Final Results
Summary by AI BETAClose X
INTERNATIONAL BIOTECHNOLOGY TRUST PLC
ANNUAL REPORT AND FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 AUGUST 2026
International Biotechnology Trust plc (the "Company") hereby submits its Annual Report and Financial Statements for the year ended 31 August 2026 as required by the Financial Conduct Authority's Disclosure Guidance and Transparency Rule 4.1.
Key Highlights
The Company’s share price total return was 73.6% in the year to 31 August 2026. This was significantly ahead of the 52.3%¹ returned by the NASDAQ Biotechnology Index (the “Reference Index” or “NBI”). The Company’s net asset value (NAV) total return was 64.7%. This is the fifth consecutive year in which the Company has outperformed the NBI.
Net assets rose to £374.6m from £249.4m, with NAV per share up to 1,183.33p from 739.48p.
Takeover activity was a key driver of returns. Thirteen portfolio companies, equivalent to approximately 27% of the Company’s NAV, were acquired during the year, up from five the previous year. Deals included Vertex Pharmaceuticals’ purchase of Crinetics Pharmaceuticals for $10bn, Biogen’s acquisition of Apellis Pharmaceuticals for $5.6bn and Merck & Co’s acquisition of Terns Pharmaceuticals for $6.7bn. More than 40 portfolio companies have been acquired since 2020.
The discount to NAV narrowed from 8.9% to 4.1% over the year. The Company bought back 2,074,657 shares into treasury.
Ongoing charges fell to 1.0% from 1.3%, and the management fee on the quoted portfolio was cut to 0.65% from 0.70%, with effect from 1 September 2025.
Dividends totalling 31.31p per share were paid for the year, giving a yield of 2.8% at 31 August 2026. The dividend policy of paying 4% of the Company’s NAV through two semi-annual distributions will again be put to shareholders at the AGM in December 2026, enabling shareholders to gain exposure to the biotechnology sector while receiving regular income. As the Company’s NAV increased by 50.2% in the year ended 31 August 2026, total dividends payable in the year ending 31 August 2027 are expected to increase by the same percentage in line with the Company’s dividend policy.
Investor presentation
Our Portfolio Managers, Ailsa Craig and Marek Poszepczynski will be presenting at an investor webinar on Tuesday, 3 November 2026 at 10.00 am (which can be signed up to via the following link: https://www.schroders.events/IBTAR26).
Kate Cornish-Bowden, Chair of International Biotechnology Trust plc, commented:
“The portfolio management team has once again been successful in identifying takeover candidates with proven science, with a quarter of the Company’s NAV acquired during the financial year. New scientific innovation in difficult to treat conditions such as pancreatic cancer and depression has encouraged further excitement in the biotechnology sector during the year.
The Company has outperformed the NBI over one, three, five and ten years to 31 August 2026, delivering an annualised share price total return of 13.1%² over the decade. This compares to an annualised return of 9.6%¹ for the NBI and 8.5%² for the FTSE All-Share Index.
Both the US and the Eurozone have raised interest rates post the year-end, bringing to an end the benefits of lower borrowing costs on global economic growth. This may dampen investor enthusiasm for valuations in the biotechnology sector which are sensitive to rising yields. Nevertheless, our Portfolio Managers remain optimistic that structural trends underpinning the robust recovery which the sector has witnessed this year are set to continue.”
¹ The NASDAQ Biotechnology Index return has been calculated to 28 August 2026 rather than 31 August 2026. As a significant proportion of the Company’s portfolio is invested in US securities and 31 August 2026 was a UK bank holiday, using the 28 August 2026 benchmark return provides a comparable measure against the Company’s performance at the year-end.
² Source: Morningstar.
The Company's Annual Report and Financial Statements for the year ended 31 August 2026 is being published in hard copy format and an electronic copy will shortly be available to download from the Company's web pages: www.ibtplc.com.
The Company has submitted a copy of its Annual Financial Report to the National Storage Mechanism and it will shortly be available for inspection at https://data.fca.org.uk/#/nsm/nationalstoragemechanism.
Enquiries:
Schroder Investment Management Limited
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Charlotte Banks/Kirsty Preston (Press) |
020 7658 6000 |
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Michelle Taiwo (Company Secretarial) |
020 7658 6000 |
Chair’s Statement
“The portfolio management team has once again been successful in identifying takeover candidates with proven science, with a quarter of the Company’s NAV acquired during the financial year.
The Company has outperformed the NBI over one, three, five and ten years to 31 August 2026, delivering an annualised share price total return of 13.1% over the decade. This compares to an annualised return of 9.6% for the NBI and 8.5% for the FTSE All-Share Index.”
Dear Shareholders
I am very pleased to report that the Company has had an exceptional year to 31 August 2026 with a share price total return of 73.6%, significantly outperforming a very buoyant NASDAQ Biotechnology Index (the “Reference Index” or “NBI”), which returned 52.3%1. The net asset value (NAV) total return of the Company was 64.7%. All figures are on a sterling adjusted basis with dividends reinvested.
This very strong performance belies a volatile year. Investor fears concerning continued disruption at the US Food and Drug Administration (FDA) and the start of the war in the Middle East led to a widespread sell-off in the first quarter of the calendar year. The impact of changes at the FDA proved to be less disruptive than expected, paving the way for a recovery in the sector. A fast-growing high-profile obesity market, pioneering biotechnology innovation and a surge in merger and acquisition (M&A) activity have since propelled the sector to new highs.
In an environment where big pharmaceutical companies have been aggressively pursuing opportunities to fill the gap left by the impending patent cliff, the portfolio management team has once again been successful in identifying takeover candidates with proven science, with a quarter of the Company’s NAV acquired during the financial year. New scientific innovation in difficult to treat conditions such as pancreatic cancer and depression has encouraged further excitement in the biotechnology sector during the year.
The Company has outperformed the NBI over one, three, five and ten years to 31 August 2026, delivering an annualised share price total return of 13.1%2 over the decade. This compares to an annualised return of 9.6%1 for the NBI and 8.5%2 for the FTSE All-Share Index.
Quoted portfolio
The NAV of the quoted portfolio, sterling adjusted with dividends reinvested, rose by 73.3%3 during the year under review, strongly outperforming the NBI, which returned 52.3%1.
As we reported in the Half Year Report for the six months ended 28 February 2026, the biggest contributor to performance over the period came from the Netherlands-listed company, uniQure. In September 2025, uniQure announced positive Phase 1/2 data for its gene therapy for Huntington’s disease, leading to a 250% rise in the share price. The Portfolio Managers’ subsequent decision to sell the position contributed further to outperformance when the company’s share price fell after the FDA requested further data.
Other significant contributors to performance include the following:
• The share price of Travere Therapeutics has more than doubled following FDA approval of its drug FILSPARI for the treatment of a rare kidney disease.
• Crinetics Pharmaceuticals, the company with novel oral therapeutics for rare endocrine diseases, was bought by Vertex Pharmaceuticals for $10 billion, a 102% premium to the closing share price before the deal was announced.
• Apellis Pharmaceuticals, with therapeutics under development in ophthalmology and nephrology, was acquired by Biogen for approximately $5.6 billion, a 140% premium.
• Terns Pharmaceuticals, which rose more than fivefold after releasing very promising results from its Phase 1/2 trial in its drug for chronic myeloid leukaemia, was subsequently acquired by Merck & Co for approximately $6.7 billion.
The biggest detractor to relative performance came from the underweight position in Moderna, now a top ten holding in the NBI. The company released promising Phase 3 clinical trial results for its treatment for skin cancer ahead of the scheduled date, leading to a 177% rise in the share price.
Unquoted portfolio
It is the Board’s intention to maintain 5-15% of the Company’s assets in unquoted, early-stage innovative biotechnology opportunities, accessed through unlisted funds not easily directly available to retail investors. At the year-end, the unquoted portfolio, which represented 6.9% of the Company’s total investments, was invested in a venture capital partnership, SC IBT SLP, managed by Schroders Capital, and two venture capital funds managed by SV Health Investors; SV Fund VI and SV Biotech Crossover Opportunities Fund (SV BCOF).
The Company’s partnership with Schroders Capital, SC IBT SLP, which is in the early stages of deployment, represented 1.6% of total investments at 31 August 2026. The initial £5.5 million of capital drawn down had generated a net internal rate of return (IRR) of 37.1% as at 30 June 2026, albeit at an early stage in the life of the partnership. During the year, the Company increased its commitment to the partnership to £25 million. As at 31 August 2026, the partnership had invested in three venture capital funds; TCGX Asia Life Sciences I, TCGX III and Third Rock Ventures VII. These commitments broaden the partnership’s exposure across specialist biotechnology investment strategies and geographies.
As at 31 August 2026, SV BCOF represented 3.1% of the Company’s investments. The Company invested $30 million in SV BCOF in 2022 which is now 70.5% drawn down. Since inception in 2022, SV BCOF has delivered a very strong net IRR of 74% as at 30 June 2026.
As at 31 August 2026, SV Fund VI represented 1.6% of the Company’s investments. SV Fund VI is a mature venture capital fund, now in run-off and gradually returning capital to shareholders. Since the Company’s initial investment in 2016, SV Fund VI has performed well, delivering a net IRR of 13.1% as at 30 June 2026.
The portfolio also includes two small remaining legacy unquoted investments. The most significant of these is the discounted value of royalty streams from Ikano Therapeutics. Ikano was sold to Belgian listed UCB in 2006. As at 31 August 2026, this holding represented 0.6% of total investments.
Dividends
The Company’s dividend policy, which was last approved at the Annual General Meeting (AGM) in December 2025, is to make dividend payments equivalent to 4% of the Company’s NAV, as at the last day of the preceding financial year ending 31 August, through two semi-annual distributions. This enables shareholders to gain access to this exciting growth sector without sacrificing the security of regular income. The first dividend for the year of 15.64 pence per share was paid on 23 January 2026, and the second payment of 15.67 pence per share was made on 21 August 2026. This equates to a dividend yield of 2.8% as at 31 August 2026.
The dividend policy will once again be proposed to shareholders at the Company’s AGM in December 2026. As the Company’s NAV increased by 50.2% in the year ended 31 August 2026, total dividends payable in the year ending 31 August 2027 are expected to increase by the same percentage in line with the Company’s dividend policy.
Discount management
The discount at which the Company’s share price trades to NAV narrowed during the year under review from 8.9% to 4.1%. The Board continues to keep the discount under close review and is committed to buying back its shares to help manage the position. The Board bought back 2,074,657 shares during the year which are held in treasury.
Costs and fees
As previously noted, Schroders agreed to a fee reduction for the management of the quoted portfolio. From 1 September 2025, the fees for the management of the quoted portfolio were reduced from 0.7% to 0.65% per annum.
For the year ended 31 August 2026, a performance fee of £3,251,000 has accrued to the Manager in respect of the quoted portfolio’s performance. A performance fee of £321,000 has accrued to SV Health due to the performance of the unquoted portfolio.
Articles of Association
Under Resolution 14 set out in the Notice of AGM, the Company is proposing to adopt new Articles of Association. The proposed amendments introduce contingency provisions designed to ensure the Company can continue to operate in the unlikely event that, following a general meeting, it is left with no Directors or fewer than the minimum number required under the Articles of Association or by law. The Board considers these changes to be a prudent governance measure. Further details are set out in the AGM Recommendations, in the full Annual Report.
The Board unanimously recommends that shareholders vote in favour of the resolution to adopt the new Articles of Association, and the Directors intend to vote their shares accordingly at the forthcoming AGM in December 2026.
Schroders combination with Nuveen
Following the announcement by the Board of Schroders plc (now Schroders Limited) in February 2026 of the recommended cash acquisition by Nuveen LLC to combine the two businesses, the transaction completed on 1 October 2026. The combined entity has approximately $2.6 trillion in assets under management. The Board will continue to monitor developments following completion.
Further details are available on the Schroders website at www.schroders.com/en/global/individual/nuveenoffer/.
Webinar and shareholder communications
On Tuesday, 3 November 2026, the Company’s Portfolio Managers will be presenting to shareholders at a webinar at 10.00 a.m. To register your interest to attend this webinar, please visit https://www.schroders.events/IBTAR26 or scan the QR code in the full Annual Report and Financial Statements, where the facility to watch the recorded webinar afterwards will also be available.
Shareholders are encouraged to keep up to date with news and information about the Company by visiting the Company’s web pages at www.ibtplc.com. Shareholders can also sign up to the Manager’s investment trust updates to receive information about the Company directly at https://schro.link/ibt_subscribe, and follow the Company on LinkedIn at https://uk.linkedin.com/company/international-biotechnology-trust-plc.
AGM
The AGM will be held on Tuesday, 8 December 2026 at 12.00 noon at the offices of Schroders at 1 London Wall Place, London EC2Y 5AU. Our Portfolio Managers will present to shareholders at the AGM, and attendees will be able to ask questions in person and meet the Directors. Details of the formal business of the meeting are set out in the Notice of AGM in the full Annual Report.
All shareholders are recommended to vote by proxy in advance of the AGM and to appoint the Chair of the meeting as their proxy. This will ensure that shareholders’ votes will be counted even if they (or any appointed proxy) are not able to attend.
If shareholders have any questions for the Board, please write or email using the details below. To email, please use amcompanysecretary@schroders.com or write to us at the Company’s registered office address: Company Secretary, International Biotechnology Trust plc, 1 London Wall Place, London, EC2Y 5AU.
Outlook
After a year of strong performance in the biotechnology sector, global inflation is rising as a result of oil prices, which are 50% higher now than they were at the beginning of the Company’s financial year on 1 September 2025. Both the US and the Eurozone have raised interest rates post the year-end, bringing to an end the benefits of lower borrowing costs on global economic growth. This may dampen investor enthusiasm for valuations in the biotechnology sector which are sensitive to rising yields.
Nevertheless, our Portfolio Managers remain optimistic that structural trends underpinning the robust recovery which the sector has witnessed this year are set to continue. These include a record level of M&A transactions driven by the huge cash reserves of large pharmaceutical companies looking to replenish their pipelines, exciting scientific clinical progress accelerated by artificial intelligence, and the ever-increasing demand for therapeutics in an ageing global population.
Kate Cornish-Bowden
Chair
2 November 2026
1The NASDAQ Biotechnology Index (Reference Index) return has been calculated to 28 August 2026 rather than 31 August 2026. As a significant proportion of the Company’s portfolio is invested in US securities and 31 August 2026 was a UK bank holiday, using the 28 August 2026 benchmark return provides a comparable measure against the Company’s performance at the year-end.
