile period served us well to not only preserve the net asset value of the Company during falling markets, but also as dry powder to invest in emerging opportunities.

During the first quarter of 2022, we did not deem there to be any IPO opportunities attractive enough to participate in for inclusion in the portfolio. Following a significant fund-raising cycle in 2020 and 2021, we found that companies seeking to list on the stock market in the first few months of 2022 were either low in quality or expected valuations that we believed were not befitting of the prevailing pricing environment. Our focus is on finding opportunities for growth and we remain disciplined in our approach and continued to assess opportunities across both public and private markets. We did however see significant dislocations in asset prices of already-listed companies whose underlying fundamentals had not changed. Some of these we held, such as Trustpilot and Watches of Switzerland, in which we modestly increased our positions. The shares of both companies sold off for different reasons, but ultimately a 'risk-off' environment meant that the market was not willing to pay for growth.

Elsewhere, we sold out of Breedon, Ibstock and Civitas, the latter after the period end. Separately, we also reduced exposure to more cyclically exposed companies Volution and Bodycote, as we felt they would be pressured in the current environment.

Over the period, we conducted a significant amount of due diligence on a number of new, private equity opportunities that have been progressing through our investment pipeline. However, we remained steadfast in our pricing discipline and ultimately declined several deals on valuation grounds. This patience was rewarded after the period end with three new investments, which we believe represent attractive entry points that remain true to our valuation philosophy.

Developments since 31 March 2022

In May 2022, we announced the investment into Mintec, a leading provider of food-related commodity pricing. This was an investment that exemplified the collaborative research efforts of Schroders' public and private equity teams who manage the Company's portfolio, with the former offering crucial insights into the attractions of Mintec's business model following research carried out on Euromoney Institutional Investor, one of Europe's largest business and financial information companies, and one of the public equity positions in the portfolio, which owns a similar business in the same industry. The benefit of this shared insight demonstrates the unique collaborative research element in our management of the Company relative to other wholly private equity or wholly public equity investment vehicles. In the same month, we also announced the investment into CFC, a technology-driven global insurance business that has established itself as a leader in cyber and provider of cover for a diverse range of emerging risks that sit at the intersection of technology and business.

In June 2022, we announced the investment into Pirum, a leading provider of post-trade automation and collateral management technology for the global securities industry and the Company's ninth private equity investment since launch. Pirum was founded in 2000 to provide advanced, centralised and secure reconciliation services for financial market participants and has a market leading position.

We are delighted to have completed these three new private equity investments in strong, UK-based, market leaders. We had been tracking these businesses for an extended period of time through our long-term relationships with private equity firms Synova, Bowmark and Vitruvian, and supplemented these efforts with enhanced due diligence made possible by the close working relationship between our public and private equity teams, which provided the widest possible lens for assessment of our new investee companies. We expect these businesses to be resilient to the ongoing macroeconomic and market trends and are excited to be part of the next phase of their growth story.

As at 8 July 2022 the Company holds a cash balance of £2.5m.

Outlook

The recent downturn in tech stocks precipitated by rising inflation and interest rates, as well as the ongoing war in Ukraine, has principally impacted the venture capital and pre-IPO landscape, where valuation multiples have significantly contracted, putting them at a funding risk in the current environment. In contrast, our portfolio focusses its private investments on the later 'growth capital' and 'buyout' areas of the private equity landscape, where valuations have contracted but the delta has been relatively more resilient. Whilst we recognise that private equity valuations may continue to converge towards that of the public markets, we believe that the business models of our investments, and their end market fundamentals, differentiate our portfolio. This was evidenced during the period, where the aggregate of our private asset portfolio was revalued upwards - a function of growth in the underlying businesses offsetting the compression in the valuation multiples applied to them.

