Schroders Capital Global Innovation Trust (INOV) H2 2024 earnings summary

Executive summary

• Portfolio manager transition in December 2019 focused on stabilizing the portfolio and eliminating debt, with legacy holdings responsible for 95% of value decline since takeover.

• Achieved 4% growth in AUM to £778.7bn, with underlying revenues up 2% year-over-year.

• Profit before tax rose 14% to £558.1m, while operating profit declined 3% to £640.5m compared to 2023.

• New investments since 2021 have shown strong performance, with realized exits delivering a 3.3x cash multiple and further upside potential from negotiated earnouts.

• A shareholder vote in February 2024 approved an orderly wind-down of the trust, prioritizing value maximization over forced sales.

Financial highlights

• NAV declined by 25.2% (21.2% per share after buyback impact) for the year, with most of the decline reflected by Q3; Q4 saw only a 1% NAV per share drop.

• Net operating income stable at £2,426.8m, reflecting business resilience despite market and FX headwinds.

• 97% of the fair value change in the year attributed to legacy investments.

• Cash and equivalents represented 31.6% of the portfolio at year-end.

• Private equity holdings increased to 97% of the portfolio due to public equity sales.

Outlook and guidance

• Managed wind-down will proceed without a fixed timeline, aiming to maximize exit value and avoid forced sales.

• Targeting £150m of cost efficiencies by FY27, aiming for an adjusted cost to income ratio below 70%.

• Initial capital return of GBP 30 million to investors planned for early summer, enabled by the successful Araris exit.

• Further capital reserved for follow-on investments in new portfolio companies and operating costs.

• Public Markets to stabilise revenues; Schroders Capital to generate £20bn cumulative NNB; Wealth Management to achieve 5-7% NNB growth per annum.