2Source: Morningstar.
3Source: Schroders.
Portfolio Managers’ Report
We are pleased to present the Portfolio Managers’ Report for the year ended 31 August 2026. The Company delivered a NAV total return of 64.7%, compared with a 52.3%1 return for the NASDAQ Biotechnology Index (the “Reference Index” or “NBI”) (all figures on a total return sterling-adjusted basis). Over the period, the NAV of the quoted portfolio rose 73.3%2. This represents a period of exceptionally strong performance both in absolute terms and relative to the sector and marks the fifth consecutive year of outperformance of the Reference Index by the Company.
1 The NASDAQ Biotechnology Index (Reference Index) return has been calculated to 28 August 2026 rather than 31 August 2026. As a significant proportion of the Company’s portfolio is invested in US securities and 31 August 2026 was a UK bank holiday, using the 28 August 2026 benchmark return provides a comparable measure against the Company’s performance at the year-end.
2 Source: Schroders.
In share price terms, the Company delivered a total return of 73.6%, reflecting strong stock selection and a narrowing of the discount to NAV from 8.9% to 4.1% at the financial year-end. In accordance with the Company’s dividend policy, shareholders received dividends totalling 31.31 pence per share during the year, broadly in line with the prior year, reflecting the relatively flat NAV of the Company in the preceding financial year.
Market overview
The biotechnology sector delivered strong returns through the financial year, significantly outperforming the broader US market in a recovery that has proven both durable and broad-based. Sentiment improved meaningfully as the year progressed, with financing conditions improving, regulatory uncertainty moderating and strategic activity accelerating.
Concerns around the regulatory and political backdrop, which had weighed on the sector in the first half of the Company’s prior financial year, eased as 2025 progressed. Tariff uncertainty and disruption at regulatory institutions such as the US Food and Drug Administration (FDA) and the US Department of Health and Human Services remained important risks, but this did not prevent new drug approvals continuing at a pace broadly consistent with historical experience.
Capital markets have also strengthened materially. Following the weakest year for biotechnology issuance since 2016, both the initial public offering (IPO) market and secondary financing rebounded sharply through 2026. In the year to 31 July 2026, biotechnology funding reached approximately $67 billion, up around 90% on the prior year, and IPO proceeds for 2026 are already ahead of every full year since 2022. Larger financing rounds have become more common, with $250 million increasingly viewed as the benchmark for a sizeable raise, which marks a notable change from the caution of 2025.
Merger and acquisition (M&A) activity was similarly supportive. The first half of 2026 saw more than 80 deals in the sector, totalling over $150 billion in value. This reflects continued strategic demand for innovative late-stage and commercial biotechnology assets, driven by the need for large pharmaceutical companies to strengthen their pipelines ahead of looming patent expiries.
Quoted portfolio performance review
Key portfolio drivers
The strongest positive contributors reflected a combination of clinical execution, strategic validation and commercial momentum.
uniQure was among the year’s standout contributors, following the release of encouraging clinical data in September 2025 for its lead programme, AMT-130, a gene therapy for Huntington’s disease. This is a fatal, inherited neurological disorder with no currently approved therapy able to slow its course. The data showed a statistically significant 75% slowing of disease progression against an external control, meeting the trial’s pre-specified endpoints. This triggered a sharp re-rating in the shares, which rose by almost 250% on the day of announcement and continued to climb in the weeks that followed, reaching our internal price target and prompting us subsequently to exit the position.
Crinetics Pharmaceuticals was another strong contributor after Vertex Pharmaceuticals, a large-cap biotechnology company with a specialism in rare and genetic diseases, agreed to acquire Crinetics Pharmaceuticals for approximately $10 billion. The deal validated the strategic value of Crinetics’ endocrine franchise, including Palsonify for the growth hormone disorder acromegaly and atumelnant for the cortisol disorders congenital adrenal hyperplasia and Cushing’s syndrome. More broadly, it highlights the value of speciality rare disease platforms with meaningful commercial potential.
Meanwhile, Travere Therapeutics performed well following the FDA’s full approval of FILSPARI in focal segmental glomerulosclerosis – a kidney disease with no previously approved therapy. FILSPARI had already been approved in IgA nephropathy (a chronic autoimmune kidney disease), but this additional news materially expanded its addressable population. Commercial execution has since exceeded expectations and the business has moved into profitability in recent quarters, prompting further gains in a share price that more than doubled over the year.
By contrast, not owning Moderna was the largest relative detractor over the period, following a significant share price rise towards the end of the period. Moderna and Merck & Co announced positive top-line Phase 3 results in August 2026 in a combination therapy for a specific type of skin cancer. The data was announced earlier than anticipated, with the trial meeting its primary endpoints with statistical significance, leading to a one-day share price rise of 177%. Moderna is a stock that has been largely absent from the Company’s portfolio in recent years. For most of this time, this has been a good call – its share price declined by more than 90% from its 2021 highs as euphoria over its role in the provision of a vaccine for COVID-19 evaporated. In the period under review, however, the spectacular recent share price increase meant that Moderna’s absence from the portfolio led to underperformance.
Our holding in Supernus Pharmaceuticals also detracted, following the announcement in August 2026 of an all-stock merger of equals with Indivior, a specialty pharmaceutical company focused on addiction treatment. The deal brings together Supernus’ central nervous system franchise with Indivior’s Sublocade, an extended-release injectable treatment for opioid use disorder. We believe the deal is positive for Supernus, as it diversifies away some of its patent exposure risk in the years ahead. Although the market’s initial reception was cautious, the strategic merits of the deal should become clearer with time.
Elsewhere, Oxford Biomedica was negatively impacted by a profit warning alongside its first-half trading update, held back by client order deferrals and delays.
Major portfolio breakthroughs
We saw some extraordinary scientific breakthroughs across the portfolio this financial year. By investing in the Company, our shareholders have supported and contributed to the important work biotechnology companies are doing to address some of the most devastating diseases of our age.
Some of the more notable clinical developments are described below.
Revolution Medicines – daraxonrasib in pancreatic cancer
Pancreatic cancer has long been described as a graveyard indication as many prior attempts to develop a treatment for this devastating disease have failed. While other common cancers have benefited from chemotherapy-sparing options, pancreatic cancer has remained resistant to progress – more than 10,000 people die of the disease each year in the UK alone. Against that history, Revolution Medicines has been developing daraxonrasib as a targeted therapy for patients with pancreatic cancer. In April 2026, it announced positive data from its Phase 3 trial, showing a doubling of overall survival. The FDA authorised the drug for its expanded access programme, allowing patients to be treated ahead of formal approval, and it has already been made available to more than 2,000 patients in the US. It received full approval from the FDA in August 2026 under the brand name Rasonque.
Cytokinetics – aficamten in hypertrophic cardiomyopathy
Hypertrophic cardiomyopathy is a common inherited heart condition, affecting around 1 in 500 people. It causes the heart muscle to thicken, leaving patients breathless and fatigued, and in severe cases it can cause sudden cardiac death in the young. The disease takes two forms – ‘obstructive’, where thickened muscle blocks blood leaving the heart, and the less common ‘non-obstructive’ form, where nothing is blocked but heart function still suffers. Cytokinetics’ aficamten (brand name Myqorzo) was approved in December 2025 for the obstructive form. Earlier this year, its Phase 3 trial in the non-obstructive form also demonstrated an improvement to the quality of life and capacity for exercise in patients. The company plans to file for approval in this second indication by year-end. If successful, aficamten will become the only medicine proven to work in both forms of the disease, addressing an estimated 850,000 patients in the US.
Compass Pathways – COMP360 in treatment-resistant depression
Treatment-resistant depression affects an estimated 4 million Americans who have not responded to standard antidepressants, with patients often enduring years of ineffective treatment. Existing options are limited – Spravato, the closest approved comparator, requires clinic-supervised dosing for months, yet is on track for $3.5 billion in sales by 2028 while treating fewer than 100,000 patients, a measure of how much unmet need remains. Compass Pathways’ COMP360, a psychedelic therapy derived from psilocybin, has shown a markedly different profile in two Phase 3 trials – a rapid effect within 24 hours and lasting benefit from just one or two doses. The FDA has granted the programme a National Priority Voucher, committing to a 60-day review once its rolling submission is complete. This is expected by the end of the year, with a launch targeted for the first half of 2027. If approved, it would be the first medicine of its kind ever authorised in the US.
Insmed – brensocatib in bronchiectasis
Non-cystic fibrosis bronchiectasis is a chronic lung disease causing persistent cough, mucus and recurrent infections that gradually damage the lungs. Until August 2025, no medicine had ever been approved to treat it, leaving patients reliant on antibiotics and physical airway clearance alone. That changed when the FDA approved Insmed’s brensocatib (brand name Brinsupri), based on Phase 3 data showing a significant reduction in flare-ups, with a clean label carrying no unusual warnings. The launch has exceeded expectations, prompting Insmed to raise its long-term peak sales estimate to more than $7 billion, driven by growing physician and patient awareness and potential expansion into certain COPD and asthma populations. Brensocatib has since also become the first and only approved therapy for bronchiectasis in the EU and UK, with a decision in Japan expected later this year.
Vera Therapeutics – atacicept in IgA Nephropathy
IgA Nephropathy is the world’s most common form of primary kidney disease, typically striking adults in their 30s and 40s, and potentially leading to kidney failure within a decade. Older treatments slowed the progress but did nothing to address its underlying cause, which is an overactive immune response. Vera’s atacicept (brand name Trutakna) targets both the immune pathways driving the disease, and its pivotal Phase 3 trial met its main goal with a 42% reduction in proteinuria, a marker of kidney damage. The FDA conditionally approved it in July 2026, and Vera is launching the drug independently with a dedicated sales force targeting more than 6,000 high-prescribing nephrologists. Peak sales are modelled at more than $2 billion, with upside if ongoing trials yield further positive data.
Axsome Therapeutics – AXS-05 in Alzheimer’s disease agitation
Agitation is one of the most common and distressing symptoms of Alzheimer’s disease, affecting up to three-quarters of patients as the illness progresses. It is a leading cause of caregiver burnout and early admission to residential care. Until this year, no medicine had been approved specifically to treat it, with doctors relying on antipsychotics that carry serious safety warnings and only modest benefit. AXS-05 (brand name Auvelity), already approved for major depressive disorder, changed that in April 2026, becoming the first non-antipsychotic treatment for Alzheimer’s agitation, with no boxed warning, on the strength of two Phase 3 trials. Commercial launch followed in June 2026, with the sales force expanded to approximately 630 representatives across primary care, psychiatry, neurology and geriatrics. Axsome has raised its peak sales guidance for the drug to more than $8 billion, split roughly equally between its two approved uses.
M&A
For several years now, we have been anticipating a wave of dealmaking in the biotechnology sector, as a patent cliff approaches for the large pharmaceutical companies that dominate global healthcare. Drug discovery has become more complex, thus slower and more expensive, and pharmaceutical companies have increasingly focused on their core strengths of commercialisation and global distribution, relying on acquisitions to fill the resulting innovation gap. With approximately $400 billion of revenue at risk from patent expiries by 2030, the pharmaceutical sector has leapt into action over the last twelve months by buying in innovation from the biotechnology sector, and we expect this to continue.
Thirteen of the positions in the Company’s portfolio were acquired during the financial year, equivalent to approximately 27% of NAV. Here’s a recap of the deals involving the Company’s portfolio companies during the financial year.
• 89bio (September 2025) – acquired by Roche for up to $3.5 billion at an 80% premium, giving it access to pegozafermin, 89bio’s Phase 3 FGF21 analogue for moderate-to-severe MASH (liver disease driven by excessive fat accumulation)
• Metsera (September 2025) – acquired by Pfizer for up to $10 billion at a premium of up to 110% to its pre-bid share price, marking a renewed push into obesity therapeutics through Metsera’s long-acting injectable GLP-1 and amylin assets
• Merus (September 2025) – acquired by Genmab for approximately $8 billion at a 41% premium, giving it access to petosemtamab, its bispecific antibody in head and neck cancer
• Akero Therapeutics (October 2025) – acquired by Novo Nordisk for up to $5.2 billion at a 42% premium, broadening its MASH exposure through efruxifermin and creating potential future combination opportunities with GLP-1 obesity therapies
• Avidity Biosciences (October 2025) – acquired by Novartis for approximately $12 billion at a 46% premium, gaining its Antibody Oligonucleotide Conjugate platform and three late-stage neuromuscular programmes
• Day One Biopharmaceuticals (March 2026) – acquired by Servier for approximately $2.5 billion at a 67% premium, providing it with Ojemda, the first FDA-approved targeted therapy for relapsed or refractory paediatric low-grade glioma (brain or spinal tumour in children) and reinforcing Servier’s rare oncology strategy
• Terns Pharmaceuticals (March 2026) – acquired by Merck for approximately $6.7 billion, giving it access to TERN-701, an oral allosteric BCR:ABL1 inhibitor for chronic myeloid leukaemia, supporting Merck’s efforts to diversify its oncology portfolio ahead of its breast cancer drug Keytruda’s loss of exclusivity
• Apellis Pharmaceuticals (March 2026) – acquired by Biogen for approximately $5.6 billion at a 140% premium, providing it with commercial complement-pathway assets in ophthalmology and nephrology
• Soleno Therapeutics (April 2026) – acquired by Neurocrine for approximately $2.9 billion at a 34% premium, bringing it Vykat XR, the first approved therapy for hyperphagia (insatiable hunger) in Prader-Willi syndrome
• KalVista Pharmaceuticals (April 2026) – acquired by Chiesi for approximately $1.9 billion at a 36% premium, providing it with Ekterly, the first oral on-demand treatment for hereditary angioedema (severe swelling) attacks
• Nuvalent (June 2026) – acquired by GSK for approximately $10.6 billion at a 40% premium, accelerating its entry into precision oncology through two late-stage lung cancer assets
• Apogee Therapeutics (June 2026) – acquired by AbbVie for approximately $10.9 billion at a 50% premium, providing it with a long-acting anti-IL-13 antibody for the skin condition atopic dermatitis
• Crinetics Pharmaceuticals (July 2026) – acquired by Vertex for approximately $10 billion at a 102% premium, extending Vertex’s rare-disease model into adjacent speciality markets via Palsonify (acromegaly) and atumelnant (congenital adrenal hyperplasia, Cushing’s syndrome).
