TIDMOFG
Octopus Future Generations VCT plc
Annual report and financial statements 2022
Octopus Future Generations VCT plc ('Future Generations VCT' or
the 'Company') is backing businesses that aim to address society's
biggest challenges, providing an opportunity for investors to share
in the growth of ambitious, purpose-driven companies.
The Company today announces the final results for the period
from inception to 30 June 2022 as below.
Chair's statement
I am pleased to present the first annual report and accounts for
Future Generations VCT for the period from inception to 30 June
2022.
Future Generations VCT's three investment themes have great
potential:
-- large markets to address by tackling some of society's biggest
challenges;
-- demand for solutions to the planet's challenges is growing and becoming
more urgent; and
-- ability to attract talent as people increasingly want to work for
businesses that make a positive difference in the world.
I would firstly like to welcome shareholders to Future
Generations VCT, which aims to invest in companies that will tackle
some of society's biggest challenges. The NAV per share at 30 June
2022 was 96.1p, and in the period, Future Generations VCT made two
investments. A further four completed since the period end. More
information on two of these businesses can be found in the
Portfolio Manager's Review.
In the period to 30 June 2022, we utilised GBP1.8 million of our
cash resources, including GBP1.7 million in new investments. The
cash balance of GBP29.8 million at 30 June 2022 represents 95% of
net assets at that date. We look forward to deploying significant
further capital into new investment opportunities over the coming
months, and we ultimately intend the profile of Future Generations
VCT to comprise 80% to 90% in VCT qualifying investments and 10% to
20% in permitted non-VCT qualifying investments or cash.
Fundraise
On 31 January 2022, we launched the initial offer to raise up to
GBP20 million with an over-allotment facility of up to GBP80
million, and I am pleased to report that as of 30 June 2022, we
have successfully raised GBP32 million. The offer will close for
new applications on 31 October 2022.
As investors will be aware, the intention is to invest in
businesses which meet one of three key themes, which we believe
demonstrate excellent investment prospects as well as having the
potential to transform the world we live in for the better.
AGM
The first Annual General Meeting ('AGM') will take place on
Monday 12 December 2022 from 12.00pm and will be held at the
offices of Octopus Investments Limited ('Octopus Investments'), at
33 Holborn, London EC1N 2HT. Full details of the business to be
conducted at the AGM will be given in the Notice of Annual General
Meeting.
Shareholders' views are important, and the Board encourages
shareholders to vote on the resolutions within the Notice of Annual
General meeting published as part of the Annual Report 2022 using
the proxy form, or electronically at
www.investorcentre.co.uk/eproxy. The Board has carefully considered
the business to be approved at the AGM and recommends shareholders
to vote in favour of all the resolutions being proposed, as the
Board will be doing.
We always welcome questions from our shareholders for either the
Board or Octopus Investments ('Portfolio Manager'), so I am pleased
we will be joined by Simon King from the investment team on the
day. Alternatively, shareholders are invited to send any questions
they may have via email to
https://www.globenewswire.com/Tracker?data=8sh3n9-Mr8nnUb5k0QRYpQlKKmCr_x0pr-pm7XGwbBl2HRtnyK6d4uMeAzfLcqGwvL8IRbIHP-yCxWK1Xjqib4QN_mWqzws3L_eIkXsCFerA8hH4LOuMmNPSW2cdRlrC
FGAGM@octopusinvestments.com.
Future Generations VCT financial summary
Net assets (GBP'000) 31,292
Loss after tax (GBP'000) (313)
Net asset value ('NAV') per share
(p) 96.1
Outlook
Future Generations VCT is at a very early stage and, although
only a handful of investments have been made so far, the upcoming
pipeline of portfolio companies is extremely exciting. It spans a
wide range of issues that, if successful, could make a meaningful
difference to the world that we live in, and could create
profitable investment opportunities for Future Generations VCT.
Launching a new fund in 2022 does not come without its
complexities and challenges. With central banks increasing interest
rates, high inflation, the conflict in Ukraine and the
cost-of-living crisis, we are entering a very different economic
backdrop to that which has been experienced in recent years, even
when considering issues created by the pandemic. All markets,
including early-stage ventures, have been affected by these changes
and we expect this to continue in the near to medium term. However,
history has shown that great businesses can be founded during some
of the most challenging periods as often there is more willing
adoption of new technology and solutions. The investment team at
Octopus -- which sources the investment opportunities, completes
the investments and coordinates the portfolio management -- is
aware that portfolio companies will need more support to navigate
these challenging times and allow them to take advantage of all
opportunities available to them. The team is well resourced and is
very experienced in early-stage investing.
