Schroders Capital Global Innovation Trust plc - INOV H2 2024 Earnings Report

Schroders Capital Global Innovation Trust plc - INOV EPS Results

• Actual EPS: -GBX 0.25
• Consensus EPS: N/A
• Beat/Miss: N/A
• One Year Ago EPS: N/A

Schroders Capital Global Innovation Trust plc - INOV Revenue Results

• Actual Revenue: N/A
• Expected Revenue: N/A
• Beat/Miss: N/A
• YoY Revenue Growth: N/A

Schroders Capital Global Innovation Trust plc - INOV Announcement Details

• Quarter: H2 2024
• Date: 3/31/2025
• Time: Before Market Opens
• Conference Call Date: Friday, March 28, 2025
• Conference Call Time: 5:00AM ET

Schroder UK Public Private Trust plc specializes in investments in startups, midsize, middle market and large stage, early stage and mature stage investments. The fund primarily invests in the healthcare, financials, industrials, technology, consumer goods, telecommunications, basic materials, and biotechnology sector. It seeks to invest in quoted and unquoted companies. It primarily invests in companies incorporated in the United Kingdom or traded on a London Stock Exchange market but can invest in Europe, United States and Asia other countries. The fund seeks to become a significant shareholder in the portfolio companies.

Schroders Capital Global Innovation Trust plc - INOV H2 2024 Earnings Call Transcript

Key Takeaways

• Negative Sentiment: Legacy investments drove nearly all value loss — management says about 95%–97% of the decline since their 2019 takeover comes from inherited holdings, mainly poor-performing public biotech and life‑science names.
• Positive Sentiment: New-investment exits have been strong — recent life‑science exits (Araris, Anthos, Carmot) delivered high multiples (Araris ~7–8x upfront, Anthos ~1.9x with further milestone upside) and the team reports a 3.3x realized cash multiple on completed exits to date.
• Positive Sentiment: Managed wind‑down and immediate cash return — the board approved an orderly wind‑down to maximize realizations and announced an initial GBP 30 million capital return (targeted for early summer), while reserving some capital for follow‑ons.
• Neutral Sentiment: Portfolio shape and liquidity — at year end private investments made up ~97% of NAV, cash and equivalents were ~31.6%, and the largest holdings are Atom Bank (14%) and Revolut (9%), meaning exits depend on company events and market timing.
• Negative Sentiment: Recent NAV and share performance were weak — NAV declined ~25.2% (21.2% per share after buybacks) over the year, with several write‑offs (e.g., Reaction Engines, Occutera, AMO Pharma) and buybacks failing to close the discount, prompting the wind‑down decision.

Presentation

[James Lowe, Director of Private Markets at Schroders Capital Global Innovation Trust]

Good evening, ladies and gentlemen, and welcome to the Schroders Capital Global Innovation Trust webinar for the annual results. My name is James Lowe. I look after sales for the Schroder Investment Trust business. I'm very pleased to be joined in the studio here in London today by Harry Raikes, Co-Portfolio Manager of the Trust. Online from Zurich, we're also joined by Tim Creed. We will also be joined for the first time on one of these webinars later in the Q&A by Stephen Cohen, one of the Non-Executive Directors of the Trust. If you do have any questions for the team as we go through this, already have questions coming in, please do send them through the Q&A tab. You can also now download a copy of the results.

[James Lowe, Director of Private Markets at Schroders Capital Global Innovation Trust]

You should also be able to download a copy of the presentation to follow along with the team as we go through the detail. With that, I'll be back for the Q&A, but I'll hand over to Harry and Tim to start the presentation.

[Tim Creed, Head of Private Equity Investments at Schroders Capital Global Innovation Trust]

Perfect. Thank you. Good afternoon, everyone. I would like to start on the first slide where we start with our four key messages that we'd like to present today. The first is a reminder that we became the portfolio manager of the Trust in December 2019, and that our immediate focus at that point was to stabilize the portfolio and to sell off a number of the holdings in order to eliminate the debt. We were able to do so, which was a pleasing start to the Trust. At the same time, those legacy portfolio companies have continued to reduce in value due to the quality of some of the investments. They have contributed about 95% of the drop in value since the day that we took over the Trust.

[Tim Creed, Head of Private Equity Investments at Schroders Capital Global Innovation Trust]

Against that backdrop, from the beginning of 2021, we were able to start making new investments. Those investments were relatively small at the beginning and in relatively slow order. We have managed to ramp up the number of investments. Those investments have proven to have progressed and started very well. We have now had our first exits. We sit at a realized performance of 3.3x cash on the investments on the exits that we have made to date, with further potential upside from those companies due to some of the earnouts that we have negotiated.

[Tim Creed, Head of Private Equity Investments at Schroders Capital Global Innovation Trust]

Finally, the final key message is that, as a reminder for most of you, we had a shareholder vote in February where we decided to move to an orderly wind-down for the trust. We will talk about what that means later in this presentation. The next slide is a recap of the portfolio development since we took over the trust.

