FORESIGHT ENTERPRISE VCT PLC Annual Report and Financial Statements 31 December 2022
FORESIGHT
ENTERPRISE
VCT PLC
ANNUAL REPORT
AND ACCOUNTS
31 DECEMBER 2022
OUR PURPOSE
Foresight Enterprise VCT plc, formerly
Foresight 4 VCT plc, is a Venture Capital
Trust aiming to provide investors with
regular dividends and capital growth from
a portfolio of investments in fast‑growing,
unquoted companies in the UK.
KEY DATES
Annual General Meeting 8 June 2023
Half‑Yearly results to 30 June 2023 September 2023
Annual results to 31 December 2023 April 2024
KEY OBJECTIVES
Development of Net Asset
Value Total Return above
a 5% target
Implementing a significant
number of new and follow‑on
investments, exceeding
deployment requirements
to maintain VCT status
Payment of an annual
dividend of at least 5% of the
NAV at the start of the year
Maintaining a programme of
regular share buybacks at
a discount of 7.5% with a view to
reach 5% over the medium term,
subject to market conditions
FORESIGHT ENTERPRISE VCT PLC Annual Report and Accounts 31 December 2022 1
Strategic Report
Financial Highlights 2
Chair’s Statement 4
Evolution of Foresight
EnterpriseVCT plc 8
Company Objectives and KPIs 10
Manager’s Review 14
Top Ten Investments 26
Portfolio Overview 32
About the Manager 36
Co-Investments 39
Stakeholders and S172 40
Responsible Investment 42
Risks 45
Viability Statement 48
Governance
Board of Directors 50
Directors’ Report 52
Corporate Governance 58
Audit Committee Report 62
Directors’ Remuneration
Report 64
Statement of Directors’
Responsibilities 68
Financial Statements
Independent Auditor’s Report 70
Income Statement 76
Reconciliation of Movements
inShareholders’ Funds 77
Balance Sheet 78
Cash Flow Statement 79
Notes to the Accounts 80
Notice of Annual
General Meeting 96
Glossary of Terms 100
Financial Conduct Authority 101
Corporate Information 102
Shareholder Information 103
Additional Information 104
WWW.FORESIGHTENTERPRISEVCT.COM
CONTENTS
GOVERNANCESTRATEGIC REPORT FINANCIAL STATEMENTS
FINANCIAL HIGHLIGHTS
"In the year, the valuation of investments
increased by £8.7 million."
•
After adding back the payments of a 3.5p dividend
made on 30June2022 and a 3.8p dividend made on
30December2022, NAV Total Return per share at
31December2022 was 72.2p, representing a positive
total return of 4.5% in the year.
•
Four new investments costing £6.9million and three
follow-on investments costing £2.1million were made
during the year.
•
The Company fully exited its investments in TFC
Europe Limited and Codeplay Software Limited,
realising gains of £17.3 million in the year and returning
proceeds of £19.7 million to the Company.
•
In the year, the valuation of investments increased by
£8.7 million (2021: £22.3 million).
•
An interim dividend of 3.5p per share was paid on
30June2022, returning £6.9million to Shareholders.
•
A special interim dividend of 3.8p per share was paid
on 30December2022 following successful realisations
of TFC Europe and Codeplay Software, returning
£8.1million to Shareholders.
•
The offer for subscription launched in October 2022
was closed on 26 April 2023 and raised a total of
£21.7million after expenses.
Key metrics
1 year 3 years 5 years
Movement in NAV Total Return as at 31 December 2022
1
4.5% 21.8% 25.6%
1. Definitions of these Alternative Performance Measures (“APMs”) can be found in the Glossary on page 100.
£138.5m
Total Net Assets
as at 31 December 2022
£8.7m
Uplift in valuation of investments
in the year to 31 December 2022
64.9p
Net Asset Value per share
as at 31 December 2022
7.3p
Dividends paid
3.5p 30 June 2022 and 3.8p 30 December 2022
2
FORESIGHT ENTERPRISE VCT PLC Annual Report and Accounts 31 December 2022
Key metrics
31 December 31 December
2022 2021
Total net assets £138.5m £133.2m
Net Asset Value per share 64.9p 69.1p
Movement in NAV Total Return in the year
1
4.5% 18.0%
Share price 58.5p 61.5p
Share Price Total Return
1
125.3p 121.0p
Dividends per share paid in the year
1
7.3p 4.2p
Dividend yield
1
12.5% 6.8%
Shares in issue 213,316,422 192,806,963
2022 2021
Discount to NAV at year end
1
9.9% 11.0%
Average discount on buybacks
1
7.5% 7.5%
Shares issued through fundraising 20,149,160 −
Shares issued under the dividend reinvestment scheme 2,748,080 1,512,395
Shares bought back during the year under review
1
2,387,781 2,564,645
Ongoing charges ratio (based on net assets at 31 December)
1, 2
2.30% 2.25%
1. Definitions of these Alternative Performance Measures (“APMs”) can be found in the Glossary on page 100.
2. Special dividends paid during the year have been added back to year end net assets and the performance incentive accrual has
been added back to total expenses in the year.