Future Generations VCT was launched with the intention of
investing in companies with the power to transform the world for
the better. By focusing on our three investment themes, we believe
the businesses we are backing should achieve this ambitious goal,
as well as delivering great returns to investors.
As this Company is at the beginning of its journey, it will take
time to deploy the funds raised into companies the investment team
consider to be good investment opportunities. While the Company is
building up its investments, the portfolio will naturally be more
concentrated in fewer companies. This means that performance will
be more sensitive to the success and/or failure of these
investments than if the portfolio was larger.
As such, over the coming years, there may well be a decline in
overall value as Future Generations VCT invests in new businesses,
some of which are at the start of their growth journey and need to
build their technology, prove their market, win new contracts and
grow their teams. Their value will take time to grow, and
unfortunately some of these will ultimately fail.
The long-term target is to pay an annual dividend of 5% of the
NAV. However, given the expected holding period of target portfolio
companies and restrictions imposed on VCTs, it is very unlikely
Future Generations VCT will be able to pay dividends before 1 July
2025. During this time, any growth in value will increase the value
of the Company. Dividends are likely to be generated from
successful exits, so the Company is unlikely to pay significant
dividends until portfolio companies have time to mature and/or be
acquired.
I would like to conclude by thanking both my Board colleagues
and the Octopus team on behalf of all shareholders for their hard
work. I am excited to see what the coming year brings for this new
Company.
Helen Sinclair
Chair
28 October 2022
Portfolio Manager's review
At Octopus, our focus is on managing your investments and
providing investors with clear and transparent communication. Our
annual and interim updates are designed to keep you informed about
the progress of your investment. Octopus was established in 2000
and has a strong commitment to both smaller companies and to VCTs.
We currently manage five VCTs, including Future Generations VCT,
with assets of over GBP1.9 billion.
Focus on Future Generations VCT's performance
The NAV per share at 30 June 2022 was 96.1p and in the period
Future Generations VCT made two new investments. Going forward, we
will report on the proportion and value of the portfolio in each
sustainability theme. Of the two investments which have completed
at 30 June 2022, 61% address the revitalising healthcare theme with
a total value of GBP1.0 million and the remaining 39% are aligned
with the empowering people category, with a total value of GBP0.7
million. There are investments in the pipeline which are
concentrating on building a sustainable planet but have not yet
completed.
As part of our responsible ownership strategy, we require
portfolio companies to put in place a diversity and inclusion
policy ('D&I') and an anti--harassment policy. We will also be
engaging with each company to help them understand their greenhouse
gas emissions and support them to take action to minimise them. We
will report on engagement to our shareholders on an annual basis.
Of the two investments made, both are in the process of
implementing a D&I policy and all have been offered
complimentary access to a carbon accounting and management tool to
enable reporting around key metrics and to feed into carbon
reduction plans. We are pleased that, to date, 100% of the
portfolio companies are signed up and utilising the carbon
accounting tool.
Overview of investments
Future Generations VCT completed two new investments in the
reporting period, totalling GBP1.7 million, and four further
investments after 30 June 2022. Together, these totalled GBP3.9
million invested into new companies. These companies have also been
invested in by other funds managed by Octopus.
We are expecting to make further investments over the coming
months, and below are some examples of potential investments in the
pipeline across Future Generations VCT's three sustainability
themes:
A selection of our pipeline of new potential investments
Building a sustainable planet:
-- An embedded insurance platform that gives merchants the ability to
provide insurance bundles to their customers. This promotes more
sustainable consumption via their services for repair and reconditioning
rather than the purchase of new equipment.
Empowering people:
-- A business that offers an end-to-end federated learning platform enabling
data scientists to conduct analysis over sensitive data without
compromising privacy or data security.
-- A company which has developed a benefits platform to offer greater
autonomy for employees to select their own benefits.
Revitalising healthcare:
-- A company which has created a digital, personalised psychological therapy
and coaching platform.
-- A business which has built an antigen discovery platform to develop
cancer vaccines.
Outlook
The world around us is changing at an unprecedented rate. The
Covid-19 pandemic and the economic turbulence we have encountered
in 2022 means that businesses need to be even more agile and
resilient. We launched the Future Generations VCT in January 2022
and we believe, as history has shown us, that great businesses are
and will continue to be founded at times of economic turmoil. We
are constantly impressed at the level of ingenuity, ambition, drive
and passion that we see in the entrepreneurs we meet who are
looking to solve some of society's biggest issues. We believe the
companies that understand what it means to make the world a better
place have the potential to deliver some of the best returns to
investors.
