Final Results

Schroder BSC Social Impact Trust

30 October 2023

Schroder BSC Social Impact Trust plc

Annual Report and Accounts

Schroder BSC Social Impact Trust plc (the "Company") hereby submits its final results for the year ended 30 June 2023.

Highlights

The Company has generated resilient shareholder returns since inception on 22 December 2020 in a highly volatile market and continues to provide a source of portfolio diversification for investors, along with the opportunity to make a meaningful positive difference to communities across the UK.

· NAV of 104.90 pence per share as of 30 June 2023.

· NAV total return per share of 0.8% in the financial year ended 30 June 2023, during a period of continued downwards pressure in the wider market.

· NAV total return per share of 8.6% since inception (3.4% annualised).

· Dividend of 2.30p per share for the year, increasing 77% from 1.30p per share for the year to 30 June 2022; dividend yield on NAV guidance increased to 2-3% (from 1-2%).

· High impact housing portfolio remains resilient - 100% of rent collection due by June 2023.

· £87m of capital committed to date to support 168 frontline organisations, reaching 276,000 people, at least 94% of whom are disadvantaged or vulnerable.

· 100% of investments align with the UN Sustainable Development Goals, across four key impact themes, with the majority of the portfolio aimed at reducing poverty and inequality (SDGs 1 & 10).

The Portfolio Manager will be presenting at a webinar on 31 October 2023 at 14:00. This is open to all existing and potential shareholders, who can sign up for the webinar at:

https://registration.duuzra.com/form/SBSI23

The Company's Report and Accounts for the year ended 30 June 2023 is also being published in hard copy format and an electronic copy will shortly be available to download from the Company's website:

https://www.schroders.com/en-gb/uk/individual/funds-and-strategies/investment-trusts/schroder-bsc-social-impact-trust-plc/

Please click on the following link to view the document:

http://www.rns-pdf.londonstockexchange.com/rns/6181R_1-2023-10-28.pdf

Enquiries:

Augustine Chipungu (Press) 020 7658 6000

Matthew Riley (Company Secretary) 020 7658 6000

Schroder BSC Social Impact Trust plc

Chair's Statement

I am pleased to present the third annual report of Schroder BSC Social Impact Trust plc ("the Company"), covering the year ended 30 June 2023.

Following a period of high market volatility, the Bank of England's monetary tightening policy appears to have been successful in bringing inflation back in single-digit territory in 2023. The "worst-case" recessionary concerns of late 2022 appear to have been (narrowly) averted, and we start seeing early signs of interest rate stabilisation, alongside hopes of reducing inflation.

However, the full impact of the higher inflation and interest rates environment are only beginning to be felt and will have long-term consequences for the cost of living in the UK, putting pressure on the affordability of essential items like food, energy, and housing.

It is estimated that UK households are facing the largest fall in living standards since records began in the 1950s, and low-income households are the most affected. In this challenging environment, the social impact created by the Company's investments is needed more than ever, with many investments providing solutions to the cost-of-living crisis, such as increasing the supply of affordable housing and helping households manage energy costs through retrofit businesses and community renewables. In a time of constrained government spending, the Company's investments targeting innovation in public service commissioning through Social Outcomes Contracts generate significant savings for the Government[1].

The Board believes the Company offers investors a valuable source of portfolio diversification, through access to a unique mix of private market investments, with the dual objectives of providing long term capital growth and income and serving as a source of permanent funding for organisations dedicated to positive social impact.

Furthermore, the Board, AIFM and Portfolio Manager are committed to advancing impact investing in the UK, through events and publications aimed at increasing investors' understanding of best practices and supporting them in making impact allocations in their portfolios. We build relationships and maintain an active dialogue with the investment community, actively seeking to understand how the Company can best serve investors' requirements in committing capital to high quality, high impact investments.

We understand that our investors want the Company to grow, both through NAV asset growth and fresh capital raises, and it is a stated high priority for the Board to take actions to make this possible. We welcome conversations with investors interested in helping us to achieve this goal of growing the Company.

Financial performance

The Company has delivered resilient NAV total returns since inception on 22 December 2020, in a highly volatile market. Net asset value ("NAV") total return for the year ended 30 June 2023 was 0.8% (2022: 1.6%), resulting in a NAV total return since inception of 8.6% (3.4% annualised).

Overall, the Company's NAV per share fell from 105.4p to 104.9p during the year ended 30 June 2023, after fees which included an interim dividend payment of 1.30p per share paid on 6 December 2022 (2021: 0.57p).

The total share price return during the year ended 30 June 2023 was -11.0% (2022: -4.7%) as the Company's shares were not immune to negative investor sentiment towards equities resulting in a wider discount to NAV. The Company moved from trading at a premium to NAV to a discount after the mini budget of September 2022, and traded at an average discount of 7.3% in the twelve months to 30 June 2023, narrower than the average investment trust discount of 13.2% over the same period.

A more detailed analysis of performance and additional information on investments in the period under review are included in the Portfolio Manager's Report. I would particularly like to highlight that our Portfolio Manager has demonstrated the benefits of extensive experience and an impact-led approach to investing in social housing this year. Our portfolio has shown resilience within a turbulent market, and should the Company raise more capital, we are well positioned to deploy it responsibly in this important sector.

Social impact performance

The Company published its second Impact Report on 29 June 2023, showcasing the meaningful roles our investees have played in communities across the UK during the year, the engagement of our Portfolio Manager to support their success, and our impact management methodology.

As of the date of the Impact Report the Company had committed £87m, financing 168 organisations and reaching 276,000 people, of whom at least 94% were from disadvantaged and vulnerable backgrounds. The Company's investments helped fund over 27,000 affordable homes through the High Impact Housing asset class and generated over £98m of near-term value as savings for government and households. The full report is available on the Company's website.

The Company's investments are also contributing to addressing the specific social challenges created by rising energy costs. For example, Agility Eco (in the Bridges Evergreen portfolio) is a leading installer of energy efficiency improvements for low-income households. Man Community Housing Fund received planning permission for a development of 226 zero carbon, 100% affordable homes. Heart of England Community Energy (backed by Triodos UK and the Community Investment Fund) generates enough power for 4,500 homes as well as providing wider community benefits.

More detail can be found in the Impact Report section on pages 29 to 30 of the 2023 Annual Report and Accounts. We continue to welcome your feedback on the report, to help guide our communications with shareholders about the frontline work of our investees and our impact management methodology.

The Board was privileged in May 2023 to see first hand the valuable work that our investees are undertaking in Hull and together with representatives from the Portfolio Management team visited Hull Women's Network, an organisation helping women and their children escape domestic abuse, and Hull and East Yorkshire Mind, providing support services to individuals and families experiencing poor mental health. Both organisations also provide safe and appropriate housing for people who need it most as part of their wrap-around support services and have used social investment from the Social and Sustainable Housing fund (in the Company's High Impact Housing portfolio) to purchase and refurbish homes to a high standard for their beneficiaries.

The Board is keen to help our investors meet their own developing needs in relation to impact reporting, and we welcome feedback.

Discount management

During the year to 30 June 2023 the Company's share rating ranged between a discount to NAV of 15.3% and a premium to NAV of 1.5%. The 12-month average discount on 30 June 2023 was 7.3% (average discount 2022: 0.5%).

The Company's share price moved to a discount to NAV in October 2022, during a period of turbulence for UK equities. Following consultation with the Manager and the Company's corporate broker in late 2022 the Board agreed that it was in shareholders' best interests to commence buying back a limited number of shares with the aim of narrowing the discount at which the shares were trading to NAV. The Board also considers the shares an attractive investment and the buybacks have been accretive to existing shareholders.

While the Board is conscious that buybacks shrink the size of the Company marginally in the short-term it remains our ambition to grow the Company through share issuance in the longer term. Addressing the discount to NAV is considered critical to achieving this goal and the Board believes buy backs are one of the tools to use in pursuit of this. During the year ended 30 June 2023 the Company bought back 711,720 ordinary shares for a total consideration of £674,000. All shares were bought back at a discount to the prevailing NAV, and were placed into Treasury for future re-issue. Should the Company's shares reach a sufficient rating to its NAV, the Board will seek to use these shares to issue to new and existing investors. Our Portfolio Manager has an attractive pipeline of high impact investments, and it is the Board's ambition to raise funds to take advantage of these opportunities for our shareholders and to deploy further capital to create more equal life chances and build resilient communities in the UK.

Since 30 June 2023 and up to 26 October 2023, a further 449,924 shares have been bought back for a total consideration of £411,130.84 and placed in Treasury.

At the forthcoming Annual General Meeting ("AGM") the Board will seek to renew the authorities previously granted by shareholders to issue or buy back shares. We encourage shareholders to vote in favour of these resolutions which are described in more detail in the on pages 91 to 94 of the 2023 Annual Report and Accounts.

Investor engagement

Another important plank in the strategy of closing the discount and ultimately growing the Company, is active engagement with current and prospective shareholders, which the Board and the Managers take very seriously. Webinars and forums have been held during the year under review to shed light on the investment approach and portfolio holdings, and to help educate and inform investors newer to social impact investing. In particular, excellent feedback was received about the event convened in March 2023 that focused on the UK social housing market and the way that a high impact focus has successfully been used to manage risk and deliver resilient returns.

I am personally keen to meet with investors who may have a desire or mandate to allocate to social impact, as the Company aspires to be an attractive, diversified and reliable 'go-to' partner for such portfolios. It has been useful to hear the issues being faced by investors in this regard, and I am grateful for the ideas shared in the meetings I have had during the year under review and subsequently.

The Board recognises the size of the Company is a hurdle for some investors, but we also hear from many that our strategy answers a need across a range of investor types. Therefore, the Board is thinking creatively and proactively about our outreach in the year ahead. I hope our events, reports, and activities will be valuable to you, and will help broaden and deepen our shareholder base. I look forward to more dialogue with new investors to increase our own investor impact and accelerate the much-needed deployment of capital into high quality, high impact investments in communities across the UK.

Dividend

The Board has considered the amount available to distribute to investors and, as in previous years, has declared that the Company will pay out substantially all of its income as a dividend, resulting in a dividend of 2.30p per share (2022: 1.30p), payable on 20 December 2023 to shareholders on the Company's share register on 10 November 2023. This is above the target dividend of 1-2% of net asset value communicated to investors at the initial public offering ("IPO") and the Portfolio Manager is increasing its guidance for future dividends to yield 2-3%. The dividend of 2.30p is split between a 2.16p interest distribution and a 0.14p equity dividend.