A change in the business cycle represents an opportunity for leading companies to consolidate their advantage by acquiring smaller players at attractive valuations. We have seen a number of the private companies in our portfolio complete acquisitions, and we expect this trend to continue. Indeed, this is often a key part of our investment case and so far, Learning Curve, Waterlogic, EasyPark, Rapyd and Cera have each implemented a targeted and disciplined M&A approach to grow their revenues. Furthermore, we have seen some evidence that our private investments are attractive to third parties via the December 2021 announcement that Waterlogic is to merge with Culligan International, which is subject to regulatory approval.

On a weighted-average basis, the revenue growth reported by our current portfolio companies for their respective fiscal 2021 year was approximately 47%. We believe investing in high quality, high growth businesses such as these alongside strong management teams and highly regarded investors will generate strong returns over the long term. Valuations may ebb and flow but the growth in these businesses will drive long-term value.

We expect to see more attractive public and private investment opportunities emerging and will look for factors such as pricing power, business transformation potential and robust technological enablement. As ever, we will maintain price discipline in our investment approach.

We see the pace of the current quantitative tightening cycle as the greatest risk to equity markets for the rest of 2022, whilst inflation will continue to weigh on consumer confidence and impact the demand outlook. The portfolio is not immune to the forces which are buffeting the full spectrum of financial assets at the moment but in this environment, there is opportunity.

While 'growth' as an investment style may be challenged in the current environment, falling valuations for many businesses are removed from their underlying positive fundamentals. Our differentiated public-private equity strategy enables to invest without boundaries, whilst broadening our investable universe. We are not forced sellers when an investment crosses from private to public and vice versa - as such we hope to maximise the value creation of our investments for longer; and makes us more informed investors.

Schroder Investment Management Limited

The Company's top ten holdings as of 31 March 2022 are set out below.

1 Held via intermediary vehicle, Target Global Fund.

2 Held via intermediary vehicle, EPIC-1b Fund.

3 Held via intermediary vehicle, Purple Garden Invest (D) AB.

4 Held via intermediary vehicle, Agilitas Boyd 2020 C0-Invest Fund.

Source: Schroders

Ten Largest Investments

Rapyd

The world's largest local payments network

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 utilizing 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:

•          Acquired Valitor, a European payments and card issuing company, and launched Rapyd Ventures. Rapyd also announced in December that it had agreed to acquire Hong Kong based Neat, a cross-border trade enabling platform for small and medium-sized businesses and start-ups.

•          Raised a further $300m in August 2021 to enable the company to capitalize on emerging opportunities and accelerate the company's growth.

•          In May 2022, Rapyd announced the launch of Virtual Accounts, a vital product, empowering businesses to expand globally while supporting local payments. This new offering allows organizations anywhere in the world to securely and reliably accept local bank transfers across over 40 countries in more than 25 currencies, including the US, UK, EU, and APAC regions. The launch of Virtual Accounts comes at a crucial time for businesses searching for payment support to allow them to tap into the global marketplace. We continue to be impressed by the innovation and pipeline roll out at Rapyd.

Waterlogic

Provider of global workplace hydration solutions

Waterlogic is an innovative designer, manufacturer, distributor and service provider of drinking water dispensers and solutions designed for environments such as offices, factories, hospitals, restaurants, hotels, schools, and public spaces. From freestanding, countertop and integrated dispensers to water filling stations, fountains and boilers, every solution focuses on delivering high quality water in a safe and sustainable way.

Latest updates:

•          In January 2022, the company agreed to combine with Culligan International to create a leader in sustainable drinking water solutions and services. The transaction brings additional scale and expertise to drive innovation in the development of new water filtration, purification and treatment solutions.

•          In April 2022, Waterlogic, announced the acquisition of The Pure Water Company. Located in Norway, The Pure Water Company is a supplier of water purifier systems for Office & Horeca in Norway, with recent expansion into Sweden and Denmark. The acquisition of the business expands Waterlogic's reach and foothold in the Nordic market and gives the Company a strong opportunity to introduce and offer an even wider range of hydration solutions.

Cera

Technology-enabled home care services provider

Cera is a technology-enabled healthcare company which has grown rapidly to become one of the largest home care providers in the United Kingdom. Cera has pioneered digital services, data analytics technologies and artificial intelligence to improve elderly care, empowering users to live longer, healthier and better lives at home.

