Schroder UK Public Private Trust plc (lon:supp)
SUPP - How Is The Woodford Patient Capital Trust Doing?

Schroder UK Public Private Trust plc Financials

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Schroder UK Public Private Trust plc Share Price
Grade:The Pink Grade - A Pure Slightly Informed Gamble, The Market Doesn't Like The Company But I Think That I Understand Why.
Title: SUPP - How Is The Woodford Patient Capital Trust Doing?
Company: SUPP - Schroder UK Public Private Trust plc
Share Price Then: 24p
Author: Ian Smith
Date: Mon 06 Jul 2020
Comments: It has been a while now since the Woodford Patient Capital Trust was taken over by Schroder so how have things developed for what was supposed to be a long term investment?

I think that the price seems settled around 24p and looking at Schroder’s website this is being run as an ongoing operation rather than sell off and close down.

So now that it has lost pretty much three quarters of its value is it a good buy or has it been crippled by it earlier choices and its current real value is even less?

Given that the fund’s nature it should have been pretty much unaffected by COVID-19 but seems to have dropped from around 30p.

On the 1st of May 2020 the 2019 Annual Report was published which was basically what we already knew, things were bad.

Concentrating on the 5 holdings that represent over 50% of the investment we have

Atom Bank (14.4% of the portfolio)
Rutherford Health (14.4% of the portfolio)
Oxford Nanopore (13.3% of the portfolio)
BenevolentAI (6.0% of the portfolio)
Immunocore (4.3% of the portfolio)

The much mocked Industrial Heat now represents 2.6% of the fund and valued at £14m, down from £94m, losing £80m.

These businesses have some revenue but are not reporting profits and three are still fundraising.
                      Cost   Fair   
Company £m Value Turnover Profit
Atom Bank 75 81 38 (80)
Rutherford Health 69 81 2 (21)
Oxford Nanopore 58 75 33 (62)
Benevolent Al 85 34 7 (33)
Immunocore 35 24 24 (88)

Looking at the revaluations of the big holding from the end of 2018
                  Old Adj New
Company £m £m £m
Rutherford Health 104 (23) 81
Benevolent AI 101 (68) 33
Immunocore 50 (25) 25

We see close valuations down by £116m on three of the biggest holdings.

Rutherford are now providing treatment and have NHS contracts, so their true value should become apparent soon.

Atom Bank were approved to offer Coronavirus Business Interruption Lending Scheme (CBILS) but they are yet to make a profit, so far they have been “buying” customers by offering products at a loss.

Oxford Nanopore, Benevolent Al and Immunocore are still borrowing money, sorry raising investment funds.

On the 22nd of June NAV was reported as 46.13p per share, with Net debt of £105.4 million, down £5 million from 31 December 2019.

The trouble is that not only I don’t really believe the NAV in the sense that they can’t sell the portfolio over the next few weeks and raise that amount, the current share price at roughly half that means that nobody else is in a hurry to buy up any available shares either.

Rutherford has a real chance to become profitable, it is possible that Atom could become profitable but more likely to me is that someone will buy it and merge it into their existing operation. Beyond that it seems that the rest of portfolio needs investor to be Patient as the fund used to be called.

Looking at the proportions owned
Atom Bank 17%, Rutherford Health 26%, Oxford Nanopore 4%, Benevolent Al 6%, Immunocore 4% any future growth is seems to have been hampered by investing in companies that mainly continued to suck in more investment diluting share holdings.

To me it really does look like the fund just scatter gunned money based on hope and it is still possible that some of these companies will be profitable. But I can’t really see any hope for the initial investors and struggle to see any benefits to buying in now.

Stay in the fund and one company might become a giant, but can you afford years of little growth, or big losses on that chance?
Read Count: 159/13151

Buy/No Buy In A Nutshell
NegativesThe old Woodford Patient Capital Trust.
PositivesIf you buy now then maybe, just maybe there is a good investment in the fund from the old days such as Reaction Engines, the new management need a lot of time with their decisions
Initial Review Price30p
Last Review Price30p
Last Review Date08-Sep-2020
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