Continuation vote

In the Prospectus, published at the time of the IPO, the Company undertook to provide shareholders with the opportunity to vote on the Company's continuation should the Company's shares trade, on average, at a discount in excess of 10% to NAV for the two-year period ending 31 December 2023 and in any subsequent two-year period. In the event that a vote was triggered shareholders would be provided with the opportunity to vote on whether the Company should continue in its present form.

The Board believes that since launch the Company has established a clearly differentiated and unique position relative to other investment companies. The Company provides shareholders with exposure to hard to access high impact assets and managers whilst its investments support partnerships between UK fund managers, social organisations and the communities they serve. The Board also believes that social impact investments should continue to provide attractive long term investment opportunities and that the prospects for private market social impact investments remains positive. In addition, your Board notes that if the discount on 26 October 2023 of 13.13% were to continue until the end of this year, then the Company's shares will have traded for the two years ending 31 December 2023 on average at a discount of 6.79%.

Quarterly valuations

In the Half Year Report, I advised that the Company intended to increase the frequency of its valuation points from bi-annually to quarterly to provide increased transparency for existing and potential shareholders. Subsequently, the quarterly NAVs in respect of 31 March and 30 June 2023 were published and the Company will continue to publish the NAVs on a quarterly basis.

Online presentation

There will be a presentation by the Portfolio Manager at 2.00 p.m. on Tuesday, 31 October 2023 which will be available to watch online. To sign up to watch the presentation please click on this link: https://registration.duuzra.com/form/SBSI23

Details on how to watch the presentation are also available on the Company's webpage: www.schroders.com/sbsi

By using a webinar, I hope more shareholders, and interested parties will be able to listen to and ask questions of the Portfolio Manager.

AGM

The AGM will be held on Friday, 15 December 2023 at 12.00 noon at the offices of Schroders at 1 London Wall Place, London, EC2Y 5AU. A presentation from the Portfolio Manager will be given at the AGM, and attendees will also be able to ask questions in person. The presentation will be made available on the Company's website following the meeting. Details of the formal business of the meeting are set out in the Notice of Meeting on pages 92 to 94 of the 2023 Annual Report and Accounts.

All shareholders are encouraged to vote by proxy in advance of the AGM and to appoint the Chair of the meeting as their proxy. This will ensure that shareholders' votes will be counted even if they (or any appointed proxy) are not able to attend.

If shareholders have any questions for the Board, please write to the Company's registered office address: Company Secretary, Schroder BSC Social Impact Trust plc, 1 London Wall Place, London, EC2Y 5AU, or email: amcompanysecretary@schroders.com.

For regular news about the Company, shareholders are also encouraged to sign up to the Manager's investment trusts update by visiting the Company's website: https://www.schroders.com/en/uk/private-investor/fund-centre/funds-in-focus/investment-trusts/schroders-investment-trusts/never-miss-an-update/

Outlook

Following the volatile environment in global and UK markets, a higher inflation, higher interest rate environment is expected to have a long-term impact on the real economy, and the standards of living of UK households. Most vulnerable and disadvantaged households are the most affected, at a time when government spending is also constrained.

In this context, the services provided by the organisations funded by the Company's investments are needed more than ever. While some of these organisations themselves will be affected by rising cost pressures, the organisations in the Company's portfolio have an average 30-years' track record, having demonstrated their resilience through multiple economic cycles.

An expected election in the UK in the next twelve months introduces further uncertainty around the policy risk. A significant portion of the Company's portfolio is invested in organisations with government-backed revenue sources. The Portfolio Manager mitigates policy risk by diversifying the portfolio across policy areas, and targeting areas with broad cross-party support, such as housing, health and social care, and energy resilience.

Despite the challenging market environment, the social investment market in the UK grew by 18% to £9.4bn in 2022, according to the most recent annual market sizing exercise published by Big Society Capital[2]. The Board believes that the Company remains well positioned to lead and benefit from further market growth, as the Portfolio Manager continues to see an expanding and maturing pipeline of investment opportunities.

One of these opportunities is in very advanced stages, and we expect the Portfolio Manager to fully commit the capital available (following partial exits and capital repayments from the existing portfolio) by early 2024. This opportunity would increase the portfolio exposure to the "just transition to net zero" impact theme and is expected to provide attractive returns to investors.

In September 2023, the Company was Highly Commended in the Best Newcomer Sustainable Fund category of Investment Week's Sustainable Investment Awards 2023. We are pleased that the Company's contribution as a key player in the sustainable investing space is being recognised by the investor community.

We are encouraged to see growing appetite for sustainable investment products, and an increased focus both from regulators and investors on ensuring quality and clear standards. In the UK, the Company engaged with the Financial Conduct Authority's Sustainable Disclosure Requirement ("SDR") consultation through Schroders and Big Society Capital, and we were pleased to see extensive engagement from the broader financial sector. The proposed SDR framework signals the regulator's commitment to supporting the integrity and growth of the impact and wider sustainability investment markets in the UK. We believe transparent labelling and disclosure of impact products are essential for the impact investment market to grow healthily. We also welcome the EU's Sustainable Finance Disclosure Requirements ("SFDR") consultation, launched this year to review SFDR's implementation and explore new classifications that offer greater clarity on investment product impact credentials.

Through engagement with key stakeholders in the investment and regulatory space, as well as showcasing best practice in making successful impact investments, the Managers aspire to position the Company as a trusted leader and attractive partner for investors making allocations to this emerging asset class.

We have been gratified to hear the interest in, and support for, the Company's approach and purpose, but realise successful growth depends on converting more of this latent demand and widening the shareholder base. We look forward to speaking with you during the year.

Susannah Nicklin

Chair

27 October 2023

Portfolio Manager's Report

Market developments

The twelve months to 30 June 2023 were a particularly challenging one for the UK economy with inflation at a 40 year high, led by large increases in energy and food prices and contending with recessionary concerns. The "mini-budget" of September 2022 further exacerbated the instability in financial markets, and negative investor sentiment, despite its subsequent reversal.

The Bank of England's ("BoE") response to market conditions was to raise interest rates eight times in a 12-month period, to 5% on 30 June 2023, with a further rise to 5.25% voted for in August 2023. The new interest rate environment has broad implications on the investment community as well as the broader population, in particular, the most vulnerable and disadvantaged people that the Company's investments are aiming to support.

Inflation started to reduce during 2023, returning to single digits; however, the full effects of the higher inflationary and interest rate environment are only just beginning to be felt, and are expected to have long term consequences in areas such as housing affordability, and continued pressures on cost-of-living.

A House of Commons research briefing published in September 2023 highlights some of the starkest data illustrating the impact on the cost of living of the last 2 years of rising inflation:

• Food prices: Over the two years from August 2021 to August 2023 food prices rose by 28.4%. It previously took over 13 years, from April 2008 to August 2021, for average food prices to rise by the same amount.

• Energy prices: household energy tariffs and road fuel costs increased sharply in 2022; in an effort to mitigate the impact of rising gas and electricity prices, the Government introduced an Energy Price Guarantee (EPG) in October 2022, capping typical consumption at £2,500 a year. This limited increases in typical bills to 27% in October 2022.

• Housing affordability: base interest rates rose from 0.1% in December 2021 to 5.25% in September 2023, which led to higher borrowing rates for households (specifically higher mortgage rates), and higher rental costs - significantly impacting housing affordability.

Low-income households are most affected by rising prices, mostly due to being more affected by high food and energy prices.

"Food bank charities are reporting an increase in demand: the Trussell Trust reported that in the year to March 2023 they provided nearly 3 million emergency food parcels, a record number, more than during the pandemic and more than double the number in the same period five years before."

- House of Commons Library Research -

Rising Cost of Living in UK - Sep 23.

The new environment creates both risk and opportunities for the Company on both social impact and financial returns. Looking first at the social impact risk, many of the charities and social enterprises supported by the Company's investments, and the vulnerable people who benefit from their services, will be negatively affected by the current environment. Whilst increasing the need for the positive impact of our investments it means that in some cases impact will be outweighed in overall terms by the rising cost of living. On financial returns, we have aimed to build a portfolio with a degree of inflation correlation. However, in a very volatile inflation environment some of those correlations will be only partial and some operate with a time-lag. In particular, as the portfolio relies to a significant extent on government backed revenues, government restrictions on how fast inflation flows through into social housing rents and contract payments will be important.

Looking at the opportunities for our investment strategy, the social impact created by our investments is needed more than ever. Many of our investments are directly tackling the cost of living crisis, such as increasing the supply of affordable housing and our retrofit and community renewable investments tackling fuel poverty. In a time of constrained government finances our investments are targeting service innovation that create significant savings - for example our recent review of Social Outcomes Contracts showed that every £1 spent has generated £10 in public value.

On the financial side, we expect the Company will continue to provide a valuable source of diversification in a challenging investment environment. High and volatile inflation is strongly negative for traditional public market equity and bond portfolios. We have aimed for a unique mix of impact-focused private assets with diverse and resilient revenue streams that has thus far protected capital and should continue to do so in the event of further sharp market downturns.

Across our portfolios we are seeing the wider move to invest in impact continuing. Our latest market sizing report values the social impact investment market at £9.4bn as of the end of 2022, an 18% increase from 2021. This represents an almost 11-fold increase in the social impact investment market in the last 11 years. As a result, we are seeing an expanding and maturing pipeline of investment opportunities, primarily in private markets that are difficult for many investors to access. We believe the Company remains well positioned to offer investor access to a mature portfolio of high quality impact investments within this expanding opportunity set.

Performance update

The NAV total return per share for the twelve-month period to 30 June 2023 was 0.8%. Overall, the Company's total NAV reduced slightly from £89.92m to £88.75m over the period due to share buy-backs reducing the number of shares in issue from 85.32 million to 84.60 million. The shares bought back were held in Treasury at the end of the financial year.

The Company's NAV per share declined from 105.39p to 104.90p after an 1.30p dividend payment - with a full performance bridge in the chart below.

In the 12 months to 30 June 2023 the Company recorded gross revenue of £2.77m (2022 - £1.86m) and net revenue after fees, costs and expenses of £1.97m (2022 - £1.12m), providing a net revenue return per share of 2.32 pence (2022 - 1.37 pence). The Company recorded losses on the fair value of investments of £1.02m (2022 - gains of £0.63m) and capitalised expenses of £0.33m (2022 - £0.29m), resulting in a total gross return of £1.75m (2022 - £2.49m), and total net return of £0.62m (2022 - £1.44m), or 0.73 pence per share (2022 - 1.77 pence).