Latest updates:

•          The new financing from the former round was used to advance the company's tech platform, as well as further scale its service platform through the acquisition of small and mid-sized home care serve providers in the UK.

•          In October, Cera announced its plans to develop 15 digital healthcare hubs in cities and towns throughout the UK over the next six months. These hubs, combined with Cera's existing network throughout the UK, will see the company providing healthcare services to a community equal in size to the capacity of several dozen NHS hospitals or 1000 care homes every day.

Graphcore

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 begun shipping its new IPU product - a powerful compact, affordable system for innovators to explore new machine intelligence approaches enabled by Graphcore's IPU technology.

•          In February 2022, Graphcore announced a partnership with NEC - one of the world's best known and most respected technology companies - to accelerate heterogeneous supercomputing and innovation in artificial intelligence. The collaboration brings together their Intelligence Processing Unit (IPU) systems with NEC's vector supercomputer SX-Aurora TSUBASA to deliver AI high-performance solutions to customers worldwide. Graphcore became part of NEC's offering to customers who are building their AI compute capacity and want the advanced capabilities and performance advantage made possible by the IPU.

EasyPark

Fast-growing European mobility company that helps drivers to find, manage and pay for both parking and electric vehicle charging

EasyPark Group's technology supports its users, the companies they work for, cities and parking operators with parking administration, planning and management working seamlessly in over 2,200 cities across 20 countries throughout Europe and Australia.

Latest updates:

•          Our investment provided part of the financing for EasyPark's acquisition of PARK NOW, which offers a broad portfolio of digital services related to parking. This will enable EasyPark to grow further and become a global pacesetter in parking-related mobility services.

•          In February 2022 EasyPark Group, announced that PARK NOW users in Austria are being migrated to the EasyPark app, followed by Swiss, German and French users in the upcoming months. The PARK NOW has been a part of EasyPark Group since June 1, 2021, and the integration of the two companies is being realized in several steps.

•          Additionally, in moving its leading position forward, the EasyPark Group became the first parking application to launch Android Auto support. This means that EasyPark has taken another step towards more accessible and frictionless car parking for millions of drivers.

•          EasyPark announced in March 2022 that after 14 successful years as CEO of EasyPark Group, Johan Birgersson has decided to step down from his position to enable a leadership transition ahead of the company's next phase. Cameron Clayton, previously CEO of The Weather Company, will take over the role as CEO of EasyPark Group as of April 19, 2022. Johan Birgersson will continue as a Senior Advisor to Cameron Clayton and to the Board of Directors. We see this as a positive development as EasyPark continues to scale and expand its international operations in-line with our original business case.

Learning Curve Group

Provider of training and education services for adults

Learning Curve provides life-changing opportunities for over 120,000 learners and 4,500 employers per year to help upskill both new and existing staff, enabling individuals to develop new skills in order to enter employment or advance their careers. The company, which has received 'Good' or 'Outstanding' OFSTED ratings for its business divisions, works with a range of businesses, individuals and further education colleges across the UK, offering a diverse range of over 150 courses in a variety of sectors including Health & Social Care, Education, Business and IT, Hair & Beauty and Fitness.

Latest updates:

•          In December 2021, Learning Curve announced the acquisition of Cardiff-based Motivational Preparation College for Training to complement its existing academy.

•          The company has been shortlisted for several awards in 2021 and in July 2021 successfully secured funding to play a key role in a high-profile government initiative to deliver skills bootcamps in construction, digital and rail engineering.

•          In March 2022, Learning Curve announced that they had joined forces with recruitment and leadership development organisation, Breakthrough, who work with hard-to-reach individuals to support them into employment. The partnership will provide extensive, expert training to ex-offenders and match them with innovative employers, enabling businesses to diversify their workforce and tap into unique, inspiring talent through fully supported apprenticeships. Learning Curve works with over 4,500 employers across the country every year to support them with training solutions. Furthermore, 81% of employers who have hired ex-offenders through the Breakthrough programme have said it has helped their business. Learning Curve is a leading example of a company that contributes positively towards society and supports the UN sustainable development goals (including 10: reduce inequality within and among countries).

