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Annual Report and Accounts 2018 Annual Report and Accounts 2018 Delivering more for smaller businesses across the UK We help drive economic growth by making fnance markets work better for smaller businesses – wherever they are in the UK and whatever their stage of development. British Business Bank — Annual Report and Accounts 2018 1 Contents 2 Chair ’s statement 4 Chief Executive ’s statement 6 Strategic report 45 Directors’ report 66 Directors’ remuneration report 81 Directors’ responsibilities 82 Independent auditor ’s report 89 Consolidated fnancial statements 93 Notes to the consolidated fnancial statements 136 Independent auditor ’s report 139 Company fnancial statements 2 British Business Bank — Annual Report and Accounts 2018 Chair’s statement Chair’s statement Helping to drive economic growth As the UK government’s economic The British Business Bank’s mission is to help drive development bank, we fnd ourselves economic growth by making fnance markets work in a strong position at the end of better for smaller businesses – wherever they are the 2017/18 fnancial year, having in the UK and whatever their stage of development. enhanced our infrastructure, our organisation and our delivery to smaller businesses. Smaller businesses make up 99 percent of the UK’s business population by number, and it is vitally important to our economy to enable these businesses to prosper and grow. A growing remit In a productive and successful year, two major developments illustrate the growing remit of the British Business Bank group most strongly. On the 1st of April, we combined with The Start-Up Loans Company (SULCo), building our group capability to deliver for businesses at the earliest stage. For businesses further along their development, the government allocated us an extra £2.5bn at Autumn Budget 2017 to tackle the long-standing dearth of crucially- important long-term patient capital which enables high growth potential, ambitious companies to grow into large, world-leading businesses. Chair’s statement British Business Bank — Annual Report and Accounts 2018 3 Because of our growing reputation, Our people The Board both as a trusted centre of expertise Since April last year, as our role has There have been several Board on smaller business fnance and as expanded, our numbers have changes this year. I would like to thank an organisation that delivers, we increased rapidly from 167 to 248, Colin Glass and Teresa Graham, who are being asked by the government necessitating a move to a new head stepped down as Non-executive to deliver more and take on new ofce in Shefeld’ s Steel City House Directors (NEDs) in June 2017, for their responsibilities. as well as changes to our systems and valuable contributions since joining This is refected in two additional processes. Colleagues across the Bank the Board in June 2014. We welcomed objectives against which we have have shown considerable commitment, Piers Linney and Amanda Rendle as been asked to deliver from the start dedication and ability in continuing new NEDs in December 2017, and of the 2018/19 fnancial year: to deliver against our corporate look forward to drawing on their identifying and helping to reduce objectives during a year of such considerable knowledge and regional imbalances in access to signifcant growth and change. experience in the future. fnance for smaller businesses across Underpinning our corporate culture On my appointment last year, I said the UK; and being the centre of is a strong set of shared values, that I believe passionately that access expertise on smaller business fnance created and owned by colleagues to fnance is a vital part of helping in the UK, providing advice and across the Bank and supported by smaller businesses to invest, grow support to government. the Board. I am proud to chair an and achieve their ambitions. organisation that considers enabling, We have already helped many such talent, openness, connecting, businesses along their journey to innovation and commercial success. I look forward to working with responsibility as the foundations on the dedicated team at the Bank to help which to build its success. I am also even more of those businesses to pleased we are championing diversity maintain and grow their enormous as a signatory to HM Treasury’ s contribution to the UK economy. Women in Finance Charter. Colleagues across the Bank have shown Lord Smith of Kelvin considerable commitment, dedication Chair and ability in continuing to deliver against our corporate objectives during a year of such signifcant growth and change. 