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2022-03-31-accounts

Social Investment Business Foundation

Year Ended 31 March 2022 Charity number 1117185

SOCIAL INVESTMENT BUSINESS FOUNDATION REPORT AND FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2022

Contents

ntents
Page
Trustees, Officers and Advisers 2
Trustees’ Report 3 - 9
Statement of Trustees’ Responsibilities 10
Independent auditor's report 11 - 13
Consolidated Statement of Financial Activities 14
Consolidated Balance Sheet 15
Consolidated Statement of Cash Flows 16
Notes to the consolidated financial statements 17 - 41

1

SOCIAL INVESTMENT BUSINESS FOUNDATION TRUSTEES, OFFICERS AND ADVISERS FOR THE YEAR ENDED 31 MARCH 2022

Trustees

Rt Hon Hazel Blears (Chair) Hugh Rolo OBE (resigned 22 September 2021) James Rice Jenny North Richard Pelly OBE Robert Hewitt Sonali Siriwardena Jagjit Dosanjh-Elton Edward Wallis (appointed 22 September 2021)

Company Secretary and registered office

Nishit Chikhlia (appointed 8 July 2021)

Nicolas Temple (resigned 8 July 2021)

CAN Mezzanine, 7-14 Great Dover Street, London, SE1 4YR

Charity number

1117185

Company number

05777484

Auditor

RSM UK Audit LLP, 25 Farringdon Street, London, EC4A 4AB

Bankers

Barclays Bank, 1 Churchill Place, Leicester LE87 2BB

Unity Trust Bank, Nine Brindley Place, Birmingham B1 2HB

CCLA Investment Management, Senator House, 85 Queen Victoria St, London EC4V 4ET

Charity Bank, Fosse House 182 High Street, Tonbridge TN9 1BE

The Royal Bank Of Scotland, Chatham Rcsc Western Avenue Waterside Court Chatham Maritime, Chatham ME4 4RT

Lloyds Bank, Po Box 1000, BX1 1LT

National Westminster Bank, Chatham Rcsc Western Avenue Waterside Court Chatham Maritime, Chatham ME4 4RT

Santander Bank, Bridle Road Bootle, Merseyside L30 4GB

Triodos Bank, Deanery Road Bristol BS1 5AS

Lawyers

Weil, Gotshal & Manges (London) LLP, 110 Fetter Lane, London EC4A 1AY United Kingdom

2

SOCIAL INVESTMENT BUSINESS FOUNDATION REPORT OF THE BOARD OF TRUSTEES FOR THE YEAR ENDED 31 MARCH 2022

The Board of Trustees of Social Investment Business Foundation (SIBF) present their report together with the audited financial statements for the Group for the year ended 31 March 2022, in accordance with the Company's governing documents. These statements have been prepared under the Guidelines in the Accounting and Reporting by Charities: Statement of Recommended Practice, 2019 (Charities SORP) 2nd Edition, and with the Companies Act 2006. The Trustees are also Directors of SIBF for the purposes of company law.

1 Objectives and Activities

The objects of the Charity are to promote for the public benefit all purposes as are recognised as charitable under the laws of England and Wales including but not limited to:

SIBF is committed to helping impact-led organisations improve people’s lives. We aim to do this by:

All our activities are underpinned by:

Our five core values inform our relationships with the charities and social enterprises we work with and how we operate:

SIBF continues to manage the Communitybuilders Fund and the Adventure Capital Fund, both of which invest in community based social enterprises. SIBF is the parent company of Social Investment Business Limited (SIB Limited), which holds and delivers fund management contracts on behalf of third parties, including Government departments, and Futurebuilders England Limited (FBE), which holds the assets of the Futurebuilders and Modernisation Funds. The Communitybuilders Fund which was endowed to SIBF in 2011 became unrestricted on 1 April 2021.

SIBF is also the parent company and sole shareholder of Forward Enterprise FM Ltd, a company limited by shares. Forward Enterprise FM Ltd (FEFM), was established in March 2018 with the sole purpose of making investments in enterprises working with or being led by ex-offenders or people in recovery from addiction and creating employment opportunities for people from these communities. During the year a decision was made to transfer the assets and liabilities of FEFM to SIBF and strike off FEFM.

SIBF is also the parent company and sole shareholder of Social Investment Business FM Ltd (SIB FM), a company limited by shares established with the sole purpose of making investments to charities and social enterprises during Covid.

3

SOCIAL INVESTMENT BUSINESS FOUNDATION REPORT OF THE BOARD OF TRUSTEES (CONTINUED) FOR THE YEAR ENDED 31 MARCH 2022

During the year SIBF invested £3m in Social Investment Business Loans Ltd, a wholly owned subsidiary established to manage the Recovery Loan Fund (RLS); it is also a company limited by shares, with SIB Foundation its sole shareholder.

Collectively the group of companies is referred to as Social Investment Business (SIB).

SIBF continues to be a shareholder and investor in Social and Sustainable Capital LLP (0C378569) (SASC) and its funds; during the year, the SIB investment in the Community Investment Fund (CIF) was largely recovered, and therefore SIBF’s share in the LLP reduced from 29% to 14.5%.

2 The Group’s specific strategic priorities for the year 2021/22 were:

All underpinned by operational excellence, renewed approach to training/performance and sector leading employment practice.

This section of the report highlights the major achievements of the year helping to achieve those key priorities:

2.1 Listening, designing and adapting to customer demand

After the success of the Resilience and Recovery Loan Fund (RRLF), which made its final investments at the start of this financial year, SIB looked at the data and designed a successor fund – the Recovery Loan Fund. The team successfully raised over £21m for this fund from a wide range of investors, including social enterprise Fusion 21, the Church of England’s Archbishops’ Council, Big Society Capital and MFS Asset Management.

Analysis of data from previous funds revealed systemic underinvestment in black and minority-led organisations, so the team applied for a Flexible Finance grant from Access to lower turnover thresholds, work with specialist partners, and put grant alongside loan from the Recovery Loan Fund to address this historic exclusion.

There were also continuous improvement of systems and processes connected to the Reach Fund and the Enterprise Development Programme in this period, using a combination of data and direct customer feedback.

2.2 Embedding data and impact in core activities, especially decision-making

SIB won and delivered the first phase of the Future Camden Fund in this period, which used a data-led approach to assessment and decision-making. Data has become equally critical to the portfolio construction and management of SIB’s investment funds – with a transparent online dashboard providing accountability to wider audiences.

SIB also built on its partnership with Tortoise Media with a partnership with the Financial Times, using SIB data and analysis to assess the impact on local economies from the pandemic. This work in the mainstream media complemented more social sector-specific work like our Diversity and Resilience dashboards, both drawing on our significant datasets.

2.3 Grow influence with government and sector on key issues (policy makers and peers)

SIB has continued to host the Social Investment Forum, the Diversity Forum for Social Investment, and the Equality Impact Investing Project: all important pieces of infrastructure to help the wider landscape be as representative and as effective as possible. SIB has also successfully worked in co-ordination with sector peers to advocate for appropriate inclusion of the social sector in government guarantee schemes. SIB also contributed data and evidence to the Adebowale Commission on social investment, feeding directly into its central recommendations.

4

SOCIAL INVESTMENT BUSINESS FOUNDATION REPORT OF THE BOARD OF TRUSTEES (CONTINUED) FOR THE YEAR ENDED 31 MARCH 2022

2.4 Maximise impact through focusing on the people and places most in need, post Covid

Much of the organisation’s work in this period has been focused on the people and places most in need, and particularly those most affected by the pandemic. Work has particularly focused on black and minority-led communities: through the Future Camden Fund, Flexible Finance and the Black and Minoritised strand of the Enterprise Development Programme. SIB has worked constructively with partners Create Equity and the Ubele Initiative on these.

The Recovery Loan Fund is explicitly focused on supporting charities and social enterprises with their post-Covid recovery and development, and already has a strong portfolio, diverse in sector, geography and leadership.

SIB’s work managing the Enterprise Development Programme and Reach Fund for Access, as well as the existing grants programme for Power to Change, means that it is directly supporting and enabling activity in many of the communities that have been ‘left behind’ across England.

2.5 Ensure SIB continuity through a strong operating model and balance sheet

This financial year fell after the extraordinary year of Covid (wave 1) and the emergency responses in which SIB played a significant role, so it was primarily a year of consolidation, transition and development. Nevertheless, SIB is in a strong position for the future through:

All of the above has been underpinned by significant progress in strengthening our operational capability, notably in finance and systems – and by the continued excellence of our People and Values team on developing training, frameworks, opportunities and support.

3 Future Developments

The Board are committed to a renewal of the strategy in 2022 which includes a focus on tackling inequality as the golden thread through all of SIB’s work.

Our mission remains to build a more resilient, diverse and distributed social economy that contributes to a more equal society.

Four key outcome areas working towards achieving our mission are:

This work will continue to be underpinned by a retained focus on operational excellence:

5

SOCIAL INVESTMENT BUSINESS FOUNDATION REPORT OF THE BOARD OF TRUSTEES (CONTINUED) FOR THE YEAR ENDED 31 MARCH 2022

4 Main Strategic Risks

SIB maintains a risk register which identifies the key strategic risks facing the organisation. This register is a working document and is discussed and reviewed at the Executive Group meetings and by both the Audit and Finance Committee and Board. The risk register is updated to reflect recent operational and financial developments, strategic objectives and changes in the external environment. Each risk together with actions that can be or are being taken in mitigation is analysed according to its perceived potential impact, likelihood of occurrence together with actions taken in mitigation.

The risk register contains four of the following main areas of concern, as follows, with associated mitigations:

Additionally, the board and senior team are monitoring the external environment closely for any specific risks either directly for SIB or the organisations it supports – this includes ongoing impact of the pandemic, the cost-of-living crisis, and the growing effects of climate change.

Trustees are satisfied that there are procedures in place commensurate with these key risks to prevent or manage their effects. These procedures include the active monitoring and updating of control systems and procedures to ensure we are managing and taking appropriate action. Where appropriate, financial provision will be made on the balance sheet, reserves set aside, or financial plans updated.