Ascential

Marketing for the digital age

Ascential has its origins in 19th century newspapers but today it is one of the next generation marketing companies, leading the way in using real-time data analytics to monitor and adapt pricing and product strategy for their clients. It works with two thirds of the world's 100 most valuable brands and has become indispensable in understanding key nascent market trends. They also operate key events and exhibitions such as Cannes Lion and Money 20/20.

Latest updates:

•          For the first time since the COVID 19 outbreak, in 2022 Ascential delivered an in-person Cannes Lion festival with a good recovery in awards and attendance, albeit still below 2019. A strong recovery in their other key event, fintech conference Money20/20, with revenue back to 98% of 2019 levels shows the importance of in-person meetings and the power of these strong brands. The continued recovery in these businesses should complement the ongoing growth in the marketing and e-commerce parts of their offering.

•          The firm has continued to re-shape its business towards higher growth areas through M&A, having sold MediaLink in December 2021 and acquired Sellics in April 2022. Sellics provides media execution services to challenger brands and further increases their exposure to ecommerce which is the fastest growing area of media spend globally.

•          Ascential is also looking to crystallise some value in its high growth but underappreciated digital assets by potentially listing some of those assets in the US where such companies are awarded higher multiples. We are agnostic to whether this happens given our long-term approach but believe it could validate the investment case sooner than we otherwise expect.

OSB Group

Leading specialist mortgage lender

OSB Group is a leading specialist mortgage lender, primarily focused on carefully selected sub-sectors of the mortgage market. Its specialist lending is supported by a stable retail savings franchise with 150 years of heritage.

Latest updates:

•          In March 2022, the company announced its preliminary annual results for the year ending 31 December 2021, which showed that its underlying profit before tax increased 51%, whilst its underlying and statutory loan book rose by 10% to £20.9bn and £21.1bn respectively. The results generally highlighted a high-quality loan book and a company that is poised to do well as interest rates rise.

Keywords Studios

International technical and creative services provider to the global video games industry and beyond

Keywords Studios is an international technical and creative services provider to the global video games industry. Established in 1998, and now with over 70 facilities in 23 countries strategically located in Asia, Australia, the Americas and Europe, it provides integrated art creation, marketing services, game development, testing, localization, audio and player support services across more than 50 languages and 16 games platforms to a blue-chip client base of over 950 clients across the globe. Keywords Studios has a strong market position, providing services to 23 of the top 25 most prominent games companies. Across the games and entertainment industry, clients include Activision Blizzard, Bandai Namco, Bethesda, Electronic Arts, Epic Games, Konami, Microsoft, Netflix, Riot Games, Square Enix, Supercell, TakeTwo, Tencent and Ubisoft.

Latest updates:

•          The company's full year results to 31 December 2021 showed strong momentum in revenue growth, supported by a buoyant video games industry that was refocused on content creation and a continued trend towards external service provision.

•          The firm has completed many acquisitions over the last several months and with its strong balance sheet, we believe there is scope for further deals in the future.

Genuit Group

Group of businesses that serve the construction industry by providing sustainable water, climate and ventilation management solutions

Genuit has a goal to be the leading provider of sustainable construction products for heating, plumbing, drainage, and ventilation. Its purpose is to address the challenges caused by climate change and urbanisation by providing water, climate and ventilation management solutions to the residential, commercial and infrastructure sectors.

Latest updates:

•          Genuit has continued to benefit from COVID induced spending on home improvement and sustainability solutions. Even against a strong performance last year, revenue in the first quarter of this year saw revenue increase 8%. This performance was helped by robust pass-through of cost inflation which has been supported by strong ongoing end market demand.