Future Generations VCT's three themes address some of the
biggest challenges we have ever faced as a society and planet. The
team investing the Future Generations VCT was founded in 2007, has
backed over 175 teams, and a third of them have founded their own
companies previously. We review thousands of potential businesses
each year and typically select fewer than 1% of these to invest in.
The portfolio companies are supported through their growth journey
as we believe early-stage businesses require more than just funding
to be successful. They require specialist knowledge to be able to
take advantage of all opportunities presented, especially in
today's more challenging and competitive climate. Our dedicated,
in-house portfolio talent team offers support to help companies to
scale their recruitment, provides access to specialist advice and
consultants, and runs events and workshops.
We have already completed some of Future Generations VCT's first
investments and these companies are addressing a mixture of issues
including career coaching, microscopic camera technology, and
autonomous telemedicine. This diversity shows how wide-ranging
Future Generation VCT's scope will be across its three investment
themes and we believe the entrepreneurs behind these businesses
have created some best-in-class solutions that we are delighted to
help scale. As well as backing companies across a diverse range of
sectors, we also want to back diverse management teams as we
believe diversity encourages innovation and is a crucial success
factor. As such, we have recently published our intention to make
sure 30% of all new founder pitches will be by businesses led or
co-led by a woman by 2025, increasing to 50% by 2027. Alongside
this, we have also been signatories to HM Treasury's Investing in
Women Code since 2020. We are excited to have the opportunity to
invest this new VCT, support its ambition to make the world a
better place for future generations, and to deliver attractive
returns to shareholders. We believe that Octopus is extremely well
placed to see some of the best investment opportunities, generated
by our extensive network and reputation in the early--stage
market.
Who we've backed so far
Inflow
http://www.getinflow.io www.getinflow.io
---------------------------------------------
Inflow is a digital health company -- Inflow has achieved over 200,000 downloads and has
that helps people with Attention Deficit over 15,000 paying members.
Hyperactivity Disorder ('ADHD'). ADHD -- The company follows a self-pay, direct-to-consumer
impacts hundreds of millions of people model.
worldwide and the company hopes to
become the home for people with ADHD
before then applying its approach
to a broader set of neurological differences
including Autism, Dyslexia, Dyspraxia,
Obsessive Compulsive Disorder ('OCD')
and Tourette's.
Product launch date: March 2021
Investment date: June 2022
Post period end investment
Oto
http://www.joinoto.com www.joinoto.com
---------------------------------------
Oto is a digital health start-up that -- One in eight people are affected by tinnitus, and
helps people with overlooked chronic there are 23 million British and American people
conditions get their life back. Its really struggling with it.
first product is a digital programme -- Digital therapeutics solutions like Oto are providing
that teaches people to manage tinnitus a 10x cheaper and more convenient way of managing
-- a condition commonly experienced this condition.
as ringing in the ears. The programme
uses science-based therapy delivered
via a mobile app to enable tinnitus
self-management at a fraction of the
cost of in--person treatment.
Product launch date: January 2021
Investment date: July 2022
Risk and risk management
The Board assesses the risks faced by Future Generations VCT
and, as a Board, reviews the mitigating controls and actions and
monitors effectiveness of these controls and actions.
Principal risks, emerging risks and risk management
Detailed below are the principal risks of Future Generations
VCT, and the mitigating actions in relation to those risks. In
addition to the principal risks, emerging risks including adverse
changes in the global macroeconomic environment, climate change,
high market valuations and geopolitical protectionism are monitored
by the Board.
The Board seeks to mitigate risks by setting policy, regularly
reviewing performance and monitoring progress and compliance. In
the mitigation and management of these risks, the Board applies the
principles detailed in the Financial Reporting Council's Guidance
on Risk Management, Internal Control and Related Financial and
Business Reporting.
Risk Mitigation
-------------------------------------- ----------------------------------------------
Investment performance: Octopus has significant experience
The focus of Future Generations and a strong track record of investing
VCT investments is into early-stage, in early-stage unquoted companies,
unquoted, small and medium--sized and appropriate due diligence is undertaken
VCT qualifying companies which, on every new investment. A member of
by their nature, entail a higher the Octopus Ventures team is typically
level of risk and shorter cash appointed to the board of a portfolio
runway than investments in larger company, and regular board reports
quoted companies. are prepared by the portfolio company's
management and examined by the Manager.
This arrangement, in conjunction with
its portfolio talent team's active
involvement, allows Future Generations
VCT to play a prominent role in a portfolio
company's ongoing development and strategy.
