The Bank has today published its Annual Report and Accounts (ARA), covering the period 1 April 2025 to 31 March 2026.
The financial results reflect a challenging operating environment for early-stage businesses as well as operational progress for the development bank, which committed £374m to Scottish businesses and projects - the most in a single year since it was established - with a further £445m from other investors committed alongside its investments.
Despite operational progress, the Bank recorded a net loss of £138m, driven by realised losses (£65m) relating to the failure of three investments made in the early years of the Bank, and unrealised losses (£85m) due to re-evaluations of long-term assets, as well as anticipated losses relating to the failure of two further portfolio companies whose administration processes hadn’t completed by 31 March. 1
Continued progress
When excluding investment losses, the Bank generated an operational profit of £12m, showing its continued progress in maintaining operational financial self-sustainability. The Bank’s income has consistently exceeded its operational costs since FY23/24.
Willie Watt, Chair of the Scottish National Investment Bank, said: “Investment losses will always be present in a development bank portfolio, with a mandate to take on higher risk. However, the scale of the realised losses taken together with the provisions made against the portfolio is challenging. Many of these losses relate to the first three years of the Bank’s existence and predate tighter investment conditions that were introduced in 2023.
“Our learning and adapting is reflected in our current portfolio and investment practice, as well as our careful study of market trends. Businesses are facing a challenging funding and operating landscape, demonstrating that Scotland needs investors, like the Bank, with a long-term view, and this is reflected in the strength of our pipeline.”
Despite economic headwinds, many of the Bank’s portfolio companies are performing well and it anticipates successful exits in the future. To date, the Bank has committed £1.2bn and a further £1.9bn of capital invested alongside into Scottish businesses and projects.
Ambitious plans
Last month, the Bank published its updated investment strategy – the first to be overseen by its new CEO, David Ritchie – which strengthens the Bank’s commercial terms.
David Ritchie said: “We have been learning lessons from previous investments while re-calibrating our processes to capitalise on the opportunities in the current Scottish market. We will continue to invest on market-based terms while crowding in private finance. We have ambitious plans, aligned to our clear purpose of accelerating a sustainable, innovative and inclusive Scottish economy.
“We concluded several significant investments last year, alongside notable institutional investors. Our £50m investment in Octopus Capital’s Affordable Housing Fund introduced a new model of affordable housing to Scotland.
“We are also looking at how we can support energy security and grid stabilisation, as reflected by our £45m investment in Highview’s long-duration energy storage (LDES) facility at Hunterston. And we continue to support promising innovation with demonstratable income generation, like our £3m investment in healthtech business Bioliberty, which led the firm’s Series A round.
“Looking ahead, we are focused on strengthening the Bank’s long-term capability. That includes improving our ability to retain and recycle capital to sustain investment over time, entering the market to raise and manage third party capital and continuing to invest in Scottish projects and businesses that drive long-term economic value and societal benefit.”
- Losses connected to the failures of Krucial, M Squared and Trojan had crystallised by end of financial year and are therefore recorded as realised losses. The administration processes for Orbex and Pneumowave will complete in the next financial year, so losses are recorded as unrealised.