•          Their acquisitions last year, Adey and Nu-heat, continue to perform well and help with energy transition through the provision of efficient home heating solutions and energy sources such as heat pumps. These types of solutions continue to receive regulatory support and are likely to be an important source of growth for years to come. They should also help the UK decarbonise given the residential sector is responsible for over 20% of the UK's total carbon emissions.

•          As well as helping homes decarbonise through their products, they are reducing waste and decarbonising their own production by increasing the proportion of recycled materials in their products. In the 12 months to 31 December 2021, they increased the proportion of recycled materials used in their products to 49% (up from 46% the prior year) and continue to make progress towards their 62% 2025 target. Additionally, they also reduced their carbon intensity by 44% through switching to renewable sources.

Strategic Review

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 risks and the monitoring system are also subject to regular, robust review. The last review took place in July 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.

Emerging risks and uncertainties

During the period, the Board also discussed and monitored a number of risks which could affect the valuations of investee companies. Two emerging market risks were considered, political risk and climate change risk. The Board receives updates from the Portfolio Managers, Company Secretary and other service providers on other potential risks that could affect the Company.

Political risk includes the impact of geopolitical risk, regional tensions, trade wars and sanctions against companies. During the period, the Board noted that the invasion of Ukraine impacted political tensions, supply chains, interest rates and in particular higher inflation in the UK and globally. The Board is also mindful that changes to public policy could impact the Company in the future.

Climate change risk includes how climate change could affect the Company's investments, and potentially shareholder returns. The Board notes the Manager has integrated ESG considerations, including climate change, into the investment process. The Board will continue to monitor this.

The Board considers that both political risks and climate risks referred to above are covered in the risk matrix under market risks.

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 reporting period 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.

An analysis of the financial risks facing the Company is set out in note 22 to the accounts on pages 66 to 69 of the 2022 Report and Accounts.

Going concern

The Directors have a reasonable expectation that the Company has adequate resources to continue in operational existence until 31 July 2023, which is more than twelve months from the date when these financial statements were signed and the Directors have accordingly adopted the going concern basis in preparing the financial statements.

In reaching this assessment the Directors have considered the principal risks, the impact of the emerging risks and uncertainties and the matters referred to in the viability statement. They have additionally 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, the listed investments in the portfolio may be realised and the Directors have reviewed the average days to liquidate the listed investments. The Company is a closed-end investment trust and there is no requirement to redeem or buy back shares. 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.

Viability statement

In accordance with the AIC Code the Board has considered the longer term prospects for the Company beyond the twelve months required to assess the Company's ability to continue as a going concern. 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 Portfolio Managers and investors; this period is in line with the Company's Key Information Document.

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 and emerging risks and uncertainties detailed on pages 27 and 28 of the 2022 Report and Accounts and, in particular, the impact of 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 Going Concern above, 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.

In preparing these financial statements the Directors have considered the impact of political risk and climate change risk as emerging risks as set out on page 27 of the 2022 Report and Accounts. Following this assessment, the Directors have concluded that climate change risk and political risk did not materially impact the viability of the Company.

The conclusion of this review is that the Board has a reasonable expectation that the Company will be able to continue in operation and meet its liabilities as they fall due over the next five years.

By order of the Board

Schroder Investment Management Limited

Statement of Directors' Responsibilities

The Directors are responsible for preparing the annual report, and the 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 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.

Each of the Directors, whose names and functions are listed on pages 30 and 31 of the 2022 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

Neil England
Chairman

Income Statement

For the nine months ended 31 March 2022

¹ The comparative figures cover the period from the date of incorporation on 21 September 2020, to 30 June 2021. The Company began investing on 1 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.

Statement of Changes in Equity

For the nine months ended 31 March 2022

For the period ended 30 June 2021¹

¹ The comparative figures cover the period from the date of incorporation on 21 September 2020, to 30 June 2021. The Company began investing on 1 December 2020 (launch date).

Statement of Financial Position
at 31 March 2022

Cash Flow Statement

Included under operating activities are dividends received during the period amounting to £230,000 (period ended 30 June 2021: £227,000).