[Tim Creed, Head of Private Equity Investments at Schroders Capital Global Innovation Trust]

This slide shows, as I mentioned, 95% of the drop in value has been the legacy investments. You see also on the right-hand side the Schroders Capital Public Investments and the Schroders Capital Private Investments. These slides are all, as James mentioned, available. Please do look at them in detail should you wish to do so.

[Tim Creed, Head of Private Equity Investments at Schroders Capital Global Innovation Trust]

I'll fire through the next couple of slides relatively quickly to ensure we have time for Q&A. This slide is a backward-looking slide. It is a slide that we put up at the beginning of last year to say what our objectives would be. We sit here now 12 months later to show the progress against those objectives. We had four main objectives for the Trust. They're listed here. We wanted to support the existing portfolio. We wanted to maximize the sales. We wanted to execute a sizable buyback. We wanted to make a number of new investments. We achieved all four of those goals during the course of last year.

[Tim Creed, Head of Private Equity Investments at Schroders Capital Global Innovation Trust]

The next slide shows the new investments that we made since we took over the trust. We split them into three categories: the Growth investments, the Venture investments, and the Life Science investments. You can see the names of the companies. You can also see the dates when we made those investments. There are four companies that are highlighted. They are highlighted because they are sold, so two of them fully sold and two of them that are in exit process. If anyone has questions about those companies, we have a couple of slides that describe particularly Araris and Anthos in a bit more detail.

[Tim Creed, Head of Private Equity Investments at Schroders Capital Global Innovation Trust]

We now will move into the financial performance of the Trust. The next couple of slides are standard slides that we've been using since we took over the Trust. This slide really does show the disappointing progress over the last five years of both the NAV, the net asset value, as well as the share price over the five years and the discount that is there quite visible between the share price and the NAV. It shows on the left-hand side the price per share and on the right-hand side the total.

[Tim Creed, Head of Private Equity Investments at Schroders Capital Global Innovation Trust]

The next slide is a standard slide that shows the calendar year performance with, of course, all the risk criteria written underneath. Here you can see the year-on-year performance of the portfolio and of the trust over the last six years. I'll now hand over the microphone to Harry, who will go into a lot more detail about the progress of the portfolio over this last year.

[Harry Raikes, Head of UK Venture Investments at Schroders Capital Global Innovation Trust]

Thanks, Tim. Good afternoon, everyone. Thanks very much for joining us for this webinar. The first couple of slides that I'll present are an overview of the performance attribution during the year. The NAV declined by 25.2% or 21.2%, attributing for the per-share decline on the impact of the share buyback. The key thing to highlight is that most of the implications were reflected in the NAV produced as of Q3. The change in the fourth quarter was actually only a negative decline of 1% on a NAV per share basis.

[Harry Raikes, Head of UK Venture Investments at Schroders Capital Global Innovation Trust]

If we're running from left to right on this slide, the largest negative contributor by category was the public equity portfolio. Disappointing performance from Oxford Nanopore, which we'll go on to in a bit more detail. Autolus, which is a listed biotech company that we still hold in the portfolio and are still positive about. Benevolent, a small liquid but still listed company that has actually since delisted from the market.

[Harry Raikes, Head of UK Venture Investments at Schroders Capital Global Innovation Trust]

In the growth segment, there was the positive news from Revolut that we'll go to in a bit more detail. There were negative contributions from a couple of the new investments that we've made. We can talk about that. Also, Salica, the Environmental Technologies Fund, had some disappointing developments in the portfolio. The second largest contributor by category was the Venture holdings. We had a positive contribution from one of our new AI software companies, but that was not able to detract from the negative contribution from particularly the write-off of Reaction Engines, which was unable to secure additional financing.

[Harry Raikes, Head of UK Venture Investments at Schroders Capital Global Innovation Trust]

Lastly, the Life Sciences category, where we had the full write-off of Legacy holdings OcuTerra and AMO Pharma, and a small positive contribution from our new investment Anthos that we'll describe in more detail as that company was exited after the period end. Lastly, a very small positive contribution from the money market funds that we're holding. Further detraction from the capital allocated for the buyback, hence why I mentioned the positive impact on the NAV per share performance, and also the costs over the year.

[Harry Raikes, Head of UK Venture Investments at Schroders Capital Global Innovation Trust]

The next slide just provides the same breakdown, but the attribution based on the Legacy holdings that we inherited back in 2019 and then the new portfolio. You can see here that 97% of the fair value change in the year can be attributed to investments that were part of the legacy portfolio. The same impact from the other categories.

[Harry Raikes, Head of UK Venture Investments at Schroders Capital Global Innovation Trust]

This slide just provides an overview of the portfolio as of the end of December. Probably three things that I draw out on this slide. Firstly, the two largest holdings that are quite substantially larger than the third and smaller holdings, those being Atom Bank and Revolut, which are 14% and 9% of the NAV, respectively. The second thing I would highlight is the cash balance of 31.6% at the end of the year. That is on the basis of a combination of cash and the money market funds that we hold in the fund.