4 British Business Bank — Annual Report and Accounts 2018 Chief Executive’s statement Chief Executive’s statement Increased delivery, enhanced capability Over the course of the last fnancial year, we’ve The British Business Bank was set up at the end of 2014 to make fnance increased our delivery of fnance for smaller markets work better for smaller businesses, taking on new responsibilities while businesses. Over 74,000 businesses enabling ever greater supply and diversity of fnance. across the UK now beneft from our programmes, which increase both the range and the amount of fnance available. Smaller businesses at all stages – whether startups, scaleups or well-established frms – need the right sort of fnance to realise their potential. We help the market meet those needs more efectively. During 2017/18, we saw money fowing to smaller businesses from our national and regional programmes. Against our four Key Performance Indicators: — we increased the total stock of fnance provided through our programmes by 33% — we supported further diversity of fnance, delivering 96% of our support through smaller banks, non-bank lenders, alternative lenders and equity investors — we expanded how we promote information about fnance options, helping businesses to become more aware of, consider and explore their options — we achieved a 4.7% adjusted return on capital, exceeding the target set by our government shareholder. Chief Executive’s statement British Business Bank — Annual Report and Accounts 2018 5 1 2 3 4 Increase the supply Help to create a more Promote better Achieve this whilst of fnance diverse fnance market information in the market managing taxpayers’ money efciently £12.3bn 50% 50% 96% 48% 94% 4.7% 90% 43% 79% 4.1% £9.2bn 3.8% £7.5bn 2.9% £5.1bn 2014/15 2015/16 2016/17 2017/18 2014/15 2015/16 2016/17 2017/18 2014/15 2015/16 2016/17 2017/18 2014/15 2015/16 2016/17 2017/18 Stock of fnance Percentage through Awareness of diferent Adjusted return on non-Big Four banks forms of fnance capital employed The fnancial statements for British as the Enterprise Finance Guarantee. which enables growing businesses Business Bank plc show an operating Alongside this, 2017/18 saw the to understand and choose the best proft of £48.3m (before provision for Bank increasingly focus on scaleup fnance for their needs. ECF loan commitments) and a proft businesses. As well as making total As the government’ s centre of before tax of £11.3m. commitments of £285m through our expertise on smaller business fnance, Venture Capital (VC) Catalyst, Our frst two regional funds – the this year we’ ve increasingly been called Enterprise Capital Funds and Angel Northern Powerhouse Investment on to provide research and informed CoFund – providing much-needed Fund and the Midlands Engine analysis. This includes leading equity fnance – the government Investment Fund – are now delivering government-sponsored research into asked us at Autumn Budget 2017 critically-important debt and equity VC industry diversity and capability to deliver a signifcant increase in fnance to boost their respective and how Intellectual Property might long-term patient capital provision. regional economies. A third regional be used to secure fnance. In 2018/19 we intend to nearly double fund for Cornwall and the Isles of our commitments, to £543m, to help The British Business Bank now Scilly, a new angel investment fund innovative scaleups become the global supports smaller businesses at all focused outside of London and the successes of tomorrow. stages – from startup to long-term South East, and our forthcoming patient capital for high-growth Regional Manager Network will Following on from our successful potential scaleup businesses. address further the well-documented Business Finance Guide, which we The gearing up of our delivery and imbalances in regional fnance. publish jointly with the Institute of capability in the last year means Chartered Accountants in England We are continuing to deliver high we are ready and able to support and Wales, this year we have been volumes of funding through our more UK businesses in the future, developing an innovative Information well-established programmes such whatever opportunities and Hub – FinanceYourGrowth.co.uk – challenges may lie ahead. The British Business Bank now supports smaller businesses at all stages – from startup to long-term patient capital for Keith Morgan high-growth potential scaleup businesses. Chief Executive Ofcer 6 British Business Bank — Annual Report and Accounts 2018 Strategic report Strategic report Our mission and objectives In 2017/18 the Bank had four key objectives: The British Business Bank’s mission is to help 1 Increase the supply of fnance drive economic growth by to smaller businesses where markets don’t work well making fnance markets work better for smaller businesses1 – wherever 2 Help to create a more diverse fnance market they are in the UK and for smaller businesses, with greater choice of options wherever they are on and provider their business journey – enabling them to prosper 3 Promote better information in the market and grow. building confdence among SMEs in their understanding of the fnance options available to them 1. Small and Medium-sized Enterprises (SME) and small mid-cap businesses. 4 To achieve these while managing taxpayers’ money efciently within a robust risk management framework Objective two now excludes Evolving our objectives To encourage and enable the fve largest banks instead During the year our shareholder SMEs to seek the fnance of the largest four.
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