PLACE OF BUSINESS OF
PORTFOLIO COMPANIES
Key:
Technology, Media &
Telecommunications
Industrials &
Manufacturing
Healthcare
Business Services
Consumer & Leisure
Other
FORESIGHT ENTERPRISE VCT PLC Annual Report and Accounts 31 December 2022 3
GOVERNANCESTRATEGIC REPORT FINANCIAL STATEMENTS
I am pleased to present the audited
Annual Report and Accounts for
the year ended 31 December 2022
and to report a Net Asset Value
Total Return of 4.5% for the year
including a dividend yield of 12.5%.
Raymond Abbott
Chair of Foresight Enterprise VCT plc
CHAIR’S STATEMENT
Overview of 2022
The business environment remains challenging after the
substantial impact of the COVID-19 pandemic receded,
with the war in Ukraine, supply chain issues, rapidly rising
inflation and energy prices, and the threat of recession
the new economic reality. I believe that the careful
planning, help and advice the Manager provided the
portfolio companies during the pandemic will continue to
be relevant to the current and future economic situations.
While there will be bumps in the road, the Board believes
that the portfolio is in good shape to withstand what we
currently see ahead.
The Company’s portfolio in aggregate has remained
resilient amid economic and political turmoil that has
plagued 2022. Many of the portfolio companies have
successfully adapted to the new economic landscape,
with some performing extremely well and demonstrating
the strength of their management teams. A minority
struggled as a result of a fall in consumer demand,
inflationary pressures and a surge in the cost of energy
prices. However, these businesses are now beginning to
show signs of recovery.
In the year ended 31 December 2022, 23 companies in
the portfolio recorded a combined increase in valuation
of £20.0 million, offset by 14 companies recording an
aggregate fall in valuation of £11.3 million.
Strategy
The Board believes that it is in the best interests of
Shareholders to continue to pursue a strategy of:
•
Growth in Net Asset Value Total Return above a 5%
target while continuing to grow the Company’s assets
•
Payment of annual dividends of at least 5% of the NAV
per share per annum based on the opening NAV of
that financial year
•
Implementation of a significant number of new and
follow-on qualifying investments every year, exceeding
deployment requirements to maintain VCT status
•
Maintaining a programme of regular share buybacks
ata discount of 7.5%
Central to the Company being able to achieve these
objectives is the ability of the Manager to source
and complete attractive new qualifying investment
opportunities.
Whilst this task has not been made easier by the changes
to VCT legislation since 2015, which (amongst other
requirements) place greater emphasis on growth or
development capital investment into younger companies,
the Company is fortunate in that it has pursued a policy
of seeking growth capital investments for several
years prior to the rule changes and the Manager has an
established track record in this area.
4 FORESIGHT ENTERPRISE VCT PLC Annual Report and Accounts 31 December 2022
Performance and portfolio activity
During the year Net Asset Value per share decreased
by 6.1% from 69.1p at 31 December 2021 to 64.9p at
31December 2022. After adding back the payments
of a3.5p dividend made on 30 June 2022 and a 3.8p
dividend made on 30 December 2022, NAV Total Return
per share at 31 December 2022 was 72.2p, representing
apositive total return of 4.5%. This positive movement is
a result of the strategy and business changes throughout
the portfolio alluded to above.
During the year the Manager completed four new
investments and three follow-on investments costing
£6.9million and £2.1 million respectively. The Manager also
fully disposed of two investments, generating proceeds
of £19.7 million with a further £0.4 million of deferred
consideration included within debtors at the year end,
representing a combined return multiple of13.0x.
After the year end, the Company made four new
investments totalling £5.0 million in Sprintroom Limited
(£1.0 million), Firefish Software Limited (£1.5 million),
Five Wealth Limited (£0.7 million) and Red Flag Alert
Limited (£1.8 million). The Company also completed
four follow-on investments with an aggregate cost of
£2.7 million in IMMJ Systems Limited (£0.7 million),
NorthWest EHealth Limited (£1.5 million), Ten Health &
Fitness Limited (£0.4 million) and Additive Manufacturing
Technologies Ltd (£0.1 million). Furthermore, the
Company realised its holdings in Innovation Consulting
Group Limited and Datapath Group Limited. The two
exits combined generated proceeds of £17.0 million
at completion with a further £2.3 million of deferred
consideration due over the next 24 months. Including
cash returned to the date of this report, the exits have
delivered an impressive aggregate return multiple of
8.4 times the original investment. Further details of
these investments and realisations can be found in the
Manager's Report.