[Harry Raikes, Head of UK Venture Investments at Schroders Capital Global Innovation Trust]

Lastly, the other notable change I would highlight is the significant increase in the percentage of Private Equity holdings in the portfolio, given a number of public equity sales completed during the year. The Private Equity portfolio represents 97% of the portfolio at the year end. Moving on, just to give a bit of an overview of the two public equity holdings that we sold during the year. The first is a company called Immunocore. This is one of the Legacy investments that listed in February 2021. We have talked about this exit in previous webinars, but just to reiterate, this was a holding that we were positively viewed at the point that the portfolio was taken over. We decided to hold on to this holding and were able to achieve a positive exit in the first quarter of 2024.

[Harry Raikes, Head of UK Venture Investments at Schroders Capital Global Innovation Trust]

In combination across the different sales that we completed, generating proceeds of GBP 43 million over the period since 2021, including a partial secondary transaction that we completed monies required in order to repay the debt in the early years of the transition, and a positive contribution from part of the deal structuring associated with that transaction that was received in 2023. Overall, we're happy with the exit of the holding at the start of this year, which is looking like a good outcome given where the share price has traded since.

[Harry Raikes, Head of UK Venture Investments at Schroders Capital Global Innovation Trust]

The next holding, and quite a substantial one for this portfolio over the last few years, is the company Oxford Nanopore Technologies. This is a company that specializes in DNA and RNA sequencing devices. Again, this is an investment that was part of the Legacy portfolio inherited in 2019, and the company listed in September 2021.

[Harry Raikes, Head of UK Venture Investments at Schroders Capital Global Innovation Trust]

We fully exited the position in the fourth quarter of last year. There are really kind of three distinct phases to the way that we've sold down Oxford Nanopore over the period of our management. Firstly, a small sale that was completed in January 2020 as part of a private transaction, again, also to help repay the debt on the fund at that point in time. A relatively small sale at the point of the company listing in September 2021. The key strategic shift being the gradual sale of the holding since 2022, but most importantly since April 2023, when Schroders Capital was appointed the manager of also the public equity part of the portfolio. In total, Oxford Nanopore has generated just under GBP 50 million of proceeds for the fund over the entire period.

[Harry Raikes, Head of UK Venture Investments at Schroders Capital Global Innovation Trust]

The next couple of slides just go in detail on our Life Sciences investments. This has been an area where we've seen particular success, particularly since the period end, not actually reflected in the annual report that you'll be reading today. We are very excited by the progress that we're seeing in this part of the portfolio. Twelve companies in the Life Sciences category, eight of those being new investments and four being the legacy investments. Firstly, on the new portfolio, we had the announced exit of Carmot during last year, which was a very positive outcome for us at north of a 3x multiple of invested capital.

[Harry Raikes, Head of UK Venture Investments at Schroders Capital Global Innovation Trust]

The key news since the start of this year is the exits of Anthos and Araris that I'll come to in a moment that are very positive cases in terms of what we're looking to do with this portfolio. The other key thing that I would highlight here is that the lines that you see are the point at which we first invest in that company. A number of the companies in the new portfolio have progressed towards a clinical proof of concept stage, which means they should be approaching a point where the value from their clinical development will become more readily reflected in the values that we hold them at in the portfolio. We're very encouraged by the underlying data that we're seeing from a number of these holdings.

[Harry Raikes, Head of UK Venture Investments at Schroders Capital Global Innovation Trust]

Just to touch briefly on the Legacy investments within the Life Sciences strategy, you'll note that we had obviously the successful exit of Kymab very early on in the portfolio for which we're still receiving some of the milestone payments. The other assets in this segment are still pre-proof of concept, which means we're not expecting a meaningful inflection point in their holdings. For example, AMO Pharma is one where we're not expecting any value to be returned from that holding going forwards. Just to touch on those exits, firstly, Anthos Therapeutics. This is a developer of therapeutics for patients with cardiovascular disease. We invested just over GBP 2 million in the fourth quarter of 2022. We believe that this company had the combination that we're looking for in our life sciences holdings.

[Harry Raikes, Head of UK Venture Investments at Schroders Capital Global Innovation Trust]

Very strong and high-quality underlying science, a large market that they're targeting, a high-quality management team, and a strong shareholder syndicate in order to see this company through to the value that it will create through its clinical programs. We're delighted with the news at the start of this year that Novartis has announced the acquisition of Anthos, subject to regulatory approvals, for a combination of EUR 925 million of upfront with the potential for milestone payments of up to EUR 2.1 billion. That results in a 1.9x multiple of invested capital today, but with the potential of those additional milestones taking the outcome for the fund potentially up to 3.2x in time.

[Harry Raikes, Head of UK Venture Investments at Schroders Capital Global Innovation Trust]

The other exit is Araris Biotech. This is a company developing next-generation antibody drug conjugates to treat cancer. We invested GBP 2.6 million in the third quarter of 2022. This is a Swiss company. Again, it exhibited the exact same characteristics that I mentioned in Anthos, although this company is at an earlier stage in its clinical development.

[Harry Raikes, Head of UK Venture Investments at Schroders Capital Global Innovation Trust]

We are delighted by the news that the company is to be acquired by Taiho Pharmaceutical, a Japanese pharmaceutical conglomerate, for an upfront payment of GBP 400 million, near-term contingent milestones of GBP 90 million, and longer-term milestones of up to GBP 650 million. This is generating, based on the expected value at the end of Q1, an 8.5x multiple of invested capital on the original GBP 2.6 million that we invested, including a capital return of GBP 18.7 million. We will come back to that number because it has relevance for the initial capital return that has been proposed.

