Financial performance
In 2022 we made total new commitments of £68 million (2021: £80 million). Drawdowns in the year totalled £64 million (2021: £78 million) and cash receipts from our Social Impact Investment Portfolio totalled £48 million (2021: £53 million), both in line with expectations, receipt levels being driven by the stage of the constituents of our underlying investment portfolio.
- £68m total new commitments
- £64m total new drawdowns
- £48m cash receipts from social impact investment portfolio
- £4.1m net profit
Understanding performance
The 2022 results show a reduction of in-year net profit to £4.1 million (2021: £16.1 million), driven by reduced valuations gains in the Social Impact Investment Portfolio. As noted in prior years, we expect to see some volatility within the performance of the Social Impact Investment Portfolio, given the long-term nature and risk of our investments. We also expect there to be a general trend towards improved financial performance, as our overall investment approach has developed, and a clearer path of returns becomes apparent.
Big Society Capital as a sustainable business
All our investments are made with the aim of developing financially sustainable structures and enterprises. This ensures the social impact continues to be generated, even after the investment has been repaid with a return. We aim for a positive financial return, so as to have the greatest chance of attracting other investors, and ultimately achieve the greatest social impact in the long-term.
The net profit is driven by social impact returns, with the Social Impact Investment Portfolio generating a return in 2022 of 2.9% (2021: 6.3%). Although there has again been a positive return in 2022, upward and downward revenue volatility is likely to continue to be a feature of our portfolio performance in future years, with a heightened risk of revenue reductions in the short/medium term given the current levels of UK inflation and interest rates.
Looking to the future
2022 was a very challenging year for investment assets overall with global bond and equity indices falling by over 10%. Notwithstanding this, the Social Impact Investment Portfolio has continued to show resilience in the face of economic challenges such as high inflation, rising interest rates and increasing energy and other costs. We continue to closely monitor the effects of the uncertain economic and international environment on the UK economy, and its areas of investment focus in particular. Read the full annual report and financial statements here.