VCT qualifying status:
Future Generations VCT is required Octopus tracks Future Generations VCT's
at all times to observe the qualifying status throughout the period,
conditions for the maintenance and review this at key points including
of approved VCT status. The at the point of investment and realisation.
loss of such approval could This status is reported to the Board
lead to Future Generations VCT at each Board meeting. The Future Generations
and its investors losing access VCT Board has also engaged external
to the various tax benefits independent advisers to undertake an
associated with VCT status and independent VCT status monitoring role.
investment.
-------------------------------------- ----------------------------------------------
Loss of key people:
The loss of key investment staff The Portfolio Manager has a broad team
by the Portfolio Manager could experienced in and focused on early-stage
lead to poor fund management investing. This mitigates the risk
and/or performance due to lack of any one individual with the required
of continuity or understanding skill set and knowledge of Venture
of Future Generations VCT. Capital investing, and the portfolio
specifically, leaving. Key investment
staff are also incentivised via the
performance incentive fee.
Operational:
The Future Generations VCT Board The Future Generations VCT Board reviews
is reliant on the Portfolio the system of internal controls, both
Manager to manage investments financial and non-financial, operated
effectively, and manage the by Octopus (to the extent the latter
services of a number of third are relevant to Future Generations
parties, in particular the Registrar, VCT internal controls). These include
Depositary and tax advisers. controls designed to make sure that
A failure of the systems or Future Generations VCT assets are safeguarded
controls at Octopus or third-party and that proper accounting records
providers could lead to an inability are maintained.
to provide accurate reporting
and accounting and to ensure
adherence to VCT rules.
Information security:
A loss of key data could result Annual due diligence is conducted on
in a data breach and fines. third parties which includes a review
The Future Generations VCT Board of their controls for information security.
is reliant on Octopus and third Octopus has a dedicated information
parties to take appropriate security team and a third party is
measures to prevent a loss of engaged to provide continual protection
confidential customer information. in this area. A security framework
is in place to help prevent malicious
events.
Economic:
Events such as an economic recession, Future Generations VCT aims to invest
movement in interest rates, in a diverse portfolio of companies,
inflation and rising living across a range of sectors, which helps
costs could adversely affect to mitigate against the impact on any
some smaller companies' valuations, one sector. Future Generations VCT
as they may be more vulnerable also maintains adequate liquidity to
to changes in trading conditions make sure that it can continue to provide
or the sectors in which they follow--on investment to those portfolio
operate. This could result in companies which require it and which
a reduction in the value of is supported by the individual investment
Future Generations case.
VCT assets.
Legislative:
A change to the VCT regulations The Portfolio Manager engages with
could adversely impact Future HM Treasury and industry bodies to
Generations VCT by restricting demonstrate the positive benefits of
the companies Future Generations VCTs in terms of growing early-stage
VCT can invest in under its companies, creating jobs and increasing
current strategy. Similarly, tax revenue, and to help shape any
changes to VCT tax reliefs for change to VCT legislation. The 'sunset
investors could make VCTs less clause' meant that in 2025 the government
attractive and impact Future would need to renew the legislation
Generations VCT's ability to to allow VCTs to continue to operate
raise further funds. under the current legislation. However,
from the government's recent announcement
they have stated they are supportive
of VCTs and see the value in extending
them in the future.
Liquidity:
The risk that Future Generations Future Generations VCT's liquidity
VCT's available cash will not risk is managed on a continuing basis
be sufficient to meet its financial by Octopus in accordance with policies
obligations. Future Generations and procedures agreed by the Board.
VCT invests into smaller unquoted Future Generations VCT's overall liquidity
companies, which are inherently risks are monitored on a quarterly
illiquid as there is no readily basis by the Board, with frequent budgeting
available market for these shares. and close monitoring of available cash
Therefore, these may be difficult resources. Future Generations VCT maintains
to realise for their fair market sufficient investments in cash and
value at short notice. readily realisable securities to meet
its financial obligations.
Viability statement
In accordance with the FRC UK Corporate Governance Code
published in 2018 and provision 36 of the AIC Code of Corporate
Governance, the Directors have assessed the prospects of Future
Generations VCT over a period of five years, consistent with the
expected investment holding period of an investor. A fundraising
was launched on 31 January 2022 and is due to close on 31 October
2022, raising over GBP40 million. Under VCT rules, subscribing
investors are required to hold their investment for a five--year
period in order to benefit from the associated tax reliefs. The
Board regularly considers strategy, including investor demand for
Future Generations VCT's shares, and a five-year period is
considered to be a reasonable time horizon for this.
The Board carried out a robust assessment of the emerging and
principal risks facing Future Generations VCT and its current
position. This includes the cost of living crisis, rising interest
rates, the war in Ukraine and any other risks which may adversely
impact its business model, future performance, solvency or
liquidity, and focused on the major factors which affect the
economic, regulatory and political environment.