[Harry Raikes, Head of UK Venture Investments at Schroders Capital Global Innovation Trust]

That's an upfront multiple of 7.2x, 8.2x including the value of those residual holdings, but then also the potential for significant further milestone payments from the earnout provisions, potentially taking this up to a pretty miraculous 20x multiple. I'll pass back to Tim, who's just going to give a bit of an update on Revolut, which is one of the key holdings in our growth portfolio.

[Tim Creed, Head of Private Equity Investments at Schroders Capital Global Innovation Trust]

Indeed. Thank you, Harry. We've spoken a bit about the legacy portfolio, and we've spoken probably a bit more about the investments that Schroders Capital have made. Part of the logic of speaking more about those investments is there's more upside in those investments, as demonstrated by the two exits that Harry just talked about. We now want to talk about one of the companies that is still an existing company within the portfolio.

[Tim Creed, Head of Private Equity Investments at Schroders Capital Global Innovation Trust]

It's the second largest investment in the portfolio and the largest of the new investments that we made. The company is Revolut. Many of you will have heard us talking about this company since we invested. We invested from this Trust back in 2021, although we've been an investor indirectly through other portfolios for many years before that. That has allowed us, or that did allow us, to get to know the company very well. The company, many of you will know, many of you will use it, it is, in our view, the single best venture-backed company in the U.K. and the single best venture-backed company in Europe and one of the best globally. The company itself has the goal to be one app for all things money.

[Tim Creed, Head of Private Equity Investments at Schroders Capital Global Innovation Trust]

In the middle of the chart, you can see the growth in user numbers, the number of people who use the app itself, plus you can see the revenue growth. You can see that it's had systematic growth year-on-year-on-year, which is something that we really like to see in the kind of companies that we invest in. On the bottom left, you see a few additional data points. I'd also like to highlight that Revolut themselves actually produce an annual report. There is a lot of information that Revolut provide about themselves if you want to learn more about the company. From this Trust, we invested back in 2021 in the Series E round at a GBP 32 billion valuation.

[Tim Creed, Head of Private Equity Investments at Schroders Capital Global Innovation Trust]

Since then, there has been a recent secondary round last year at a GBP 45 billion value, and the company continues to grow nicely. Therefore, we have substantial hope for further development with this investment. With that, I'll now move on to the outlook. The outlook, as I mentioned in the fourth bullet point on the first slide, is the managed wind-down. This slide provides the data about our position for the managed wind-down. Harry showed on his first two slides that the NAV of the trust as of December 31, 2024 is GBP 162.4 million. Therefore, the NAV is GBP 162 million. That is really where the bulk of the growth will come from, from the portfolio. This slide shows the cash position, so not the non-investments.

[Tim Creed, Head of Private Equity Investments at Schroders Capital Global Innovation Trust]

On the left-hand side, you see the cash and equivalents, and you also see the proceeds from the Araris exit. On the right-hand side, you see how we're going to use some of those proceeds. The announcement that we've made is that we're going to make an initial capital return to investors in this trust of GBP 30 million. Our original plan had been to do a distribution of near GBP 10 million, but the successful exit of Araris has allowed us to significantly increase that return to GBP 3`0 million.

[Tim Creed, Head of Private Equity Investments at Schroders Capital Global Innovation Trust]

We will be reserving some capital for follow-on investments. We've specifically said these are going to be follow-on investments in the investments made by Schroders Capital, the new investments. We're doing that really to ensure that the growth of the portfolio can continue as we manage through the wind-down period. Of course, there'll be a small amount of capital used for operating costs.

[Tim Creed, Head of Private Equity Investments at Schroders Capital Global Innovation Trust]

It's important to think about the principles of the ordinary wind-down to ensure that everyone knows the approach that we're taking. This slide shows the three key overriding guiding principles that we're following. The first is that we're aiming to maximize the exit value. That means that we are attempting to get the highest value for each of the investments that are within the Trust, both the legacy investments and the new investments made by us. In order to maximize the value, we're going to support the exits rather than forcing the exits. In other words, this is not going to be a fire sale. We're not trying to sell the companies as quickly as possible. Instead, we're going to sell our positions in the companies when there is an event in those companies.

[Tim Creed, Head of Private Equity Investments at Schroders Capital Global Innovation Trust]

For example, when Araris has been sold, or when the other companies are sold, or when a company is IPOed, that is the time that we are likely to do the majority of our exits rather than forcing any form of sale before that point. Finally, we are going to have some prudent reserving. There are a small number of companies that we feel that we could add a bit more capital in order to enhance the total return. Hence, there is going to be a smaller amount of capital reserved. Working on those three guiding principles, we believe there is further growth in the NAV from this point and good potential growth for the Trust overall. With that, I will hand the microphone back to James, who will probably manage through the questions.