5 Going Concern

The Trustees have reviewed the forecasts for each company in the group, covering a period of 12 months from the date of signing these financial statements with concentration on the overall group position as the parent Charity (SIBF) would underwrite any losses in its subsidiaries.

Where SIB’s own funds are directly invested, SIB has continued to retain a cautious provisioning position to ensure any future risk is mitigated and continues to monitor performance at quarterly investment committee meetings.

The entities within the group, are anticipated to have sufficient cash resources for at least 12 months following the date of signing these financial statements. As a result, the Trustees have not identified any material uncertainties and therefore consider it appropriate for the accounts to be prepared on a going concern basis.

6 This year’s performance

The Statement of Financial Activities (SOFA) shows that the Group’s unrestricted reserves increased by £18,083k (2021: decreased by £400k). Restricted reserves decreased by £18,670k inclusive of £534k returned from Futurebuilders to the DCMS (2021: decrease £8,128k, £7,966k returned to DCMS).

Unrestricted income, including transfers from restricted funds, increased by £16,917k to £20,718k (2021: £3,801k) inclusive of £21m released from the Community Builders Funds and the transfer out of £3m to SIB Loans’ as restricted equity. Unrestricted expenditure decreased by £916k to £3,285k (2021: £4,201k), due to increased activity in the year.

For full detail of this year’s performance by the subsidiaries see Note 25 to the Group Accounts.

6

SOCIAL INVESTMENT BUSINESS FOUNDATION REPORT OF THE BOARD OF TRUSTEES (CONTINUED) FOR THE YEAR ENDED 31 MARCH 2022

7 Reserves Policy

The Trustees have ultimate responsibility for ensuring SIBF has an effective Group Reserves Policy. The reserve policy is established to ensure that each company has adequate reserves and/or retained profits to meet the current and future needs of the business, whilst taking into consideration the requirements of the individual subsidiaries and ensuring they comply with the Charities SORP and the Companies Act 2006. The policy is reviewed each year.

The policy is to balance the goal of sustainability with the aim of being efficient as a not-for-profit organisation. Decisions on the appropriate, sustainable levels of reserves will be informed by a combination of short-term working capital requirements, projected levels of operating costs, estimates of contract exit costs and availability of funds for new business development. The reserves are to be held in cash or cash equivalent securities.

SIBF’s reserves policy stipulates that the cash and reserves position is to be sufficient to cover a minimum of 6 months operating costs and to enable SIBF to develop new initiatives in support of its charitable objects. With 6 months operating costs estimated at £1.8m, the Trustees have agreed a target reserves of £1.5m to £2.0m. At the end of the year, the Group’s free unrestricted reserves stood at £20.8m.

8 Treasury Management Policy

SIBF and the Group as a whole, operate a Treasury Management Policy, based on five key criteria of Security, Business Needs, Ethical, Influence and Returns. Applying these criteria means that investments are protected, access is facilitated, funds are used to support social or environmental benefit, and SIB builds relationships in the sector and influences banking attitudes to social enterprise.

SIBF has several bank accounts across which funds are deposited to spread risk, our policy limits a maximum of £10m in any individual bank which must ideally have a positive view to ethical investment and have a green/amber rating on the Ethical Company Index (scoring over 50%) or should have adopted the Equator Principles and be listed on the current Equator Principles Financial Institutions (EPFIs) in line with our key principle of security for our assets. These limits are regularly reviewed, having been reviewed and agreed by the Audit and Finance Committee in 2022.

We continue to hold assets on behalf of funds that are not our own. We therefore have significant amounts of money held in cash, because this money can be called upon to be disbursed or returned to its owners at short notice.

9 Structure, Governance and Management

(a) Background and Legal Structure the Group is formed as follows:

SIB Foundation – the ultimate parent company, a charity and company limited by guarantee SIBL is a private company limited by guarantee and a subsidiary of SIB Foundation.

SIBL is the sole member of FBE, a private company limited by guarantee.

SIBFM and SIB Loans are private companies limited by shares, with SIBF as the sole shareholder.

(b) Governance and Decision Making

The governance structures and decision-making processes for all the companies in the Group are laid out in the relevant articles of association. In this financial year all the recommendations were enacted following the previous years NCVO governance review in line with the Charity Governance Code this included setting up an internal Governance Working Group as well as a Governance Committee.

SIBF is governed by seven members of the Board of Trustees. During the year the following Board Subcommittee Structure were in place:

7

SOCIAL INVESTMENT BUSINESS FOUNDATION REPORT OF THE BOARD OF TRUSTEES (CONTINUED) FOR THE YEAR ENDED 31 MARCH 2022

SIB Limited has a Board comprising seven Non-Executive Directors, these govern SIBL and retain governance rights and a supervisory role over FBE. FBE's Board of Directors is the Executive Senior Management Team of SIBL.

For the Group we also ensure that governance and decision-making processes are in line with and enable us to meet contractual obligations set out in all agreements with external parties.

The Directors delegated the day-to-day management of the Group to the Executive team. The Executive team throughout the year were:

Nicolas Temple Chief Executive
Nishit Chikhlia Director of Finance (from 1 July 2021)
Phillip King Interim Director of Finance (to 30 June 2021)
Robert Benfield Director of Investment
Genevieve Maitland Hudson Director of Learning & Influence
Deborah Smart Director of Grants (to 5 July 2022)
Shelby Bradley Director of People and Values

Details of the Trustees who served during the year and to the date of signing the financial statements are shown on page 2 of this report. Five Trustees are also Directors of SIBL.

Each member agrees to contribute £1 in the event of the charity winding up. The remaining Founder Member, Locality, has the right to nominate a representative to sit on the Board of Trustees.

The Trustees are committed to ensuring that the Boards have the combination of skills necessary to support the effective provision of finance to charities and community enterprises. We will ensure that our Board of Trustees includes skills and expertise in the following areas: banking and investment, community regeneration and social enterprise, business, commercial law and financial and risk management.

(c) Public Benefit Statement

The Trustees have considered the Charity Commission's general guidance on public benefit when reviewing our aims and objectives and in planning our future activities. We are mindful of the need to ensure that all funds and activities will deliver public benefit and help us to meet our aims and objectives and are also taking account of Charity Commission guidance around non-charitable organisations.

The Trustees have a duty to include in this Annual Report a statement on the Charity’s public benefit and demonstrate that:

We have set out under ‘Objectives and Activities’ above how we deliver public benefit against our charitable objectives.

(d) Fundraising statement

Section 162a of the Charities Act 2011 requires charities to make a statement regarding fundraising activities. Although we do not undertake widespread fundraising from the general public, the legislation defines fund raising as “soliciting or otherwise procuring money or other property for charitable purposes.” Such amounts receivable are presented in our accounts as “voluntary income” and includes legacies and grants.

In relation to the above we confirm that all solicitations are managed internally, without involvement of commercial participators or professional fundraisers, or third parties. The day-to-day management of all income generation is delegated to the Executive team accountable to the Trustees.

SIBF is not bound by any undertaking to be bound by any regulatory scheme and the SIBF does not consider it necessary to comply with any voluntary code of practice.

We have received no complaints in relation to fundraising activities. Our terms of employment always require staff to behave reasonably; as we do not approach individuals for funds, we have not specified this to fundraising activities nor do we consider it necessary to design specific procedures to monitor such activities.

8

SOCIAL INVESTMENT BUSINESS FOUNDATION REPORT OF THE BOARD OF TRUSTEES (CONTINUED) FOR THE YEAR ENDED 31 MARCH 2022

(e) Related parties

Related party transactions are referred to in detail in Note 24 to the financial statements.

(f) Disclosure of Information to Auditor

In so far as the Trustees are aware:

The Trustees report, incorporating the Strategic Report was approved by the Trustees of SIB Foundation on 28 September 2022 and signed on their behalf.

Rt Hon Hazel Blears Chair Date: 28 September 2022

Jagjit Dosanjh-Elton Trustee Date: 28 September 2022

9

SOCIAL INVESTMENT BUSINESS FOUNDATION REPORT OF THE BOARD OF TRUSTEES (CONTINUED) FOR THE YEAR ENDED 31 MARCH 2022

STATEMENT OF TRUSTEES’ RESPONSIBILITIES

The Trustees (who are also directors of SIBF for the purposes of company law) are responsible for preparing the Annual Report and the financial statements in accordance with applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice).

Company law requires the Trustees to prepare financial statements for each financial year in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). Under company law the Trustees 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 Group and Charity and of the incoming resources and application of resources, including the income and expenditure, of the Group for that period.

In preparing these financial statements, the Trustees are required to:

The Trustees are responsible for keeping adequate accounting records that are sufficient to show and explain the Charity’s transactions and disclose with reasonable accuracy at any time the financial position of the Charity and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the Charity and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

The Trustees are responsible for the maintenance and integrity of the corporate and financial information included on the charitable company’s website. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

10

INDEPENDENT AUDITOR’S REPORT TO MEMBERS OF SOCIAL INVESTMENT BUSINESS FOUNDATION FOR THE YEAR ENDED 31 MARCH 2022

Opinion

We have audited the financial statements of Social Investment Business Foundation (the ‘parent charitable company’) and its subsidiaries (the ‘group’) for the year ended 31 March 2022 which comprise the Consolidated Statement of Financial Activities, the Consolidated and Company Balance Sheets, the Consolidated Cash Flow Statement and notes to the financial statements, including significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland” (United Kingdom Generally Accepted Accounting Practice).

In our opinion the financial statements:

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the financial statements section of our report. We are independent of the group and parent charitable company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Conclusions relating to going concern

In auditing the financial statements, we have concluded that the trustees’ use of the going concern basis of accounting in the preparation of the financial statements is appropriate.

Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the group’s or parent charitable company’s ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.

Our responsibilities and the responsibilities of the trustees with respect to going concern are described in the relevant sections of this report.

Other information

The other information comprises the information included in the Annual Report other than the financial statements and our auditor’s report thereon. The trustees are responsible for the other information contained within the Annual Report. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon.

Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.

We have nothing to report in this regard.