Particular consideration was given to Future Generations VCT's
reliance on, and close working relationship with, the Portfolio
Manager. The principal risks faced by Future Generations VCT and
the procedures in place to monitor and mitigate them are set out
above.
The Board has carried out robust stress testing of cash flows,
which included assessing the resilience of portfolio companies,
including the requirement for any future financial support.
The Board has additionally considered the ability of Future
Generations VCT to comply with the ongoing conditions to make sure
it maintains its VCT qualifying status under its current investment
policy.
Based on this assessment the Board confirms that it has a
reasonable expectation that Future Generations VCT will be able to
continue in operation and meet its liabilities as they fall due
over the five-year period to 30 June 2027. The Board is mindful of
the ongoing risks and will continue to make sure that appropriate
safeguards are in place, in addition to monitoring the cash flow
forecasts to make sure Future Generations VCT has sufficient
liquidity.
Directors' responsibilities statement
The Directors are responsible for preparing the Strategic
Report, the Directors' Report, the Directors' Remuneration Report
and the Financial Statements in accordance with applicable law and
regulations. They are also responsible for ensuring that the annual
report and financial statements include information required by the
Listing Rules of the Financial Conduct Authority.
Company law requires the Directors to prepare financial
statements for each financial year. Under that law the Directors
have elected to prepare the financial statements in accordance with
United Kingdom Generally Accepted Accounting Practice ('GAAP'),
including Financial Reporting Standard 102 -- The Financial
Reporting Standard Applicable in the United Kingdom and Republic of
Ireland ('FRS 102'), United Kingdom accounting standards 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 and profit 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 have been followed,
subject to any material departures disclosed and explained in the
financial statements;
-- prepare the financial statements on the going concern basis unless it is
inappropriate to presume that the Company will continue in business; and
-- prepare a Strategic Report, Directors' Report and Directors' Remuneration
Report which comply with the requirements of the Companies Act 2006.
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 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.
In so far as each of the Directors is aware:
-- there is no relevant audit information of which the Company's auditor is
unaware; and
-- the Directors have taken all steps that they ought to have taken to make
themselves aware of any relevant audit information and to establish that
the auditor is aware of that information.
The Directors are responsible for preparing the annual report
and financial statements in accordance with applicable law and
regulations. Having taken advice from the Audit Committee, the
Directors are of the opinion that this report as a whole provides
the necessary information to assess the Company's performance,
business model and strategy and is fair, balanced and
understandable.
The Directors are responsible for the maintenance and integrity
of the corporate and financial information included on the
Company's website. Legislation in the United Kingdom governing the
preparation and dissemination of financial statements may differ
from legislation in other jurisdictions.
The Directors confirm that, to the best of their knowledge:
-- the financial statements, prepared in accordance with United Kingdom
Generally Accepted Accounting Practice, including FRS 102, give a true
and fair view of the assets, liabilities, financial position and profit
or loss of the Company; and
-- the annual report and financial statements (including the Strategic
Report), give a fair review of the development and performance of the
business and the position of the Company, together with a description of
the principal risks and uncertainties that it faces.
On behalf of the Board
Helen Sinclair
Chair
28 October 2022
Income statement
Period ended 30 June 2022
Period to 30 June 2022
--------------------------
Revenue Capital Total
GBP'000 GBP'000 GBP'000
-------- ------- -------
Net gain on valuation of fixed asset investments -- 9 9
Investment management fee (39) (118) (157)
Other expenses (165) -- (165)
------------------------------------------------ -------- ------- -------
Loss before tax (204) (109) (313)
------------------------------------------------ -------- ------- -------
Tax -- -- --
----------------------------------------------- -------- ------- -------
Loss after tax (204) (109) (313)
------------------------------------------------ -------- ------- -------
Loss per share -- basic and diluted (1.6)p (0.8)p (2.4)p
-- The 'Total' column of this statement is the profit and loss account of
Future Generations VCT; the supplementary revenue return and capital
return columns have been prepared under guidance published by the
Association of Investment Companies.
-- All revenue and capital items in the above statement derive from
continuing operations.
-- Future Generations VCT has only one class of business and derives its
income from investments made in shares and securities and from bank and
money market funds.
Future Generations VCT has no other comprehensive income for the
period.