As shown in the table below, portfolio returns since inception have been driven by the performance of investments in their mature phase, contributing 10.67% to NAV total return. However, in the 12 months to 30 June 2023, the mature phase investments underperformed plan contributing 0.17% due to a significant write down in the Bridges Evergreen portfolio and the headwinds of rising rates.

Assets in their investment phase, which are earlier in their lifecycles and J-curves, made a 1.58% contribution to NAV total return during the year to 30 June 2023, which is in line with expectations.

Liquidity Assets made a positive contribution of 0.16% to performance during a challenging year for markets through allocations to shorter duration and floating rate credit.

	30 Jun 2023	30 Jun 2023	NAV total return	NAV total return
	% NAV	% NAV	contribution	contribution
	committed	invested	12m to 30 June 2023	since launch
Mature	65.04%	63.89%	0.17%	10.67%
Investment phase	32.33%	23.62%	1.58%	1.74%
Liquidity Assets	-	10.53%	0.16%	-0.57%
Cash and cash equivalents	-	1.97%	-1.14%	-3.23%
Total*	97.37%	100.00%	0.78%	8.61%

*Please note totals might not sum due to rounding

The key drivers of financial performance in the twelve-month period to 30 June 2023 were:

• A ramp-up of returns in the High Impact Housing portfolio, in particular valuation gains in the CBRE Affordable Housing Fund, contributing 0.58p to NAV per share, and the Man Community Housing Fund contributing 0.48p to NAV per share, mostly driven by developments reaching completion.

• A mix of income and capital gains in the Social Outcomes Contracts portfolio driven by strong performance of the underlying projects, with Bridges Social Outcomes Fund II contributing 0.48p to NAV per share.

• A notable negative development in the Bridges Evergreen portfolio was the write-down to zero of their investment in Skills Training UK. Bridges Evergreen contributed a negative 1.66p to NAV per share.

• With the exception of the Bridges Evergreen investment, all other holdings in the Company's High Impact Portfolio made a positive contribution to returns and are performing to plan.

The Social Impact performance of the portfolio was reported in the Company's second Impact report published in June 2023. The report highlighted that since launch, the Company's investments have reached 276,000 people, 94% of whom are from disadvantaged, vulnerable or underserved backgrounds; generated £98m in social outcomes and savings; and funded 27,000 affordable, decent homes. The Impact Section of this report contains the key highlights from the Social Impact report, as well as details of our evolving approach to impact management and reporting.

Portfolio cash flows and balance sheet

Overall, in the period £7.61m was deployed into existing and new investments in the High Impact Portfolio:

• The majority of the amount invested (£6.27m) was deployed towards delivering new affordable homes in the High Impact Housing allocation: Man Community Housing Fund drew down £2.55m and the Social and Sustainable Housing fund drew down £3.72m over the year.

• In Debt and Equity for Social Enterprises, £1.03m was drawn for further investment into the secured co-investments made with Charity Bank, and the Charity Bond portfolio, delivering high social impact in Health and Social Care.

• Within Social Outcomes Contracts, further investment was made into existing projects helping children on the edge of care and homelessness. The Social Outcomes Contracts investments made in the year to 30 June 2023 totaled £419,000.

Some of the Company's higher impact investments involve the staged deployment of capital over multiple years; we aim to mitigate any cash drag on returns through our Liquidity Assets allocation. This is invested in assets with similar financial risk and return characteristics as the core asset allocation, though has a lower direct social impact given the lack of availability of social impact-focused assets in publicly listed markets. During the period, we fully redeemed our positions in two investments to fulfil drawdowns in our High Impact Portfolio. The Liquidity Assets portfolio experienced some volatility over the year due to market turbulence but had a small net positive contribution to the total return for the year of 0.16%.

Portfolio Allocation

The Company's investment objective is defined as:

• Delivering measurable positive social impact as well as long term capital growth and income, through investing in a diversified portfolio of private market impact funds, co-investments alongside impact investors and direct investments in order to gain exposure to private market social impact investments.

• Aiming to provide NAV total return of CPI plus 2 per cent. per annum (once the portfolio is fully invested and averaged over a rolling three- to five-year period, net of fees).

• With low correlation to traditional quoted markets whilst offering to address significant social issues in the UK.

A diversified asset allocation delivering local UK social impact

The Company delivers its investment objective through allocating to best-in-class social impact managers in private markets - with proven track records delivering high quality financial returns alongside measurable social impact for more disadvantaged groups in the UK. Investments that are committed but not yet drawn by private market funds are held in listed Liquidity Assets investments to mitigate cash drag during longer drawdown periods.

As of 30 June 2023, the portfolio was 97% committed and 88% invested in the Company's High Impact Portfolio. The Company has approximately £2.5m of uncommitted capital, following the cancellation of an unused follow-on commitment to the Charity Bond portfolio, a partial exit from the Real Lettings Property Fund in the third quarter of 2023, scheduled capital repayments from the portfolio, and share buybacks. Furthermore 10% of NAV was held in our Liquidity Assets portfolio and will in the longer term be invested in higher impact private investments. In response to the higher interest rate environment, the Company is balancing use of Liquidity Assets with greater use of cash and cash equivalents in money market funds, earning interest in line with base rates.

Providing access to a seasoned high impact portfolio

The Company has built a seasoned high impact portfolio that would be difficult for shareholders to access directly - through a combination of a seed portfolio and secondary investments from the Portfolio Manager's relationships and knowledge of the sector. This provides a greater allocation to more mature assets that will help drive future financial and impact performance. The Portfolio Manager's broader portfolio relationships offer additional fee benefits to Company shareholders - with 41% of the Company's portfolio with no or discounted management fees - from co-investments or fee discounts that the Portfolio Manager has negotiated, often through their role as initial cornerstone investor in funds.

Targeting inflation resilient returns

The Company aims to deliver an asset allocation that is resilient through periods of rising prices through targeting two-thirds of its asset allocation to assets that will benefit from inflation. These assets are:

• Property and renewables - with a mix of long dated inflation linked leases, shorter property leases where value is more driven by property prices, and smaller investments in community renewables in our Debt and Equity for Social Enterprises asset class; we also hold renewables investments in our Liquidity Assets portfolio

• Mezzanine and equity investments - where the value is driven by government contracts that have historically moved with inflation

• Floating rate instruments which will benefit from increases in the base rate

As of 30 June 2023, the Company had committed 62% of its capital to inflation sensitive assets. The remaining capital committed to high impact investments was allocated to fixed income securities such as charity bonds and social outcomes contracts; the Company aims to minimise the duration of these fixed income assets, to allow reinvestment over time into a potentially higher interest rate environment. Including the investments in Liquidity Assets and cash and cash equivalents held in money market funds, the Company's invested amount in assets that will benefit from inflation is 66% of its capital. The Portfolio Manager is seeking to optimise its liquidity management, by investing its cash reserves in money market funds benefitting from increases in the base rate.

As previously indicated, the Company sees significant risk in achieving target returns to match recent elevated inflation levels. As a result, the Company is underperforming its CPI+2% aim. This is due to:

• Property and renewables: The presence of caps and collars in property index linked leases, caps in housing benefit increases and expected real falls in property prices.

• Mezzanine and equity investments: Delays in the pass through of inflation to government contracts in the current environment

• Floating rate instruments: Expected path of floating rates to continue to lag inflation

• A portion of the investment allocation (34% of invested capital) in fixed income securities and social outcome contracts where Company revenue will only benefit over time from inflation at higher interest rates as capital is re-invested.

Targeting low correlation to mainstream markets

The Company's asset allocation aims to achieve low correlation to mainstream markets by backing business models that are underpinned by government expenditure and have been historically resilient through economic cycles. As at 30 June 2023, 70% of the committed portfolio (61% invested) is underpinned by government backed revenue streams. The proportion of government-backed revenues in the portfolio is slightly below our long-term target of 75% (on a committed basis) due to the partial exit from The Real Lettings Property Fund ("RLPP1"), the cancellation of the charity bond top-up commitment, capital repayments in the period and the write-down in the BEH portfolio; however, the advanced pipeline opportunities which are being considered for the re-deployment of available capital have a high proportion of government-backed revenues, which we expect to bring our capital allocation in line with the target. These revenue streams are themselves diversified across policy areas, such as housing, clean energy and fuel poverty, education, redressing inequalities/levelling up. This diversification reduces exposure to individual policy risk, such as the risk that government or budgetary changes would significantly reduce or withdraw payments. The Company targets areas with a track record of delivering impact for more disadvantaged groups and generating savings for the public purse which provides additional revenue resilience. Reflecting the uncorrelated nature of the portfolio relative to mainstream markets, the Company's share price had a negative correlation with the FTSE ALL Share Index in the twelve months to 30 June 2023 (-0.62), and since inception (-0.53).

Recent Events

Following the realisation of capital from RLPF1 and the cancellation of unused commitments, and net of capital used for share buybacks to date, the Company has c. £2.5m of uncommitted capital, held to invest in further High Impact Investment opportunities or provide flexibility for further share buybacks. We are actively reviewing an active pipeline of investments in the High Impact Portfolio, which we think will provide further diversification and exposure to the four key impact themes identified in our latest Impact Report (reducing poverty and inequalities; good health and wellbeing; education, training and decent work; and just transition to net zero), while also enhancing returns. In particular, we are in an advanced stage with a new investment in an opportunity that will increase the Company's exposure to the "just transition to net zero" theme (currently with the lowest weight in our investment portfolio), while providing an attractive returns profile. We expect to be in a position to complete and announce the transaction by the first quarter of next year, which would bring us back to being fully committed.

We are confident that the Company remains well positioned to lead and benefit from further market growth, as we continue to see an expanding and maturing pipeline of investment opportunities.

In September, the Company was Highly Commended in the Best Newcomer Sustainable Fund category of Investment Week's Sustainable Investment Awards 2023. Entries were judged by a panel of experts from across the investment industry considering factors such as strong performance record; strength of the team; meeting the fund's sustainable objectives; excellence in sustainable investing within the investment process; strong engagement record; effective client communication; wider fund impact; and key developments on the strategy in the past year. We are pleased that the Company's contribution is being recognised as playing a key role in the evolution of sustainable investing.