11

INDEPENDENT AUDITOR’S REPORT TO MEMBERS OF SOCIAL INVESTMENT BUSINESS FOUNDATION FOR THE YEAR ENDED 31 MARCH 2022

Opinions on other matters prescribed by the Companies Act 2006

In our opinion, based on the work undertaken in the course of the audit:

Matters on which we are required to report by exception

In the light of the knowledge and understanding of the group and the parent charitable company and their environment obtained in the course of the audit, we have not identified material misstatements in the Directors’ Report included within the Trustees’ Report.

We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you if, in our opinion:

Responsibilities of trustees

As explained more fully in the Statement of Trustees’ responsibilities set out on page 10, the trustees (who are also the directors of the charitable company for the purposes of company law) are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the trustees determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, the trustees are responsible for assessing the group’s and parent charitable company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the trustees either intend to liquidate the group or parent charitable company or to cease operations, or have no realistic alternative but to do so.

Auditor’s responsibilities for the audit of the financial statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

The extent to which the audit was considered capable of detecting irregularities, including fraud

Irregularities are instances of non-compliance with laws and regulations. The objectives of our audit are to obtain sufficient appropriate audit evidence regarding compliance with laws and regulations that have a direct effect on the determination of material amounts and disclosures in the financial statements, to perform audit procedures to help identify instances of non-compliance with other laws and regulations that may have a material effect on the financial statements, and to respond appropriately to identified or suspected non-compliance with laws and regulations identified during the audit.

In relation to fraud, the objectives of our audit are to identify and assess the risk of material misstatement of the financial statements due to fraud, to obtain sufficient appropriate audit evidence regarding the assessed risks of material misstatement due to fraud through designing and implementing appropriate responses and to respond appropriately to fraud or suspected fraud identified during the audit.

12

INDEPENDENT AUDITOR’S REPORT TO MEMBERS OF SOCIAL INVESTMENT BUSINESS FOUNDATION FOR THE YEAR ENDED 31 MARCH 2022

However, it is the primary responsibility of management, with the oversight of those charged with governance, to ensure that the entity's operations are conducted in accordance with the provisions of laws and regulations and for the prevention and detection of fraud.

In identifying and assessing risks of material misstatement in respect of irregularities, including fraud, the group audit engagement team:

As a result of these procedures we consider the most significant laws and regulations that have a direct impact on the financial statements are FRS 102, Charities SORP (FRS 102), Companies Act 2006, Charities Act 2011, the parent charitable company’s governing document, tax legislation and Charities (Protection and Social Investment) Act 2016. We performed audit procedures to detect non-compliances which may have a material impact on the financial statements which included reviewing the financial statements including the Trustees’ Report, remaining alert to new or unusual transactions which may not be in accordance with the governing documents, inspecting correspondence with local tax authorities and evaluating advice received from external advisors.

The group audit engagement team identified the risk of management override of controls as the area where the financial statements were most susceptible to material misstatement due to fraud. Audit procedures performed included but were not limited to testing manual journal entries and other adjustments, evaluating the business rationale in relation to significant, unusual transactions and transactions entered into outside the normal course of business and challenging judgments and estimates.

A further description of our responsibilities for the audit of the financial statements is provided on the Financial Reporting Council’s website at http://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report.

Use of our report

This report is made solely to the charitable company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the charitable company’s members those matters we are required to state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the charitable company and the charitable company’s members as a body, for our audit work, for this report, or for the opinions we have formed.

NICHOLAS SLADDEN (Senior Statutory Auditor) For and on behalf of RSM UK AUDIT LLP, Statutory Auditor Chartered Accountants 25 Farringdon Street London EC4A 4AB

29 September 2022 Date…………………….

13

SOCIAL INVESTMENT BUSINESS FOUNDATION CONSOLIDATED STATEMENT OF FINANCIAL ACTIVITIES (incorporating income and expenditure account) FOR THE YEAR ENDED 31 MARCH 2022

Unrestricted
Funds
2022
Notes
£'000
Income from:
Donations
2
325
Charitable activities:
Investment income
3
152
Fund management income
4
953
Grant income
4
-
Other income
5
151
Total income
1,581
Expenditure on:
Charitable activities:
Fund management costs
6
(3,285)
Fund costs - grants awarded
8
-
Repayments to DCMS
8
-
Share of associate’s loss for the year
-
Total expenditure
(3,285)
Net movement on investments
Investment provision decrease/(increase)
8
650
Net (expenditure)/income
(1,054)
Transfers between funds
19
19,137
Net income/(expenditure) before tax
9
18,083
Corporation tax credit/(charge)
11
-
Net movement in funds
18,083
Reconciliation of funds
Funds brought forward at 1 April
2,699
Funds carried forward at 31 March
20,782		 Restricted
Funds
2022
£'000
-
1,856
323
5,115
193
7,487
(1,586)
(5,115)
(534)
-
(7,235)
256
508
(19,137)
(18,629)
(41)
(18,670)
46,910
28,240		 Group
2022
£'000
325
2,008
1,276
5,115
344
9,068
(4,871)
(5,115)
(534)
-
(10,520)
906
(546)
-
(546)
(41)
(587)
49,609
49,022		 Group
2021
£'000
-
1,499
2,504
5,237
296
9,536
(4,300)
(5,237)
(7,966)
(180)
(17,683)
(444)
(8,591)
-
(8,591)
63
(8,528)
58,137
49,609

The notes on page 17 to 41 form part of these financial statements.

14

SOCIAL INVESTMENT BUSINESS FOUNDATION CONSOLIDATED BALANCE SHEET

AS AT 31 MARCH 2022 Company No 05777484

Notes
Fixed assets
Tangible fixed assets
12
Mixed motive investments - loans to investees
13
Mixed motive investments – other investments
14
Investments - loan to subsidiary
Investment in subsidiary
25
Mixed motive investment in associate
13
Current assets
Debtors
15
Short term deposits
Cash at bank and in hand
Current liabilities
Creditors: amounts falling due within one year
16
Amount due to associates
Net current assets
Total assets less current liabilities
Creditors: amounts falling due after more
than one year
Amounts owed to fund co-investors
18
Provisions for liabilities in associate
Net assets
Funds
Unrestricted funds
19
Restricted funds
19
Total funds
19		 Group
2022
2021

£’000
£’000
-
-
31,514
37,911
1,768
-
-
-
-
-
-
11,500
33,282
49,411
862
1,251
13,179
16,172
24,307
11,338
38,348
28,761
(1,708)
(2,401)
-
(3,245)
(1,708)
(5,646)
36,640
23,115
69,922
72,526
(20,900)
(20,221)
-
(2,696)
49,022
49,609
20,782
2,699
28,240
46,910
49,022
49,609		 Foundation
2022
2021
£’000
£’000
-
-
4,402
5,273
1,768
-
78
141
3,000
-
-
11,500
9,248
16,914
100
315
13,179
16,172
8,008
3,497
21,287
19,984
(147)
(755)
-
(3,245)
(147)
(4,000)
21,140
15,984
30,388
32,898
-
-
-
(2,696)
30,388
30,202
20,351
1,878
10,037
28,324
30,388
30,202		 Foundation
2022
2021
£’000
£’000
-
-
4,402
5,273
1,768
-
78
141
3,000
-
-
11,500
9,248
16,914
100
315
13,179
16,172
8,008
3,497
21,287
19,984
(147)
(755)
-
(3,245)
(147)
(4,000)
21,140
15,984
30,388
32,898
-
-
-
(2,696)
30,388
30,202
20,351
1,878
10,037
28,324
30,388
30,202
16,914
315
16,172
3,497
19,984
(755)
(3,245)
(4,000)
15,984
32,898
-
(2,696)
30,202
1,878
28,324
30,202

The notes on page 17 to 41 form part of these financial statements.

SIBF has taken advantage of the exemption in section 408 of the Companies Act 2006 not to present its own Statement of Financial Activities. The surplus for the year incurred by the Foundation was £186k (2021: deficit £971k).

These financial statements were approved by the Board of Directors on 28 September 2022 and were signed on its behalf by:

Rt Hon Hazel Blears Chair

Jagjit Dosanjh-Elton Trustee

15

SOCIAL INVESTMENT BUSINESS FOUNDATION CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 31 MARCH 2022

SOCIAL INVESTMENT BUSINESS FOUNDATION
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 MARCH 2022
Notes
Net cash (used in)/generated by operating activities
21
Cash flows from investing activities
Payment from associate
Investment income
Payments for financial investments
Repayments of financial investments
Net cash generated by/(used in) investing activities
Net increase in cash and cash equivalents
Cash and cash equivalents at the beginning of the year
Cash and cash equivalents at the end of the year
Analysis of cash and cash equivalents
Cash
Short term deposits		 2022
£’000
(3,080)
3,829
2,008
(8,241)
15,460
13,056
9,976
27,510
37,486
2022
£’000
24,307
13,179
37,486		 2021
£’000
10,357
307
1,499
(16,612)
5,990
(8,816)
1,541
25,969
27,510
2021
£’000
11,338
16,172
27,510

The notes on page 17 to 41 form part of these financial statements.

16

SOCIAL INVESTMENT BUSINESS FOUNDATION NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2022

1 Significant accounting policies

(a) Reporting entity

Social Investment Business Foundation (SIBF) is a private company limited by guarantee (company number 05777484) and a registered charity (charity number 1117185), registered and domiciled in England and Wales. The principal activities of the Group are documented in the Trustees’ Report. The registered office address of SIBF and its subsidiaries is CAN Mezzanine, 7-14 Great Dover Street, London SE1 4YR.

The Group consists of the ultimate parent SIBF (the Foundation) and its subsidiaries: The Social Investment Business Limited (SIBL - 100% owned), Futurebuilders England Limited (FBE - 100% owned), Forward Enterprise FM Limited (FEFM - 100% owned), Social Investment Business FM Ltd (SIBFM – 100% owned) and Social Investments Business Loans Limited (SIB Loans – 100% owned). All subsidiaries are included in the consolidated financial statements of SIBF. Both SIBL and FBE have traded under the name of the Social Investment Business since 28 July 2009.