Unquoted portfolio review
The unquoted portfolio represented approximately 6.9% of the Company’s total investments at the financial year-end. It provides diversified exposure to earlier-stage biotechnology through three specialist funds managed by SV Health Investors and Schroders Capital. The portfolio also retained two small legacy unquoted investments, principally royalty interests relating to Ikano Therapeutics, acquired by UCB in 2006, which represented 0.6% of total investments at the financial year-end.
The unquoted portfolio combines clinical and near-clinical opportunities with company creation and crossover strategies across North America, Europe and Greater China, complementing the Company’s quoted holdings and broadening access to innovation that is not yet available in public markets.
The Company’s partnership with Schroders Capital, SC IBT SLP, represents the latest investments within the unquoted portfolio and is therefore at an earlier stage of deployment. The commitment was increased from £10 million to £25 million in July 2026. At 30 June 2026, £5.5 million had been called and investments were valued at £6.2 million, producing a net internal rate of return (IRR) of 37.1%, although this figure should be viewed in the context of the partnership’s relatively short life. By 31 August 2026, underlying commitments totalled $23.3 million across TCGX Asia Life Sciences I, TCGX III and Third Rock Ventures VII. Together, these strategies provide access to China-linked life sciences, clinical-stage crossover investing and US company creation. We believe this diversified specialist exposure should enhance the Company’s ability to participate in promising private biotechnology businesses while maintaining a disciplined approach to deployment.
The two SV Health-managed funds continued to make progress. SV BCOF, a 2022-vintage fund focused on clinical or near-clinical-stage biotechnology companies, reported a net IRR of 74% as at 30 June 2026. Approximately 70% of the Company’s $30 million commitment had been drawn by 30 June 2026. Following the end of the fund’s investment period in February, remaining capital will principally support existing holdings through value-creating milestones and potential exits. During the year under review, the SV BCOF portfolio company AdvanCell completed a large successful funding round to commence Phase 3 trials for its prostate cancer drug. Draig Therapeutics also closed a further successful financing round which will help it accelerate clinical development of a treatment for depression. Artios Pharma initiated a Phase 2 trial for breast cancer and announced a clinical trial collaboration with GSK to develop a drug in patients with gastrointestinal tumours. BioAge Labs was sold following the discontinuation of its trial to develop a drug to support muscle mass associated with weight loss drugs. SV BCOF also received milestone payments from EyeBio, the company sold to Merck & Co in 2024.
SV Fund VI reported a gross multiple of 2x and net IRR of 13.1% as at 30 June 2026. During the period, shareholders received proceeds related to the sale of portfolio company Centauri Health Solutions. Follow-on capital was invested in Artios Pharma, Enara Bio, Sitryx and Jet Health, supporting existing portfolio companies as they advance towards important development milestones.
Political and regulatory landscape
The year began with genuine concern about the political and regulatory backdrop. The FDA had lost senior figures and faced substantial staffing reductions, funding cuts at the National Institutes of Health raised questions about the pipeline of early-stage science and the revival of ‘Most Favoured Nation’ (MFN) drug pricing – a policy under which the US ties domestic drug prices to the lower prices paid in other wealthy nations – alongside the threat of pharmaceutical tariffs, clouded the commercial outlook.
Continued leadership turnover has added a further layer of uncertainty. FDA Commissioner Marty Makary resigned during the year, and the Center for Drug Evaluation and Research, the FDA division responsible for reviewing new drug approvals, has had six directors in little over a year. The Center for Biologics Evaluation and Research, which reviews gene and cell therapies, has seen similarly high turnover.
Despite these concerns, the FDA has continued to function, approving 46 novel drugs in 2025, and MFN pricing and tariffs have largely been settled through negotiated agreements and exemptions. These negotiations continued right to the end of the financial year. On 31 August 2026, the US administration announced pricing agreements with a further nine mid-sized drug and biotechnology companies, taking the total number of participants in the programme to 26, in exchange for tariff relief, Medicaid pricing alignment with other wealthy nations, US manufacturing commitments and exemption from certain Medicare pilot programmes.
These political risks have eased as clarity has emerged, but they have not disappeared completely. Indeed, the approaching US mid-term elections could bring some of them back into focus.
Portfolio strategy and positioning
With the marked sell-off in April 2025 leading to depressed valuations, the portfolio was deliberately positioned towards the smaller, development-stage end of the spectrum. While this added more volatility to the portfolio, it gave us the chance to capture more of the potential upside we anticipated, while accepting greater downside risk had that view not played out. As the market recovered from its lows and sector conditions normalised, we reduced the volatility in the portfolio and gearing was moderated accordingly. We maintain a positive view of the outlook for the sector, as described below, but find that companies with approved drugs currently offer a better risk-reward profile.
As at financial year-end, approximately 33% of the portfolio is invested in commercially ready biotechnology companies, compared with an estimated 7% Reference Index exposure. This weighting reflects a deliberate strategy, built on three interlinked observations.
First, biotechnology has become the primary engine of drug innovation. More than 70% of new drug approvals now originate from the sector, up from around a third a decade ago. Second, the looming patent cliff means the pharmaceutical sector will need to continue to replace lost revenues by acquiring innovative therapies that have moved beyond the point of peak clinical risk. Third, and most importantly, this is where we currently find the most compelling opportunities – businesses that have already navigated the key clinical risks and are now approaching approval, newly launched or already profitable.
Rare diseases remain another key area of focus. We are drawn to this area because it combines high unmet medical need with compelling scientific and commercial dynamics. Regulatory frameworks such as the Orphan Drug Act, introduced in 1983, offer meaningful incentives, including market exclusivity, higher pricing and accelerated approval pathways, that reduce development risk and enhance value creation. These incentives have helped make rare diseases a natural launch pad for breakthrough technologies such as gene therapy and RNA-based treatments, which were often first validated in rare diseases before expanding to broader applications. Prominent rare disease positions in the portfolio include Vera Therapeutics,Travere Therapeutics and Alnylam Pharmaceuticals.
Elsewhere, the portfolio contains attractive exposure to innovative early- and late-stage science across a range of other therapeutic areas including cancer, diseases of the central nervous system and autoimmune diseases.
Outlook
The backdrop for the sector is the strongest we have seen in several years. Valuations across small and mid-cap biotechnology remain attractive relative to prior cycles, and financing conditions have improved markedly – secondary fundraisings are up strongly on last year’s level, and the IPO window finally seems to be opening after several lean years.
The interest rate backdrop remains an important variable for investor sentiment towards the sector. Biotechnology is a long-duration asset class, and expectations for higher rates can weigh on valuations, particularly among earlier-stage companies that remain dependent on external capital. However, our view is that the sector is now better placed to absorb this risk than it was during the depths of the bear market, given improved access to financing, stronger balance sheets across many companies and the increasing focus of our portfolio on commercially ready businesses where value creation is driven less by discount rates and more by clinical execution, product launches and strategic demand from large pharmaceutical acquirers.
The key investment question for this part of the portfolio has shifted from whether the science works to how commercially successful the resulting therapies can become. These businesses retain optionality that we find attractive. They may be acquired by larger pharmaceutical companies at a premium, delivering more immediate upside, or they may commercialise independently and capture a greater share of the long-term economic opportunity, albeit with higher execution risk attached. In either outcome, shareholders stand to benefit.
We expect the current wave of M&A to continue. Deal-making has been focused on a handful of disease areas such as oncology, immunology, rare disease and obesity, and buyers have consistently favoured late-stage and commercial assets over earlier-stage risk, a pattern we expect to persist. The innovation feeding that activity is not quite so narrow, however, with developments in CAR-T, bispecifics, antibody-drug conjugates, next-generation oral small molecules and cell and gene therapy all driving fresh strategic interest. This breadth gives us confidence that M&A activity will persist, given the current pace of innovation we are seeing across these modalities.
Risks, as always, remain. Regulatory instability has eased over the year but has not disappeared. US-China relations add a further, more specific complication for the biotechnology sector. The BIOSECURE Act, now law, restricts federal contracting with Chinese biotechnology suppliers, and further designations are expected before the end of 2026. At the same time, licensing deals between Western pharmaceutical and Chinese biotechnology companies have continued to accelerate, underlining how dependent the sector’s innovation pipeline has become on China even as the political relationship grows more strained. Smaller, earlier-stage companies also remain dependent on continued access to capital, though the improving financing conditions described above should ease that pressure.
The portfolio is well positioned to benefit from these trends, weighted towards commercially ready businesses that are themselves attractive acquisition targets, while retaining exposure to the earlier-stage innovation that continues to feed the pipeline that the pharmaceutical sector will need in the years ahead.
To conclude, we believe the biotechnology sector can be a very rewarding destination for long-term capital, both in terms of financial returns and supporting game changing scientific breakthroughs. There remains ample opportunity for us, as professional biotechnology investors, to continue to identify businesses capable of creating substantial future value.
We thank you for your continued support of International Biotechnology Trust plc and look to the future with great confidence.
Ailsa Craig and Marek Poszepczynski
Portfolio Managers
Schroder Investment Management Limited
2 November 2026
Any reference to sectors/countries/stocks/securities are for illustrative purposes only and not a recommendation to buy or sell any financial instrument/securities or adopt any investment strategy. Past performance is not a guide to future performance and may not be repeated. The value of investments and the income from them may go down as well as up and investors may not get back the amounts originally invested. Exchange rate changes may cause the value of investments to fall as well as rise.
Risk Report
The Board, through its delegation to the Audit Committee, 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 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.
In light of the requirements of Provision 34 of the AIC Corporate Governance Code, the Board has continued to review and enhance the Company’s risk management and internal control framework. During the year under review, the Board commenced a dry-run assessment of the Company’s material controls in preparation for the enhanced reporting requirements applicable to the Company’s financial year beginning 1 September 2026. This work continued after the year-end and focused on identifying the controls relating to risks that could have the most significant impact on the Company’s ability to achieve its investment objective and continue in operation, and on assessing the key sources of assurance that those controls are operating effectively. The Board intends to continue this work as it prepares for compliance with the new reporting requirements.
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 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.
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.
Both the principal risks and uncertainties and the monitoring system are also subject to robust review at least annually. The last assessment took place in October 2026.
During the year, the Board discussed and monitored a number of risks which could potentially impact the Company’s ability to meet its strategic objectives. The Board receives updates from the Investment Manager, Company Secretary and other service providers on emerging risks that could affect the Company. The Board was mindful of the evolving global environment during the year and the risks posed by volatile markets and geopolitical uncertainty, including the continuing effects of the outbreak of war in the Middle East and rising oil prices on inflation.
During the Company’s financial year, J.P. Morgan was appointed to provide depositary, custodian and certain fund administration services, effective 3 October 2025. The Board was mindful of the operational risks associated with the transition and closely monitored the migration of services from HSBC to J.P. Morgan. Further details are included in the table below. The Board considered in detail whether there were any material emerging risks and has continued to include the development of artificial intelligence as an emerging risk in the table below.
No significant control failings or weaknesses were identified from the Audit Committee’s ongoing risk assessment throughout the financial year 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 and that the internal control environment continues to operate effectively. A full analysis of the financial risks facing the Company is set out in note 19 to the financial statements.
The Board considers that the risks set out in the table below are the principal risks currently facing the Company to deliver its strategy together with those actions taken by the Board and, where appropriate, its Committees, to manage and mitigate those risks.
The “Change” column on the right highlights at a glance the Board’s assessment of any increases or decreases in risk during the year after mitigation and management. The arrows in the Change column show the risks as increased or decreased or unchanged.