Outlook

Following a year of monetary tightening, inflation continued on a downward trend over the summer, and in October UK food prices dropped slightly for the first time in two years. The Bank of England slowed its rate increases, and guides towards inflation reaching mid-single digits by the end of the year, returning to the long-term 2% target by 2025. HM Treasury has set 22 November 2023 for this year's Autumn Statement, to be accompanied by an Office for Budget Responsibility forecast. This is expected to be the chancellor's last fiscal update before a general election, and it is expected that one of the areas of scrutiny will be the government's performance against the economic pledges from earlier this year, in particular the pledge to halve inflation by year end. While the Prime Minister made comments about prioritising curbing inflation and easing cost of living, there is an expectation that we will see real-term cuts to benefits and public spending while the UK is trying to contain high levels of national debt.

Despite the "bright spots", the outlook for the UK economy remains uncertain, with some market commentators suggesting a recession remains "unavoidable"[3], as higher rates will have a lagged effect on the economy.

It is estimated that UK households are facing the largest fall in living standards since records began in the 1950s[4], and this fall in living standards disproportionately affects those who are already most vulnerable in society[5]. UK households are seeing their real incomes fall, while struggling to meet significantly higher costs for essential items like food, energy and housing[6].

With continued pressures on government spending, the scaling of proven solutions tackling social issues - such as the organisations that the Company supports - remains as essential as ever.

This uncertain environment provides opportunities and risks for the Company. While the solutions provided by the organisations that the Company supports are needed more than ever, these organisations need to manage higher cost bases themselves in order to remain viable. We work with organisations with long track records (30 years on average[7]), who have demonstrated their resilience over multiple economic cycles. Two thirds of our capital is invested in models with revenues rising with inflation; while our historical returns to date are lagging the CPI+2% target, as explained in the Performance Update section, we are maintaining our target for the medium-to-long term, as we expect some of the benefits to flow through with a lagged effect, and the inflation and interest rate environment to stabilise. What we have seen in the last year was an increase in the income generated by the portfolio, as a result of increases in the interest rate on floating-rate loans, and higher income generated by maturing investments. This increased income is being passed on to our investors as a dividend exceeding our previous guidance of 1-2% yield on net asset value. We expect the income generated by our investments to continue to improve in the future and have increased our future guidance on dividend yield to 2-3%.

With a general election expected in the next 12 months, we acknowledge our portfolio is subject to policy risk. At the time of writing, 70% of our committed capital is underpinned by government-backed revenues. During the year, we have seen a negative impact from policy risk in our portfolio, following a change in government policy regarding traineeships, leading to a write-down in the Bridges Evergreen portfolio. While this development was disappointing, we believe this to be an isolated case in our portfolio, which is diversified across multiple policy areas, mostly targeting the most vulnerable and disadvantaged groups. Successful interventions in these areas typically generate savings for the government that are multiples of the cost, and therefore these areas benefit from cross-party support. We further mitigate policy risk by working with organisations that have been successfully operating for several decades, navigating different policy environments, and making investments that benefit from some element of asset backing.

We are encouraged to see growing appetite for sustainable investment products, and an increased focus both from regulators and investors on ensuring quality and clear standards.

In this uncertain environment the goals of the Company remain the same: to deliver for shareholders high quality returns with a low correlation to traditional quoted markets alongside significant social impact for more disadvantaged groups across the UK.

Hermina Popa, Jeremy Rogers

Big Society Capital

27 October 2023

Strategic Report

Principal and emerging risks and uncertainties

The Board, through its delegation to the Audit and Risk Committee, is responsible for the Company's system of risk management and internal control and for reviewing its effectiveness. The Board has adopted a detailed matrix of principal risks affecting the Company's business as an investment trust and has established associated policies and processes designed to manage and, where possible, mitigate those risks, which are monitored by the Audit and Risk Committee on an ongoing basis. This system assists the Board in determining the nature and extent of the risks it is willing to take in achieving the Company's strategic objectives. Both the principal and emerging risks and the monitoring system are also subject to robust assessment at least annually. The last assessment took place in October 2023.

During the year, the Board discussed and monitored a number of risks which could potentially impact the Company's ability to meet its strategic objectives. The Board received updates from the Manager, Portfolio Manager, Company Secretary and other service providers on emerging risks that could affect the Company. The Board was mindful of the following emerging risks during the year; the ongoing conflict in Ukraine, rising inflation and interest rates, the threat of a UK recession and volatile energy prices. These risks were not seen as new principal or emerging risks but those that exacerbate existing risks and have been incorporated in the market risks section in the table below.

Although the Board believes that it has a robust framework of internal control in place this can provide only reasonable, and not absolute, assurance against material financial misstatement or loss and is designed to manage, not eliminate, risk.

Actions taken by the Board and, where appropriate, its committees, to manage and mitigate the Company's principal risks and uncertainties are set out in the table below.

The "Change" column on the right highlights the Audit and Risk Committee's assessment of any increases or decreases in risk during the year after mitigation and management. The arrows show the risks as increased or decreased, and sideway arrows show risks as stable.

Risk	Mitigation and management	Change

Strategic risk

The Company's investment objectives may become out of line with the requirements of investors, or the Company's investment strategy might not lead to the Company achieving its investment objective resulting in the Company being subscale and shares trading at a discount.	The appropriateness of the Company's investment remit is regularly reviewed and the success of the Company in meeting its stated objectives is monitored. The share price relative to NAV per share is monitored and the Board has implemented a buy-back programme. The target return of the company is inflation plus 2%. There is no guarantee that this will be achieved and in high inflation environments the target becomes more challenging despite a element of the portfolios investment returns benefitting from higher inflation, with a lag.	Up

Continuity risk

31 December 2023, and in any two-year period following such date, the Ordinary Shares have traded, on average, at a discount in excess of 10 per cent. to Net Asset Value per Share, the Directors will propose an ordinary resolution at the Company's next annual general meeting that the Company continues its business as presently constituted (the "Continuation Resolution"). It could take several years until all of the Company's private equity investments are disposed of and any final distribution of proceeds made to shareholders. The Company moved from trading at a premium to NAV to trading at an average discount of 7.3% in the twelve months to 30 June 2023, which is narrower than the average investment trust discount over the period.	The Portfolio Manager has extensive experience and a track record in accurately timing the exits of private equity investments. The Board will regularly monitor the position to ensure that any alternative proposals to be made to shareholders are put forward at an appropriate time. The Board also made enquiry of the broker and discussed with Big Society Capital and Schroders, who in aggregate hold 43.99% of the Company's total voting rights as at 30 September 2023. It believed that there is no reason to anticipate that shareholders would not be supportive should a continuation vote be held in 2024. If the Continuation Resolution is not passed, the Directors will put forward proposals for the reconstruction or reorganisation of the Company, bearing in mind the liquidity of the Company's Investments, as soon as reasonably practicable following the date on which the Continuation Resolution is not passed. These proposals may or may not involve winding up the Company and, accordingly, failure to pass the Continuation Resolution will not necessarily result in the winding up of the Company.	Up





Investment management risks

Risks relating to the social impact of investee companies and the achievement of the target financial return.	The Portfolio Manager has extensive experience in selecting private social impact investments and has a robust investment process to ensure that the anticipated positive impact of investee companies is realistic and achievable. The Board also monitors impact regularly and publishes an annual impact report. The Portfolio Manager makes investments according to a tested and robust process and based on the goal of achieving the target return. A pipeline of opportunities is vetted and reviewed and significant care is taken in selecting high quality managers and investees. The Portfolio Manager receives regular management information and engages regularly with investees to monitor and ensure performance to plan.	No change

Liquidity risk

Liquidity risks include those risks resulting from holding private equity investments as well as not being able to participate in follow-on fundraises through lack of available capital which could result in dilution of an investment. Risks relating to investment commitments and capital calls.	Concentration limits are imposed on single investments to minimise the size of positions. The Portfolio Manager can sell Liquidity Assets to meet investment commitments and capital calls. The Portfolio Manager will monitor and manage cash flows and expected capital calls. The Portfolio Manager will seek to manage cashflow such that the Company will be able to participate in follow on fundraisings where appropriate.	No change

Valuation risk

Private equity investments are generally less liquid and more difficult to value than publicly traded companies. A lack of open market data and reliance on investee company projections may also make it more difficult to estimate fair value on a timely basis.	Contracts with investee companies and funds are drafted to include obligations to provide information to the Portfolio Manager in a timely manner, where possible. The Portfolio Manager and AIFM have extensive track records of valuing privately held investments. A valuation policy has been agreed by the AIFM and Portfolio Manager and includes a robust process for the valuation of assets, including consideration of the valuations provided by investee companies and the methodologies they have used. Any changes to this policy must be approved by the Audit and Risk Committee. The Audit and Risk Committee reviews all valuations of unlisted investments and challenges the methodologies used by the Portfolio Manager and AIFM. The Audit and Risk Committee may also appoint an independent party to complete a valuation of the Company's assets.	No change

Cyber security risks

Each of the Company's service providers is at risk of cyber attack, data theft or disruption to their infrastructure which could have an effect on the services they provide to the Company. These risks could lead to reputational damage or the risk or loss control of sensitive information leading to a potential breach of data protection law.	Experienced third party service providers are employed by the Company under appropriate terms and conditions and with agreed service level specifications in relation to cyber security and related procedures. The Board receives regular reports from its service providers and the Management Engagement Committee will review the performance of key service providers at least annually. The Audit and Risk Committee reviews reports on the external audits of the internal controls operated by certain service providers.	No change

Economic, policy, and market risk

Changes in general economic and market conditions, such as interest rates, inflation rates, industry conditions, tax laws, political events and trends can substantially and adversely affect the value of investments. Market risk includes the potential impact of events which are outside the Company's control, such as pandemics, civil unrest and wars. Policy risk includes the potential negative impact of changes in UK government policies that affect the business models, revenue streams or have other material implications for investees.	The risk profile of the portfolio is considered and appropriate strategies to mitigate any negative impact of substantial changes in markets and government policies are discussed with the Portfolio Manager. The rise in government bond yields has had, and may continue to have, a negative impact on property prices. A portion of the Company's portfolio is invested in UK property.	N/A

Risk assessment and internal controls review by the Board

Risk assessment includes consideration of the scope and quality of the systems of internal control operating within key service providers, and ensures regular communication of the results of monitoring by such providers to the Audit and Risk Committee, including the incidence of significant control failings or weaknesses that have been identified at any time and the extent to which they have resulted in unforeseen outcomes or contingencies that may have a material impact on the Company's performance or condition.

No significant control failings or weaknesses were Identified from the Audit and Risk Committee's ongoing risk assessment which has been in place throughout the financial year and up to the date of this report. The Board is satisfied that it has undertaken a detailed review of the risks facing the Company.