Balance sheet
Period ended 30 June 2022
As at 30 June 2022
--------------------
GBP'000 GBP'000
--------- ---------
Fixed asset investments 1,663
Current assets:
Debtors 54
Applications cash(1) 1,915
Cash at bank 29,826
--------------------------------------------------- ---------
31,795
-------------------------------------------------- --------- ---------
Creditors: amounts falling due within one year (2,166)
--------------------------------------------------- --------- ---------
Net current assets 29,629
--------------------------------------------------- --------- ---------
Net assets 31,292
--------------------------------------------------- --------- ---------
Share capital 33
Share premium 31,572
Capital reserve realised (118)
Capital reserve unrealised 9
Revenue reserve (204)
--------------------------------------------------- ---------
Total equity shareholders' funds 31,292
--------------------------------------------------- --------- ---------
NAV per share 7 96.1p
1. Cash received from investors but not yet allotted.
The statements were approved by the Directors and authorised for
issue on 28 October 2022 and are signed on their behalf by:
Helen Sinclair
Chair
Company No: 13750143
Statement of changes in equity
Period ended 30 June 2022
Capital Capital
Share reserve reserve Revenue
Share
capital premium realised(1) unrealised reserve(1) Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------- ------- ----------- ---------- ---------- -------
As at 17
November 2021 -- -- -- -- -- --
-------------- ------- ------- ----------- ---------- ---------- -------
Comprehensive
income for the
period:
Management
fees
allocated as
capital
expenditure -- -- (118) -- -- (118)
Net gain on
fair value of
fixed asset
investments -- -- -- 9 -- 9
Loss after tax -- -- -- -- (204) (204)
-------------- ------- ------- ----------- ---------- ---------- -------
Total
comprehensive
loss for the
period -- -- (118) 9 (204) (313)
-------------- ------- ------- ----------- ---------- ---------- -------
Contributions
by and
distributions
to owners:
Shares issued 33 32,111 -- -- -- 32,144
Share issue
costs -- (539) -- -- -- (539)
-------------- ------- ------- ----------- ---------- ---------- -------
Total
contributions
by and
distributions
to owners 33 31,572 -- -- -- 31,605
-------------- ------- ------- ----------- ---------- ---------- -------
Balance as at
30 June 2022 33 31,572 (118) 9 (204) 31,292
1. Reserves are available for distribution, subject to restrictions.
Cash flow statement
Period ended 30 June 2022
Period
to 30 June
2022
GBP'000
-----------
Cash flows from operating activities
Loss before tax (313)
Increase in debtors (54)
Increase in creditors 251
Gain on valuation of fixed asset investments (9)
---------------------------------------------- -----------
Outflow from operating activities (125)
---------------------------------------------- -----------
Cash flows from investing activities
Purchase of fixed asset investments (1,654)
---------------------------------------------- -----------
Outflow from investing activities (1,654)
---------------------------------------------- -----------
Cash flows from financing activities
Applications account inflow 32,144
Applications account outflow (30,229)
Proceed from share issues 32,144
Share issue costs (539)
---------------------------------------------- -----------
Inflow from financing activities 33,520
---------------------------------------------- -----------
Increase in cash and cash equivalents 31,741
Opening cash and cash equivalents --
--------------------------------------------- -----------
Closing cash and cash equivalents 31,741
---------------------------------------------- -----------
Cash and cash equivalents comprise
Cash at bank 29,826
Applications cash 1,915
---------------------------------------------- -----------
Closing cash and cash equivalents 31,741
Notes to the financial statements
1. Principal accounting policies
Octopus Future Generations VCT plc ('Future Generations VCT') is
a Public Limited Company (plc) incorporated in England and Wales
and its registered office is at 6th Floor, 33 Holborn, London EC1N
2HT.
Future Generations VCT has been approved as a Venture Capital
Trust by HMRC under Section 259 of the Income Taxes Act 2007. The
shares of Future Generations VCT were first admitted to the
Official List of the UK Listing Authority and trading on the London
Stock Exchange on 5 April 2022 and can be found under the TIDM code
OFG. Future Generations VCT is premium listed.
The principal activity of Future Generations VCT is to invest in
a diversified portfolio of UK smaller companies in order to
generate capital growth over the long term as well as an attractive
tax-free dividend stream.
The financial statements are presented in sterling (GBP) to the
nearest GBP'000. The functional currency is also sterling
(GBP).
Basis of preparation
The financial statements have been prepared on a going concern
basis under the historical cost convention, except for the
measurement at fair value of certain financial instruments, and in
accordance with UK Generally Accepted Accounting Practice ('GAAP'),
including Financial Reporting Standard 102 -- 'The Financial
Reporting Standard applicable in the United Kingdom and Republic of
Ireland' ('FRS 102'), Companies Act 2006 and the Statement of
Recommended Practice (SORP) 'Financial Statements of Investment
Trust Companies and Venture Capital Trusts (July 2022)'.