|
Risk |
Mitigation and management |
Change |
|
Strategic |
|
|
|
Inappropriate investment strategy The investment strategy may, if inappropriate, result in negative investor sentiment, leading to a reduction in the share price and the Company underperforming the market and/or its peer group companies. |
The appropriateness of the Company’s investment mandate and the long-term investment strategy is periodically reviewed by the Board and the success of the Company in meeting its stated objectives is monitored. The Board holds a strategy meeting each year to consider the investment objective and policy and the Company’s longer-term investment strategy. |
|
|
Loss of investor appetite A loss of investor appetite for investment trusts generally, or for investment in the biotechnology sector, arising from market conditions, geopolitical developments, regulatory and policy changes, macroeconomic uncertainty or other external factors, could materially affect the Company’s ability to achieve its objective and reduce demand for the Company’s shares, resulting in a widening discount to NAV. |
The Investment Manager updates the Board at each scheduled Board meeting on issues pertinent to investment trusts, the biotechnology sector and the portfolio, including the political landscape and expected future drivers. The Board regularly considers external factors that may affect investor appetite for biotechnology investments and investment trusts more generally, including geopolitical developments, regulatory and policy changes, macroeconomic conditions and broader market sentiment. The Board discusses these matters with the Investment Manager and monitors their potential impact on the Company’s portfolio, share rating and discount to NAV. |
|
|
Loss of continuation vote The Company’s Articles of Association require the Board to put a proposal for the continuation of the Company to shareholders on a biennial basis. A resolution will be put to shareholders at the AGM to be held in 2027. |
The Manager and the corporate broker engage with shareholders to understand investor sentiment and regularly provide feedback to the Board. Directors also engage directly with shareholders at the AGM to understand their views. The Board notes that shareholders demonstrated strong support for the continuation of the Company at the 2025 AGM, with 99.95% of votes cast in favour of the continuation resolution. The Board believes that the Investment Manager remains well positioned to deliver the Company’s investment objective and that the investment mandate continues to provide shareholders with attractive exposure to long-term growth opportunities in the biotechnology sector. |
|
|
Performance/investment |
|
|
|
Adverse macroeconomic factors The Company’s returns are affected by changes in economic, political, financial and corporate conditions, which can cause substantial market and exchange rate fluctuations. A significant fall in US equity markets is likely to adversely affect the value of the Company’s portfolio. The biotechnology sector has its own specific risks leading to higher volatility than the broader equity market indices. Wider geopolitical risks include regional tensions, trade wars and sanctions against companies, in areas which the Company invests or may invest. In addition, the financial statements and performance of the Company are denominated in sterling because the Company is a UK company listed on the London Stock Exchange. However, the majority of the Company’s assets are denominated in US dollars (“$”). Accordingly, the total return and capital value of the Company’s investments can be significantly affected by movements in foreign exchange rates. |
The Portfolio Managers consider carefully the portfolio composition by size of company, development stage and therapeutic area and adjusts accordingly. The Board is also supportive of the Portfolio Managers’ approach to reducing exposure to companies with imminent binary events such as a readout of data from a clinical trial. The Board continues to monitor market volatility on an ongoing basis. Market risk, including foreign exchange risk, is mitigated to some extent by the Investment Manager and note 19 to the financial statements provides further details of the steps taken to mitigate those risks associated with the portfolio. The Portfolio Managers provide regular reports to the Board on general economic conditions as well as portfolio activity, strategy and performance, including risk monitoring. The reports are discussed in detail at Board meetings, which are all attended by the Portfolio Managers, to allow the Board to monitor the implementation of the investment strategy and process. |
|
|
Share price underperformance Share price performance may consistently lag NAV performance leading to a wide and persistent discount to NAV. |
The share price relative to the NAV per share is kept under review as a key performance indicator and is considered against the Company’s peers on a regular basis. The Board has implemented a robust share buyback policy which has been used consistently during the year under review, with 2,074,657 shares being repurchased to be held in treasury. The discount narrowed during the year from 8.9% to 4.1%. The use of the buyback authority is reviewed regularly. Proactive engagement with shareholders takes place via the AGM, feedback from shareholder presentations, and ad hoc meetings with the Board. The Manager provides a dedicated, experienced investment trust marketing team together with PR resource. The Manager and corporate broker monitor market feedback and the Board considers this at each quarterly meeting. |
|
|
Inappropriate gearing The Company utilises a credit facility, which increases the funds available for investment through borrowing. While this has the potential to enhance investment returns in rising markets, in falling markets the impact could be detrimental to performance. |
The Manager monitors gearing levels and reports regularly to the Board. Gearing continues to operate within pre-agreed limits so as not to exceed 30% of the Company’s net assets. The Manager also monitors compliance with the terms and covenants of the Company’s credit facility. |
|
|
Inadequate ESG considerations The Board recognises that a responsible and proactive approach to ESG-related factors can positively impact the performance and success of its portfolio companies and the Company. A failure to focus sufficiently on ESG matters may not promote the Company to shareholders in a way that generates investor demand. |
The consideration of climate change risks and ESG factors is integrated into the investment process and reported at Board meetings. The Manager’s approach to ESG matters is set out in the full Annual Report and Financial Statements. The Company uses data gathered by Sustainalytics to monitor the compliance of its quoted portfolio with an accepted set of ESG standards. |
|
|
Operational |
|
|
|
Underperformance of service providers Inadequate performance of service providers could lead to poor performance and/or exposure to a number of financial, regulatory and business risks. Service providers may terminate their services if they deem the Company to no longer fit their business model. Operational risks may arise from the transfer of custodian, depositary and fund administration services to a new service provider. |
The Board receives reports from the Manager and Investment Manager on its internal controls and risk management throughout the year, including those relating to cybersecurity, and receives assurances from all its other significant service providers on at least an annual basis. The Management Engagement Committee reviews the performance of key service providers at least annually. The Manager also monitors closely the control environments and quality of services provided by third-parties, including those of the depositary, through service level agreements and regular meetings. The Directors are invited to an annual internal controls briefing session, hosted by the Manager in respect of the internal controls of the Company’s key service providers including the Company’s depositary and custodian, J.P. Morgan, and the Manager’s Internal Audit team. Experienced service providers are appointed by the Company subject to due diligence processes and clearly documented contractual arrangements which include agreed service level specifications and notice periods for terminations. Following the completion of the combination of the businesses of Schroders and Nuveen in October 2026, the Board will continue to monitor developments. In respect of the transition of custodian, depositary and fund administration services from HSBC to J.P. Morgan which completed in October 2025, the Board continues to closely monitor post-implementation performance and service delivery. Further details of the internal controls which are in place are set out in the Audit Committee’s Report in the full Annual Report and Financial Statements. |
|
|
Insufficient information technology (IT), resilience and security Cyber risk such as fraud, sabotage or crime perpetrated against the Company or any of its third- party service providers could result in data theft, service disruption and reputational damage. |
Cybersecurity is closely monitored by the Audit Committee as part of the review of the internal controls of its service providers. Against a backdrop of an evolving global threat landscape and continued increases in cyber risk, the Board considers this risk to have increased during the year and continues to monitor it closely. The Manager’s IT security team presents to the Directors on the Manager’s cybersecurity controls as part of the annual internal controls briefing session hosted by Schroders. |
|
|
Emerging |
|
|
|
Artificial Intelligence (AI) Whilst there are opportunities and benefits associated with the development of AI, and a risk of not embracing these opportunities and benefits, the development of AI presents potential risks to businesses in almost every sector. The extent of the risk presented by AI is extremely hard to assess at this point but the Board considers that it is an emerging risk and together with the Manager and Investment Manager, will monitor developments in this area. | ||
Statement of Directors’ Responsibilities in respect of the Annual Report and Financial Statements
The Directors are responsible for preparing the Annual Report and Financial Statements in accordance with applicable law and regulation.
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 UK-adopted international accounting standards.
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 the financial statements, the Directors are required to:
• select suitable accounting policies and then apply them consistently;
• state whether applicable UK-adopted international accounting standards have been followed, subject to any material departures disclosed and explained in the financial statements;
• make judgements and accounting estimates that are reasonable and prudent; and
• prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company will continue in business.
The Directors 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 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.
The Manager is responsible for the maintenance and integrity of the web pages dedicated to the Company. Legislation in the UK governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.
Directors’ Statement
Each of the Directors, whose names and functions are listed in the full Annual Report and Financial Statements confirm that, to the best of their knowledge:
• the Company’s financial statements, which have been prepared in accordance with UK-adopted international accounting standards, give a true and fair view of the assets, liabilities, financial position and result of the Company;
• the Strategic Report 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
• that the Annual Report and Financial Statements, taken as a whole, are fair, balanced and understandable and provide the information necessary for shareholders to assess the Company’s performance, business model and strategy.
On behalf of the Board
Kate Cornish-Bowden
Chair
2 November 2026
Statement of Comprehensive Income
For the year ended 31 August 2026
|
|
|
2026 |
2025 | ||||
|
|
Notes |
Revenue |
Capital |
Total |
Revenue |
Capital |
Total |
|
Gains on investments held at fair value through profit or loss |
2 |
— |
157,677 |
157,677 |
— |
4,735 |
4,735 |
|
Net foreign currency gains |
|
— |
1,383 |
1,383 |
— |
819 |
819 |
|
Income from investments |
3 |
456 |
— |
456 |
286 |
— |
286 |
|
Other interest receivable and similar income |
3 |
432 |
— |
432 |
228 |
— |
228 |
|
Gross return |
|
888 |
159,060 |
159,948 |
514 |
5,554 |
6,068 |
|
Management fee |
4 |
(2,106) |
— |
(2,106) |
(1,638) |
— |
(1,638) |
|
Performance fee |
4 |
— |
(3,572) |
(3,572) |
— |
(2,665) |
(2,665) |
|
Administrative expenses |
5 |
(706) |
— |
(706) |
(967) |
— |
(967) |
|
Net (loss)/return before finance costs and taxation |
|
(1,924) |
155,488 |
153,564 |
(2,091) |
2,889 |
798 |
|
Finance costs |
6 |
(1,282) |
— |
(1,282) |
(1,940) |
— |
(1,940) |
|
Net (loss)/return before taxation |
|
(3,206) |
155,488 |
152,282 |
(4,031) |
2,889 |
(1,142) |
|
Taxation |
7 |
(71) |
— |
(71) |
(28) |
— |
(28) |
|
Net (loss)/return after taxation |
|
(3,277) |
155,488 |
152,211 |
(4,059) |
2,889 |
(1,170) |
|
(Loss)/return per share (pence) |
8 |
(10.22) |
485.09 |
474.87 |
(11.42) |
8.13 |
(3.29) |
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 (loss)/return after taxation is also the total comprehensive income for the year.
The “Revenue” and “Capital” columns represent supplementary information prepared under guidance set out in the statement of recommended practice for investment trust companies (the “SORP”) issued by the Association of Investment Companies in July 2022.
All revenue and capital items in the above statement derive from continuing operations. No operations were acquired or discontinued in the period.
The notes form an integral part of these financial statements.
Statement of Changes in Equity
For the year ended 31 August 2026
|
|
Note |
Called-up |
Share |
Capital |
Capital |
Revenue |
Total |
|
At 31 August 2024 |
|
10,346 |
29,873 |
31,482 |
264,591 |
(54,027) |
282,265 |
|
Net return/(loss) after taxation |
|
— |
— |
— |
2,889 |
(4,059) |
(1,170) |
|
Dividend paid in the year |
9 |
— |
— |
— |
(11,196) |
— |
(11,196) |
|
Repurchase of the Company’s own shares into treasury |
|
— |
— |
— |
(20,490) |
— |
(20,490) |
|
At 31 August 2025 |
|
10,346 |
29,873 |
31,482 |
235,794 |
(58,086) |
249,409 |
|
Net return/(loss) after taxation |
|
— |
— |
— |
155,488 |
(3,277) |
152,211 |
|
Dividend paid in the year |
9 |
— |
— |
— |
(9,973) |
— |
(9,973) |
|
Project cost |
|
— |
— |
— |
(30) |
— |
(30) |
|
Repurchase of the Company’s own shares into treasury |
|
— |
— |
— |
(17,059) |
— |
(17,059) |
|
At 31 August 2026 |
|
10,346 |
29,873 |
31,482 |
364,220 |
(61,363) |
374,558 |
The notes form an integral part of these financial statements.
Statement of Financial Position
At 31 August 2026
|
|
Notes |
2026 |
2025 |
|
Fixed assets |
|
|
|
|
Investments held at fair value through profit or loss |
10 |
399,575 |
268,920 |
|
Current assets |
|
|
|
|
Debtors |
11 |
276 |
136 |
|
Cash and cash equivalents |
12 |
2,072 |
14,980 |
|
|
|
2,348 |
15,116 |
|
Current liabilities |
|
|
|
|
Creditors: amounts falling due within one year |
13 |
(27,365) |
(34,627) |
|
Net current liabilities |
|
(25,017) |
(19,511) |
|
Total assets less current liabilities |
|
374,558 |
249,409 |
|
Net assets |
|
374,558 |
249,409 |
|
|
|
|
|
|
Capital and reserves |
|
|
|
|
Called-up share capital |
15 |
10,346 |
10,346 |
|
Share premium |
16 |
29,873 |
29,873 |
|
Capital redemption reserve |
16 |
31,482 |
31,482 |
|
Capital reserves |
16 |
364,220 |
235,794 |
|
Revenue reserve |
16 |
(61,363) |
(58,086) |
|
Total equity shareholders’ funds |
|
374,558 |
249,409 |
|
Net asset value per share (pence) |
17 |
1,183.33 |
739.48 |
The financial statements were approved by the Board of Directors and authorised for issue on 2 November 2026 and signed on its behalf by:
Alexa Henderson
Chair of the Audit Committee
The notes form an integral part of these financial statements.
Registered in England and Wales as a public company limited by shares.
Company registration number: 02892872.
Cash Flow Statement
For the year ended 31 August 2026
|
|
Note |
2026 |
2025 |
|
Operating activities |
|
|
|
|
Profit before finance costs and taxation |
|
153,564 |
798 |
|
Adjustments for: |
|
|
|
|
Net foreign currency gains |
|
(1,383) |
(819) |
|
Gains on investments at fair value through profit or loss |
|
(157,677) |
(4,735) |
|
Net proceeds generated from investment transactions |
|
24,926 |
33,513 |
|
Dividend income |
|
(325) |
(286) |
|
Interest income |
|
(533) |
(228) |
|
(Increase)/decrease in receivables |
|
(112) |
9 |
|
Increase in payables |
|
2,308 |
1,766 |
|
Overseas taxation paid |
|
(71) |
(26) |
|
Net cash inflow from operating activities before dividends and interest |
|
20,697 |
29,992 |
|
Dividends received |
|
329 |
336 |
|
Interest received |
|
533 |
245 |
|
Interest paid |
|
(1,282) |
(1,940) |
|
Net cash inflow from operating activities |
|
20,277 |
28,633 |
|
|
|
|
|
|
Financing activities |
|
|
|
|
Bank loan drawdown |
|
41,557 |
31,106 |
|
Bank loan repaid |
|
(48,213) |
(23,345) |
|
Project cost |
|
(30) |
— |
|
Repurchase of ordinary shares into treasury |
|
(17,059) |
(20,490) |
|
Dividends paid |
9 |
(9,973) |
(11,196) |
|
Net cash outflow from financing activities |
|
(33,718) |
(23,925) |
|
(Decrease)/increase in cash and cash equivalents |
|
(13,441) |
4,708 |
|
Cash and cash equivalents at the start of the year |
|
14,980 |
10,433 |
|
Effect of foreign exchange rates on cash and cash equivalents |
|
533 |
(161) |
|
Cash and cash equivalents at the end of the year |
12 |
2,072 |
14,980 |
The notes form an integral part of these financial statements.
Notes to the Financial Statements
For the year ended 31 August 2026
1. Material accounting policies
The nature of the Company’s operations and its principal activities are set out in the Strategic Report and Directors’ Report.
The Company’s financial statements have been prepared in accordance with UK-adopted International Accounting Standards and those parts of the Companies Act 2006 (“the Act”) applicable to companies reporting under UK-adopted International Accounting Standards. These comprise standards and interpretations approved by the International Accounting Standards Board (“IASB”) and International Accounting Standards Committee (“IASC”), that remain in effect and to the extent that they have been adopted by the United Kingdom and the UK Listing Rules of the FCA.
For the purposes of the financial statements, the results and financial position of the Company are expressed in pounds sterling, which is the functional currency and the presentational currency of the Company.
Sterling is the functional currency because it is the currency which is most relevant to the majority of the Company’s shareholders and creditors and the currency in which the majority of the Company’s operating expenses are paid.
All values are rounded to the nearest thousand pounds (£’000) except where otherwise indicated.
The principal accounting policies followed, which have been applied consistently for all years presented, are set out below:
(a) Basis of preparation
The Company’s financial statements have been prepared on a going concern basis (as set out in the full Annual Report and Financial Statements) and under the historical cost convention, as modified by the inclusion of investments at fair value through profit or loss.
