British Business Investments reports sharp drop in annual profit
British Business Investments reported a sharp drop in annual profit on Tuesday as it lamented a challenging economic backdrop in the UK.
British Business Investments is a subsidiary of the British Business Bank, a government-owned development bank. BBI aims to improve access to alternative finance for smaller businesses in the UK while making a commercial return for the UK taxpayer.
It made 19 new commitments in the year ended March 31, totalling £386mn. But, despite a strong year for new commitments, BBI noted that write-downs in fair value gains for some of the companies in its portfolio had impacted its financial performance.
BBI’s unrealised gains on assets held at fair value plunged to £31.6mn from £167mn the previous year. Realised gains dropped to £8.1mn from £12mn.
As a result, the firm delivered a pretax profit of £38.1mn and income from investments of £53.1mn. This represented a sharp fall from the £189.4mn and £203.4mn posted the previous year.
BBI noted that the write-down in fair value gains for some of its equity holdings was expected, adding that its performance was in line with that of the wider venture capital market.
“Despite the continued challenging economic environment, British Business Investments saw resilient performance in its portfolio during the past financial year, combined with strong demand across all of our programmes,” said Managing Director Adam Kelly.
“This illustrates that funding gaps remain in the market for the types of finance that we support.”
Of the 19 commitments made this past year, nine of them were to new delivery partners. These included firms such as agriculture-focused challenger bank Oxbury, online property finance specialist CrowdProperty, and sustainability-led alternative assets and SME investment manager Foresight Group.
Debt funds continued to represent the largest part of BBI’s balance sheet. It said the return from this portfolio had underpinned its overall financial result this financial year, which, though lower than last year, had performed in line with expectations.