[James Lowe, Director of Private Markets at Schroders Capital Global Innovation Trust]

Perfect. Thanks, Tim. I think we should have Stephen joining us on screen now. There he is. Stephen, welcome to the webinar. Thanks for having, thanks for being with us.

[James Lowe, Director of Private Markets at Schroders Capital Global Innovation Trust]

Thanks, Tim and Harry. We've got lots of questions that have come through. Maybe just starting with a couple of questions, Harry, on the portfolio, just if you've spoken through, we've had some questions about specifics of companies coming through. Then we'll come back to some of the broader questions around the future of the trust, how the managed wind-down will work, et cetera. Maybe just starting with one of the negative detractors you mentioned was the Salica Fund, which had a write-down. Could you just give a bit more information on what was going on there?

[Harry Raikes, Head of UK Venture Investments at Schroders Capital Global Innovation Trust]

Yeah. There are principally shareholders may remember that the Salica Fund was previously called the Hambro Perks Environmental Technology Fund. Prior to that, previously also Ombu Group, we participated and actively supported the restructure of that fund under a new guise to realize value from this portfolio, of which we've already distributed or sort of returned capital of one times the value we were offered to sell out of that position. Everything from here is upside relative to that other opportunity. The portfolio is basically concentrated in three different companies. That's Bluewater Bio, that's in the wastewater treatment sector, a company called P2i that is a waterproof coating technology for consumer electronics, and a company called Iceotope that does liquid-cooling technologies for data centers.

[Harry Raikes, Head of UK Venture Investments at Schroders Capital Global Innovation Trust]

There's not a lot of sort of publicly available information about this portfolio, but all we can say is that developments in that portfolio have not been as expected, and therefore the valuation team have elected to reduce the size of the value in the holding.

[James Lowe, Director of Private Markets at Schroders Capital Global Innovation Trust]

Thanks. That's really clear. Another question on a specific company we've had is around the Araris Biotech exit. What are the conditions, or can you share some of the conditions of the milestone payments?

[Harry Raikes, Head of UK Venture Investments at Schroders Capital Global Innovation Trust]

We can't disclose that publicly. I think the one thing I would draw a highlight to is that the upfront amount is the 7.2x the original money. We are valuing the holding at 8.5x, so effectively a 1.3x that original GBP 2.6 million investment. That is the value that the valuation team have ascribed on a present and risk-adjusted basis for those milestones. As and when we get closer to potential sight on returns from those milestone payments, then the value of that remaining holding will increase in value.

[James Lowe, Director of Private Markets at Schroders Capital Global Innovation Trust]

Great. Thank you, Harry. Tim, now just coming to you on the managed wind-down, there's a couple of questions here that have come through just about, and I know you've just given us some information on the process and the guiding principles, but there's a number of questions here about how long you think it likely could take.

[Tim Creed, Head of Private Equity Investments at Schroders Capital Global Innovation Trust]

Yes, that is indeed a very fair question. We're not putting a specific timeline on the length of the wind-down. The reason we're not doing so is we don't want to be a forced seller at any one point of time. We want to actively manage the rest of the portfolio to maximize the value. Effectively, the wind-down will finish when we've sold the last company.

[Tim Creed, Head of Private Equity Investments at Schroders Capital Global Innovation Trust]

Now, a number of the companies we've held in the portfolio for a number of years, and therefore they've grown nicely, and therefore they are heading towards the exit process. We don't expect it to be too long, but at the same time, we don't want to rush it too quickly either.

[James Lowe, Director of Private Markets at Schroders Capital Global Innovation Trust]

Yeah, understood. Thank you. Maybe just quickly, we've had another question just on the top holdings. Maybe Harry, you could start on this, and Tim, please add. What are the expected catalysts across the top holdings? You showed us, obviously, the top 20 in the slides. Is there any way of accelerating the disposal of the holdings?

[Harry Raikes, Head of UK Venture Investments at Schroders Capital Global Innovation Trust]

I think, as Tim talked about, and this slide still sort of evidences we're not looking to force exit events and take discounted secondary opportunities. We are really looking to maximize value. I think one thing I would draw attention to is this is obviously a portfolio of minority, typically venture-capital-style investments. We are not the determinant within those companies of an exit event, hence why we have leaned towards that strategic approach. There are sort of natural exit points for each of the companies.

[Harry Raikes, Head of UK Venture Investments at Schroders Capital Global Innovation Trust]

I think if you think about the two largest holdings in the portfolio, Atom Bank and Revolut, as Tim mentioned, there is actually publicly available information about these companies because they are financial services institutions that are regulated and have to report their annual results. They talk about plans for IPOs in the future, of which the management teams and boards of those companies consider the prevailing market conditions before considering what they might do.

[Harry Raikes, Head of UK Venture Investments at Schroders Capital Global Innovation Trust]

We are really looking for those companies to outline the potential future events. As and when we can influence exit outcomes, we will look to do so in the spirit of maximizing value. We are a minority investor in most of these companies.

[James Lowe, Director of Private Markets at Schroders Capital Global Innovation Trust]

Sure. There is a question just here on secondary sales. How actively can you explore that avenue?