Where presentational guidance set out in the Statement of Recommended Practice (the “SORP”) for investment trusts issued by The Association of Investment Companies (the “AIC”) in November 2014 (and updated in July 2022) is consistent with the requirements of UK-adopted International Accounting Standards, the Directors have sought to prepare the financial statements on a basis compliant with the recommendations of the SORP.
The financial position of the Company as at 31 August 2026 is shown in the Statement of Financial Position. As at 31 August 2026, the Company’s total assets exceeded its total liabilities by a multiple of over 16. The assets of the Company consist mainly of securities that are held in accordance with the Company’s investment policy, as set out in the full Annual Report and Financial Statements. The Directors have considered a detailed assessment of the Company’s ability to meet its liabilities as they fall due. The assessment took account of the Company’s current financial position, its cash flows and its liquidity position. In addition to the assessment, the Company carried out stress testing, which used a variety of falling parameters to demonstrate the effects on the Company’s share prices and NAV.
In light of the results of these tests, the Company’s cash balances, and the liquidity position, the Directors consider that the Company has adequate financial resources to enable it to continue in operational existence. Accordingly, the Directors believe that it is appropriate to continue to adopt the going concern basis in preparing the Company’s financial statements.
(b) Presentation of the Statement of Comprehensive Income
In order to better reflect the activities of an investment trust company and in accordance with guidance issued by the AIC, supplementary information which analyses the Statement of Comprehensive Income between items of a revenue and capital nature has been presented alongside the Statement of Comprehensive Income.
The net loss after taxation in the revenue column is the measure the Directors believe appropriate in assessing the Company’s compliance with certain requirements set out in Section 1158 of the Corporation Tax Act 2010 (“CTA”).
(c) Income
Dividends receivable on equity shares are recognised as revenue for the year on an ex-dividend basis. Special dividends are treated as revenue return or as capital return, depending on the facts of each individual case.
Where the Company has elected to receive its dividends in the form of additional shares rather than cash, the amount of cash dividend foregone is recognised as income in the revenue column of the Statement of Comprehensive Income. Any excess in the value of shares over the amount of cash dividend foregone is recognised as a gain in the capital column of the Statement of Comprehensive Income.
Interest from fixed income securities is recognised on a time apportionment basis so as to reflect the effective yield on the fixed income securities.
Deposit interest outstanding at the year-end is calculated and accrued on a time apportionment basis using market rates of interest.
(d) Expenses and interest payable
Administrative expenses including the management fee and interest payable are accounted for on an accruals basis and are recognised when they fall due.
All expenses and interest payable have been presented as revenue items except as follows:
• Any performance fee payable is allocated wholly to capital, as it is primarily attributable to the capital performance of the Company’s assets.
• Transaction costs incurred on the acquisition or disposal of investments are expensed and included in the costs of acquisition or deducted from the proceeds of sale as appropriate.
(e) Taxation
Deferred tax is calculated in full, using the liability method, on all taxable and deductible temporary differences at the Statement of Financial Position date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes. Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the period when the asset is realised or the liability settled, based on tax rates and tax laws that have been enacted or substantively enacted at the Statement of Financial Position date.
Deferred tax assets are recognised to the extent that it is probable that future taxable profits will be available against which the deductible temporary differences can be utilised.
In line with the recommendations of the SORP, the allocation method used to calculate tax relief on expenses presented in the capital column of the Statement of Comprehensive Income is the marginal basis. Under this basis, if taxable income is capable of being offset entirely by expenses presented in the revenue column of the Statement of Comprehensive Income, then no tax relief is transferred to the capital column.
(f) Non-current asset investments held at fair value
The Company holds three types of investments: direct investments in quoted companies; direct investments in unquoted companies; and indirect investments held through venture funds.
Investments are recognised or derecognised on the trade date where a purchase or sale of an investment is under a contract whose terms require delivery of the investment within the timeframe established by the market concerned.
On initial recognition all non-current asset investments are designated as held at fair value through profit or loss as defined by UK-adopted International Accounting Standards. They are further categorised into the following fair value hierarchy:
Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level 2: Having inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).
Level 3: Having inputs for the asset or liability that are not based on observable market data.
All non-current investments (including those over which the Company has significant influence) are measured at fair value with gains and losses arising from changes in their fair value being included in net profit or loss for the year as a capital item.
Any gains and losses realised on disposal are recognised in the capital column of the Statement of Comprehensive Income.
Quoted investments
The fair value of quoted investments is either the bid price or the last traded price, depending on the convention of the exchange on which the investment is quoted.
Unquoted investments
In respect of unquoted investments (excluding investments in SV Fund VI, SV BCOF and SC IBT SLP), or where the market for a financial instrument is not active, fair value is established by the adviser using various valuation techniques, in accordance with the International Private Equity and Venture Capital (“IPEV”) guidelines issued in December 2022 and Special Valuations Guidance issued in March 2020. These may include reference to recent rounds of re-financing undertaken by investee companies involving knowledgeable parties, an earnings or multiple, a discounted cashflow model or the present value of future milestone payments, all with reference to recent arm’s length market transactions between knowledgeable parties, where available.
The valuations of the unquoted investments are assessed by the adviser to ensure that the fair value is fairly reflected and will be revalued accordingly, driven by the underlying assumptions deriving the value including: the ability of portfolio company management to keep cash and operating budgets; investor milestone targets; clinical trial data; progress of competitor products; any underlying litigation at the portfolio company level; performance of the investment and quality of the management team; and the market for the product being developed; and the broad climate of the economies of the countries in which they will likely be sold by reference to public stock market performance. Management scrutinises and challenges the assumptions, judgements and valuation inputs used by the adviser on a quarterly basis.
Investment in unquoted funds
The Company receives formal quarterly reports from each of the private equity funds in which it invests: SV Fund VI, SV BCOF and SC IBT SLP (the “unquoted funds”). The values of the unquoted funds’ investments in the underlying private equity companies are reported in these quarterly reports. The reports typically arrive within 60 days of the end of the quarter (90 days at calendar year-end). As soon as a quarterly report is received by the Company, the reported value of the unquoted funds is reflected in the NAV on the next NAV date.
During the period between quarterly reports, the Company may be advised of a sale of a portfolio company (or its securities) held within one of the funds at a different price from the last reported value in that quarterly report. As soon as the Company is informed of the completion of any such transaction establishing a new value for the investment, the new NAV of that investment to the unquoted funds is reflected in the NAV on the next NAV date. With respect to any investments within the unquoted funds for which there is a listed price, the Company takes account of stock price movements in the underlying security when revaluing its investment in the unquoted funds. The listed price of these underlying securities is monitored on an ongoing basis. Any price move in the unquoted funds' underlying investments that materially impacts the Company's holding in the unquoted funds is reflected in the NAV on the next NAV date.
The value of a fund investment used by the Company in determining the NAV is always based on the most current information known to the Company on the NAV date.
(g) Foreign currencies
Transactions involving currencies other than sterling are recorded at the exchange rate ruling on the transaction date.
At each Statement of Financial Position date, monetary items and non-monetary assets and liabilities that are fair valued, which are denominated in foreign currencies, are translated at the closing rates of exchange. Foreign currency exchange differences arising on translation are recognised in the Statement of Comprehensive Income. Exchange gains and losses on investments held at fair value through profit or loss are included within “Gains/(losses) on investments held at fair value”.
(h) Critical accounting estimates and judgements
The preparation of financial statements in conformity with UK-adopted International Accounting Standards requires the use of estimates and judgements. These estimates and judgements affect the reported amounts of assets and liabilities at the reporting date. While estimates are based on best judgement using information and financial data available, the actual outcome may differ from these estimates. The key sources of estimation and uncertainty relate to the fair value of the unquoted investments.
Judgements
The Directors consider that the preparation of the financial statements involves the following key judgements:
(i) The fair value of the unquoted investments.
The key judgements in the fair value process are:
(i) The adviser’s (SV Health’s) determination of the appropriate application of the IPEV Valuation Guidelines (December 2022) and Special Valuations Guidance (March 2020) to each unquoted investment; and
(ii) The Directors’ consideration of whether each fair value is appropriate following detailed review and challenge.
The judgement applied by the adviser in the selection of the methodology used for determining the fair value of each unquoted investment can have a significant impact upon the valuation.
Estimates
The key estimate in the financial statements is the determination of the fair value of the unquoted investments (excluding investments in the unquoted funds) by SV Health for consideration by the Directors. This estimate is key as it significantly impacts the valuation of the unquoted investments (excluding investments in the unquoted funds) at the Statement of Financial Position date. The fair value process involves estimation using subjective inputs that are unobservable (for which market data is unavailable).
The main estimates involved in the selection of the valuation process inputs are:
(i) The application of an appropriate discount factor to reflect macro-economic factors and the reduced liquidity of unquoted companies;
(ii) The selection of an appropriate estimate of the probability of royalty income reflecting potential commercial uptake risk, competitor risk and uncertainty around drug pricing; and
(iii) The calculation of valuation adjustments derived from milestone achievement analysis incorporating the likelihood of clinical trial success.
Fair value estimates are cross-checked to alternative estimation methods where possible to improve the robustness of the estimate. As the valuation outcomes may differ from the fair value estimates a price sensitivity analysis is provided in Level 3 investments at fair value through profit and loss – price risk sensitivity in note 19.7 (iii) to illustrate the effect on the financial statements of an over or under estimation of the significant observable inputs.
(i) Other financial assets and liabilities
In the Cash Flow Statement, cash and cash equivalents includes cash in hand, short-term deposits and bank overdrafts. These are held for the purpose of meeting short-term cash commitments rather than for investment or other purposes and cash balances are held at their fair value (translated to sterling at the Statement of Financial Position date where appropriate).
Interest-bearing bank loans are initially recognised at cost, being the proceeds net of direct issue costs, and subsequently at amortised cost.
(j) Receivables
Other receivables do not carry any right to interest and are short term in nature. Accordingly they are stated at their nominal value (amortised cost) reduced by appropriate allowances for estimated irrecoverable amounts.
(k) Other payables
Other payables are not interest-bearing and are stated at their nominal amount (amortised cost). Where there are any long-term borrowings, finance costs are calculated over the term of the debt on the effective interest basis.
(l) Bank loans and finance costs
Interest-bearing bank loans are initially recognised at cost, being the proceeds received net of direct issue costs, and subsequently at amortised cost. The amounts falling due for repayment within one year are included under current liabilities and more than one year under non-current liabilities in the Statement of Financial Position.
Finance costs are calculated using the effective interest rate method and accounted for on an accrual basis and, in line with the management fee expense, are charged 100% to the revenue account of the Statement of Comprehensive Income.
(m) Repurchase of ordinary shares (including those held in treasury) and subsequent reissues
The costs of repurchasing ordinary shares including related stamp duty and transaction costs are taken directly to equity and reported through the Statement of Changes in Equity as a charge on the capital reserves.
The sales proceeds of treasury shares reissued are treated as a realised profit up to the amount of the purchase price of those shares and is transferred to capital reserves. The excess of the sales proceeds over the purchase price is transferred to share premium.
Share purchase transactions are accounted for on a trade date basis. The nominal value of ordinary share capital repurchased and cancelled is transferred out of called up share capital and into the capital redemption reserve. Where shares are repurchased and held in treasury, the transfer to the capital redemption reserve is made if and when such shares are subsequently cancelled.
(n) Dividend distributions
Dividend distributions to shareholders are recognised in the period in which they are paid.
(o) Reserves
(i) Capital redemption reserve:
The capital redemption reserve, which is non-distributable, holds the amount by which the nominal value of the Company’s issued share capital is diminished when shares redeemed or purchased out of the Company’s distributable reserves are subsequently cancelled.
(ii) Share premium account:
A non-distributable reserve, represents the amount by which the fair value of the consideration received exceeds the nominal value of shares issued.
(iii) Capital reserves:
When making a distribution to shareholders, the Directors determine profits available by reference to ‘Guidance realised and distributable profits under the Companies Act 2006’ issued by the Institute of Chartered Accountants in England and Wales and the Institute of Chartered Accountants of Scotland in April 2017. The availability of distributable reserves in the Company is dependent on those dividends meeting the definition of qualifying consideration within the guidance and on available cash resources of the Company and other accessible source of funds. The distributable reserves are therefore subject to any future restrictions or limitations at the time such distribution is made.
The following are accounted for in this reserve and are distributable:
• Gains and losses on the realisation of investments;
• Realised investment holding gains and losses;
• Foreign exchange gains and losses;
• Performance fee;
• Reissue of ordinary shares from treasury;
• Repurchase of ordinary shares in issue; and
• Dividends paid to shareholders.
Note: Unrealised holding gains on all assets are not distributable.
(iv) Revenue reserve:
Comprises accumulated undistributed revenue profits and losses.
(p) New and revised accounting standards
At the date of authorisation of the Company’s financial statements, the following relevant standards that potentially impact the Company are in issue but are not yet effective and have not been applied in the financial statements:
|
Standards and interpretations |
|
Effective for periods commencing on or after |
|
Annual Improvements to IFRS Accounting Standards – Volume 11 |
The amendments clarify the requirements Hedge accounting by a first-time adopter (IFRS 1 First-time Adoption of International Financial Reporting Standards); Gain or loss on derecognition (IFRS 7 Financial Instruments: Disclosures); Transaction price (IFRS 9 Financial Instruments); Derecognition of lease liabilities (IFRS 9); Determination of a ‘de facto agent’ (IFRS 10 Consolidated Financial Statements) and Cost method (IAS 7 Statement of Cash Flows). |
1 January 2026 |
|
Amendments to IFRS 9 and IFRS 7 – |
The amendments address two of the issues identified during the post-implementation review of IFRS 9, being the derecognition of a financial liability settled through electronic transfer and the classification of financial assets, it also introduces new and amended disclosure requirements. |
1 January 2026 |
|
IFRS 18 Presentation and Disclosure in Financial Statements |
IFRS 18 replaces IAS 1 Presentation of Financial Statements and introduces new requirements for the presentation and disclosure of information in financial statements, including new subtotals in the statement of profit or loss and enhanced disclosures regarding management-defined performance measures. |
1 January 2027 |
The Directors expect that the adoption of the standards listed above will have either no impact or that any impact will not be material on the financial statements of the Company in future periods.
