Schroder BSC Social Impact Trust’s results for the 12 month period ended 30 June 2024 show a modest 1.5% NAV return for the period, below the 2.8% per annum return achieved since launch in December 2020. The share price traded at a 16.7% discount to NAV at the period end, and as of 22 October 2024, the discount had widened to 19.67%. During the year ended 30 June 2024, the company bought back 1,575,205 ordinary shares for a total consideration of £1.4m. If the discount persists, it could trigger a continuation vote, but not until the AGM in 2026. The dividend for the period is 2.94p, up 28% on last year.
The largest positive contribution to the return came from investment income (4.0p per share), partially offset by valuation losses (1.5p per share) principally due to the write-down in the Bridges Evergreen Holdings along with a provision made for refinancing a charity bond.
The FCA has introduced new rules to prevent ‘greenwashing’. The Sustainability Disclosure Requirements (SDR) and investment labels regime means that financial products that are marketed as sustainable should do as they claim and have the evidence to back it up. One might have though that it would be really easy for this trust to meet the requirements. It is the board’s intention that the company adopts the “Sustainability Impact” label, given it is in line with the company’s existing central aims and objective. However, the statement says that it has already engaged in “significant work” to ensure adoption of this label. The trust is currently in dialogue with the FCA in relation to amending its investment policy, adding additional disclosure to align with SDR guidance. On FCA approval of the proposed new investment policy, the change will be put to shareholders at an EGM. [This all feels like overkill to me – I hope that this is a one-off exercise but I suspect that it will just become another overhead, diverting money that could have been invested to support good causes.]
Extracts from the manager’s report
The key drivers of financial performance in the twelve-month period to 30 June 2024 were:
- A mix of income and capital gains in the Social Outcomes Contracts portfolio driven by strong performance of the underlying projects, with Bridges Social Outcomes Fund II contributing 0.56p to NAV per share;
- A ramp-up of returns in the High Impact Housing portfolio, in particular valuation gains in the Real Lettings Property Fund, contributing 0.55p to NAV per share, driven by the increases in the Local Housing Allowance (LHA) effective from 1 April 2024 (with an expected 13% uplift in annual rental income) and uplifts in the value of its property portfolio;
- BEH had a negative 1.00p contribution to NAV per share, due to a capital loss on the disposal of AgilityEco, relative to the previously recorded book value of the investment, as disclosed in the Interim Report. The full year loss was slightly lower than the (1.10)p per share disclosed in the Interim Report, thanks to dividend income and continued performance of the remaining investments.
The Social Impact performance of the portfolio was reported in the Company’s third Impact Report published in July 2024. The report highlighted that since launch, the Company’s investments have reached 400,000 people, 95% of whom are from disadvantaged, vulnerable or underserved backgrounds; generated £217m in social outcomes and savings; and funded 35,000 affordable, decent homes.
SBSI : Schroder BSC Social Impact working to secure sustainability impact label