[Harry Raikes, Head of UK Venture Investments at Schroders Capital Global Innovation Trust]

We are always looking at options. I would say, I mean, across our Private Equity and Venture Capital business, we are always actively looking at secondaries across all the different stages. I would say venture secondaries in portfolios like this are at significantly elevated levels at the moment because it really is a buyer's environment. It would not be opportune for this portfolio to be sold through a secondary.

[Harry Raikes, Head of UK Venture Investments at Schroders Capital Global Innovation Trust]

We will continue to evaluate those opportunities as and when the discounts start to narrow and there's more capital available for such transactions. As we said, the primary strategy here is to pursue the natural exit events of each company in the portfolio.

[James Lowe, Director of Private Markets at Schroders Capital Global Innovation Trust]

Sure. Maybe this is a good time to bring Stephen in for his views and the discussion that's been taking place at the Board. Stephen, lots of questions here about time to wind-down, how we balance sales with maximizing value. From a Board governance and oversight point of view, how are you as a Board thinking about this?

[Stephen Cohen, Independent Non-Executive Director at Schroders Capital Global Innovation Trust]

Thank you, James. Look, you're absolutely right to raise that as a point. You can see if you look in our annual report that in our risk register, we have particularly highlighted the risk either on the one hand of perhaps selling too early and not maximizing value, or on the other hand, dragging the process out and making shareholders wait too long for the payouts. We are well aware of those risks on the board, and we are going to seek to actively manage them. You will also see in the annual report, it refers to the fact that as and when Schroders wish to make a follow-on investment in a company, then they will need Board approval. On the Board, we are going to be monitoring this extremely closely and are well aware of the issues.

[James Lowe, Director of Private Markets at Schroders Capital Global Innovation Trust]

Great. Thank you. There is a question here, which is more technical around distributions and when people are eligible for distributions or not. Is that something that's been discussed, or should we follow up with that person?

[Stephen Cohen, Independent Non-Executive Director at Schroders Capital Global Innovation Trust]

I'm not sure what's meant by eligibility. All shareholders will be equally eligible.

[James Lowe, Director of Private Markets at Schroders Capital Global Innovation Trust]

That answers the question. Thank you very much. That's perfect. Thanks for that. Question about costs of the wind-down process. Who would like to, who's best placed to, I know we probably can't give exact estimates because there'll be transaction costs associated. Is there a cost for working to maximum caps, anything like that in place? Maybe Stephen, if you want to take that.

[Stephen Cohen, Independent Non-Executive Director at Schroders Capital Global Innovation Trust]

I think that's two answers, one from me and one from the Schroders team. Obviously, we are well aware of the fact that the trust will be shrinking now over time, and we need to be very careful to manage the costs, although quite a lot of them are fixed costs. We're going to be engaging with all our service providers to seek to manage down the costs wherever possible. A lot of the costs will also shrink pro rata as the Trust shrinks, for instance, the management fees and the custodian fees and so forth. Again, something we are very conscious and mindful of.

[James Lowe, Director of Private Markets at Schroders Capital Global Innovation Trust]

Thanks.

[Tim Creed, Head of Private Equity Investments at Schroders Capital Global Innovation Trust]

I would agree with everything Stephen just mentioned. There's a lot of focus on the costs, both at the Board level and also within Schroders Capital. One additional point is that many of the investments that we've made are also in a number of other pools that Schroders Capital also manages. If there are costs involved in a specific company, they're shared pro rata across the different vehicles that invest into that same company.

[James Lowe, Director of Private Markets at Schroders Capital Global Innovation Trust]

Great. Thank you both. That's really clear. There's a couple of questions here around the discount to NAV that still prevails. The question is, I guess, why not continue to do buybacks at the same time? Is that something that's been discussed, Stephen, at the Board level?

[Stephen Cohen, Independent Non-Executive Director at Schroders Capital Global Innovation Trust]

I think what we felt was that we had done a substantial number of buybacks, which is what we undertook to do. The reality was they had not really moved the discount. That is one of the reasons why we've made the decision to wind-down. What is happening now is that we're going to be trying to wind this down as sensibly as we can, balancing the question of timeliness with maximizing return and getting the money back to shareholders. Shareholders will be getting out, as it were, at net asset value, but over time.

[James Lowe, Director of Private Markets at Schroders Capital Global Innovation Trust]

Yeah, understood. That's really clear as well. There is a couple of questions here around the timings of cash return, particularly that GBP 30 million.

[Stephen Cohen, Independent Non-Executive Director at Schroders Capital Global Innovation Trust]

Yes. We hope to be able to do the first payment. I think Harry was referring to that in his slides, and that was going to be a payment of GBP 30 million and make that in the early summer.

[James Lowe, Director of Private Markets at Schroders Capital Global Innovation Trust]

Is the plan to make that in cash?

[Stephen Cohen, Independent Non-Executive Director at Schroders Capital Global Innovation Trust]

Absolutely.

[James Lowe, Director of Private Markets at Schroders Capital Global Innovation Trust]

Great. You have another question as to what type of distribution that would be. I guess there is, again, a couple of questions about the process of delisting the fund and at what point that would take place.