2. Investment management fees
Accounting policy
For the purposes of the revenue and capital columns in the
Income Statement, the management fee has been allocated 25% to
revenue and 75% to capital, in line with the Board's expected
long-term return in the form of income and capital gains
respectively from Future Generations VCT's investment
portfolio.
Disclosure
Period to 30 June 2022
--------------------------
Revenue Capital Total
GBP'000 GBP'000 GBP'000
-------- ------- -------
Investment management fee 39 118 157
-------------------------- -------- ------- -------
Total 39 118 157
The Portfolio Manager provides investment management services
through agreements with Octopus AIF Management Limited and Future
Generations VCT. It also provides accounting and administration
services to Future Generations VCT under a Non-Investment Services
Agreement ('NISA'). No compensation is payable if the agreement is
terminated by either party, if the required notice period is given.
The fee payable, should insufficient notice be given, will be equal
to the fee that would have been paid should continuous service be
provided, or the required notice period was given.
3. Other expenses
Accounting policy
Other expenses are accounted for on an accruals basis and are
charged wholly to revenue.
The transaction costs incurred when purchasing or selling assets
are written off to the Income Statement in the period that they
occur.
Period
to
30 June
2022
GBP'000
-------
Audit fees(1) 38
Directors' remuneration(2) 29
NISA fees 24
Listing fees 17
Printing fees 17
Depositary fees 13
Registrar fees 12
Other fees 15
--------------------------- -------
Total 165
1. Includes VAT.
2. Includes employers' NI.
Total ongoing charges are capped at 3.0% of net assets. For the
period to 30 June 2022 the ongoing charges were 2.2% of net assets.
This is calculated by summing the annualised expenses incurred in
the period (excluding non-recurring expenses) divided by the
average NAV throughout the period.
4. Directors' remuneration
Total Directors' fees paid during the period were GBP28,000.
Employers' National Insurance contributions paid during the period
were GBP1,000. The highest paid Director received GBP16,000. None
of the Directors received any other remuneration or benefit from
Future Generations VCT during the period. Future Generations VCT
has no employees other than Non-Executive Directors. The average
number of Non-Executive Directors in the period was three.
5. Tax on ordinary activities
Accounting policy
Corporation tax payable is applied to profits chargeable to
corporation tax, if any, at the current rate. The tax effect of
different items of income/gain and expenditure/loss is allocated
between capital and revenue return on the 'marginal' basis as
recommended in the SORP.
Deferred tax is recognised in respect of all timing differences
at the reporting date. Timing differences are differences between
taxable profits and total income as stated in the financial
statements that arise from the inclusion of income and expenses in
tax assessments in periods different from those in which they are
recognised in financial statements.
Disclosure
The corporation tax charge for the period was GBPnil.
Period
to
30 June
2022
GBP'000
-------
Loss on ordinary activities before tax (313)
Current tax at 19% (60)
----------------------------------------------------- -------
Effects of:
Non--taxable income --
Non--taxable capital gains (2)
Non--deductible expenses --
Excess management expenses on which deferred tax not
recognised 81
Tax rate differences(1) (19)
----------------------------------------------------- -------
Total current tax charge --
1. Tax rate difference due to tax charge for the period being calculated at
19% and excess management expenses on which deferred tax is not
recognised being calculated at 25%.
Unrelieved tax losses of GBP313,000 are estimated to be carried
forward at 30 June 2022 (subject to completion of Future
Generations VCT's tax return) and are available for offset against
future taxable income, subject to agreement with HMRC. Future
Generations VCT has not recognised the deferred tax asset of
GBP81,000 in respect of these tax losses because there is
insufficient forecast taxable income in excess of deductible
expenses to utilise these losses carried forward.
The deferred tax asset is based on the future tax rate that has
been substantially enacted as at the balance sheet date.
Approved VCTs are exempt from tax on capital gains. As the
Directors intend for Future Generations VCT to continue to maintain
its approval as a VCT through its affairs, no current deferred tax
has been recognised in respect of any capital gains or losses
arising on the revaluation or disposal of investment.
6. Earnings per share
Period to 30 June 2022
--------------------------
Revenue Capital Total
GBP'000 GBP'000 GBP'000
-------- ------- -------
Loss attributable to Ordinary shareholders
(GBP'000) (204) (109) (313)
Loss per Ordinary share (p) (1.6) (0.8) (2.4)
The total earnings per share is based on 13,205,218 Ordinary
shares, being the weighted average number of Ordinary shares in
issue during the period.
There are no potentially dilutive capital instruments in issue
and so no diluted return per share figures are relevant. The basic
and diluted earnings per share are therefore identical.
