LONDON (Alliance News) - Strategic Equity Capital PLC said on Monday it underperformed against its benchmark for its recently ended financial year, due to an undervalued portfolio.
The company said its net asset value total return for the year to the end of June 30 was 1.8%, underperforming against the FTSE Small Cap ex Investment Trusts Total Return Index, which returned 6.4%.
The net asset value per share as at June 30 was 260.16 pence per share, up from 256.00p on the same date the year before.
Shares in Strategic Equity Capital remained flat at 227.00 pence on Monday.
The trust said that the disappointing performance against its benchmark was caused by increased volatility within its portfolio, usually caused by the takeover of companies held within the portfolio.
Alliance Pharma PLC and Equiniti Group PLC emerged as the top performers within the portfolio. Alliance Pharma's share price rose with the approval of its anti-nausea treatment Diclectin, and Equiniti rose with the acquisition of Wells Fargo's Share Services business in July 2017.
However Brooks Macdonald's share price fell over the period due to added costs coming from regulatory requirements and legacy legal issues, and Proactis suffered due to a profit warning made in April, coming from the loss of two large customers and a slower pipeline of new business.
Brooks Macdonald Group PLC and Proactis Holdings PLC ended up being the two biggest detractors in the fund's portfolio.
"In the opinion of your investment manager and board, the portfolio is significantly under-valued. We anticipate that the public market will acknowledge this fact over time (or potential acquirers if the dislocation persists) and re-rate individual shares and, therefore, the portfolio in aggregate. As this transpires and performance improves, the discount should narrow," said Chairman Richard Hills.