The Group is authorised for the Communitybuilders Fund, Futurebuilders Fund and Modernisation Fund, and the Resilience and Recovery Loan Fund, as the fund manager, to act as the principal, therefore all transactions relating to these funds are recorded in the Statement of Financial Activities and the Balance Sheet. The Group acts as principal for the Access Reach and Access Impact Grants.

The Group is authorised by the Social Enterprise Investment Fund (SEIF), as the fund manager, to act as the agent, therefore transactions relating to this fund are not part of the financial statements of the Group. Income received for managing the fund and the cost associated with managing the fund are recorded in the financial statements. The Group acts as the agent in respect of the Centre for Social Action Fund and Big Potential (Big Lottery).

(b) Basis of preparation

These financial statements for the Group are prepared on the going concern basis, under the historical cost convention, and in accordance with the Charities Act 2011, Companies Act 2006, and applicable accounting standards in the United Kingdom. These financial statements have also been prepared in accordance with the Statement of Recommended Practice: Accounting and Reporting by Charities preparing their accounts in accordance with the Financial Reporting Standard applicable in the UK and Republic of Ireland (FRS 102) (effective 1 January 2019).

The Foundation constitutes a public benefit entity as defined by FRS 102. The financial statements are prepared in sterling, both the functional and presentational currency of the Group. Financial values are rounded to the nearest £’000.

The Foundation has chosen to take advantage of the exemption from disclosing the following information in its company only accounts, as permitted by the reduced disclosure regime within FRS 102:-

The financial statements of the Foundation are consolidated in the financial statements of SIBF. The consolidated financial statements of SIBF are available from CAN Mezzanine, 7-14 Great Dover Street, London SE1 4YR.

(c) Going concern

The Trustees have reviewed the forecasts for each company in the group, covering a period of 12 months from the date of signing these financial statements with concentration on the overall group position as the parent Charity (SIBF) would underwrite any losses in its subsidiaries.

Where SIB’s own funds are directly invested, SIB has continued to retain a cautious provisioning position to ensure any future risk is mitigated and continues to monitor performance at quarterly investment committee meetings.

The entities within the group are anticipated to have sufficient cash resources for at least 12 months following the date of signing these financial statements. As a result, the Trustees have not identified any material uncertainties and therefore consider it appropriate for the accounts to be prepared on a Going Concern.

17

SOCIAL INVESTMENT BUSINESS FOUNDATION NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED 31 MARCH 2022

1 Significant accounting policies (continued)

(d) Basis of consolidation

The financial statements consolidate the results of the Foundation and its subsidiary undertakings on a line-by-line basis. The entities consolidated are those listed in the Note 25. All intra-group transactions, balances and unrealised gains on transactions between group companies are eliminated on consolidation. SIBF has taken advantage of the exemption in section 408 of the Companies Act 2006 not to present its own Statement of Financial Activities.

(e) Fund accounting

Restricted funds

Restricted funds are to be used for specific purposes either laid down by the funder or specified in each agreement for the benefit of identified beneficiaries. Expenditure incurred by the Foundation for these purposes is charged to the fund, together with a fair allocation of overheads, support costs and interest income.

Unrestricted funds

Unrestricted funds are available for use against operating costs in delivery of specific funds as stated in the service agreements in place and within the overall price therein, but at the Trustees’ discretion in how delivery is achieved within that price. Where contracts might place restrictions on any gains, any cost savings are repayable to the appropriate funder on a basis specified in the contract. Fees payable to the Group for the management of restricted funds are unrestricted and are transferred from restricted to unrestricted funds.

(f) Investment in subsidiaries

In the separate accounts of the Foundation, interests in subsidiaries and associates are initially measured at cost and subsequently measured at cost less any accumulated impairment losses. Interest in subsidiaries and associates are assessed for impairment at each reporting date. Any impairment losses or reversals of impairment losses are recognised immediately in the Statement of Financial Activities.

(g) Investment in associate – SASC

During 2013, SIBF acquired a 29% share of SASC – entitling the Group to a 51% share of all future profit distributions. The investment in this associate has been accounted for using the equity method – with the initial investment recognised at cost which is considered to be the fair value of the consideration paid by the Group. The carrying amount of the investment is increased or decreased to recognise the Group's share of the profit or loss of SASC - and this profit or loss is reflected in the Group's results for the period. During the year, SIBF’s exit of SASC's CIF reduced its share of SASC down to 14.5% this financial year.

Further details of this transaction can be seen in note 14.

18

SOCIAL INVESTMENT BUSINESS FOUNDATION NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED 31 MARCH 2022

1 Significant accounting policies (continued)

(h) Income

All income is included in the Statement of Financial Activities when the Group is legally entitled, receipt is probable and the amount can be measured reliably, and performance related conditions are fulfilled.

Investment income, including associated tax, relating to both unrestricted and restricted funds, is recognised when receivable.

Fund management fee income is recognised when the Group is entitled to the income based on the fund management contract. Fund income in respect of investment activity, when the Group is principal, is recognised when a drawdown request is made. Investments offered to investees but not yet requested as a draw down from the Fund Authority at the Balance Sheet date are disclosed as contingent assets.

In some circumstances, the Group acts as agent with regard to the distribution certain funds, payments received in relation to these funds and subsequent disbursements to the intended recipients are excluded from the Statement of Financial Activities as the Group does not have control over the charitable application of the funds. Funds received but not disbursed at the year end are included in other creditors on the balance sheet. Details of these are disclosed within Note 27.

Grant income, where the Group operates as principal, are included in the Statement of Financial Activities on a receivable basis. The balance of income received for specific purposes but not expended during the period is shown in the relevant funds on the balance sheet. Where income is received in advance of meeting any performancerelated conditions there is not unconditional entitlement to the income and its recognition is deferred and included in creditors as deferred income until the performance-related conditions are met. Where entitlement occurs before income is received, the income is accrued.

Pro bono activities

Services received from professional service providers on a pro bono basis are recognised within donations at the fair value of the services provided as determined by the third parties, with an equivalent amount recognised within governance costs.

(i) Expenditure

Expenditure is recognised once there is a legal or constructive obligation to make a payment to a third party and on an accruals basis in the period in which they are incurred. Resources expended include attributable VAT when this cannot be recovered.

Costs incurred on charitable activities comprise all the resource applied by the Group in undertaking its charitable objectives. Expenditure is allocated between:

Items of indirect expenditure are apportioned on an appropriate basis as follows:

Governance costs are costs incurred in connection with meetings of the Board of Trustees and Committees of the Group, fees paid to the statutory auditor, internal auditor and legal fees where they are not for services provided in relation to fund management activities. The expenditure classed as governance costs has been detailed in Note 6, and these costs have been allocated over fund management costs on the basis of staff time spent on these activities.

19

SOCIAL INVESTMENT BUSINESS FOUNDATION NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED 31 MARCH 2022

1 Significant accounting policies (continued)

(j) Expenditure (continued)

Support costs are functions that assist the work of the Foundation but do not directly undertake charitable activities. Support costs include back office costs, finance and human resources. The basis on which support costs have been allocated are set out in Note 7.

Funds to be returned for recycling are recognised only when their return is formally notified, or requested, by the funder.

Grant expenditure is recognised at the point where the Group has a legal or constructive obligation to make a payment, the grant has been approved and communicated to the recipient. Loan offers communicated are recognised as a financial investment in the Balance Sheet only once a disbursement has been made to the investees.

(k) Employee benefits

The costs of short-term employee benefits are recognised as a liability and an expense, unless those costs are required to be recognised as part of the cost of stock or fixed assets. The cost of any unused holiday entitlement is recognised in the period in which the employee’s services are received.

(l) Defined contribution pension schemes

The Group operates a defined contribution pension scheme. Contributions to the pension scheme are recognised as an expense in the Statement of Financial Activities as incurred. Differences between contributions payable in the year and contributions actually paid are shown as either accruals or prepayments.

(m) Operating leases

Rentals payable under operating leases, including any lease incentives received, are charged to profit or loss on a straight-line basis over the term of the relevant lease except where another more systematic basis is more representative of the time pattern in which economic benefits from the leased asset are consumed.

(n) Taxation

Corporation tax expense comprises both current tax and deferred tax and is calculated using tax rates that have been enacted or substantively enacted by balance sheet date.

Current tax is the amount of corporation tax payable based on the taxable profit for the current year, plus any adjustments to income tax payable in respect of prior years.

Deferred tax liabilities are generally recognised for all taxable temporary differences. Deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which the deductible temporary differences or tax losses can be utilised.

The Group's subsidiaries are liable for corporation tax on their operating profits, to the extent not gift- aided to the holding charity.

(o) Tangible fixed assets

Tangible fixed assets are shown at cost (comprising the original purchase price of the asset and the costs attributable to bringing the asset to its working condition for its intended use), less accumulated depreciation and impairment, except for items costing less than £2,000 which are written off to the consolidated Statement of Financial Activities in the year of purchase.

20

SOCIAL INVESTMENT BUSINESS FOUNDATION NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED 31 MARCH 2022

1 Significant accounting policies (continued)

(p) Tangible fixed assets (continued)

Depreciation

Depreciation is provided on a straight-line basis on all tangible fixed assets, at rates that will write off the cost of the assets to their estimated residual values over their useful lives. The useful lives and associated depreciation rates of major classes of assets have been estimated as follows:

Office equipment & IT 3-5 years (20% - 33% per annum)

The residual value and useful life of an asset is reviewed, and adjusted if applicable, at each financial year end.

(q) Financial investments

Financial investment loans, equivalent to mixed motive investments, are recognised at the point of the disbursement under the conditions set out in the loan.

(r) Financial instruments

The Group has elected to apply the provisions of Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instruments Issues’ of FRS 102 to all of its financial instruments.

Financial instruments are recognised when the Group becomes party to the contractual provisions of the instrument.

Financial assets and liabilities are offset, with the net amounts presented in the financial statements, when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously.

Basic financial assets

Basic financial assets, which include trade and other debtors, amounts owed by group undertakings and accrued income, are initially measured at transaction price including transaction costs and are subsequently carried at amortised cost being the transaction price less any amounts settled and impairment losses.