[Stephen Cohen, Independent Non-Executive Director at Schroders Capital Global Innovation Trust]

Obviously, there are regulations around when an investment trust can retain investment trust status and retain listing status. That is a function of size and number of holdings it has left and concentration of holdings and so forth. Our intention at the moment is to hang on to the listing status of the company and the investment trust status for as long as possible because that also, we think, creates a benefit for shareholders in as much as they will also have the opportunity to sell in the market as we go along, should they so wish.

[James Lowe, Director of Private Markets at Schroders Capital Global Innovation Trust]

Continuing on the theme of sales, Tim, maybe coming to you for this. There's a question about whether other Schroders Capital vehicles are able to buy any of INOV's holdings.

[Tim Creed, Head of Private Equity Investments at Schroders Capital Global Innovation Trust]

We've looked at that thoroughly. The challenge with that is there's a lot of potential conflicts. We could be accused of selling companies at too high or too low value based on different pools that are buying or selling.

[Harry Raikes, Head of UK Venture Investments at Schroders Capital Global Innovation Trust]

We try and ensure that we do not sell from one vehicle to another vehicle unless it's the very last possible option. In this case, our preference is to sell the companies or sell our holdings in the companies when there is an event because that is both seen internally and externally as a much cleaner event. If Revolut have talked about an IPO at some point, if they IPO and when they IPO, there will be a set price and no one will be able to argue or discuss whether it's fair to sell at that price or not because it's a clear and set price. We think it's cleaner to ensure that we sell in the market rather than to another vehicle.

[James Lowe, Director of Private Markets at Schroders Capital Global Innovation Trust]

Great. Thank you, Tim. There's just a slightly different question here that talks about how actually from a number of the comments that were made today around exits and some of the underlying positivity in the new investments that we've made, what's the likelihood that a larger investor tries to come in and buy those in a larger transaction? I know this is crystal ball, but I'm asking the questions that our listeners are interested to hear.

[Harry Raikes, Head of UK Venture Investments at Schroders Capital Global Innovation Trust]

There's always the potential, I would say. I mean, we obviously disclose lots of information about the companies, the values, the names, etc. So there is that potential. That kind of goes to my earlier response in terms of we're continually reviewing opportunities that might otherwise be available.

[James Lowe, Director of Private Markets at Schroders Capital Global Innovation Trust]

Just also on the good performance of parts of the portfolio that we've started to see coming through, there's a question about what obviously the NAV is where it is at the moment, but what are going to be the key drivers going forward? We're going into a wind-down situation, but you did say also that you're expecting the NAV performance to be positive in certain places from here. Where's that coming from?

[Harry Raikes, Head of UK Venture Investments at Schroders Capital Global Innovation Trust]

I mean, I can start, and then Tim, maybe if you want to add to this, but I think we're very positive on the outlook for the new investment portfolio. We track all of the companies that we've invested in against our original underwriting cases. As with venture investments, you need a period of time before the winners emerge, and those have started to happen, particularly in the biotech portfolio initially.

[Harry Raikes, Head of UK Venture Investments at Schroders Capital Global Innovation Trust]

We are excited about the potential of that part of the portfolio. I would say probably for the more sort of legacy side of the portfolio, it may be more a focus on turning the values that we've currently got into more cash-generated, although there is some value in some of the holdings there. Tim, perhaps you want to add to that?

[Tim Creed, Head of Private Equity Investments at Schroders Capital Global Innovation Trust]

I fully agree with everything you've said. I mean, we're spending a lot of time on both parts of the portfolio. We are actively managing the legacy investments as well as actively managing the new investments that we made. The difference is there's just greater upside in the new investments. There are actually three slides at the end of the deck for people who've downloaded the deck that describe three of the new investments, a couple of the AI companies and Neurona. You can go into those in a bit more detail if you'd like to. There are some exciting companies in the portfolio.

[James Lowe, Director of Private Markets at Schroders Capital Global Innovation Trust]

Great. Thank you for that, Tim. There is a question here just about NAV. What is the NAV per share? I think we did show it in the slides, but just a reminder.

[Harry Raikes, Head of UK Venture Investments at Schroders Capital Global Innovation Trust]

As of December 31, 2024, it is GBP 0.1994 per share.

[James Lowe, Director of Private Markets at Schroders Capital Global Innovation Trust]

Thank you for that. Another question just came through here in terms of Reaction Engines. You mentioned that there had been a write-off there. Is there any residual value potential there?

[Harry Raikes, Head of UK Venture Investments at Schroders Capital Global Innovation Trust]

No, no residual value expected from that holding.

[James Lowe, Director of Private Markets at Schroders Capital Global Innovation Trust]

Okay. Actually, another interesting, more technical question around the dynamics of the wind up, where what happens if there is a longer-term milestone payment that comes through after the majority of the realizations have occurred? Stephen, I do not know if you have the answer to that.

[Stephen Cohen, Independent Non-Executive Director at Schroders Capital Global Innovation Trust]

The shareholders can still be a bigger part.