2. Gains on investments held at fair value through profit or loss
|
|
2026 |
2025 |
|
Realised gains on sales of investments |
143,090 |
18,172 |
|
Change in unrealised gains/(losses) on Investments at fair value through profit or loss |
14,829 |
(13,437) |
|
Other capital charges |
(242) |
— |
|
Gains on investments held at fair value through profit or loss |
157,677 |
4,735 |
3. Income
|
|
2026 |
2025 |
|
Income from investments: |
|
|
|
UK dividends |
92 |
102 |
|
Overseas dividends |
233 |
184 |
|
Interest income |
131 |
— |
|
|
456 |
286 |
|
Other interest receivable and similar income: |
|
|
|
Deposit interest |
402 |
228 |
|
Other income |
30 |
— |
|
|
432 |
228 |
|
Total income |
888 |
514 |
4. Investment management and performance fees
|
|
2026 |
2025 | ||||
|
|
Revenue |
Capital |
Total |
Revenue |
Capital |
Total |
|
Management fee |
2,106 |
— |
2,106 |
1,638 |
— |
1,638 |
|
Performance fee1 |
— |
3,572 |
3,572 |
— |
2,665 |
2,665 |
|
|
2,106 |
3,572 |
5,678 |
1,638 |
2,665 |
4,303 |
1 The NASDAQ Biotechnology Index (Reference Index) return has been calculated to 28 August 2026 rather than 31 August 2026. As a significant proportion of the Company’s portfolio is invested in US securities and 31 August 2026 was a UK bank holiday, using the 28 August 2026 benchmark return provides a comparable measure against the Company’s performance at the year-end.
The basis for calculating the management fee and any performance fees are set out in the Directors’ Report in the full Annual Report and Financial Statements.
Following the investments into the unquoted funds, the management fees are paid through the venture capital investments. Venture capital fees paid through the investments in the SV unquoted funds in the year were £520,000 (2025: £648,000) and the Schroders Capital fund were £78,000 (2025: nil). The total management fee on a comparative basis was £2,704,000 (2025: £2,286,000).
Refer to note 18, Transactions with the Manager and related party transactions, for further details.
5. Administrative expenses
|
|
2026 |
2025 |
|
Other administrative expenses |
357 |
610 |
|
Directors’ fees |
181 |
183 |
|
Secretarial fee |
100 |
100 |
|
Auditor remuneration1,2 |
68 |
74 |
|
|
706 |
967 |
1 There were no non-audit services performed by the auditor during the year (2025: none).
2 Includes VAT amounting to £11,000 (2025: £12,000).
6. Finance costs
|
|
2026 |
2025 |
|
Interest on loan and overdraft |
1,282 |
1,940 |
|
|
1,282 |
1,940 |
All finance costs are allocated 100% to revenue.
7. Taxation
(a) Analysis of tax charge for the year
|
|
2026 |
2025 | ||||
|
|
Revenue |
Capital |
Total |
Revenue |
Capital |
Total |
|
Irrecoverable overseas tax |
71 |
— |
71 |
28 |
— |
28 |
|
|
71 |
— |
71 |
28 |
— |
28 |
The Company has no corporation tax liability for the year ended 31 August 2026 (2025: the same).
(b) Factors affecting tax charge for the year
The tax assessed for the year ending 31 August 2026 is higher (2025: higher) than the Company’s applicable rate of corporation tax for that year of 25% (2025: 25%).
The factors affecting the tax charge for the year are as follows:
|
|
2026 |
2025 | ||||
|
|
Revenue |
Capital |
Total |
Revenue |
Capital |
Total |
|
Net (loss)/return before taxation |
(3,206) |
155,488 |
152,282 |
(4,031) |
2,889 |
(1,142) |
|
Net (loss)/return before taxation multiplied by the Company’s applicable rate of corporation tax for the year of 25.0% (2025: 25.0%) |
(802) |
38,872 |
38,070 |
(1,008) |
722 |
(286) |
|
Effects of: |
|
|
|
|
|
|
|
Income not chargeable to corporation tax |
(114) |
— |
(114) |
(63) |
— |
(63) |
|
Capital gains on investments |
— |
(39,419) |
(39,419) |
— |
(1,143) |
(1,143) |
|
Non taxable exchange gains |
— |
(346) |
(346) |
— |
(245) |
(245) |
|
Unrelieved expenses |
916 |
893 |
1,809 |
1,071 |
666 |
1,737 |
|
Irrecoverable overseas tax |
71 |
— |
71 |
28 |
— |
28 |
|
Taxation for the year |
71 |
— |
71 |
28 |
— |
28 |
(c) Deferred taxation
The Company has an unrecognised deferred tax asset of £24,871,000 (2025: £23,062,000) based on a prospective corporation tax rate of 25% (2025: 25%). The main rate of corporation tax increased to 25% for fiscal years beginning on or after 1 April 2023.
The deferred tax asset has arisen due to the cumulative excess of deductible expenses over taxable income. Given the composition of the Company’s portfolio, it is not likely that this asset will be utilised in the foreseeable future and therefore no asset has been recognised in the financial statements.
Given the Company’s status as an investment trust company, no provision has been made for deferred tax on any capital gains or losses arising on the revaluation or disposal of investments.
8. Return/(loss) per share
|
|
2026 |
2025 |
|
Revenue loss (£’000) |
(3,277) |
(4,059) |
|
Capital return (£’000) |
155,488 |
2,889 |
|
Total return/(loss) (£’000) |
152,211 |
(1,170) |
|
Weighted average number of shares in issue during the year* |
32,053,527 |
35,541,347 |
|
Revenue loss per share (pence) |
(10.22) |
(11.42) |
|
Capital return per share (pence) |
485.09 |
8.13 |
|
Total return/(loss) per share (pence) |
474.87 |
(3.29) |
*Excluding those ordinary shares held in treasury.
9. Dividend
|
|
2026 |
2025 |
|
2026 First interim dividend paid of 15.64p per share (2025: 15.56p per share) |
4,990 |
5,626 |
|
2026 Second interim dividend paid of 15.67p per share (2025: 16.17p per share) |
4,983 |
5,570 |
|
Total dividends paid of 31.31p per share (2025: 31.73p per share) |
9,973 |
11,196 |
Dividends are included in the financial statements in the year in which they are paid.
The Company is not required to pay a dividend under the requirements of Section 1158 CTA due to the negative accumulated balance on its revenue reserve. The above dividends are paid out of the capital reserve.
10. Investments held at fair value through profit or loss
(a) Analysis of investments
|
|
2026 |
2025 |
|
Quoted in the United Kingdom and overseas |
372,147 |
247,853 |
|
|
372,147 |
247,853 |
|
Unquoted in the United Kingdom |
18,680 |
9,898 |
|
Unquoted overseas |
8,748 |
11,169 |
|
|
27,428 |
21,067 |
|
Valuation of investments |
399,575 |
268,920 |
(b) Movement in investments
|
|
2026 |
2025 |
|
Opening book cost |
258,560 |
277,196 |
|
Opening investment holding gains |
10,360 |
20,311 |
|
Opening fair value |
268,920 |
297,507 |
|
Analysis of transactions made during the year |
|
|
|
Purchases at cost |
842,370 |
576,780 |
|
Sales proceeds |
(869,634) |
(610,102) |
|
Gains on investments held at fair value |
157,919 |
4,735 |
|
Closing fair value |
399,575 |
268,920 |
|
Closing book cost |
374,387 |
258,560 |
|
Closing investment holding gains |
25,188 |
10,360 |
|
Closing fair value |
399,575 |
268,920 |
The Company received £869,634,000 (2025: £610,102,000) from disposals of investments in the year. The book cost of these investments when they were purchased was £726,543,000 (2025: £595,416,000). These investments have been revalued over time and until they were sold any unrealised gains/losses were included in the fair value of the investments.
The investment holding gains of £25,188,000 (2025: £10,360,000) have not been further analysed between those amounts that are distributable and those that are not distributable.
The following transaction costs, comprising stamp duty and brokerage commission and legal fees, were incurred in the year:
|
|
2026 |
2025 |
|
On acquisitions |
346 |
228 |
|
On disposals |
244 |
179 |
|
|
590 |
407 |
(c) Significant undertakings
The Company has a holding of 11.2% in the unquoted fund SV BCOF, 7.7% in the unquoted fund SV Fund VI and 100% in the unquoted fund SC IBT SLP. These percentages are of the underlying fund share capital and not the NAV of the Company.
The total invested in the above funds to date is £39.2 million (at cost). This represents capital called by the underlying funds and does not include undrawn commitments, which are disclosed separately in note 14.
Arrangements are in place to ensure there is no double charging of management fees.
(d) Disposals of unquoted investments
There were no significant unquoted investment disposals during the year (2025: nil).
(e) Significant changes in fair values of unquoted investments
During the year under review, the following unquoted investments were written (down/up) (adjusted for currency movements) by:
|
|
Write (down/up) |
Write (down/up) |
|
SV Fund VI* |
(1,935) |
(4,788) |
|
SV BCOF* |
2,776 |
1,086 |
|
SC IBT SLP* |
6,228 |
— |
* The movement in Fair Value (FV) gain was a combination of distributions from the above funds of £2.2 million (2025: £4.4 million), capital contributions of £8.9 million (2025: £3.5 million), and foreign currency and FV gains/(losses) of £0.3 million (2025: £2.8 million).
11. Current assets
Debtors
|
|
2026 |
2025 |
|
Dividends and interest receivable |
45 |
49 |
|
Securities sold awaiting settlement |
32 |
— |
|
Other debtors |
199 |
87 |
|
|
276 |
136 |
12. Cash and cash equivalents
Cash and cash equivalents include the following for the purposes of the Statement of Cash Flows:
|
|
2026 |
2025 |
|
Cash at bank |
2,072 |
14,980 |
|
Cash and cash equivalents |
2,072 |
14,980 |
13. Current liabilities
Creditors: amounts falling due within one year
|
|
2026 |
2025 |
|
Bank loan |
22,100 |
29,607 |
|
Securities purchased awaiting settlement |
— |
2,063 |
|
Other creditors and accruals |
5,265 |
2,957 |
|
|
27,365 |
34,627 |
The Company arranged a £55 million secured credit facility revolving on a monthly basis with The Bank of Nova Scotia, effective from 16 November 2023 and amended and restated on 13 November 2025. Interest is payable at the aggregate of the compounded Risk Free Rate (“RFR”) for the relevant currency and loan period, plus a margin. Amounts are normally drawn down on the facility for a one month period, at the end of which it may be rolled over or adjusted. As at 31 August 2026, the Company had a drawn down amount of $30.0 million (£22.1 million) (2025: $40.0 million or £29.6 million) which carries an interest of 4.56% per annum (2025: 5.44%). The revolving credit facility is secured on all the Company’s assets (except for level 3 assets) and undertakings both present and future. The drawings are subject to covenants and restrictions which are customary for a facility of this nature and all of these have been complied with.
14. Capital commitments – contingent assets and liabilities
The Company made a $30.0 million commitment to SV Fund VI in 2016. Of this $30.0 million commitment, the Company has further commitments of $1.0 million as at 31 August 2026 (2025: $2.2 million). The outstanding capital commitments are callable by SV Fund VI at any time.
While the fund will no longer make new investments, additional follow on investments are likely to be made by the fund into its investee companies.
The Company has a commitment of $30.0 million to SV BCOF (2025: $30.0 million). The Company made no further commitments in 2026 (2025: nil). Of this commitment, the Company has outstanding commitments of $8.9 million (including recallable distributions) as at 31 August 2026 (2025: $18.3 million).
The Company had a commitment of £10.0 million to SC IBT SLP (2025: nil). The Company made a further commitment of £15.0 million during the year (2025: nil). As at 31 August 2026, the Company had outstanding commitments of £19.5 million, including recallable distributions (2025: nil).
15. Called-up share capital
|
|
2026 |
2025 |
|
Ordinary shares of 25p each allotted, called up and fully paid: |
|
|
|
Opening balance of 33,727,491 (2025: 36,834,910) shares, excluding shares held in treasury |
8,432 |
9,209 |
|
Repurchase of 2,074,657 (2025: 3,107,419) shares into treasury |
(519) |
(777) |
|
Closing balance of 31,652,834 (2025: 33,727,491) shares excluding shares held in treasury |
7,913 |
8,432 |
|
Shares held in treasury 9,730,983 (2025: 7,656,326) |
2,433 |
1,914 |
|
Closing balance of 41,383,817 (2025: 41,383,817) shares including shares held in treasury |
10,346 |
10,346 |
The ordinary shares rank pari passu, and each share carries one vote. The ordinary shares held in treasury have no voting rights and are not entitled to dividends. The nominal value of each share is 25p.
During the year, the Company purchased 2,074,657 of its own shares, nominal value of £519,000 to hold in treasury for a total consideration of £17,059,000 representing 5.0% of the shares outstanding at the beginning of the year (including shares held in treasury). The reason for these share purchases was to seek to manage the volatility of the share price discount to net asset value per share.
16. Reserves
|
|
Share |
Capital |
Capital |
Revenue |
|
At 1 September 2025 |
29,873 |
31,482 |
235,794 |
(58,086) |
|
Gains on sale of investments |
— |
— |
143,090 |
— |
|
Change in unrealised gains on investments at fair value through profit or loss |
— |
— |
14,829 |
— |
|
Other capital charges |
— |
— |
(242) |
— |
|
Exchange gains on cash and short-term deposits |
— |
— |
533 |
— |
|
Project cost |
— |
— |
(30) |
— |
|
Exchange gains on foreign currency loan |
— |
— |
850 |
— |
|
Performance fees allocated to capital |
— |
— |
(3,572) |
— |
|
Share repurchases into treasury |
— |
— |
(17,059) |
— |
|
Dividends paid |
— |
— |
(9,973) |
— |
|
Retained revenue for the year |
— |
— |
— |
(3,277) |
|
At 31 August 2026 |
29,873 |
31,482 |
364,220 |
(61,363) |
|
|
Share |
Capital |
Capital |
Revenue |
|
At 1 September 2024 |
29,873 |
31,482 |
264,591 |
(54,027) |
|
Gains on sale of investments |
— |
— |
18,172 |
— |
|
Change in unrealised gains on investments at fair value through profit or loss |
— |
— |
(13,437) |
— |
|
Exchange gains on cash and short-term deposits |
|
(161) |
|
|
|
Exchange gains on foreign currency loan |
— |
— |
980 |
— |
|
Performance fees allocated to capital |
— |
— |
(2,665) |
— |
|
Share repurchases into treasury |
— |
— |
(20,490) |
— |
|
Dividends paid |
— |
— |
(11,196) |
— |
|
Retained revenue for the year |
— |
— |
— |
(4,059) |
|
At 31 August 2025 |
29,873 |
31,482 |
235,794 |
(58,086) |
1 These reserves are not distributable.
2 These are realised (distributable) capital reserves which may be used to repurchase the Company’s own shares or distributed as dividends. This reserve may include some holding gains/(losses) on liquid investments (which may be deemed to be realised) and other amounts which are unrealised. An analysis has not been made between those amounts that are realised (and may be distributed as dividends or used to repurchase the Company’s own shares) and those that are unrealised.