Derecognition of financial assets and liabilities

A financial asset is derecognised only when the contractual rights to cash flows expire or are settled, or substantially all the risks and rewards of ownership are transferred to another party, or if some (but not substantially all) risks and rewards of ownership are retained but control of the asset has transferred to another party that is able to sell the asset in its entirety to an unrelated third party.

A financial liability (or part thereof) is derecognised when the obligation specified in the contract is discharged, cancelled or expires.

Classification of financial liabilities

Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the Group after deducting all of its liabilities.

Basic financial liabilities

Basic financial liabilities, which include trade and other creditors, amounts owed to group undertakings and accruals, are initially recognised at transaction price and subsequently measured at amortised cost, being transaction price less any amounts settled. Debt instruments are subsequently carried at amortised cost, using the effective interest rate method.

21

SOCIAL INVESTMENT BUSINESS FOUNDATION NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED 31 MARCH 2022

1 Significant accounting policies (continued)

(s) Provisions

Provisions are measured at the present value of the expenditure expected to be required to settle the obligation using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the obligation. The increase in the provision due to the passage of time is recognised as an interest expense and is included in "finance costs".

Debt instruments are subsequently carried at amortised cost, using the effective interest rate method.

The Group makes specific provisions for impairment against loans when, as a result of frequent monitoring and review by the Investment Committees, it is considered that recovery is doubtful. A calibrated risk approach to the investment books of the Futurebuilders, Modernisation, Communitybuilders, Adventure Capital Funds, Forward Enterprise Fund, Liverpool LIF, Resilience & Recovery Loan and Recovery Loan Funds results in a further general provision being made to the financial investments, after taking account of individual specific provisions. Provisions made during the year, less amounts released, are charged to the Statement of Financial Activities and are netted off against financial investments in the Balance Sheet.

(t) Cash and cash equivalents

All cash held in accounts of less than 90-day notice is treated as cash and, classified as a deposit if notice is required to draw down cash.

(u) Critical accounting judgements and estimates

In preparing these financial statements, management has made judgements, estimates and assumptions that affect the application of the Foundation’s accounting policies and the reported assets, liabilities, income and expenditure and the disclosures made in the financial statements. Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. The key areas that are deemed to be material for these financial statements are as follows:

Significant judgement and estimates – provisions on financial investment loans

Significant judgements and estimates have been used in the calculation of both specific and risk calibrated provisions which are deducted from financial investments after the deduction of specific provisions. These provisions are calculated by applying impairments to financial investments after assessing their likelihood of default based on financial and subjective metrics.

In respect of financial investments, the amount of specific provisions is £13.9m (2021: £16.1m), and the risk calibrated provision applied to the financial investments is £1.6m (2021: £1.9m).

Futurebuilders England Limited fund treatment

The contracts dated 1 April 2011 between Cabinet Office and SIBL and between Cabinet Office and FBE to manage the funds advanced by Cabinet Office to FBE expired on 31 March 2013. Those contracts expressly stated that FBE was acting as principal and on this basis, and taking into account the substance of the relationship with Cabinet Office, the assets and liabilities of FBE were fully consolidated in the accounts of the Group at 31 March 2013 and previous years and the monies advanced by Cabinet Office were treated as restricted funds.

This contract was replaced by a new contract between SIBL and Cabinet Office which ran from 1 April 2013 to 31 March 2016. Although there are some differences between the previous contract and the new contract the governance arrangements, and the substance of the relationship between SIBL and Cabinet Office with regard to the management of these funds, remain largely unchanged, with the contract extended to March 2022.

22

SOCIAL INVESTMENT BUSINESS FOUNDATION NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED 31 MARCH 2022

1 Significant accounting policies (continued)

(u) Critical accounting judgements and estimates (continued)

Futurebuilders England Limited fund treatment (continued)

In particular, Cabinet Office has advised that, in its opinion, FBE continues to act as principal under the contract and the contract specifically states that FBE "will hold the assets and liabilities of the fund on its Balance Sheet" although the new contract does not have an express statement confirming that FBE acts as principal not as agent.

However, the directors agree with the stance taken by Cabinet Office on the basis that FBE has discretion over whom funds are distributed to. In addition, all loan agreements are between FBE and the investee and not with the DCMS. In all these circumstances, the assets and liabilities of FBE continue to be fully consolidated in the Group's accounts at 31 March 2022 and the monies advanced by Cabinet Office continue to be treated as restricted funds. However, under the new contract, the Cabinet Office:

 has the right to terminate the contract at any time by giving at least three months’ notice;  will be given all shares in FBE for no consideration at the end of such notice period, and  can require FBE to "deal with the Funds in the manner directed by Cabinet Office".

If the above were to occur, there would be a change in the nature of the relationship with Cabinet Office and in the substance of the agreement with SIBL. In such circumstances, the Group would immediately recognise in its accounts:

 a disposal of a subsidiary undertaking for no consideration should Cabinet Office serve notice to terminate the contract; or

 a liability should Cabinet Office make a request for funds to be returned to them.

The Futurebuilders contract with the Cabinet Office was transferred to DCMS during 2016/17.

2
Donations
Pro bono legal services		 Group
2022
£’000
325
325		 Group
2021
£’000
-
-

Pro bono services relate to activities received from professional service providers and are included within donations. Governance costs have been grossed up by an equivalent amount.

In 2022, £Nil of the donation income (2021: £Nil) was attributable to restricted funds with £325k (2021: £Nil) being attributable to unrestricted funds.

23

SOCIAL INVESTMENT BUSINESS FOUNDATION NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED 31 MARCH 2022

3 Investment income

Investment income
By fund:
Adventure Capital Fund (ACF)
Futurebuilders Fund
Modernisation Fund
Forward Enterprise FM Limited
Liverpool Local Impact Fund (Liverpool LIF)
Communitybuilders Fund
Resilience & Recovery Loan Fund
Recovery Loan Fund
By nature:
Interest on investments
Interest on bank deposits – restricted		 Group
2022
£’000
23
219
-
18
10
152
1,578
8
2,008
2,007
1
2,008		 Group
2021
£’000
29
678
1
15
15
164
597
-
1,499
1,498
1
1,499

Investment income relates to loan interest receivable on ACF, Futurebuilders, Modernisation, Forward Enterprise FM, Liverpool LIF, Communitybuilders, Resilience & Recovery Loan and Recovery loan funds.

In 2022, £1,856k of the investment income (2021: £1,499k) was attributable to restricted funds with £152k (2021: £Nil) being attributable to unrestricted funds.

4 Fund management income and grant income

Fund management fees
Grant income
Total fund management income		 Group
2022
£’000
1,276
5,115
6,391		 Group
2021
£’000
2,504
5,237
7,741

Fund management income is derived from managing grant and loan funds, of which £953k (2021: £1,821k) is unrestricted income and £323k (2021: £683k) is attributable to restricted funds. All grants under management are restricted income.

5 Other income

Other income
Other income including Business Support income Group
2022
£’000
344
345		 Group
2021
£’000
296
296

Business Support income is for support provided to investees by staff and external consultants under the Communitybuilders Fund and the Social Enterprise Investment Fund and which has been recharged to these funds. In 2022, £151k (2021: £273k) of the other income was attributable to unrestricted funds and £193k (2021: £23k) was attributable to restricted funds.

24

SOCIAL INVESTMENT BUSINESS FOUNDATION NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED 31 MARCH 2022

6 Analysis of direct and support costs

Analysis of direct and support costs
Staff costs
Premises and operational
Legal and other professional
Operating leases for land and buildings
Business consultants - investee support
Other consultancy
Other direct costs
Direct fund management
Governance
Support costs		 Group
2022
£’000
1,332
294
25
44
23
209
117
1,233
592
1,002
4,871		 Group
2021
£’000
1,189
278
76
114
72
252
425
16
407
1,471
4,300

In 2022, £3,285k (2021: £4,021k) of the fund management costs was attributable to unrestricted funds and £1,586k (2021: £279k) was attributable to restricted funds.

7 Allocation of governance and support costs

Governance and support costs comprise the following:

Staff costs
Premises and operational
Legal and other professional
Pro bono legal fees
Board and investment
committee costs
Auditors’ remuneration
- audit services
Auditor’s remuneration - non
audit services
Internal audit
Other consultancy
Other direct costs		 Group 2022
Support
Governance
Costs
£’000
£’000
88
687
20
152
-
6
325
-
61
-
48
-
38
-
1
-
2
96
9
61
592
1,002		 Group 2021
Support
Basis of
Governance
Costs
appointment
£’000
£’000
128
758
Staff time
30
177
Staff time
-
32
Invoices
-
-
65
-
Invoices
103
-
Governance
23
-
Governance
4
-
Governance
8
234
Staff time
46
270
Staff time
407
1,471

25

SOCIAL INVESTMENT BUSINESS FOUNDATION NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED 31 MARCH 2022

8 Grants paid

Grants paid
Group Group
2022 2021
£’000 £’000
Grants awarded 5,115 5,237

The charity undertakes its charitable activities through grant making and awarding grants to a number of individuals and institutions in furtherance of its charitable activities.

Recipients of grants:
No. of
grants
Arts, Heritage, Sports and Faith
31
Citizenship and Community
40
Conservation of the Natural Environment
6
Employment
13
Family, Friends and Relationships
4
Housing and Local Facilities
16
Income and Financial Inclusion
6
Mental Health and Wellbeing
93
Physical Health
14
Training and Education
37
Other
16
Grants awarded but not disbursed
Amounts repaid to the DCMS
Investment provisions/write offs made in year:
Write offs
Capital
Interest
Provisions
Capital
Interest
Other adjustments
Investment in SASC
Net (income)/expenditure related to fund costs		 2022
£’000
No. of
grants
764
25
606
48
50
2
331
14
230
8
205
30
313
4
1,269
59
574
7
571
22
128
30
74
5,115
Notes
Group
2022
£’000
534
Group
2022
£’000
13
1,757
104
1,861
13
(2,578)
(130)
(2,708)
(59)
(906)		 2021
£’000
392
749
22
201
241
684
111
1,128
113
526
316
754
5,237
Notes
13
13		 Group
2021
£’000
7,966
Group
2021
£’000
75
-
75
577
46
623
(254)
444

In 2022, income of £256k (2021: expenditure of £444k) was attributable to restricted funds with income of £650k (2021: £nil) attributable to unrestricted fund.