[Tim Creed, Head of Private Equity Investments at Schroders Capital Global Innovation Trust]

I was going to say at that point, we would look if there is only one or two milestone payments and nothing else left, we would look to see if we would sell that milestone payment to someone else because there is always a price for everything. The question is, what value do we attribute it compared to what value someone else might pay for it? That is weighted against the time that we might have to wait. If it was a milestone payment that was only three months later, I think the likelihood of selling would be very low. If the milestone payment was suddenly, for example, expected to be five years later than every other payment, there would be something to think about thoroughly. Yeah.

[Stephen Cohen, Independent Non-Executive Director at Schroders Capital Global Innovation Trust]

Tim, the point I was going to make is there's no way that shareholders lose their ownership of that right and their entitlement to the cash as and when the right to that milestone is realized in some way, shape, or form.

[James Lowe, Director of Private Markets at Schroders Capital Global Innovation Trust]

Yeah, that's super important. Thanks for clarifying that, Stephen. Maybe time for a couple of final questions. If you do have any more, please do send them through. There's a question here, and I appreciate you can't give forward-looking NAV statements, but maybe you could just reflect on the progress of the portfolio that we have today. When you're underwriting these investments, what are you looking to achieve? Are we still on those underwriting levels of return that we were looking for when we made the initial investments?

[Harry Raikes, Head of UK Venture Investments at Schroders Capital Global Innovation Trust]

Tim, would you like to take that one?

[Tim Creed, Head of Private Equity Investments at Schroders Capital Global Innovation Trust]

Certainly. For the investments that we've made, yes, both in aggregate and almost all cases individually, we're well on track. In fact, some cases like the Araris exit, it was way above our underwriting case. Being very transparent, we did not underwrite that to be potentially 20.2x, but it was a great asset with huge upside potential, and therefore someone has come in and acquired the company for that valuation.

[Tim Creed, Head of Private Equity Investments at Schroders Capital Global Innovation Trust]

In aggregate, yes, the new investments are thoroughly on track. The legacy investments are also on track to the reforecasting that we did last year when we looked at the potential further progress of those companies, and we're actively managing them. The only sentence that I think is fair for us to say and repeat is the upside potential in the legacy investments is less than the upside potential in the newer investments.

[James Lowe, Director of Private Markets at Schroders Capital Global Innovation Trust]

Understood, Tim. Conscious we're coming up to time here, so I maybe just throw it back to Tim and maybe to Stephen just for some final remarks. Stephen, maybe coming to you first, is there anything you want to leave our shareholders who are listening with?

[Stephen Cohen, Independent Non-Executive Director at Schroders Capital Global Innovation Trust]

Yes, I think it's worth saying, look, some shareholders may well be disappointed that we are currently in this position. On the Board, we've reflected long and hard and felt that the wind-down was the best decision after having tried a variety of other alternatives, having reflected on the large discount at which the shares were trading, and the fact that that discount remained in place for a very long time, that the best thing to do for all concerned was to seek to return the most amount of money as soon as we practically can to shareholders in all fairness.

[James Lowe, Director of Private Markets at Schroders Capital Global Innovation Trust]

Tim, is there anything you'd like to add?

[Tim Creed, Head of Private Equity Investments at Schroders Capital Global Innovation Trust]

I think I'd like to thank the shareholders for your patience over the last couple of years as we've been working very hard on the portfolio. This decision to go into wind-down took a lot of thought, a lot of work went into this. We believe that with the continued management of the existing portfolio, there's good potential for the current NAV and current share price, but it's still got a lot of work to go. Therefore, I wish to thank the investors for their experience and time today and also for the future.

[Stephen Cohen, Independent Non-Executive Director at Schroders Capital Global Innovation Trust]

On behalf of the Board, I'd like to thank the Schroders team for all the hard work that they've been doing and will be doing.

[James Lowe, Director of Private Markets at Schroders Capital Global Innovation Trust]

Great. Thank you, Tim. Thank you, Stephen and Harry. Thank you for the presentation and answering the questions. Thank you, everyone, for joining. I hope that was a useful session around the annual results. I appreciate some of the questions. We did not get through all of them, and some were useful feedback. We will read through these and come back to you separately if there is a follow-up to be had.

[James Lowe, Director of Private Markets at Schroders Capital Global Innovation Trust]

If you do want to get in contact, please do get in contact through the normal means. That is all the time we have today. Thank you very much for listening.

[Stephen Cohen, Independent Non-Executive Director at Schroders Capital Global Innovation Trust]

We are particularly grateful for communication from shareholders. Thank you.

[James Lowe, Director of Private Markets at Schroders Capital Global Innovation Trust]

Yes, absolutely. Please do feedback. Actually, if you would like to feedback directly to the Board or us and you do not have a Schroders contact, then please do so in the feedback form that should now be appearing on your screen. We do read it and massively appreciate hearing your feedback. Please do that. Thank you again for listening, and speak to you all again soon. Goodbye. Goodbye.

Participants

Analysts

• James Lowe, Director of Private Markets at Schroders Capital Global Innovation Trust
• Harry Raikes, Head of UK Venture Investments at Schroders Capital Global Innovation Trust
• Stephen Cohen, Independent Non-Executive Director at Schroders Capital Global Innovation Trust
• Tim Creed, Head of Private Equity Investments at Schroders Capital Global Innovation Trust