A full analysis of the financial risks facing the Company is set out in note 20 to the accounts on pages 86 to 89 of the 2023 Annual Report and Accounts.

Viability statement

The Directors have assessed the viability of the Company over a five year period, taking into account the Company's position at 30 June 2023 and the potential impact of the principal risks and uncertainties it faces for the review period. The Directors have assessed the Company's operational resilience and they are satisfied that the Company's outsourced service providers will continue to operate effectively, following the implementation of their business continuity plans.

A period of five years has been chosen as the Board believes that this reflects a suitable time horizon for strategic planning, taking into account the investment policy, liquidity of investments, payment of commitments, potential impact of economic cycles, nature of operating costs, dividends and availability of funding. This time period also reflects the average holding period of an investment.

In its assessment of the viability of the Company, the directors have considered each of the Company's principal risks and uncertainties detailed on pages 47 to 49 of the 2023 Annual Report and Accounts. The Directors have also considered the Company's income and expenditure projections, liquid investments, cash balances as well as commitments to provide further funding to the Company's private equity investee companies; the Company currently has no borrowings. A substantial proportion of the Company's expenditure varies with the value of the investment portfolio. In the event that there is insufficient cash to meet the Company's liabilities, the liquid investments in the portfolio may be realised.

The Company has additionally performed stress tests which confirm that a 50% fall in the market prices of the portfolio would not affect the Board's conclusions in respect of going concern.

The Board monitors the portfolio risk profile, limits imposed on gearing, counterparty exposure, liquidity risk and financial controls at its quarterly meetings. Although there continue to be regulatory changes which could increase costs or impact revenue, the Directors do not believe that this would be sufficient to affect its viability.

The Board has assumed that the business model of a closed ended investment company, as well as the Company's investment objective, will continue to be attractive to investors. The Directors also considered the beneficial tax treatment the Company is eligible for as an investment trust. If changes to these taxation arrangements were to be made it would affect the viability of the Company to act as an effective investment vehicle.

The Board made enquiry of the broker and discussed with Big Society Capital and Schroders, who in aggregate hold 43.99% of the Company's total voting rights as at 30 September 2023. It believes that there is no reason to anticipate that shareholders would not be supportive should a continuation vote be held in 2024.

Therefore, Directors have concluded that there is a reasonable expectation that the Company will be able to continue in operation and meet its liabilities as they fall due over the five year period of their assessment.

Going concern

The Directors have assessed the principal risks, the impact of the emerging risks and uncertainties and the matters referred to in the viability statement. Based on the work the Directors have performed, they have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the Company's ability to continue as a going concern for the period assessed by the Directors, being the period to 31 October 2024 which is at least twelve months from the date the financial statements were authorised for issue.

By order of the Board

Schroder Investment Management Limited

Company Secretary

27 October 2023

Statement of Directors' Responsibilities

The Directors are responsible for preparing the annual report and accounts in accordance with applicable law and regulations.

Company law requires the Directors to prepare financial statements for each financial period. Under that law the Directors have prepared the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (FRS: 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland) and applicable law. Under company law the Directors 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 Company and of the return or loss of the Company for that period. In preparing these financial statements, the Directors are required to:

- select suitable accounting policies and then apply them consistently;

- make judgements and accounting estimates that are reasonable and prudent;

- state whether applicable UK Accounting Standards, comprising FRS 102, have been followed, subject to any material departures disclosed and explained in the financial statements;

- prepare a directors' report, a strategic report and directors' remuneration report which comply with the requirements of the Companies Act 2006; and

- prepare the financial statements on a going concern basis unless it is inappropriate to presume that the Company will continue in business.

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

The Directors are responsible for ensuring the annual report and the financial statements are made available on a website. Financial statements are published on the Company's website in accordance with legislation in the United Kingdom governing the preparation and dissemination of financial statements, which may vary from legislation in other jurisdictions. The maintenance and integrity of the Company's website is the responsibility of the Manager. The Directors' responsibility also extends to the ongoing integrity of the financial statements contained therein.

Each of the Directors, whose names and functions are listed on pages 51 and 52 of the 2023 Annual Report and Accounts, confirm that to the best of their knowledge:

- the financial statements, which have been prepared in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law), give a true and fair view of the assets, liabilities, financial position and net return of the Company;

- the annual report and accounts includes a fair review of the development and performance of the business and the financial position of the Company, together with a description of the principal risks and uncertainties that it faces; and

- the annual report and accounts, taken as a whole, is fair, balanced and understandable and provides the information necessary for shareholders to assess the Company's position and performance, business model and strategy.

On behalf of the Board

Susannah Nicklin

Chair

27 October 2023

Income Statement

For the year ended 30 June 2023

	2023			2022
	Revenue	Capital	Total	Revenue	Capital	Total
	£'000	£'000	£'000	£'000	£'000	£'000
(Losses)/gains on investments held at fair value through profit or loss	-	(1,020)	(1,020)	-	632	632
Income from investments	2,695	-	2,695	1,817	-	1,817
Other interest receivable and similar income	77	-	77	40	-	40
Gross return	2,772	(1,020)	1,752	1,857	632	2,489
Investment management fees	(334)	(334)	(668)	(286)	(286)	(572)
Administrative expenses	(464)	-	(464)	(452)	-	(452)
Transaction costs	-	-	-	-	(22)	(22)
Net return/(loss) before taxation	1,974	(1,354)	620	1,119	324	1,443
Taxation	-	-	-	-	-	-
Net return/(loss) after taxation	1,974	(1,354)	620	1,119	324	1,443
Return/(loss) per share	2.32p	(1.59)p	0.73p	1.37p	0.40p	1.77p

The "Total" column of this statement is the profit and loss account of the Company. The "Revenue" and "Capital" columns represent supplementary information prepared under guidance issued by The Association of Investment Companies. The Company has no other items of other comprehensive income, and therefore the net return after taxation is also the total comprehensive income for the year.

All revenue and capital items in the above statement derive from continuing operations. No operations were acquired or discontinued in the year (2022: none).

Statement of Changes in Equity

For the year ended 30 June 2023

Year ended 30 June 2023

	Called-up
	share	Share	Special	Capital	Revenue
	capital	premium	reserve	reserves	reserve	Total
	£'000	£'000	£'000	£'000	£'000	£'000
At 30 June 2022	853	10,571	72,993	4,373	1,126	89,916
Repurchase of the Company's own shares into treasury	-	-	(674)	-	-	(674)
Net (loss)/return after taxation	-	-	-	(1,354)	1,974	620
Dividends paid in the year	-	-	-	-	(1,109)	(1,109)
At 30 June 2023	853	10,571	72,319	3,019	1,991	88,753

Year ended 30 June 2022

	Called-up
	share	Share	Special	Capital	Revenue
	capital	premium	reserve	reserves	reserve	Total
	£'000	£'000	£'000	£'000	£'000	£'000
At 30 June 2021	750	-	72,993	4,049	435	78,227
Issue of ordinary shares	103	10,729	-	-	-	10,832
Share issue costs	-	(158)	-	-	-	(158)
Net return after taxation	-	-	-	324	1,119	1,443
Dividends paid in the year	-	-	-	-	(428)	(428)
At 30 June 2022	853	10,571	72,993	4,373	1,126	89,916

Statement of Financial Position

at 30 June 2023

	30 June	30 June
	2023	2022
	£'000	£'000
Fixed assets
Investments held at fair value through profit or loss	64,199	67,000
Investments held at amortised cost	22,583	21,832
	86,782	88,832
Current assets
Debtors	401	206
Cash at bank and in hand	2,089	1,310
	2,490	1,516
Current liabilities
Creditors: amounts falling due within one year	(519)	(432)
Net current assets	1,971	1,084
Total assets less current liabilities	88,753	89,916
Net assets	88,753	89,916
Capital and reserves
Called-up share capital	853	853
Share premium	10,571	10,571
Special reserve	72,319	72,993
Capital reserves	3,019	4,373
Revenue reserve	1,991	1,126
Total equity shareholders' funds	88,753	89,916
Net asset value per share	104.90p	105.39p

Cash Flow Statement

For the year ended 30 June 2023

	2023	2022
	£'000	£'000
Net cash inflow from operating activities	1,116	873
Investing activities
Purchases of investments	(7,833)	(31,411)
Sales of investments	9,279	4,516
Net cash inflow/(outflow) from investing activities	1,446	(26,895)
Net cash inflow/(outflow) before financing	2,562	(26,022)
Financing activities
Dividend paid	(1,109)	(428)
Repurchase of the Company's own shares into treasury	(674)	-
Issue of Ordinary Shares	-	10,832
Share issue costs	-	(158)
Net cash (outflow)/inflow from financing activities	(1,783)	10,246
Net cash inflow/(outflow) in the year	779	(15,776)
Cash at bank and in hand at the beginning of the year	1,310	17,086
Net cash inflow/(outflow) in the year	779	(15,776)
Cash at bank and in hand at the end of the year	2,089	1,310

Included in net cash inflow from operating activities are dividends received amounting to £860,000 (year ended 30 June 2022: £723,000), income from debt securities amounting to £1,236,000 (year ended 30 June 2022: £1,039,000) and other interest receivable and similar income amounting to £70,000 (year ended 30 June 2022: £40,000).

Notes to the Accounts

1. Accounting Policies

(a) Basis of accounting

Schroder BSC Social Impact Trust plc ("the Company") is registered in England and Wales as a public company limited by shares. The Company's registered office is 1 London Wall Place, London EC2Y 5AU.

The accounts are prepared in accordance with the Companies Act 2006, United Kingdom Generally Accepted Accounting Practice ("UK GAAP"), in particular in accordance with Financial Reporting Standard (FRS) 102 "The Financial Reporting Standard applicable in the UK and Republic of Ireland", and with the Statement of Recommended Practice "Financial Statements of Investment Trust Companies and Venture Capital Trusts" (the "SORP") issued by the Association of Investment Companies in July 2022. All of the Company's operations are of a continuing nature.

