Report and Financial Statements 2020

Today we publish our Report and Financial Statements for the year ended 31 December 2020. In a year dominated by COVID-19 the report documents our response to the pandemic and the impact it has had on our investment portfolio, along with other key developments in the year.

Published

Written by

Bekki Whiting, Senior Director, Head of Finance

2020 and our response to the pandemic

Our overriding purpose; to improve the lives of people in the UK through investment with a sustainable return, remains the same. At the height of the pandemic, we undertook several crucial initiatives to support and collaborate with the organisations we work with, adapting existing investments to give cash flow relief and sharing information across the sector. New funding was also made available by the release of an additional £45 million of previously committed dormant account money, alongside the repurposing and rescheduling of planned commitments. As part of this, £25 million was committed to the Resilience and Recovery Loan Fund, a Coronavirus Business Interruption Loan Scheme (CBILS) guaranteed loan fund established by us in collaboration with Social Investment Business to support charities and social enterprises whose businesses have been disrupted by the pandemic.

2020 saw the launch of the Schroder BSC Social Impact Trust plc , where we have taken on the role of designated portfolio manager for the first time. The trust is designed to give investors access to private market impact opportunities that would otherwise be unavailable to them. This provides investors with high impact investments that contribute to solutions to social challenges alongside targeting long-term capital growth and income. We invested £22 million into the Trust and provided seed assets with a value of £49 million.

In December 2020, we also issued our 2020 Impact Report , highlighting over 30 stories showing how social impact investment has helped those charities, social enterprises and other social purpose organisations to grow and thrive. The report focusses on our own, and our partners, role and contribution to those stories.

Our investments in 2020

In 2020 we committed a further £115 million to our social impact portfolio across our investment themes of Homes, Place and Early Action including:

  • £10 million to the Women in Safe Homes Fund providing affordable, safe and secure homes across the UK for women and children who are experiencing or are at risk of homelessness
  • £8 million to Eka Ventures investing in sustainable consumer technology companies
  • £6 million to the Arts and Culture Impact Fund, fulfilling unmet demand and delivering social impact through the arts.

As of the end of 2020, more than 1,500 social enterprises and charities have received money from us and other investors alongside. We have invested over £105 million of our own capital with a focus on early action, £146 million with a focus on housing for vulnerable people and £183 million with a focus on place-based investments.

2020 financial performance

Our long-term objective is to generate positive financial returns alongside demonstrable social impact. For 2020 we are reporting a net profit for the year of £3.7 million, compared to a net loss of £2.1 million in 2019, driven by unrealised gains in our social impact investment portfolio. Profits and cash generated will be used to achieve further social impact, enable our operational and market building costs to be covered, and move us towards generating returns for our shareholders.

Favourable performance in our social investment portfolio

Revenue from our social impact investment portfolio in 2020 was £7.2m (2019: £38,000 loss). Valuation movements on the portfolio continue to be a key driver of results and in the year, valuation increases outstripped investments written down. The valuation increase demonstrates the favourable impact the pandemic has had in some areas of our portfolio, particularly on tech-based businesses, and those businesses that have been able to successfully pivot their business models during the pandemic, allowing them to grow revenue and profit. Other investments, particularly in our debt portfolio, have found the circumstances more challenging. With the pandemic far from over, it is still difficult to gauge the overall longer-term impact on our portfolio. This will become more evident as the measures designed to support the economy through the pandemic are unwound.

Stable treasury returns and operating costs

As we continue to invest into our social impact portfolio, the size of our treasury portfolio diminishes. Despite this, and the turbulence created in the financial markets by the pandemic, these assets performed well during the year and contributed a further £4.7 million (2019: £5.7 million) to profit.

Operating costs of £8.3 million (2019: £7.9 million) increased in line with expectations as we continue to invest to support our strategy and a growing portfolio.

Looking ahead

2021 will bring a refresh of our strategy and we will look forward with a clear perspective. Learning from our experiences and success, we will apply our expertise and understanding to continue to create opportunities for investments with both a sustainable financial return and positive social impact.

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Bekki Whiting

Senior Director, Head of Finance bwhiting@bigsocietycapital.com

Download Report and Financial Statements 2020