The notes on pages 56 to 70 of the 2022 Report and Accounts form an integral part of these accounts.

¹ The comparative figures cover the period from the date of incorporation on 21 September 2020, to 30 June 2021. The Company began investing on 1 December 2020 (launch date).

Notes to the Accounts

1.         Accounting period

The accounts cover the nine months ended 31 March 2022. The comparative figures cover the period from the date of incorporation on 21 September 2020, to 30 June 2021. The Company began investing on 1 December 2020 (launch date).

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 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 April 2021, except for certain financial information required by paragraph 30 regarding the disclosure of percentage holdings where the Company holds 3% or more of any class of capital, and 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 either because it is not publicly available, or because investees would prefer it to remain confidential. 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 and derivative financial instruments held at fair value through profit or loss. The directors believe that the Company has adequate resources to continue operating until 31 July 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.

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.

(b)       Use of judgements, estimates and assumptions

The preparation of the financial statements requires management to make judgements, 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.

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 estimates in the financial statements are the determination of the fair values of the unlisted investments by the Investment Manager for consideration by the Directors. These estimates are key as they significantly impact the valuation of the unlisted 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 65 of the 2022 Report and Accounts and accounts.

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 imputs.

3.         (Losses)/gains on investments held at fair value through profit or loss

4.         Income from investments

5.         Investment management fee and performance fee

The bases for calculating the investment management and performance fees are set out in the Report of the Directors on page 33 of the 2022 report and accounts and details of all amounts payable to the Manager are given in note 10 below.

6.         Dividends

The Company has reported a revenue loss after taxation of £577,000 (2021: £433,000) for the period and accordingly there is no requirement to pay a dividend under Section 1158 of the Corporation Tax Act 2010.

7.         Return per share

8.         Called-up share capital

The issued share capital at the accounting date was as follows:

9.         Net asset value per share

10.       Uncalled capital commitments

At 31 March 2022, the Company had uncalled capital commitments amounting to £7,869,000 (30 June 2021: £2,259,000) which may be called by investee companies and is not subject to timeframes or the achievement of milestones or objectives.

11.       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 33 of the 2022 report and accounts.

The management fee payable in respect of the period ended 31 March 2022 amounted to £372,000 (period ended 30 June 2021: £278,000), and the whole of this amount of £650,000 (30 June 2021: £278,000) was outstanding at the period 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 have been no such investments during the period or comparative period.

A performance fee accrual amounting to £714,000 (period ended 30 June 2021: £402,000) has been included in these accounts. No performance fee has been paid to date and the cumulative amount of £1,116,000 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 period amounted to £135,000 (period ended 30 June 2021: £105,000) and the whole of this amount of £240,000 (30 June 2021: £105,000) was outstanding at the period end.

No director of the Company served as a director of any company within the Schroder Group at any time during the period or comparative period.

12.       Events after the accounting date that have not been reflected in the accounting statements

In May 2022, the Company announced an investment into Mintec (a leading provider of food-related commodity pricing) and CFC (a leading technology-driven global insurance business). In June 2022, the Company announced an investment into Pirum, a leading provider of post-trade automation and collateral management technology for the global securities industry. Pirum is the Company's ninth private asset investment since launch.

On Wednesday, 18th May, the Company purchased 100,000 of its ordinary shares, nominal value £1,000, to hold in treasury for a total consideration of £84,000 representing 0.13% of the shares outstanding at the beginning of the period. The reason for this purchase was to seek to manage the volatility of the share price discount to net asset value per share.

Status of announcement

13.       2022 Financial Information

The figures and financial information for 2022 are extracted from the Report and Accounts for the period ended 31 March 2022 and do not constitute the statutory accounts for the period. The 2022 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 Report and Accounts will be delivered to the Registrar of Companies in due course.

Neither the contents of the Company's webpages nor the contents of any website accessible from hyperlinks on the Company's webpages (or any other website) is incorporated into, or forms part of, this announcement.