26

SOCIAL INVESTMENT BUSINESS FOUNDATION NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED 31 MARCH 2022

9 Net (expenditure)/income for the year

Net (expenditure)/income for the year is stated after charging:
Operating leases for land and buildings
Auditor’s remuneration - audit services
Auditor’s remuneration - non audit services
Internal audit
10
Staff costs		 Group
Group
2022
2021
£’000
£’000
44
114
48
103
38
23
1
4
Wages and salaries
Social security costs
Other pension costs		 Group
2022
£’000
1,703
186
218
2,107		 Group
2021
£’000
1,819
182
139
2,140

Included in the figures above are payments made to key management personnel (including employer pension contributions, and employer national insurance contributions) defined as Directors and the Group Senior Management Team (CEO, Director of Finance, Director of Learning & Influence, Director of Investments, Director of Grants, and Director of People & Values). Remuneration for the 6 members of the Group Senior Management Team totalled £558,583 (2021: 6 members, £529,199) including pension payments of £52,922 (2021: £37,117) and employers national insurance of £55,153 (2021: £59,675).

The payments to Directors of SIBF Board are for their services to the Group. Authority for remunerating directors is included within the memorandum and articles of SIBF. The total SIBF directors’ remuneration is £14,676 (2021: £16,647) of which the Chair is paid £12,480 (2021: £12,480). The Chair is paid by SIBL £27,156 via A Mon Avis Limited (2021: £24,960 of which £12,480 is recharged to SIBF).

Payments are also made to the Directors of SIBL, a subsidiary of SIBF. The total SIBL director remuneration costs are £50,035 (2021: £49,862) of which £Nil (2021: £Nil) relates to pension payments. This means that the total Group Trustee and Director costs amounted to £64,711 (2021: £66,509) including pension payments of £Nil (2021: £Nil).

During the year £Nil compensation was made to employees for loss of office (2021: £33,000).

The monthly average number of employees during the year was as follows:

Operational staff
Management staff
Number of employees in the following salary ranges:
£60,000 - £69,999
£70,000 - £79,999
£80,000 - £89,999
£100,000 - £109,999 *		 Group
2022
No
34
6
40
Group
2022
No
4
3
2
1
10		 Group
2021
No
34
6
40
Group
2021
No
3
2
-
1
6

*Includes the Chief Executive

One member of operational staff was employed by the parent company SIBF (2021: one).

27

SOCIAL INVESTMENT BUSINESS FOUNDATION NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED 31 MARCH 2022

10 Staff costs (continued)

Board, Investment Committee and Directors’ remuneration

Board, Investment Committee and Directors’ remuneration are payments to members of the SIBL and SIBF Board for their services to the Group. Authority for remunerating Directors is included within the memorandum and articles of SIBF. Amina Ahmad, Jagit Dosanjh-Elton and Anne-Marie Vine-Lott were appointed during the preceding year with 2021/22 being their first full-year as directors.

Rt Hon Hazel Blears
Jeremy Newman
Louise Keeling
Richard Pelly OBE
James Rice
Jeremy Nicholls
Jenny North
Amina Ahmad
Jagit Dosanjh-Elton
Anne-Marie Vine-Lott		 Salary
2022
2021
£
£
27,156
24,960
-
10,000
-
5,250
7,000
7,000
4,023
4,000
1,913
4,000
4,000
4,000
9,629
5,533
7,000
1,436
3,990
330
64,711
66,509		 Expenses
2022
2021
£
£
-
-
-
861
-
-
-
-
-
-
-
260
-
-
-
-
-
-
-
-
-
1,121		 Expenses
2022
2021
£
£
-
-
-
861
-
-
-
-
-
-
-
260
-
-
-
-
-
-
-
-
-
1,121
1,121

These Board and Committee costs are included in the staff costs detailed above.

Pensions

SIBF operates a defined contribution pension scheme open to all staff employees (including Directors), administered by AEGON, and pays employer's contributions at three different rates for all staff who were employed before 1 August 2016: 6.79%, 9.06% and 11.33% depending on the level of employee contribution and two rates for all staff employed on 1 August 2016 and onwards: 6% or 8% depending on level of employee contribution.

The assets of the schemes are held separately from those of the Group in independently administered funds. The pension cost charge represents contributions payable under the schemes by the Group to the funds.

Included within other creditors are outstanding pension contributions for the Group at the year-end were £36,805 (2021: £17,056).

Other Board, Investment Committee and Directors’ costs

A total of £Nil was paid in other Board, Investment Committee and Director costs in the year ended 31 March 2022 (2021: £Nil).

28

SOCIAL INVESTMENT BUSINESS FOUNDATION NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED 31 MARCH 2022

11 Corporation tax (charge)/credit

SIBF, as a registered charity, is exempt from corporation tax under the Corporation Tax Act 2010 (chapters 2 and 3 of part II, section 466 onwards) or Section 256 of the Taxation for Chargeable Gains Act 1992, to the extent surpluses are applied to its charitable purposes.

FBE is not subject to corporation tax on fund income on drawn down requests in respect of investments to Civil Society Organisations. Corporation tax is chargeable to the restricted fund where it relates to loan interest received. Corporation tax relating to interest accrued is borne by FBE and is included as a charge against the unrestricted management fee.

Any tax-adjusted surplus arising in FBE and SIBL on the payment they receive to cover operational and management costs will be taxable. The tax charge arising on the payment received to cover operational and management costs differs from the surplus/deficit on that payment as follows:

Net income/(expenditure) - FBE, FEFM, SIBFM and SIBL
Net income/(expenditure) before taxation
Tax at 19% thereon
Effects of:
Expenses not deductible for tax purposes
Deferred tax adjustment for tax rate change
Deferred tax not recognized
Utilisation of tax loses
Adjustments in respect of the prior period
Actual current tax (charge)/credit		 2022
£’000
(767)
145
(92)
77
(165)
-
(6)
(41)		 2021
£’000
(7,864)
1,493
(1,516)
-
(42)
120
8
63

A potential deferred tax asset of £59,449 exists at the year-end (2021: £48,057) relating to fixed asset timing differences. This has not been recognised within the financial statements, due to the uncertainty of recognition.

12 Tangible fixed assets

Group and Foundation
Cost
at 1 April 2021 and 31 March 2022
Accumulated depreciation
at 1 April 2021 and 31 March 2022
Net book value
at 1 April 2021 and 31 March 2022		 Office
equipment
and IT
£’000
244
244
-

29

SOCIAL INVESTMENT BUSINESS FOUNDATION NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED 31 MARCH 2022

13 Financial investments

Financial investments are in the form of loans and guarantees and are mixed motive investments. This year the Group have made specific provisions against 2 loans (2021: 2) which may be non-performing. The Trustees believe that the carrying value of the investments is supported by their underlying assets.

Balance at 1 April
New loans disbursed
Transfer of FEFM Loan Book
Repaymentsreceived
Loan balance at 31 March before write
off and provisions
Loans written off
Movement in provisions
Balance at 31 March
Maturity of loans and advances:
Within 1 year
Over 1 year to 5 years
Over 5 years
Provisions brought forward 1 April
Increase in provisions
Provisions written off
Provisions carried forward 31 March		 Group
2022
2021
£’000
£’000
37,912
28,008
8,241
16,612
-
-
(15,460)
(5,990)
30,693
38,630
(1,757)
(75)
2,578
(644)
821
(719)
31,514
37,911
Group
2022
2021
£’000
£’000
6,667
7,772
18,391
22,227
6,456
7,912
31,514
37,911
Group
2022
2021
£’000
£’000
18,142
17,498
292
716
(2,870)
(72)
15,564
18,142		 Foundation
2022
2021
£’000
£’000
5,273
5,742
9
268
112
-
(1,432)
(582)
3,962
5,428
(1,641)
(75)
2,079
(80)
438
(155)
4,400
5,273
Foundation
2022
2021
£’000
£’000
870
1,058
1,889
2,475
1,641
1,740
4,400
5,273
Foundation
2022
2021
£’000
£’000
6,305
6,225
258
139
(2,270)
(59)
4,293
6,305		 Foundation
2022
2021
£’000
£’000
5,273
5,742
9
268
112
-
(1,432)
(582)
3,962
5,428
(1,641)
(75)
2,079
(80)
438
(155)
4,400
5,273
Foundation
2022
2021
£’000
£’000
870
1,058
1,889
2,475
1,641
1,740
4,400
5,273
Foundation
2022
2021
£’000
£’000
6,305
6,225
258
139
(2,270)
(59)
4,293
6,305
6,305

SIBF

The Foundation shows a decrease in provision in the year of £2,079k (2021: increase of £80k) comprising an increase in ACF of £192k (2021: increase of £79k), a decrease in Communitybuilders provision of £2,149k (2021: decrease of £66k), a decrease of £48k in East London IF (2021: increase of £50k), a decrease of £73k in the Liverpool LIF provision (2021: increase of £13k), a decrease of £10k in Forward Enterprise Fund (2021: £nil) and an increase of £9k (2021: increase of £4k) in the NCRIF provision.

Futurebuilders England Limited

During the year, no specific provision of was made (2021: £270k, 1 loan). Specific provisions were released across 10 loans totalling £406k (2021: £165k, 10 loans). In addition, the risk calibrated provision was decreased by £194k (2021: decreased by £63k).

SIB FM Limited

During the year, an additional specific provision of £136k was made on 2 loans (2021: £Nil). In addition, the risk calibrated provision was decreased by £5k (2021: increased by £451k).

SIB Loans Limited

During the year, an additional risk calibrated provision was made of £5k (2021: £Nil).

30

SOCIAL INVESTMENT BUSINESS FOUNDATION NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED 31 MARCH 2022

13 Financial investments (continued)

Forward Enterprise FM Limited

During the year the loan book totalling £179k held in FEFM transferred at book value across to SIBF for nil consideration.