3 The revenue reserve may be distributed as dividends or used to repurchase the Company’s own shares (subject to being a positive balance). A negative revenue reserve will reduce any distributable reserves available in the capital reserve.
17. Net asset value per share
|
|
2026 |
2025 |
|
Net assets attributable to shareholders (£’000) |
374,558 |
249,409 |
|
Shares in issue at the year-end |
31,652,834 |
33,727,491 |
|
Net asset value per share (pence) |
1,183.33 |
739.48 |
18. Transactions with the Manager and related party transactions
(a) Transactions with the Manager
With effect from 20 November 2023, Schroder Unit Trusts Limited (“SUTL”) was appointed as the Company’s Alternative Investment Fund Manager (“AIFM”). The management fee payable by the Company on its quoted portfolio was 0.7% per annum. Effective from 1 September 2025, the management fee was reduced to 0.65% per annum.
Details of the management and performance fee agreements are given in the Directors’ Report in the full Annual Report and Financial Statements. The management fee payable in respect of the year amounted to £2,704,000 (2025: £2,286,000), which includes £520,000 (2025: £648,000) paid to SV Health for the Company’s investment into the SV unquoted funds and £78,000 (2025: nil) paid to the Schroders Capital fund. As at the year-end, £1,064,000 was outstanding to SUTL (2025: £137,000).
|
Fees paid to the investment manager/adviser: |
2026 |
2025 |
|
Management fee paid by the Company directly to SUTL |
2,106 |
1,638 |
|
Adviser fee paid through unquoted funds to SV Health |
520 |
648 |
|
Accounting and administration fee payable by the Company directly to SUTL |
100 |
100 |
|
Adviser fee paid to Schroders Capital fund |
78 |
— |
|
Total |
2,804 |
2,386 |
Performance fees of £3,572,000 were payable for the year ended 31 August 2026 (2025: £2,665,000). Of the £3,572,000 payable, £321,000 was outstanding to SV Health and £3,251,000 was outstanding to SUTL at the year-end.
Under the terms of the AIFM agreement, SUTL is entitled to receive an annual fee of £100,000 in respect of the accounting and administration services it provides to the Company. The administration fee payable in respect of the period under SUTL was £100,000 of which £50,000 was outstanding at the year-end.
SV Health will continue to provide ongoing investment management assistance to the Company in respect of the exited investments with contingent milestones, the exited investments in liquidation and the directly held unquoted investments in consideration for payment of a performance fee.
The NASDAQ Biotechnology Index (Reference Index) return has been calculated to 28 August 2026 rather than 31 August 2026. As a significant proportion of the Company’s portfolio is invested in US securities and 31 August 2026 was a UK bank holiday, using the 28 August 2026 benchmark return provides a comparable measure against the Company’s performance at the year-end.
(b) Related party transactions
The Directors of the Company are key management personnel. The total remuneration payable to Directors in respect of the year ended 31 August 2026 was £181,000 (2025: £183,500) of which £nil (2025: £29,000) was outstanding at the year-end.
19. Financial instruments
Risk management policies and procedures
The Company’s financial assets and liabilities, in addition to short-term debtors and creditors and cash, comprise financial instruments which include investments in equity.
The holding of securities, investment activities and associated financing undertaken pursuant to the investment policy involve certain inherent risks. Events may occur that would result in either a reduction in the Company’s net assets or a reduction of the total return.
The main risks arising from the Company’s pursuit of its investment objective are those that affect stock market levels: market risk, credit risk and liquidity risk. In addition, there are specific risks inherent in investing in the biotechnology sector. The Board reviews and agrees policies for managing these risks, as summarised below. These policies have remained substantially unchanged throughout the current and preceding year. In assessing any changes to these risks, the Board considered changes in the economic and geopolitical climate, including the resurgence of the conflict in the Middle East; the continuing war in Ukraine and the increasingly tense relations between the US and China, and noted that it did not have a significant impact on the risk management policies for the year-end 31 August 2026.
19.1 Market risk
The fair value or future cash flows of a financial instrument held by the Company may fluctuate because of changes in market prices. This market risk comprises three elements – price risk, currency risk and interest rate risk. The Portfolio Managers assess the exposure to market risk when making each investment decision, and monitor the overall level of market risk on the whole of the investment portfolio on an ongoing basis.
(a) Price risk
The Company is an investment company and as such its performance is dependent on the valuation of its investments. A breakdown of the investment portfolio is given in the full Annual Report and Financial Statements. Market price risk arises mainly from uncertainty about future prices of the financial instruments held.
Management of the risk
The Board regularly considers the asset allocation of the portfolio as part of the process of managing the risks associated with the biotechnology sector, described in greater detail in the section on specific risk (note 19.4), whilst continuing to follow the investment objective. It is not the Company’s current policy to use derivative instruments to hedge the investment portfolio against market price risk.
Price risk exposure
At the year-end, the Company’s assets exposed to market price risk were as follows:
|
|
2026 |
2025 |
|
Non-current asset investments at fair value through profit or loss |
399,575 |
268,920 |
|
Total exposure |
399,575 |
268,920 |
The level of assets exposed to market price risk increased by approximately 48.6% (2025: 9.6%) during the year, through a combination of acquisitions and disposal of investments and changes in fair values.
Concentration of exposure to price risk
The Company currently holds investments in 70 (2025: 84) companies (excluding those valued at nil), in a mixture of quoted and unquoted investments in a variety of countries, which significantly spreads the risk of individual investments performing poorly and reduces the concentration of exposure.
This includes the Company’s investment into SV BCOF, SV Fund VI and SC IBT SLP as three unquoted holdings. However, SV BCOF has 16, SV Fund VI has 12 and SC IBT SLP has 3 companies, respectively, in their own portfolios. The classification of investments by sector is provided within the Investment Portfolio section of the report.
Price risk sensitivity
The following table illustrates the sensitivity of the profit for the year and the equity to an increase or decrease of 10% (2025: 10%) in the fair values of the Company’s investments. The Board believes that a 10% (2025: 10%) movement is sufficient to provide a reasonable range that could have affected the investment valuations at the year-end. This level of change is considered to be reasonably possible based on observation of current market conditions and based on the average total share price percentage return over the last five years on the ‘Ten-Year Financial Record’ in the full Annual Report and Financial Statements.
The sensitivity analysis is based on the Company’s investments at each Statement of Financial Position date, with all other variables held constant.
|
Income Statement – return after taxation |
2026 |
2026 |
2025 |
2025 |
|
Revenue return |
280 |
(280) |
(188) |
188 |
|
Capital return |
39,958 |
(39,958) |
26,892 |
(26,892) |
|
Total return after taxation |
40,238 |
(40,238) |
26,704 |
(26,704) |
(b) Currency risk
The financial statements of the Company are denominated in sterling. However, the majority of the Company’s assets and the total return are denominated in US dollars, accordingly the total return and capital value of the Company’s investments can be significantly affected by movements in foreign exchange rates. It is not the Company’s policy to hedge against foreign currency movement.
Management of the risk
The Manager monitors the Company’s exposure to foreign currencies on a daily basis, and reports to the Board on a regular basis.
Foreign currency exposure
The fair values of the Company’s monetary items that have foreign currency exposure at 31 August 2026 are shown below. Where the Company’s equity investments (which are not monetary items) are priced in a foreign currency, they have been included separately in the analysis so as to show the overall level of exposure.
|
|
2026 |
2025 |
|
Cash and cash equivalents: |
|
|
|
US dollars |
1,970 |
14,138 |
|
Short term receivables: |
|
|
|
US dollars |
91 |
65 |
|
Danish krone |
— |
4 |
|
Short term payables: |
|
|
|
US dollars |
(22,100) |
(31,316) |
|
Foreign currency exposure on net monetary items |
(20,039) |
(17,109) |
|
|
|
|
|
Non-current asset investments held at fair value |
|
|
|
US dollars |
381,948 |
268,539 |
|
Hong Kong dollars |
693 |
|
|
Euros |
— |
— |
|
Total net foreign currency exposure |
362,602 |
251,430 |
At the year-end, approximately 96.8% (2025: 100.8%) of the Company’s net assets were denominated in currencies other than sterling, reflecting a small overall net sterling liability at year-end, compared with a small net sterling asset balance at the end of 2025. This level of exposure is broadly representative of the levels throughout the year.
Foreign currency sensitivity
The Company measures foreign currency sensitivity by calculating the standard deviation of rates throughout the financial year. On this basis sterling strengthened by 0.5% against the US dollar, 1.1% against the Euro, and 1.3% against the Danish krone (2025: strengthened 2.8%, weakened by 2.8% and 2.7% respectively). Given the movements over the last two years, a change of 10% or even more is possible.
The following table illustrates the sensitivity of the profit after taxation for the year and the equity in regard to the Company’s financial assets and financial liabilities, assuming a 10% (2025: 10%) change in exchange rates.
If sterling had weakened by 10% against the exposure currencies, with all other variables held constant, this would have affected Company net assets and net profit for the year attributable to equity shareholders as follows:
|
|
2026 |
2025 |
|
US dollars |
36,260 |
25,143 |
|
|
36,260 |
25,143 |
If sterling had strengthened by 10% against the exposure currencies, with all other variables held constant, this would have affected Company net assets and net profit after taxation attributable to equity shareholders as follows:
|
|
2026 |
2025 |
|
US dollars |
(36,260) |
(25,143) |
|
|
(36,260) |
(25,143) |
In the opinion of the Directors, the above sensitivity analyses are not necessarily representative of the year as a whole, since the level of exposure changes as part of the currency risk management process used to meet the Company’s objectives.
(c) Interest rate risk
The Company will be affected by interest rate changes as it holds interest-bearing financial assets and liabilities. Interest rate changes will also have an impact on the valuation of investments, although this forms part of price risk, which is considered separately above.
Management of the risk
Interest rate risk is limited by the Company’s financial structure with operations mainly financed through the share capital, share premium and retained reserves. The majority of the Company’s financial assets are, under normal circumstances, equity shares and other investments which neither pay interest nor have a stated maturity date. Liquidity and loan facilities are managed with the aim of increasing returns for shareholders.
In the normal course of business, the Company’s policy is to be fully invested and, other than as arising from the timing of investment transactions, the cash holding is kept to a minimum.
It is not the Company’s policy to use derivative instruments to mitigate interest rate risk, as the Board believes that the effectiveness of such instruments does not justify the costs involved.
Interest rate exposure
The exposure of financial assets and financial liabilities to floating rates, giving cash flow interest risk when rates are re-set, is shown below:
|
|
2026 |
2025 |
|
Exposure to floating interest rates: |
|
|
|
Cash and cash equivalents |
2,072 |
14,980 |
|
Other payables: drawings on credit facility |
(22,100) |
(29,607) |
|
Total exposure |
(20,028) |
(14,627) |
The above year-end amounts are not representative of the exposure to interest rates during the year as the level of cash balances and drawings on the secured credit facility have fluctuated. The maximum and minimum net interest rate exposure during the year has been as follows:
|
|
2026 |
2025 |
|
Maximum interest rate exposure during the year – net debt |
(34,060) |
(34,762) |
|
Minimum interest rate exposure during the year – net (debt)/cash |
(3,466) |
(6,874) |
Interest rate sensitivity
The following table illustrates the sensitivity of the return after taxation for the year and net assets to a 3.0% (2025: 3.0%) increase or decrease in interest rates in regards to the Company’s monetary financial assets and financial liabilities. This level of change is considered to be a reasonable illustration based on observation of current market conditions. The sensitivity analysis is based on the Company’s monetary financial instruments held at the Statement of Financial Position date with all other variables held constant.
The sensitivity analysis is based on the Company’s monetary financial instruments held at each Statement of Financial Position date, with all other variables held constant.
|
Income Statement – return after taxation |
2026 |
2026 |
2025 |
2025 |
|
Revenue return |
(601) |
601 |
(439) |
439 |
|
Capital return |
— |
— |
— |
— |
|
Total return after taxation |
(601) |
601 |
(439) |
439 |
In the opinion of the Directors, this sensitivity analysis may not be representative of the Company’s future exposure to interest rate changes due to fluctuations in the level of cash balances and drawings on the secured credit facility.
(d) Loss of investor appetite
Loss of investor appetite risk is the risk that there will be a loss of investor appetite for investing in the sector as a result of political conditions, including FDA and FTC policy, or declining interest in IPOs.
Management of the risk
Loss of investor appetite risk is mitigated as the Portfolio Managers update the Board monthly and at each scheduled Board meeting on issues pertinent to the portfolio and the biotechnology sector generally, including expected future drivers.
Loss of investor appetite risk exposure
As an investment trust that invests in the biotechnology sector, the Company has a moderate loss of investor appetite risk exposure.
19.2 Credit risk
Credit risk is the exposure to loss from failure of a counterparty to deliver securities or cash for acquisitions or disposals of investments. Additionally, the Company has funds on deposit with banks or in money market funds. HSBC Bank plc was the custodian of the Company’s assets prior to 3 October 2025. The custodian of the Company’s assets is JPMorgan Chase Bank, N.A. London Branch which has long-term credit ratings of AA with Fitch and Aa2 with Moody’s. The Company’s investments are held in accounts which are segregated from the custodian’s own trading assets.
If the custodian were to become insolvent, the Company’s right of ownership is clear and they are therefore protected. However cash balances deposited with the custodian may be at risk in this instance, as the Company would rank alongside other creditors.
Management of the risk
During the year the Company bought and sold investments only through brokers which had been approved by the Manager as acceptable counterparties. In addition, limits are set as to the maximum exposure to any individual broker that may exist at any time. These limits are reviewed regularly.
