Scottish Enterprise details £4.6 million worth of failed investments – Insider.co.uk

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Scottish Enterprise generated £55.6m of income from its core investment portfolio last year, despite the impact of the pandemic.

However, the economic development agency has more than £221m outstanding in borrowings due to be paid back to the Scottish Government. No interest is payable and the funding is repayable over a period of up to 21 years.

It invested £78.1m into early stage companies, leveraging £122m. The value of equity investments and loans to companies rose to £460.6m during the year.

Scottish Enterprise lost £4.6m of taxpayers money through investing it into promising companies that eventually failed.

Big Data for Humans offered a leading edge service in customer insights automation, but dissolved in 2020 following the company failing to renew contracts with around 10 small to medium-sized enterprises (SMEs).

Scottish Enterprise invested £1.3m and wrote it off as a loss.

It lost £1.9m through its investment into CiQual, a provider of software solutions for the mobile communications market, whose technology failed to catch on. The company was forced into administration, before being sold to a US company for $40,000 in July 2020, when it formally dissolved.

Scottish Enterprise also invested £949,000 into Relitect, a spin-out from Leeds University which wanted to commercialise high sensitivity impedance spectroscopy technology.

Despite support from investors and efforts from the management team, scientific challenges could not be overcome, leading directors to cease trading and begin the voluntary wind-up procedure in April 2020. Scottish Enterprise received an £84,000 distribution of funds from this process and the company was dissolved in September last year.

The report also detailed losses of £254,000 from Impact Results, £284,000 through its investment with gaming company TPLD and a loss of £272,000 from an investment into cloud hosting firm Senient.

The statement blamed the pandemic for “directly impacting” performance outcome measurements, following £581.8m expenditure.

The sum represents the organisation’s “highest level of financial year expenditure” in its current structure, which was through its delivery of pandemic support companies.

Scottish Enterprise is primarily funded by Scottish Government budget transfers, combined with the delivery of a large element of its original business plan.

It started the financial year in a “unique situation”, with a deficit of £8m following a decision to not reduce its expenditure budget, due to “high level of legal commitments and the imperative to invest in the economy”.

The annual report stated: “The position was expected to recover primarily through a decrease in expenditure as the pandemic impacted on the delivery of customer projects.”

The original resource budget for 2020/21 that Scottish Enterprise received was £212m, comprising a grant in aid provision of £203m and a non-cash allocation of £8.3m.

During the course of the year, the Scottish Government confirmed additional net transfers of budget, amounting to £324.8m, of which £211m was specifically for direct Covid-19 support programmes.

There were further transfers specifically towards a range of discrete projects and other cost pressures, including £15m for research and development activity, £13.8m for National Manufacturing Institute for Scotland and £8.3m for general capital expenditure pressures.

There was also a net increase of £1.9m in the financial transactions allocation, reflecting additional Covid-19 funding of £29.4m and a reduction of £27.4m, primarily as a result of a significant investment return received during the year.

Scottish Enterprise’s final resource budget for 2020/21 amounted to £536.9m, comprising a grant in aid provision of £459.1m and a non-cash allocation of £77.8m.

Scottish Enterprise handed out almost £220m of pandemic-related support to around 4,000 businesses employing more than 70,000 people and invested more than £568m in Scotland’s economy during 2020/21.

Elsewhere in the report, it reveal the remuneration payment to Steve Dunlop, who resigned as its chief executive after two and a half years in the job.

Up until his departure he was paid £119,000 and received £23,000 in pension benefit for the financial year. The full-time equivalent salary payable to Mr Dunlop would have been £176,702 but received £211,000 the year before including pension benefits.

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