The accounts have been prepared on a going concern basis under the historical cost convention, as modified by the revaluation of investments held at fair value. The Directors believe that the Company has adequate resources to continue operating until 31 October 2024, which is at least 12 months from the date of approval of these accounts. In forming this opinion, the Directors have taken into consideration: the controls and monitoring processes in place; the Company's level of debt, undrawn commitments and other payables; the low level of operating expenses, comprising largely variable costs which would reduce pro rata in the event of a market downturn; the Company's cash flow forecasts and the liquidity of the Company's investments. In forming this opinion, the Directors have also considered any potential impact of climate change, and the risk/impact of elevated and sustained inflation and interest rates on the viability of the Company. The Company has additionally performed stress tests which confirm that a 50% fall in the market prices of the portfolio would not affect the Board's conclusions in respect of going concern. Further details of Directors' considerations regarding this are given in the Chair's Statement, Portfolio Managers' Review, Going Concern Statement, Viability Statement and under the Principal and emerging risks and uncertainties heading on page 47 of the 2023 Annual Report and Accounts.

The accounts are presented in sterling and amounts have been rounded to the nearest thousand.

The accounting policies applied to these accounts are consistent with those applied in the accounts for the year ended 30 June 2022.

Certain judgements, estimates and assumptions have been required in valuing the Company's investments and these are detailed in note 19 on page 85 of the 2023 Annual Report and Accounts.

(b) Valuation of investments

The Company's business is investing in financial assets with a view to profiting from their total return in the form of income and capital growth. Investments with a fixed coupon and redemption amount are valued at amortised cost in accordance with FRS 102. Other financial assets are managed and their performance evaluated on a fair value basis, in accordance with a documented investment objective and information is provided internally on that basis to the Company's Board of Directors. Upon initial recognition these investments are designated by the Company as "held at fair value through profit or loss", included initially at cost and subsequently at fair value using the methodology below. This valuation process is consistent with International Private Equity and Venture Capital Guidelines issued in December 2022, which are intended to set out current best practice on the valuation of Private Capital investments.

(i) Quoted bid prices for investments traded in active markets.

(ii) The price of a recent investment, where there is considered to have been no material change in fair value.

(iii) Where it is felt that a milestone has been reached or a target achieved, the Company may use the price of a recent investment adjusted to reflect that change.

(iv) Investments in funds may be valued using the NAV per unit with an appropriate discount or premium applied to arrive at a unit price.

(v) Price earnings multiples, based on comparable businesses.

(vi) Industry benchmarks, where available.

(vii) Discounted Cash Flow techniques, where reliable estimates of cash flows are available.

The above valuation methodologies are deemed to reflect the impact of climate change risk on the investments held.

Purchases and sales of quoted investments are accounted for on a trade date basis. Purchases and sales of unquoted investments are recognised when the related contract becomes unconditional.

Gains and losses on sales of investments and the management fee or finance costs allocated to capital, are included in the Income Statement and dealt with in capital reserves. Increases and decreases in the valuation of investments held at the year end, are included in the Income Statement and in capital reserves within "Investment holding gains and losses".

For shares that are repurchased and held in treasury, the full cost is charged to the Special reserve.

(d) Income

Dividends receivable are included in revenue on an ex-dividend basis except where, in the opinion of the Board, the dividend is capital in nature, in which case it is included in capital.

Income from limited partnerships will be included in revenue on the income declaration date.

Income from fixed interest debt securities is recognised using the effective interest method.

Deposit interest outstanding at the year end is calculated and accrued on a time apportionment basis using market rates of interest.

(e) Expenses

All expenses are accounted for on an accruals basis. Expenses are allocated wholly to the revenue column of the Income Statement with the following exceptions:

- The management fee is allocated 50% to revenue and 50% to capital in line with the Board's expected long-term split of revenue and capital return from the Company's investment portfolio.

- Expenses incidental to the purchase of an investment are charged to capital. These expenses are commonly referred to as transaction costs and comprise brokerage commission and stamp duty. Details of transaction costs are given in note 9 (c) on page 83 of the 2023 Annual Report and Accounts.

The underlying costs incurred by the Company's investments in collective funds are not included in the various expense disclosures.

(f) Finance costs

Finance costs, including any premiums payable on settlement or redemption and direct issue costs, are accounted for on an accruals basis using the effective interest method and in accordance with FRS 102.

Finance costs are allocated 50% to revenue and 50% to capital in line with the Board's expected long-term split of revenue and capital return from the Company's investment portfolio.

(g) Financial instruments

Cash at bank and in hand may comprise cash, short-term deposits and highly liquid investments which are readily convertible to a known amount of cash and are subject to insignificant risk of changes in value.

Other debtors and creditors do not carry any interest, are short-term in nature and are accordingly stated at nominal value, with debtors reduced by appropriate allowances for estimated irrecoverable amounts.

Bank loans and overdrafts are initially measured at fair value and subsequently measured at amortised cost. They are recorded at the proceeds received net of direct issue costs. The Company had no bank loans or overdrafts at 30 June 2023 (2022: nil).

(h) Taxation

Taxation on ordinary activities comprises amounts expected to be received or paid.

Tax relief is allocated to expenses charged to the capital column of the Income Statement on the "marginal basis". On this basis, if taxable income is capable of being entirely offset by revenue expenses, then no tax relief is transferred to the capital column.

As the Company continues to meet the conditions required to retain its status as an Investment Trust, any capital gains or losses arising on the revaluation or disposal of investments are exempt. The Company has no deferred tax asset, recognised or unrecognised at 30 June 2023 (2022: nil).

(i) Value added tax ("VAT")

Expenses are disclosed inclusive of the related irrecoverable VAT.

(j) Dividends payable

In accordance with FRS 102, dividends payable are included in the accounts in the year in which they are paid. Part, or all of any dividend declared may be designated as an "interest distribution", calculated in accordance with the investment trust income streaming rules and paid without deduction of any income tax.

2. Gains on investments held at fair value through profit or loss

	2023	2022
	£'000	£'000
(Losses)/gains on sales of investments based on historic cost	(642)	99
Amounts recognised in investment holding gains in the previous year in respect of investments sold in the year	537	12
(Losses)/gains on sales of investments based on the carrying value at the previous balance sheet date	(105)	111
Net movement in investment holding (losses)/gains	(915)	521
(Losses)/gains on investments held at fair value in the current year through profit and loss	(1,020)	632

3. Income from investments

	2023	2022
	£'000	£'000
Income from investments:
UK dividends	1,133	752
Overseas dividends	163	20
Interest income from debt securities and other financial assets	1,399	1,045
	2,695	1,817
Other interest receivable and similar income:
Deposit interest	37	2
Other income	40	38
	77	40
Total income	2,772	1,857

4. Investment management fees

		2023			2022
	Revenue	Capital	Total	Revenue	Capital	Total
	£'000	£'000	£'000	£'000	£'000	£'000
Investment management fees	334	334	668	286	286	572

The bases for calculating the investment management fees are set out in the Report of the Directors on page 54 of the 2023 Annual Report and Accounts and details of all amounts payable to the managers are given in note 17 on page 85 of the 2023 Annual Report and Accounts.

5. Administrative expenses

	2023	2022
	£'000	£'000
Other administrative expenses	261	263
Directors' fees¹	141	137
Auditor's remuneration for the audit of the Company's annual accounts²	62	52
	464	452

¹Full details are given in the remuneration report on pages 65 to 66 of the 2023 Annual Report and Accounts

²Includes VAT amounting to £12,000 (2022: £9,000).

6. Taxation

(a) Analysis of tax charge for the year

		2023			2022
	Revenue	Capital	Total	Revenue	Capital	Total
	£'000	£'000	£'000	£'000	£'000	£'000
Taxation for the year	-	-	-	-	-	-

The Company has no corporation tax liability for the year ended 30 June 2023 (2022: nil).

(b) Factors affecting tax charge for the year

		2023			2022
	Revenue	Capital	Total	Revenue	Capital	Total
	£'000	£'000	£'000	£'000	£'000	£'000
Net return before taxation	1,974	(1,354)	620	1,119	324	1,443
Net return before taxation multiplied by the Company's applicable rate of corporation tax for the year of 20.5% (2022: 19%)	405	(278)	127	213	62	275
Effects of:
Capital gains on investments	-	210	210	-	(120)	(120)
Tax deductible interest distribution	(405)	68	(337)	(213)	54	(159)
Expenses not deductible for corporation tax purposes	-	-	-	-	4	4
Taxation on ordinary activities	-	-	-	-	-	-

UK Corporation Tax rate has increased from 19% to 25% with effect from 1 April 2023.

The Company has met the condition to retain its status as an Investment Trust Company. The Company has no unrecognised deferred tax asset (2022: nil).

7. Return per share

	2023	2022
	£'000	£'000
Revenue return	1,974	1,119
Capital return	(1,354)	324
Total return	620	1,443
Weighted average number of shares in issue during the year	85,132,892	81,387,804
Revenue return per share	2.32p	1.37p
Capital return per share	(1.59)p	0.40p
Total return per share	0.73p	1.77p

There are no dilutive instruments, the return per share is actual return.

8. Dividends

	2023	2022
	£'000	£'000
2022 final dividend of 1.30p (2021: 0.57p) paid out of revenue profits as an interest distribution	1,109	428

	2023	2022
	£'000	£'000
2023 final dividend proposed of 2.30p (2022: 1.30p), to be paid out of revenue profits	1,946	1,109

The 2023 final dividend of 2.30p will be split between a 2.16p interest distribution and a 0.14p equity dividend (2022: 1.30p was interest distribution).

The proposed final dividend amounting to £1,946,000 (2022: £1,109,000) is the amount used for the basis of determining whether the Company has satisfied the distribution requirements of Section 1158 of the Corporation Tax Act 2010. The revenue available for distribution by way of dividend for the year is £1,974,000 (2022: £1,119,000).