Cash balances will only be deposited with reputable banks with high quality credit ratings.
|
|
2026 |
2025 |
|
Accrued income |
45 |
49 |
|
Cash at bank |
2,072 |
14,980 |
|
|
2,117 |
15,029 |
All of the above financial assets are current, their fair values are considered to be the same as the values shown and the likelihood of a material credit default is considered to be low.
None of the Company’s financial assets are past due or impaired.
19.3 Liquidity risk
Liquidity risk is the possibility of failure of the Company to realise sufficient assets to meet its financial liabilities.
Management of the risk
Liquidity and cash flow risk are mitigated as the Portfolio Managers aim to hold sufficient Company assets in the form of readily realisable securities which can be sold to meet funding commitments as necessary. In addition, the Company has a secured credit facility with The Bank of Nova Scotia, London branch, of £55.0 million (2025: same).
It should be noted, however, that investments in unquoted securities will not be readily realisable. Furthermore, even where the Company holds an investment in quoted securities, the Company may be restricted in its ability to trade that investment either because the investment becomes subject to restrictions when the company concerned becomes publicly quoted or, at certain times, as a consequence of the Company being privy to confidential price sensitive information as a result of the Portfolio Managers’ active involvement in that company.
Liquidity risk exposure
As an investment trust, the Company has limited liquidity risk. In any event, the Company estimates it could liquidate 90% (2025: 91%) of the portfolio within five days if required. A summary of the Company’s financial liabilities is provided in sub-note 19.6.
19.4 Sector specific risk
As well as the general risk factors outlined above, investing in the biotechnology sector carries some particular risks:
(a) the stock prices of publicly quoted biotechnology companies have been characterised by periods of high volatility;
(b) a significant proportion of the Company’s investments will be in companies whose securities are not publicly traded or freely marketable and may, therefore, be difficult to realise. In addition, there are inherent difficulties in valuing unquoted investments and the realisations from sales of investments could be less than their carrying value;
(c) biotechnology companies typically have a limited product range and those products may be subject to extensive government regulation. Obtaining necessary approval for new products can be a lengthy process, which is expensive and uncertain as to outcome;
(d) technological advances can render existing biotechnology products obsolete;
(e) intense competition exists in certain product areas in relation to obtaining and sustaining proprietary technology protection and the complex nature of the technologies involved can lead to patent disputes;
(f) certain biotechnology companies may be exposed to potential product liability risks, particularly in relation to the testing, manufacturing and sales of healthcare products;
(g) biotechnology companies spend a considerable proportion of their resources on R&D, which may be commercially unproductive or require the injection of further funds to exploit the results of their work; and
(h) the growing cost of providing healthcare has placed financial strains on governments, insurers, employers and individuals, all of whom are searching for ways to reduce costs. As a result, certain areas may be affected by price controls and reimbursement limitations.
19.5 Fair values of financial assets and financial liabilities
All financial assets and liabilities are either carried in the Statement of Financial Position at fair value or the Statement of Financial Position amount is a reasonable approximation of fair value. The fair value of quoted shares and securities is based on the bid price or last traded price, depending on the convention of the exchange on which the investment is quoted.
Unquoted investments are valued in accordance with IPEVC Guidelines. The methods commonly used to value unquoted securities are stated in accounting policy 1(f).
19.6 Summary of financial assets and financial liabilities by category
The carrying amounts of the Company’s financial assets and financial liabilities as recognised at the Statement of Financial Position date of the reporting periods under review are categorised as follows:
|
Financial assets |
2026 |
2025 |
|
Financial assets at fair value through profit or loss: |
|
|
|
Non-current asset investments – designated as such on initial recognition |
399,575 |
268,920 |
|
|
|
|
|
Cash and receivables: |
|
|
|
Current assets: |
|
|
|
Securities sold settlement |
32 |
— |
|
Receivables and other debtors |
244 |
136 |
|
Cash at bank |
2,072 |
14,980 |
|
|
2,348 |
15,116 |
|
Financial liabilities |
2026 |
2025 |
|
Measured at amortised cost |
|
|
|
Creditors: amounts falling due within one month: |
|
|
|
Purchases awaiting settlement |
— |
2,063 |
|
Bank loan |
22,100 |
29,607 |
|
Other creditors and accruals |
5,265 |
2,957 |
|
|
27,365 |
34,627 |
Note: Amortised cost is the same as the carrying value shown above.
19.7 Disclosures regarding financial instruments measured at fair value
The Company’s portfolio of investments, which may comprise investments in quoted equities and unquoted holdings, are carried in the Statement of Financial Position at fair value. Other financial instruments held by the Company may comprise amounts due to or from brokers, dividends and interest receivable, accruals, cash at bank and drawings on the secured credit facility.
For these instruments, the Statement of Financial Position amount is a reasonable approximation of fair value.
The investments are categorised into a hierarchy comprising the following three levels:
Level 1 – valued using quoted prices in active markets.
Level 2 – valued by reference to valuation techniques using observable inputs other than quoted prices included within Level 1.
Level 3 – valued by reference to valuation techniques using inputs that are not based on observable market data.
Categorisation within the hierarchy has been determined on the basis of the lowest level of input that is significant to the fair value measurement of the relevant asset.
Details of the valuation techniques used by the Company are given in the accounting policies.
(i) Financial assets at fair value through profit and loss
|
31 August 2026 |
Level 1 |
Level 2 |
Level 3 |
Total |
|
Equity investments |
348,017 |
— |
27,428 |
375,445 |
|
Bonds |
24,130 |
— |
— |
24,130 |
|
Total |
372,147 |
— |
27,428 |
399,575 |
|
31 August 2025 |
Level 1 |
Level 2 |
Level 3 |
Total |
|
Equity investments |
247,853 |
— |
21,067 |
268,920 |
|
Bonds |
— |
— |
— |
— |
|
Total |
247,853 |
— |
21,067 |
268,920 |
There were no transfers between levels 1, 2 or 3 during the year (2025: same). A reconciliation of fair value measurements in Level 3 is set out below.
(ii) Level 3 investments at fair value through profit or loss
|
Financial assets |
2026 |
2025 |
|
Opening valuation |
21,067 |
26,624 |
|
Capital contributions |
9,196 |
3,513 |
|
Distributions |
(4,032) |
(5,937) |
|
Total gains included in the Statement of Comprehensive Income |
|
|
|
On assets realised |
1,461 |
4,035 |
|
On assets held at the year-end |
(264) |
(7,168) |
|
Closing valuation |
27,428 |
21,067 |
(iii) Level 3 investments at fair value through profit and loss – price risk sensitivity
Investments are reported at their fair values. A full list of the Company’s investments is given in the full Annual Report and Financial Statements. As at 31 August 2026, 93.10% of the Company’s net asset value is invested in level 1 investments and 6.9% in level 3 investments.
The fair value of level 3 investments is influenced by the estimates, assumptions and judgements made in the valuation process. A sensitivity analysis is provided below which recognises that the valuation methodologies used involve different levels of subjectivity in their inputs in respect of unquoted investments (excluding investments in the unquoted funds). The unquoted funds do not have significant observable inputs used in the determination of their fair value, as described in note 1 (f). No key estimates or assumptions have been applied to the valuation of SV BCOF, SV Fund VI and SC IBT SLP between the date of the last quarterly report received and 31 August 2026.
|
31 August 2026* |
|
|
Effect of reasonably possible alternative assumptions | |
|
Valuation Techniques* |
Fair value |
Significant |
Favourable impacts |
Unfavourable impacts |
|
Discounted future cash flows |
2,351 |
Probability estimate of royalty income |
235 |
(235) |
|
|
|
Discount rate |
56 |
(53) |
|
Present value of future milestone payments |
158 |
Probability estimate of milestone achievement |
— |
— |
|
|
|
Discount rate |
3 |
(3) |
|
Calibration price of recent investment |
— |
Calibration price of recent investment |
— |
— |
|
|
2,509 |
|
294 |
(291) |
|
Net asset value |
— |
No significant judgements applied |
— |
— |
|
|
2,509 |
|
294 |
(291) |
|
31 August 2025* |
|
|
Effect of reasonably possible alternative assumptions | |
|
Valuation Techniques** |
Fair value |
Significant |
Favourable impacts |
Unfavourable impacts |
|
Discounted future cash flows |
2,486 |
Probability estimate of royalty income |
257 |
(256) |
|
|
|
Discount rate |
88 |
(83) |
|
Present value of future milestone payments |
350 |
Probability estimate of milestone achievement |
35 |
(35) |
|
|
|
Discount rate |
2 |
(2) |
|
Calibration price of recent investment |
341 |
Calibration price of recent investment |
34 |
(34) |
|
|
3,177 |
|
416 |
(410) |
|
Net asset value |
40 |
No significant judgements applied |
— |
— |
|
|
3,217 |
|
416 |
(410) |
* Investments in the table above have been valued by the adviser for the unquoted portfolio.
** Excludes investments in the SV unquoted funds and SC IBT SLP unquoted fund.
Significant unobservable inputs
The significant unobservable inputs applicable to each type of valuation technique will vary dependent on the particular circumstances of each unquoted company valuation. An explanation of each of the significant unobservable inputs is provided below and includes an indication of the range in value for each input, where relevant. The assumptions made in the production of the inputs are described in note 1(f).
Probability estimate of royalty income
The probability estimate of royalty income is a key variable input in the discounted future cash flow valuation technique used by the adviser and further probability adjusted at 80% (2025: 80%) of the calculated net present value.
It represents the potential commercial uptake risk, competitor risk and uncertainty around drug pricing. To factor in the uncertainty surrounding the probability estimate of royalty income, the input has been stressed by a factor of +/- 10%. Management is comfortable with the adviser assessment that the largest differential in the flux of the valuations would be 10%.
Probability estimate of milestone achievement
The probability estimate of milestone achievement is a key variable input in the present value of future milestone payments valuation technique used by the adviser and represents the potential risk that commercial milestones are achieved/not achieved in accordance with the estimated timeline. To factor in the uncertainty surrounding the probability estimate of milestone achievement, the input has been stressed by a factor of +/- 10%. Management is comfortable with the adviser’s assessment that the largest differential in the flux of the valuations would be 10%.
Discount rate
The application of a risk adjusted discount rate (14% for Ikano Therapeutics (2025: 14%)) has been applied by the adviser to discounted future cash flow and present value of future milestone payments valuation techniques. The discount rate takes into account the macro market risk and the liquidity premium. To factor in the uncertainty surrounding the discount rate, the input has been stressed by +/- 2%. Management is comfortable with the adviser’s assessment that the largest differential in the flux of the valuations would be 2%.
Calibration price of similar/recent investment
The fair values of the underlying investments are based on the calibration price but remain unadjusted from the recent price of the investment. To factor in the uncertainty surrounding the selection of calibration price, the fair value of the investment at the reporting date has been stressed by +/- 10%.
19.8 Capital management policies and procedures
The Company’s objectives, policies and processes for managing capital are unchanged from the preceding year.
|
The Company’s debt and capital structure comprises the following: |
2026 |
2025 |
|
Debt |
|
|
|
Bank loan |
22,100 |
29,607 |
|
Total debt |
22,100 |
29,607 |
|
Equity |
|
|
|
Share capital |
10,346 |
10,346 |
|
Reserves |
364,212 |
239,063 |
|
Total equity |
374,558 |
249,409 |
|
Total debt and equity |
396,658 |
279,016 |
The Company’s capital management objectives are to ensure that it will continue as a going concern and to maximise total return to its equity shareholders through an appropriate level of gearing.
The Board’s policy is to limit gearing to 30%. Gearing for this purpose is defined as borrowings used for investment purposes, less cash, expressed as a percentage of net assets.
|
The Company’s debt and capital structure comprises the following: |
2026 |
2025 |
|
Borrowings used for investment purposes, less cash |
20,028 |
14,627 |
|
Net assets |
374,558 |
249,409 |
|
Gearing |
5.3% |
5.9% |
The Board, with the assistance of the Manager, monitors and reviews the broad structure of the Company’s capital on an ongoing basis.
This review includes:
(i) the planned level of gearing, which takes into account the Manager’s view of the market;
(ii) the need to buyback the Company’s own shares for cancellation or to hold in treasury, which takes into account the share price discount;
(iii) the opportunities for issue of new shares or to reissue shares from treasury; and
(iv) the amount of dividend to be paid, in excess of that which is required to be distributed.
20. Segmental reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker. The chief operating decision-maker, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as the Board.
The Board is of the opinion that the Company is engaged in a single segment of business, namely the investment in biotechnology and other life sciences companies in accordance with the Company’s investment objective, and consequently no segmental analysis is provided.
21. Post Statement of Financial Position events
There have been no significant events since the year-end that would require adjustment to, or disclosure in, the financial statements.
STATUS OF RESULTS ANNOUNCEMENT
2026 Financial Information
The figures and financial information for 2026 are extracted from the Annual Report and Financial Statements for the year ended 31 August 2026 and do not constitute the statutory accounts for that year. The Annual Report and Financial Statements include the Report of the Independent Auditor which is unqualified and does not contain a statement under either section 498(2) or section 498(3) of the Companies Act 2006. The Annual Report and Financial Statements will be delivered to the Registrar of Companies in due course.
2025 Financial Information
The figures and financial information for 2025 are extracted from the Annual Report and Financial Statements for the year ended 31 August 2025 and do not constitute the statutory accounts for that year. The Annual Report and Financial Statements include the Report of the Independent Auditor which is unqualified and does not contain a statement under either section 498(2) or section 498(3) of the Companies Act 2006. The Annual Report and Financial Statements has been delivered to the Registrar of Companies.
Neither the contents of the Company's web pages nor the contents of any website accessible from hyperlinks on the Company's web pages (or any other website) is incorporated into, or forms part of, this announcement.
For further information:
Michelle Taiwo
Schroder Investment Management Limited
E-mail: AMCompanySecretary@Schroders.com
Issued by Schroder Investment Management Limited. Registration No 1893220 England.
Authorised and regulated by the Financial Conduct Authority. For regular updates by e-mail please register online at www.schroders.com for our alerting service.
ENDS
A copy of the 2026 Annual Report and Financial Statements will shortly be submitted to the FCA's National Storage Mechanism and will be available for inspection at https://data.fca.org.uk/#/nsm/nationalstoragemechanism
The 2026 Annual Report and Financial Statements will shortly be available on the Company's web pages at www.ibtplc.com where up-to-date information on the Company, including daily NAV and share prices, factsheets and portfolio information can also be found.
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