7. Net asset value per share
30 June
2022
----------
Net assets (GBP'000) 31,292
Shares in issue 32,569,178
NAV per share (p) 96.1
8. Post balance sheet events
The following events occurred between the balance sheet date and
the signing of these financial statements:
-- four new investments completed totalling GBP2.3 million; and
-- 4.6 million shares were allotted at a price of 99.1p per share on 8
August 2022. This includes the applications cash balance that had not yet
been allotted at 30 June 2022.
-- on 25 October 2022, the Company announced the current Offer for
Subscription to raise up to GBP20 million in aggregate with an
over-allotment facility of GBP80 million will close for new applications
on 31 October 2022.
9. Transactions with the Manager and Portfolio Manager
Future Generations VCT is classified as a full-scope Alternative
Investment Fund under the Alternative Investment Fund Management
Directive (the 'AIFM Directive'). Future Generations VCT has
appointed Octopus AIF Management Limited to provide the services of
an AIFM of a full scope AIF. In accordance with its power to do so
under AIFMD, Octopus AIF Management Limited has delegated
investment management to Octopus Investments Limited, whilst
retaining the obligations of a risk manager.
Future Generations VCT paid Octopus AIF Management Limited
GBP157,000 in the period as a management fee. The annual management
charge ('AMC') is based on 2% of Future Generations VCT's NAV. The
AMC is payable quarterly in advance and calculated using the latest
published NAV of Future Generations VCT and the number of shares in
issue at each quarter end. Once the quarter has ended, an
adjustment will be made if the NAV at the end of the current
quarter is calculated and which differs from the NAV as at the end
of the previous quarter.
Octopus also provides Non-Investment Services to Future
Generations VCT, payable quarterly in advance. The fee is 0.3% of
Future Generations VCT's NAV, calculated at quarterly intervals.
The NISA fee is calculated using the latest published NAV of Future
Generations VCT and the number of shares in issue at each quarter
end. As with the AMC, an adjustment will be made once the quarter
has ended if the NAV at the end of the current quarter is
calculated and which differs from the NAV as at the end of the
previous quarter. During the period GBP24,000 was paid to Octopus
for Non-Investment Services.
In addition, Octopus are entitled to performance-related
incentive fees, subject to Future Generations VCT's total return at
year end exceeding the total return at the previous year end when
an incentive fee was paid or 97p if the first incentive fee has not
yet been paid (the 'Excess'), equal to 20% of the Excess. No
performance fee will be paid prior to the financial year ending on
30 June 2025, dividends (paid or declared) being equal to or
greater than 10p per Ordinary share and the total return exceeding
120p.
The cap relating to Future Generations VCT's total expense
ratio, that is the regular, recurring costs of Future Generations
VCT expressed as a percentage of its NAV, above which Octopus have
agreed to pay, is 3.0%, and is calculated in accordance with the
AIC Guidelines.
10. Related party transactions
Several members of the Octopus investment team hold
non-executive directorships as part of their monitoring roles in
Future Generations VCT's portfolio companies, but they have no
controlling interests in those companies.
Emma Davies, a Non-Executive Director of Future Generations VCT,
is also co-CEO of Octopus Ventures and owns shares in Octopus
Capital Ltd. No dividends have been paid to the Directors of Future
Generations VCT.
Period
to
30 June
2022
GBP
-------
Helen Sinclair --
Joanna Santinon --
Emma Davies --
--------------- -------
Total --
11. 2022 financial information
The figures and financial information for the period ended 30
June 2022 are extracted from the Company's annual financial
statements for the period and do not constitute statutory accounts.
The Auditors' report on the 2022 annual financial statements was
unqualified, did not include a reference to any matter to which the
auditors drew attention without qualifying the report, and did not
contain any statements under Sections 498(2) or 498(3) of the
Companies Act 2006.
12. Annual Report and financial statements
The Annual Report and financial statements will be available on
the Company's website
www.octopusinvestments.com/our-products/venture-capital-trusts/octopus-future-generations-vct
and the National Storage Mechanism which is located at
https://data.fca.org.uk/#/nsm/nationalstoragemechanism. The Notice
of Annual General Meeting is contained within the Annual
Report.
13. General information
Registered in England & Wales. Company No. 13750143
LEI: 213800AL71Z7N2O58N66
14. Directors
Helen Sinclair (Chair), Joanna Santinon and Emma Davies.
15. Secretary and registered office
Octopus Company Secretarial Services Limited
33 Holborn, London EC1N 2HT
(END) Dow Jones Newswires
October 31, 2022 03:00 ET (07:00 GMT)
Copyright (c) 2022 Dow Jones & Company, Inc.
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