The Board and the Manager are confident that a number
of new and follow-on investments can be achieved this
year, particularly with the increased investment activity
notedabove. Details of each of these new, existing
and former portfolio companies can be found in the
Manager’s Review.
The Manager continues to see a strong pipeline of
potential investments sourced through its regional
networks and well-developed relationships with advisers
and the SME community; however, it is also focused on
supporting the existing portfolio through the current
economic climate. Following the successful fundraise
launched in October2022, the Company is in a position
to fully support the portfolio, where appropriate, and
exploit potential attractive investment opportunities.
The offer was closed on 26 April 2023 having raised
gross proceeds of £22.6 million, £21.7 million after
expenses, as detailed in the post-balance sheet events
in note 20. TheBoard would like to thank those existing
Shareholders who have already supported this offer and
welcome all new Shareholders to theCompany.
Responsible investing
The analysis of environmental, social and governance
(“ESG”) issues is embedded in the Manager’s investment
process and these factors are considered key in
determining the quality of a business and its long-term
success. Central to the Manager’s responsible investment
approach are five ESG principles that are applied to
evaluate investee companies, acquired since May 2018,
throughout the lifecycle of their investment, from their
initial review and acquisition to their final sale. Every year,
these portfolio companies are assessed and progress
measured against these principles. More detailed
information about the process can be found on pages 42
to 44 of the Manager’s Review.
Dividends
An interim dividend of 3.5p per share was declared
on 27May2022 based on an ex-dividend date of
16June2022 and a record date of 17 June 2022.
Thedividend was paid on 30June2022, returning
£6.9million to Shareholders.
Following the successful realisations of TFC Europe
and Codeplay Software, a special interim dividend
of 3.8p per share was declared on 8 November 2022
based on an ex-dividend date of 15 December 2022
and a record date of 16 December 2022. Thedividend
was paid on 30December 2022, returning £8.1million
toShareholders.
As noted in the prior Annual Report and Accounts and
in light of the change in portfolio towards earlier-stage,
higher-risk companies as required by the VCT rules,
the Board felt it prudent to adjust the dividend policy
towards a targeted annual dividend yield of 5% of NAV
per annum. The Board and the Manager continue to
hope that this may be enhanced by additional “special”
dividends as and when particularly successful portfolio
exits are made.
Buybacks
The Board is pleased to have achieved an average
discount across all buybacks of 7.5% to the Net Asset
Value per share in the year, but continues to have an
objective of achieving and maintaining buybacks at a
discount of 5% over the medium term, subject to market
conditions.
FORESIGHT ENTERPRISE VCT PLC Annual Report and Accounts 31 December 2022 5
GOVERNANCESTRATEGIC REPORT FINANCIAL STATEMENTS
Management charges and performance incentive
The annual management fee is an amount equal to 2.0%
of net assets. This has resulted in ongoing charges for
the period ended 31 December 2022 of 2.30% after
adding back special dividends paid during the year to
theyear end net assets and adding back the performance
incentive accrual to total expenses for the year, which
is at the lower end of the range when compared to
competitor VCTs.
As explained in note 13, the Directors have prepared a
calculation incorporating estimated future dividends over
the vesting period and expect a performance incentive
fee to become payable during the vesting period.
Therefore, a liability of £280,000 has been recognised
asat 31 December 2022 (2021: £nil).
Shareholder communication
We were delighted to meet once again with some
Shareholders in person at the AGM on 9 June 2022,
having long been unable to do so as a result of the travel
restrictions due to COVID-19. Following the disappointing
remote attendance at the hybrid event, the Board will
be reverting to an in-person event only in the future.
Additionally, the Manager once again reintroduced
in-person investor forum events in the year which have
proven popular with our Shareholders in the past.
Board composition
The Board continues to review its own performance
and undertakes succession planning to maintain an
appropriate level of independence, experience, diversity
and skills in order to be in a position to discharge all its
responsibilities. We are in the process of adding new
Board members in view of the retirement of Simon
Jamieson at the AGM and we hope to be able to make
anannouncement at that time.
I thank Simon for his dedication to the Company and
the Board over the last nine years, having overseen
a transformation of the Company strategy through
previously difficult times. I wish him all the best for
thefuture.
Annual General Meeting
The Company’s Annual General Meeting will take
place on 8 June 2023 at 1.00pm and we look forward
to meeting as many of you as possible in person.