14 Financial investments – movements in other mixed motive investments

Group and Foundation

SASC
Balance at 1 April
Share of total recognised revenues and expenses
Balance at 31 March
CIF
Opening investment
Investment (disposal) in CIF
Closing investment
Opening provision
Provision recovered (increase)
Closing provision
Balance at 31 March
SASH
Opening investment
Investment in SASH
Balance at 31 March
TSIF
Opening investment
Investment (disposal) in CIF
Closing investment
Opening provision
Provision recovered (increase)
Closing provision
Balance at 31 March
Total balance at 31 March		 2022
£’000
-
-
-
6,081
(5,455)
626
(1,571)
1,501
(70)
556
674
163
837
1,500
-
1,500
(1,125)
(1,125)
375
1,768		 2021
£’000
180
(180)
-
5,681
400
6,081
(1,825)
254
(1,571)
4,510
674
-
674
1,500
-
1,500
(1,125)
(1,125)
375
5,559

31

SOCIAL INVESTMENT BUSINESS FOUNDATION NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED 31 MARCH 2022

14 Financial investments – movements in other mixed motive investments (continued)

SASC investment

During 2013, SIBF acquired a 29% share of SASC – entitling the Group to a 51% share of all future profit distributions. The investment in this associate has been accounted for using the equity method – with the initial investment recognised at cost which is considered to be the fair value of the consideration paid by the Group. The carrying amount of the investment is increased or decreased to recognise the Group's share of the profit or loss of SASC - and this profit or loss is reflected in the Group's results for the period.

During the year, SIBF’s exit of SASC's CIF reduced its share of SASC down to 14.5% this financial year. The share % of SASC is below the associate threshold and therefore SASC investments and provisions have been reclassified from investment in associate to other mixed motive investments.

As at 31 March 2022, SIBF had the remaining commitment of £0.6m to SASC from the Communitybuilders Fund to invest into SASC's CIF, against which there is a provision of £70k. SIBF also committed £1.5m as first loss provision on SASC's Third Sector Loan Fund. It is estimated that £375k of the loss provision will be repaid to SIBF over 10 years, and therefore a provision for the remaining £1.125m is included in the financial statements. SIBF has also committed £2m to SASC’s new housing fund, SASH.

15 Debtors: amounts falling due within one year

Trade debtors
Investee interest receivable
Prepayments and accrued income
Amounts owed by subsidiaries
Other debtors		 Group
2022
2021
£’000
£’000
309
334
359
500
180
388
-
-
14
29
862
1,251		 Foundation
2022
2021
£’000
£’000
-
-
73
117
22
108
5
90
-
-
100
315		 Foundation
2022
2021
£’000
£’000
-
-
73
117
22
108
5
90
-
-
100
315
315

16 Creditors: amounts falling due within one year

Trade creditors
Other taxation and social security
Corporation tax
Other creditors
Accruals
Amount owed to subsidiaries
Deferred income (note 17)		 Group
2022
2021
£’000
£’000
78
125
163
351
35
98
987
1,163
165
420
-
-
280
244
1,708
2,401		 Foundation
2022
2021
£’000
£’000
-
-
-
1
-
-
147
340
-
26
-
388
-
-
147
755		 Foundation
2022
2021
£’000
£’000
-
-
-
1
-
-
147
340
-
26
-
388
-
-
147
755
755

32

SOCIAL INVESTMENT BUSINESS FOUNDATION NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED 31 MARCH 2022

17 Deferred income

Deferred income
As at 1 April 2021
Income deferred during the year
Amounts released from previous year
As at 31 March 2022		 Group Foundation
£’000
£’000
244
-
280
-
(244)
-
280
-
-

Deferred income relates to the arrangement fees received in advance of the loan on disbursement of the loan.

18 Creditors: amounts falling due in more than one year

Creditors: amounts falling due in more than one year
Group Foundation
2022 2021 2022 2021
£’000 £’000 £’000 £’000
Amounts owed to co-investors:
Owed to BSC, co-investor in FEFM - 246 - -
Owed to Access, co-investor in FEFM - 7 - -
Owed to BSC, co-investor in SIBFM 20,900 19,968 - -
20,900 20,221 - -

The above amount represents a loan owed to Big Society Capital, net of provisions.

During the year, SIBF paid FEFM £243k which was used to settle the amounts owed to co-investors.

BSC Loan Funds are to be repaid bi-annually following the end of the availability period from SIB FM cash balances, after SIBL management fees have been deducted. Accordingly, none of the BSC Loan Funds are expected to be payable within one year and fall due between two and five years.

No security is given over these loans and no interest is charged on the balance.

33

SOCIAL INVESTMENT BUSINESS FOUNDATION NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED 31 MARCH 2022

19 Funds

In year
Group
Futurebuilders Fund
Communitybuilders Fund
Resilience & Recovery Fund
Recovery Loan Fund
Other investment funds
Grant funds
Restricted funds carried
forward
Unrestricted funds
Total funds carried forward
Previous year
Group
Futurebuilders Fund
Communitybuilders Fund
Resilience & Recovery Fund
Other investment funds
Grant funds
Restricted funds carried
forward
Unrestricted funds
Total funds carried forward		 Balance
1 April
2021
£’000
18,330
23,724
-
-
4,856
-
46,910
2,699
49,609
Balance
1 April
2020
£’000
26,517
23,707
-
4,814
-
55,038
3,099
58,137

Income

£’000
219
-
1,883
26
244
5,115
7,487
1,581
9,068


Income

£’000
689
162
1,248
106
5,237
7,442
2,094
9,536		 Expenditure
and
provisions
£’000
(51)
-
(1,390)
(33)
(431)
(5,115)
(7,020)
(2,635)
(9,655)
Expenditure
and
provisions
£’000
(8,245)
118
(467)
(32)
(5,237)
(13,863)
(4,201)
(18,064)		 Transfers
£’000
(554)
(21,088)
(493)
2,985
13
-
(19,137)
19,137
-
Transfers
£’000
(631)
(263)
(781)
(32)
-
(1,707)
1,707
-		 Balance
31 March
2022
£’000
17,944
2,636
-
2,978
4,682
-
28,240
20,782
49,022
Balance
31 March
2021
£’000
18,330
23,724
-
4,856
-
46,910
2,699
49,609

The Futurebuilders Fund provides loan financing, often combined with grants and professional support, to civil society organisations in England that need investment to help them bid for, win and deliver public service contracts. This fund is closed for new applications.

The Communitybuilders Fund provides loans, grants and business support to multi-purpose, inclusive, community-led organisations (sometimes known as Community Anchors). This restricted fund takes the form of an endowment to SIBF and, on 1 April 2022, the current restrictions were lifted.

The Resilience & Recovery Fund was initiated to support VCSE’s faced with financial difficulties due to the Covid-19 disruption and restrictions.

The Recovery Loan Fund represents the carrying value of the net assets of SIB Loans, a wholly owned subsidiary of SIBF, which was set up to manage this fund.

34

SOCIAL INVESTMENT BUSINESS FOUNDATION NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED 31 MARCH 2022

19 Funds (continued)

Transfers

Transfers to unrestricted funds:
- Communitybuilders Fund
- Investment in SASC
- Forward Enterprise Fund
Transfers to restricted funds:
- Recovery Loan Fund
Transfers to management fees:
- Communitybuilders Fund
- Futurebuilders Fund
- Resilience & Recovery Loan Fund
- Recovery Loan Fund		 Group
2022
£’000
15,529
5,559
(46)
(3,000)
33
554
493
15
19,137		 Group
2021
£’000
-
-
-
-
263
663
781
-
1,707

Transfer to management fee – Communitybuilders Fund represents a transfer from the restricted Communitybuilders Fund to SIBL as payment of the fund management fee.

Transfer to management fee – Futurebuilders Fund represents the payment of the management fee from DCMS to SIBL from returns to the fund.

Transfer to management fee – Resilience & Recovery Fund represents a transfer from the restricted SIBFM funds to SIBL as payment for initial set-up, and loan arrangement fees.

All of these are shown as transfers between restricted and unrestricted funds on the face of the Statement of Financial Activities.

of Financial Activities.
In year
Foundation
Futurebuilders Fund
Communitybuilders Fund
Resilience & Recovery Fund
Recovery Loan Fund
Other investment funds
Grant funds
Restricted funds carried
forward
Unrestricted funds
Total funds carried forward		 Balance
1 April
2021
£’000
-
23,724
-
-
4,600
-
28,324
1,878
30,202
Income

£’000
-
-
-
-
266
-
266
176
442		 Expenditure
and
provisions
£’000
-
-
-
-
(465)
-
(465)
209
(256)		 Transfers
£’000
-
(21,088)
-
3,000
-
-
(18,088)
18,088
-		 Balance
31 March
2022
£’000
-
2,636
-
3,000
4,401
-
10,037
20,351
30,388

35

SOCIAL INVESTMENT BUSINESS FOUNDATION NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED 31 MARCH 2022

19 Funds (continued)

Transfers (continued)

Transfers (continued)
Previous year
Foundation
Futurebuilders Fund
Communitybuilders Fund
Resilience & Recovery Fund
Other investment funds
Grant funds
Restricted funds carried
forward
Unrestricted funds
Total funds carried forward		 Balance
1 April
2020
£’000
23,707
4,802
28,509
2,664
31,173
Income

£’000
162
487
649
29
678		 Expenditure
and
provisions
£’000
118
(689)
(571)
(1,078)
(1,649)		 Transfers
£’000
(263)
-
(263)
263
-		 Balance
31 March
2021
£’000
23,724
4,600
28,324
1,878
30,202
20
Analysis of net assets between funds
Group
In year
Restricted funds
Unrestricted funds
Total Group
Previous year
Restricted funds
Unrestricted funds
Total Group		 Current
Financial
assets investments
2022
2022
£’000
£’000
21,680
27,325
16,669
5,957
38,349
33,282
2021
2021
£’000
£’000
21,978
49,411
7,901
-
29,879
49,411		 Total
liabilities
2022
£’000
(20,765)
(1,844)
(22,609)
2021
£’000
(24,479)
(5,202)
(29,681)		 Total
funds
2022
£’000
28,240
20,782
49,022
2021
£’000
46,910
2,699
49,609

36

SOCIAL INVESTMENT BUSINESS FOUNDATION NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED 31 MARCH 2022

20 Analysis of net assets between funds (continued)

Transfer to unrestricted funds

Communitybuilders Fund became unrestricted from 1st April 2021 and this is represented by the transfer from restricted to unrestricted all the Communitiybuilders net assets that have been fully reconciled including SASC, of which the cash from Communitybuilders Fund was used to invest in.