9. Fixed assets

(a) Movement in investments

	2023			2022
	Investments held at fair value through profit or loss £'000	Investments held at amortised cost £'000	Total £'000	Investments held at fair value through profit or loss £'000	Investments held at amortised cost £'000	Total £'000
Opening book cost	62,267	21,832	84,099	37,169	21,142	58,311
Opening investment holding gains	4,733	-	4,733	4,200	-	4,200
Opening fair value	67,000	21,832	88,832	41,369	21,142	62,511
Purchases at cost	7,269	980	8,249	31,411	3,195	34,606
Sales proceeds	(9,050)	(229)	(9,279)	(6,101)	(2,816)	(8,917)
(Losses)/gains on investments held at fair value through profit or loss	(1,020)	-	(1,020)	321	311	632
Closing fair value	64,199	22,583	86,782	67,000	21,832	88,832
Closing book cost	59,844	22,583	82,427	62,267	21,832	84,099
Closing investment holding gains	4,355	-	4,355	4,733	-	4,733
Closing fair value	64,199	22,583	86,782	67,000	21,832	88,832

(b) Unquoted investments, including investments quoted in inactive markets

Material revaluations of unquoted investments during the year

Investment	Opening valuation at 30 June 2022 £'000	Purchases £'000	Revaluation £'000	Distributions £'000	Closing valuation at 30 June 2023 £'000
Bridges Evergreen Capital LP	14,451	-	(1,701)	-	12,750
Man GPM RI Community Housing 1 LP	5,202	2,930	397	(383)	8,146
UK Affordable Housing Fund	9,848	-	351	-	10,199

Material revaluations of unquoted investments during the year ended 30 June 2022

Investment	Opening valuation at 30 June 2021 £'000	Purchases £'000	Revaluation £'000	Distributions £'000	Closing valuation at 30 June 2022 £'000
Community Investment fund	-	4,500	957	-	5,457

Material disposals of unquoted investments during the year

	2023
Investment	Book cost £'000	Sales proceeds £'000	Realised gain/(loss) £'000
Resonance Real Lettings Property Fund LP	990	990	-

Material disposals of unquoted investments during the year ended 30 June 2022

	2022
Investment	Book cost £'000	Sales proceeds £'000	Realised gain/(loss) £'000
Man GPM RI Community Housing 1 LP	851	851	-

There were no material disposals of unquoted investments during the year ended 30 June 2022.

The following transaction costs, comprising stamp duty and legal fees, were incurred in the year:

	2023 £'000	2022 £'000
On acquisitions	-	12
On disposals	-	-
	-	12

10. Current assets

Debtors	2023 £'000	2022 £'000
Dividends and interest receivable	382	193
Other debtors	19	13
	401	206

11. Current liabilities

Creditors: amounts falling due within one year

	2023 £'000	2022 £'000
Other creditors and accruals	519	432

The Directors consider that the carrying amount of creditors falling due within one year approximates to their fair value.

12. Called-up share capital

	2023	2022
	£'000	£'000
Ordinary Shares of 1p each, allotted, called up and fully paid:
Opening balance of 85,316,586 (2022: 75,000,000) shares	853	750
Repurchase of 711,720 (2022: nil) shares into treasury	(7)	-
Placing of nil (2022: 10,316,586) shares	-	103
Subtotal of 84,604,866 (2022: 85,316,586) shares	846	853
711,720 (2022: nil) shares held in treasury	7	-
Closing balance¹	853	853

¹Represents 85,316,586 (2022: 85,316,586) shares of 1p each, including 711,720 (2022: nil) held in treasury.

During the year, the Company repurchased 711,720 of its own shares, nominal value £7,117, to hold in treasury, representing 0.83% of the shares outstanding at the beginning of the year. The total consideration paid for these shares amounted to £674,000. The reason for these purchases was to seek to manage the volatility of the share price discount to NAV per share.

13. Reserves

Year ended 30 June 2023

			Capital reserves
	Share premium¹ £'000	Special reserve² £'000	Gains and losses on sales of investments³ £'000	Investment holding gains and losses⁴ £'000	Revenue reserve⁵ £'000
Opening balance	10,571	72,993	(360)	4,733	1,126
Losses on sales of investments based on the carrying value at the previous balance sheet date	-	-	(105)	-	-
Net movement in investment holding losses	-	-	-	(915)	-
Transfer on disposal of investments	-	-	(537)	537	-
Repurchase of the Company's own shares into treasury	-	(674)	-	-	-
Management fees allocated to capital	-	-	(334)	-	-
Dividends paid	-	-	-	-	(1,109)
Retained revenue for the year	-	-	-	-	1,974
Closing balance	10,571	72,319	(1,336)	4,355	1,991

Year ended 30 June 2022

			Capital reserves
	Share premium¹ £'000	Special reserve² £'000	Gains and losses on sales of investments³ £'000	Investment holding gains and losses⁴ £'000	Revenue reserve⁵ £'000
Opening balance	-	72,993	(151)	4,200	435
Proceeds of placing	10,729	-	-	-	-
Expenses of placing	(158)	-	-	-	-
Gains on sales of investments based on the carrying value at the previous balance sheet date	-	-	111	-	-
Net movement in investment holding gains	-	-	-	521	-
Transfer on disposal of investments	-	-	(12)	12	-
Management fees allocated to capital	-	-	(286)	-	-
Transaction costs	-	-	(22)	-	-
Dividend paid	-	-	-	-	(428)
Retained revenue for the year	-	-	-	-	1,119
Closing balance	10,571	72,993	(360)	4,733	1,126

The Company's Articles of Association permit dividend distributions out of realised capital profits.

¹Share premium is a non distributable reserve and represents the amount by which the fair value of the consideration received from shares issued exceeds the nominal value of shares issued.

²This is a distributable capital reserve arising from the cancellation of the share premium, and may be distributed as dividends or used to repurchase the Company's own shares.

³This is a realised (distributable) capital reserve and may be distributed as dividends or used to repurchase the Company's own shares.

⁴This reserve may include some holding gains on liquid investments (which may be deemed to be realised) and other amounts which are unrealised. An analysis has not been made between those amounts that are realised (and may be distributed as dividends or used to repurchase the Company's own shares) and those that are unrealised.

⁵The revenue reserve may be distributed as dividends or used to repurchase the Company's own shares.

14. Net asset value per share

	2023	2022
Net assets attributable to shareholders (£'000)	88,753	89,916
Shares in issue at the year end	84,604,866	85,316,586
Net asset value per share	104.90p	105.39p

15. Reconciliation of total return on ordinary activities before finance costs and taxation to net cash inflow from operating activities

	2023 £'000	2022 £'000
Total return before taxation	620	1,443
Less capital return before taxation	1,354	(324)
Less accumulation dividends¹	(416)	(51)
(Increase)/decrease in prepayments and accrued income	(189)	14
(Increase)/decrease in other debtors	(6)	1
Increase in other creditors	87	98
Management fee and transaction costs allocated to capital	(334)	(308)
Net cash inflow from operating activities	1,116	873

¹Accumulation dividends are capitalised to investments.

16. Uncalled capital commitments

At 30 June 2023, the Company had uncalled capital commitments amounting to £8,749,000 (2022: £17,392,000) in respect of follow-on investments, which may be drawn down or called by investee entities, subject to standard notice periods.

17. Transactions with the Managers

Under the terms of the Alternative Investment Fund Manager Agreement, the Manager is entitled to receive a management fee. Details of the basis of the calculation are given in the Directors' Report on page 54 of the 2023 Annual Report and Accounts.

The fee payable to the Manager in respect of the year ended 30 June 2023 amounted to £614,000 (2022: £512,000), of which £307,000 (2022: £171,000) was outstanding at the year end. Any investments in funds managed or advised by the Manager or any of its associated companies, are excluded from the assets used for the purpose of the calculation and therefore incur no fee.

Under the terms of the Investment Management Agreement, the Manager may reclaim from the Company certain expenses paid by the Manager on behalf of the Company to HSBC in connection with accounting and administrative services provided to the Company. These charges amounted to £66,000 for the year ended 30 June 2023 (2022: £96,000), and the whole of this amount (2022: same) was outstanding at the year end.

No Director of the Company served as a Director of any company within the Schroder Group at any time during the year, or prior period.

In accordance with the terms of a discretionary mandate between the Company, Big Society Capital Limited and Rathbone Investment Management Limited is entitled to receive a management fee for portfolio management services relating to certain of the Company's investments. Details of the basis of the calculation are given in the Directors' Report on page 54 of the 2023 Annual Report and Accounts. The fee payable to Rathbone in respect of the year ended 30 June 2023 amounted to £55,000, (2022: £61,000) of which £13,000 (2022: £14,000) was outstanding at the year end.

18. Related party transactions

Details of the remuneration payable to directors are given in the Directors' Remuneration Report on page 64 of the 2023 Annual Report and Accounts and details of Directors' shareholdings are given in the Directors' Remuneration Report on page 65 of the 2023 Annual Report and Accounts. Details of transactions with the Managers are given in note 17 above. There have been no other transactions with related parties during the year or prior period.

19. Disclosures regarding financial instruments measured at fair value

The Company's financial instruments within the scope of FRS 102 that are held at fair value comprise certain investments held in its investment portfolio.

FRS 102 requires that financial instruments held at fair value are categorised into a hierarchy consisting of the three levels below. A fair value measurement is categorised in its entirety on the basis of the lowest level input that is significant to the fair value measurement.

Level 1 - valued using unadjusted quoted prices in active markets for identical assets.

Level 2 - valued using observable inputs other than quoted prices included within Level 1.

Level 3 - valued using inputs that are unobservable.

Details of the Company's policy for valuing investments are given in note 1(b) on page 78 of the 2023 Annual Report and Accounts. Level 3 investments have been valued in accordance with note 1(b)(ii) to (vii).

The Company's unlisted investments held at fair value are valued using a variety of techniques consistent with the recommendations set out in the International Private Equity and Venture Capital guidelines. Investments in third-party managed funds were valued by reference to the most recent net asset value provided by the relevant manager. The valuation methods adopted by third-party managers include using comparable company multiples, net asset values, assessment of comparable company performance and assessment of milestone achievement at the investee. For certain investments, such as High Impact Housing, the third-party manager may appoint external valuers to periodically value the underlying portfolio of assets. The valuations of third-party managed funds will also be subject to an annual audit. The valuations of all investments are considered by the Portfolio Manager and recommended to the AIFM, who in turn recommends them to the Company. Where it is deemed appropriate, the Portfolio Manager may recommend an adjusted valuation to the extent that the adjusted valuation represents the Portfolio Manager's view of fair value.

At 30 June, the Company's investment held at fair value, were categorised as follows:

	2023	2022
	£'000	£'000
Level 1	9,342	16,847
Level 2	-	-
Level 3	54,857	50,153
Total	64,199	67,000

There have been no other transfers between Levels 1, 2 or 3 during the year (2022: nil).

Movements in fair value measurements included in Level 3 during the year are as follows:

	2023	2022
	£'000	£'000
Opening book cost	44,693	26,222
Opening investment holding gains	5,460	4,244
Opening fair value of Level 3 investments	50,153	30,466
Purchases at cost	6,957	18,471
Sales proceeds	(1,742)	-
Net gains on investments	(511)	1,216
Closing fair value of Level 3 investments	54,857	50,153
Closing book cost	49,908	44,693
Closing investment holding gains	4,949	5,460
Closing fair value of Level 3 investments	54,857	50,153

20. Financial instruments' exposure to risk and risk management policies

The Company's objectives are set out on the inside front cover of this report. In pursuing these objectives, the Company is exposed to a variety of financial risks that could result in a reduction in the Company's net assets or a reduction in the profits available for dividends.