Transfer to restricted funds

Recovery Loan Fund is set up in a new subsidiary, SIB Loan Limited (SIB Loans). SIB Loans is a whollyowed subsidiary of the Social Investment Business Foundation (SIBF). The special vehicle entity was set up to manage the Recovery Loan Fund (RLF). SIBF applied for the allotment and issued 3,000,000 ordinary shares of £1.00 each in the capital of SIB Loans which are restricted fund.

Transfer to management fee

Communitybuilders Fund represents a transfer from the restricted Communitybuilders Fund to SIBL as payment of the fund management fees.

Futurebuilders Fund represents the payment of the management fee from DCMS to SIBL from returns to the fund.

Resilience & Recovery Fund represents a transfer from the restricted SIBFM funds to SIBL as payment for fund management fees and loan arrangement fees.

Recovery Loan Fund represents a transfer from the restricted SIB Loans funds to SIBL as payment for fund management fees and loan arrangement fees.

All of these are shown as transfers between restricted and unrestricted funds on the face of the Statement of Financial Activities.

Foundation
In year
Restricted funds
Unrestricted funds
Total Foundation
Previous year
Restricted funds
Unrestricted funds
Total Foundation		 Current
Financial
assets investments
2022
2022
£’000
£’000
6,893
3,291
14,394
5,957
21,287
9,248
2021
2021
£’000
£’000
18,106
16,914
1,878
-
19,984
16,914		 Total
liabilities
2022
£’000
(147)
-
(147)
2021
£’000
(6,696)
-
(6,696)		 Total
funds
2022
£’000
10,037
20,351
30,388
2021
£’000
28,324
1,878
30,202

37

SOCIAL INVESTMENT BUSINESS FOUNDATION NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED 31 MARCH 2022

21 Statement of Cash Flows notes:

Reconciliation of net expenditure to net cash (used in)/ generated by operating activities:

Net expenditure after taxation
Investments income and bank interest received
(Decrease)/increase in investment provisions/write offs
Decrease in associate investment provision
Decrease/(increase) in debtors
Increase in creditors
Net outgoing from associate
Net cash (used in)/generated by operating activities
Analysis of changes in net funds:
1 April
2021
£’000
Cash at bank and in hand
Cash
11,338
Short term deposits
16,172
Debt due > 1 year
Amounts owed to fund co-investors
(20,221)
Total net funds
7,289		 Group
2022
£’000
(623)
(2,008)
(821)
(38)
381
29
-
(3,080)
Cashflow
£’000
12,969
(2,993)
(679)
9,297		 Group
2021
£’000
(8,528)
(1,499)
719
(254)
(399)
20,138
180
10,357
31 March
2022
£’000
24,307
13,179
(20,900)
16,586

22 Contingent liabilities

Social Investment Business Foundation

If an investee of the Adventure Capital Fund sells an asset purchased with those funds, the Home Office could require a partial repayment of its grant to the extent of any sales proceeds received by SIBF under any security which it holds over the investee. This could be regarded as a contingent liability but any obligation to pay the Home Office would be matched by funds received from the investee.

SIBF had the investment in The Community Investment Fund LP (CIF) which is part of the SASC investment. As part of the exit strategy of CIF, SIBF completed the settlement with Schroders BSC Social Impact Trust in March 2022 and agreed the indemnity on one of CIF’s investees with the total exposure of £559,607. The value of the indemnity is based on the original portion of SIBF investment in SASC (44%) on the investee’s outstanding loan balance at the settlement date of £1,259,115 and will be triggered upon the default of its loan. The directors considered this as a contingent liability on the basis that it may materialise in the future.

Futurebuilders England Limited

38

SOCIAL INVESTMENT BUSINESS FOUNDATION NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED 31 MARCH 2022

23 Operating lease commitments

The SIBF Group has no future minimum lease payments under non-cancellable operating leases. The office is rented under a rolling lease which is automatically renewed every 6 months, there is a 6 months’ termination clause in the agreement.

24 Related party transactions

SIBF is a partner in SASC which includes: The Third Sector Loan Fund LLP, the Community Investment Fund LP and Social and Sustainable Housing LP.

SIBF paid SIBL £185k (2021: £262k) for management of the Communitybuilders Fund, and £302k (2021: £297k) towards operational and premises costs. SIBF paid SIBL £168k (2021:£3k) for grant programme delivery fees during the year. SIBF received £4k (2021: £6k) in interest and £62k (2021: £62k) in capital regarding an intercompany loan between SIBF and SIBL.

At the balance sheet date the following amounts were outstanding with related parties:

Related Relationship Transaction type 2022 2021
Party £ £
SIBL Wholly-owned subsidiary Intercompany Balance 5,168 (298,159)
SIBL Wholly-owned subsidiary Intercompany Loan 78,125 140,625
FEFM Wholly-owned subsidiary Cash Investment 165,000 -
FEFM Wholly-owned subsidiary Acquisition of Loan Book 119,165 -

Hugh Rolo was a member of the SIBF Board until September 2021 and was employed as the Director of Development at Locality until December 2020. Until May 2021, he was also a Director of Key Fund who provided a loan of £153k (2021: £153k) for the Northern Cultural Regeneration Fund.

SIBL is a trading subsidiary of the SIBF.

25 Investment in subsidiaries

Details of the Foundation’s subsidiaries at 31 March 2022 are as follows:

Name Status Members % Registered
owned No
The Social Investment Business Company limited by SIBF 100 06490609
Limited (SIBL) guarantee
Futurebuilders England Limited Company limited by SIBL 100 05066676
(FBE) guarantee
Forward Enterprise FM Limited Company limited by SIBF 100 11238102
(FEFM) shares
Social Investment Business FM Company limited by SIBF 100 12543106
Limited (SIBFM) shares
Social Investment Business Loans Company limited by SIBF 100 13259359
Limited (SIB Loans) shares

All are registered in England and Wales.

All have their registered address at: CAN Mezzanine, 7-14 Great Dover Street, London SE1 4YR.

During the year, the loan book totalling £179k of FEFM was transferred to SIBF at book value for £nil consideration.

The remaining assets and liabilities were settled and the directors of FEFM are in the process of winding up the company up.

39

SOCIAL INVESTMENT BUSINESS FOUNDATION NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED 31 MARCH 2022

25 Investment in subsidiaries (continued)

The financial results of the subsidiaries are summarised below:

Profit and Loss Account
Income
Expenditure
Net income/(deficit) before tax
Corporation tax (charge)/ credit
Net income/(deficit) for the year after tax
Balance Sheet
Fixed assets
Current assets
Debtors
Cash at bank and in hand
Current liabilities
Creditors
Net current assets
Creditors due after more than 1yr
Net assets		 SIBL
FBE
FEFM
SIBFM
SIB
Loans
2022
2021
2022
2021
2022
2021
2022
2021
2022
2021
£'000
£'000
£'000
£'000
£'000
£'000
£'000
£’000
£’000
£’000
7,874
9,650
218
689
24
70
1,883
1,248
25
-
(8,265)
(9,263)
(561)
(8,939)
(35)
(71)
(1,883)
(1,248)
(48)
-
(391)
387
(343)
(8,250)
(11)
(1)
-
-
(23)
-
-
-
(41)
63
-
-
-
-
-
-
(391)
387
(384)
(8,187)
(11)
(1)
-
-
(23)
-
SIBL
FBE
FEFM
SIBFM
SIB
Loans
2022
2021
2022
2021
2022
2021
2022
2021
2022
2021
£'000
£'000
£'000
£'000
£'000
£'000
£'000
£’000
£’000
£’000
-
-
12,533
16,599
-
226
13,988
15,814
592
-
639
1,161
28
59
-
18
255
504
4
-
1,635
1,958
5,484
1,874
-
23
6,784
3,986
2,396
-
2,274
3,119
5,512
1,933
-
41
7,039
4,490
2,400
-
(1,822)
(2,156)
(98)
(202)
-
(3)
(127)
(336)
(15)
-
452
963
5,414
1,731
-
38
6,912
4,154
2,385
-
(21)
(141)
-
-
-
(253)(20,900) (19,968)
-
-
431
822
17,947
18,330
-
11
-
-
2,977
-

40

SOCIAL INVESTMENT BUSINESS FOUNDATION NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED 31 MARCH 2022

26 Guarantors

Locality (formerly The Development Trusts Association) Registered Charity no: 1036460 is the remaining founder member of SIBF. The Directors appointed by the Board are the non-founder Directors. The founder and non-founder Directors are the members of the Foundation. Every member undertakes to contribute a sum not exceeding £1 to the assets of the Foundation if it is wound up during his or her membership or within one year afterwards.

27 Amounts disbursed as agent - Group

SIBL manages and disburses the restricted funds as principal, with the income and expenditure included in the Group Statement of Financial Activities; and as agent, with the grants, related disbursements, assets and liabilities excluded from the Group's financial statements. The activities as agent are shown below and in other creditors.

Social Enterprise Investment Fund (SEIF)
Balance at 1 April
Returns to Funder (DoH)
Repayments from Investees
Balance held at 31 March
Power to Change grant programmes
Balance at 1 April
Funds received from PTC
Funds disbursed to grantees
Balance held at 31 March
Youth Endowment Fund grant programmes
Balance at 1 April
Funds received from YEF
Funds disbursed to grantees
Balance held at 31 March		 2022
£'000
112
(97)
174
189
2022
£'000
1,682
7,889
(8,582)
989
2022
£'000
1,118
(1,118)
-
-		 2021
£'000
37
(2,422)
2,497
112
2021
£'000
-
21,813
(20,131)
1,682
2021
£'000
778
12,149
(11,809)
1,118

41