These financial risks include market risk (comprising interest rate risk and other price risk), liquidity risk and credit risk. The Directors' policy for managing these risks is set out below. The Board coordinates the Company's risk management policy. The Company has no significant exposure to foreign exchange risk on monetary items.

The Company's classes of financial instruments may comprise the following:

- investments in collective funds, listed and unlisted bonds, shares of quoted and unquoted companies which are held in accordance with the Company's investment objective;

- debtors, creditors, short-term deposit and cash arising directly from its operations;

- bank loans used for investment purposes; and

- derivatives used for efficient portfolio management or currency hedging.

(a) Market risk

The fair value or future cash flows of a financial instrument held by the Company may fluctuate because of changes in market prices. This market risk comprises two elements: interest rate risk and other price risk. Information to enable an evaluation of the nature and extent of these two elements of market risk is given in parts (i) and (ii) of this note, together with sensitivity analyses where appropriate. The Board reviews and agrees policies for managing these risks. The Manager assesses the exposure to market risk when making each investment decision and monitors the overall level of market risk on the whole of the investment portfolio on an ongoing basis.

(i) Interest rate risk

Interest rate movements may affect the level of income receivable on investments carrying a floating interest rate coupon, cash balances and interest payable on any loans or overdrafts when interest rates are re-set.

Management of interest rate risk

Liquidity and borrowings are managed with the aim of increasing returns to shareholders. The Company may borrow from time to time, but gearing will not exceed 20 per cent of net asset value at the time of drawing. Gearing is defined as borrowings less cash, expressed as a percentage of net assets. The Company has arranged an overdraft facility with HSBC Bank plc but it has not been utilised during the year or prior year.

Interest rate exposure

The exposure of financial assets and financial liabilities to floating interest rates, giving cash flow interest rate risk when rates are re-set, is shown below:

	2023	2022
	£'000	£'000
Exposure to floating interest rates:
Investments carrying a floating interest rate coupon	5,603	4,852
Cash at bank and in hand	2,089	1,310
	7,692	6,162

Sterling cash balances at call earn interest at floating rates based on the Sterling Overnight Interest Average rates ("SONIA"). The above year end amounts are broadly representative of the exposure to interest rates during the year and prior year.

Interest rate sensitivity

The following table illustrates the sensitivity of the return after taxation for the year and net assets to a 0.75% (2022: 0.75%) increase or decrease in interest rates in regards to the Company's monetary financial assets and financial liabilities. This level of change is considered to be a reasonable illustration based on observation of current market conditions. The sensitivity analysis is based on the Company's monetary financial instruments held at the accounting date with all other variables held constant.

	2023		2022
	0.75% increase in rate £'000	0.75% decrease in rate £'000	0.75% increase in rate £'000	0.75% decrease in rate £'000
Income statement - return after taxation
Revenue return	58	(58)	46	(46)
Capital return	-	-	-	-
Total return after taxation	58	(58)	46	(46)
Net assets	58	(58)	46	(46)

(ii) Other price risk

Other price risk includes changes in market prices which may affect the value of investments.

Management of other price risk

The Board meets on at least four occasions each year to consider the asset allocation of the portfolio and the risk associated with particular industry sectors. The portfolio management team has responsibility for monitoring the portfolio, which is selected in accordance with the Company's investment objective and seeks to ensure that individual stocks meet an acceptable risk/reward profile. The Board may authorise the Manager to enter derivative transactions for the purpose of currency hedging, although non-sterling exposures are expected to be limited.

Market price risk exposure

The Company's total exposure to changes in market prices at 30 June comprises the following:

	2023	2022
	£'000	£'000
Investments held at fair value through profit or loss	64,199	67,000

The above data is broadly representative of the exposure to market price risk during the period.

Concentration of exposure to market price risk

An analysis of the Company's investments is given on pages 34 and 35 of the 2023 Annual Report and Accounts. This shows a concentration of exposure to the social housing sector in the United Kingdom.

Market price risk sensitivity

The following table illustrates the sensitivity of the return after taxation for the period and net assets to an increase or decrease of 10% in the fair values of the Company's investments. This level of change is considered to be a reasonable illustration based on observation of current market conditions. The sensitivity analysis is based on the Company's exposure to the underlying investments and includes the impact on the management fee but assumes that all other variables are held constant.

	2023		2022
	10%	10%	10%	10%
	increase in	decrease in	increase in	decrease in
	fair value	fair value	fair value	fair value
	£'000	£'000	£'000	£'000
Income statement - return after taxation
Revenue return	(26)	26	(27)	27
Capital return	6,394	(6,394)	6,673	(6,673)
Total return after taxation and net assets	6,368	(6,368)	6,646	(6,646)
Percentage change in net asset value	7.2%	(7.2%)	7.4%	(7.4%)

(b) Liquidity risk

This is the risk that the Company will encounter difficulty in meeting its obligations associated with financial liabilities that are settled by delivering cash or another financial asset.

Management of the risk

The Portfolio Manager monitors the cash position to ensure sufficient is available to meet the Company's financial obligations. For this purpose, the Portfolio Manager may retain up to 20% of net assets in Liquidity Assets, other liquid investments and a reserve of cash. The Company has also arranged an overdraft facility with HSBC Bank plc.

Liquidity risk exposure

Contractual maturities of financial liabilities, based on the earliest date on which payment can be required are as follows:

	2023		2022
	Three months or less £'000	Total £'000	Three months or less £'000	Total £'000
Creditors: amounts falling due within one year
Other creditors and accruals	(519)	(519)	(432)	(432)
	(519)	(519)	(432)	(432)

Credit risk is the risk that the failure of the counterparty to a transaction to discharge its obligations under that transaction could result in loss to the Company.

Credit risk exposure

The Company is exposed to credit risk principally from debt securities held, loans and receivables and cash deposits.

Portfolio dealing

The credit ratings of broker counterparties are monitored by the AIFM and limits are set on exposure to any one broker.

Exposure to the Custodian

The custodian of the Company's assets is HSBC Bank plc which has long-term Credit Ratings of AA- with Fitch and Aa3 with Moody's.

Any assets held by the custodian will be held in accounts which are segregated from the custodian's own trading assets. If the custodian were to become insolvent, the Company's right of ownership of those investments is clear and they are therefore protected. However the Company's cash balances are all deposited with the custodian as banker and held on the custodian's balance sheet. Accordingly, in accordance with usual banking practice, the Company will rank as a general creditor to the custodian in respect of cash balances.

Exposure to debt securities

The Portfolio Manager's investment process ensures that potential investments are subject to robust analysis, appropriate due diligence and approval by an investment committee. Pre-investment checks are made to prevent breach of the Company's investment limits, which are designed to ensure a diversified portfolio to manage risk. Debt securities are subject to continuous monitoring and quarterly reports are presented to the Board.

Credit risk exposure

The following amounts shown in the Statement of Financial Position, represent the maximum exposure to credit risk at the year end:

	2023		2022
	Balance Sheet £'000	Maximum exposure £'000	Balance Sheet £'000	Maximum exposure £'000
Fixed assets
Investments held at fair value through profit	64,199	-	67,000	-
Investments held at amortised cost (debt securities)	22,583	22,583	21,832	21,832
Current assets
Debtors	401	401	206	206
Cash at bank and in hand	2,089	2,089	1,310	1,310
	89,272	25,073	90,348	23,348

(d) Fair values of financial assets and financial liabilities

All financial assets and liabilities are either carried in the balance sheet at fair value, or the balance sheet amount is a reasonable approximation of fair value.

21. Capital management policies and procedures

The Company's capital management objectives are to ensure that it will be able to continue as a going concern, and to maximise the income and capital return to its equity shareholders.

The Company's capital structure comprises the following:

	2023	2022
	£'000	£'000
Equity
Called-up share capital	853	853
Reserves	87,900	89,063
Total equity	88,753	89,916

The Board, with the assistance of the Manager, monitors and reviews the broad structure of the Company's capital on an ongoing basis. This review will include:

- the possible use of gearing, which will take into account the Manager's views on the market;

- the potential benefit of repurchasing the Company's own shares for cancellation or holding in treasury, which will take into account the share price discount;

- the opportunity for issue of new shares; and

- the amount of dividend to be paid, in excess of that which is required to be distributed.

22. Events after the accounting date that have not been reflected in the financial statements

There have been no events we are aware of since the balance sheet date which either require changes to be made to the figures included in the financial statements or to be disclosed by way of note.

Status of announcement

2022 Financial Information

The figures and financial information for 2022 are extracted from the published Annual Report and Accounts for the year ended 30 June 2022 and do not constitute the statutory accounts for that year. The 2022 Annual Report and Accounts have been delivered to the Registrar of Companies and included the Report of the Independent Auditors which was unqualified and did not contain a statement under either section 498(2) or section 498(3) of the Companies Act 2006.

2023 Financial Information

The figures and financial information for 2023 are extracted from the Annual Report and Accounts for the year ended 30 June 2023 and do not constitute the statutory accounts for the year. The 2023 Annual Report and Accounts include the Report of the Independent Auditors which is unqualified and does not contain a statement under either section 498(2) or section 498(3) of the Companies Act 2006. The 2023 Annual Report and Accounts will be delivered to the Registrar of Companies in due course.

Neither the contents of the Company's webpages nor the contents of any website accessible from hyperlinks on the Company's webpages (or any other website) is incorporated into, or forms part of, this announcement.

[1]Outcomes for All: Ten Years of Social Outcomes Contracts, Big Society Capital, June 2022

[2]https://bigsocietycapital.com/latest/investment-into-uk-social-impact-exceeds-9-billion-despite-economic-gloom/

[3]https://www.investmentweek.co.uk/opinion/4130808/recession-probablycoming

[4]Institute for Government, 2023

[5]Joseph Rowntree Foundation, 2023

[6]House of Commons Library, Rising Cost of Living in the UK report, 2023

[7]SBSI Impact Report

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Companies

Schroder BSC Social Impact Trust (SBSI)

Friday, 1st November 2024

COMPANIES COVERED:

AML BOO RKT

Reckitt Benckiser shares jump notably on a US legal ruling in favour of a subsidiary company, Boohoo appoints a new CEO – likely to the chagrin of Frasers Group – and Aston Martin gives back some of its recent gains.

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