Pleaserefer to the formal notice on pages 96 to 99
forfurther details in relation to the format of this year’s
meeting. Wewould encourage you to submit your
votes by proxyahead of thedeadline of 1.00pm on
6June 2023 andtoforwardany questions by email
toInvestorRelations@foresightgroup.eu in advance
ofthemeeting.
Sunset clause
The "Sunset Clause" for EIS and VCT reliefs has to be
reviewed by the government by 6 April 2025. The clause
provides that income tax relief will no longer be given to
subscriptions made on or after 6 April 2025, unless the
legislation is amended to make the scheme permanent,
or the “sunset clause” is extended. The government has
the power to extend or remove the sunset clause through
secondary legislation, which would allow the VCT & EIS
schemes to operate in their current form beyond the
current expiry date of the scheme. The then Chancellor
Kwasi Kwarteng announced during his mini-budget of
23 September 2022 that venture capital schemes will
be safeguarded beyond 2025 but no further details
were given as to how this will be implemented. To date,
the now Chancellor Jeremy Hunt has yet to clarify.
However, through correspondence with the Treasury
Select Committee, the Chancellor has stated that it is
the government's firm intention to extend the VCT and
EIS schemes beyond the sunset on 6 April 2025 and that
further details will be provided in due course. The Treasury
Select Committee also notes that the UK should be able
to extend the scheme without European Commission
approval, clarified by the recently announced Northern
Ireland Protocol, the Windsor Framework.
Outlook
As mentioned in my introduction, while the impact of
the pandemic has lessened, other economic impacts are
being seen after Russia invaded Ukraine, including, but
not limited to, the significant rise in energy prices, rapid
inflation, the cost of living crisis and the potential for a
global recession. Supply chains remain under pressure
post-Brexit and pandemic, and after the Russian invasion,
such issues are unlikely to be resolved soon. While the
Company’s portfolio has not been materially exposed to
either Russia or Ukraine, it is very likely that the economic
impacts we are currently experiencing will raise issues and
concerns for the individual investee company management
teams and the Manager.
However, the portfolio is showing signs of resilience and
the Manager has been working with management teams to
assess business plans, consider funding requirements and
help navigate through these difficult times. The portfolio is
well diversified in terms of sector, size and number and the
Manager’s approach through the pandemic will continue to
be valuable to tackle the challenges ahead.
The Company is well positioned to continue to support the
portfolio and the fundraising that we are making will also
provide the opportunity to seek new investments and take
advantage of the opportunities that will emerge from the
current economic situation.
Raymond Abbott
Chair
28 April 2023
CHAIR’S STATEMENT CONTINUED
6 FORESIGHT ENTERPRISE VCT PLC Annual Report and Accounts 31 December 2022
60
30
0
Actual NAV at
31 December
2021
Realised
gains
Funds raised
(net of
expenses)
Interest and
dividends
Dividend paid
(excluding
DRIS)
Management
and secretarial
fees
BuybacksUnrealised
losses
Other
income and
expenses
(0.4)
Actual NAV at
31 December
2022
120
90
180
150
NAV bridge (£'000)
133.2
138.5
17.5
13.7
0.9
(13.2)
(8.5)
(3.2)
(1.5)
Dividend history
(Since share consolidation in 2005)
Ordinary Shares
Dividend per
Date share (p)
30 December 2022 3.8
30 June 2022 3.5
18 June 2021 4.2
28 August 2020 2.8
16 August 2019 4.0
19 October 2018 4.0
17 July 2017 4.0
18 December 2015 4.0
26 April 2013 4.0
24 February 2012 5.0
4 February 2011 5.0
18 December 2009 5.0
26 December 2008 5.0
28 December 2007 5.0
15 December 2006 2.5
30 December 2005 5.0
Cumulative 66.8
NAV per share 64.9
NAV Total Return 131.7
C Shares
Dividend per
Date share (p)
6 August 2015 25.0
NAV bridge and dividend history
FORESIGHT ENTERPRISE VCT PLC Annual Report and Accounts 31 December 2022 7
GOVERNANCESTRATEGIC REPORT FINANCIAL STATEMENTS
EVOLUTION OF FORESIGHT
ENTERPRISE VCT PLC
2011
Foresight Group LLP’s private equity
team was appointed manager of Acuity
Growth VCT (formerly Acuity 2 VCT plc
andpreviously Electra Kingsway VCT 2 plc) on
24February2011, which was renamed Foresight
5 VCT plc. Foresight Group was also appointed
manager of Acuity VCT 3 plc (formerly Electra
Kingsway VCT 3 plc) on 1 April 2011.
2012
Foresight 4 VCT plc acquired the assets and
liabilities of both Foresight 5 VCT plc and Acuity
VCT 3 plc. On 6 February 2012, Foresight 5 VCT
plc and Acuity 3 VCT plc were merged into
Foresight 4 VCT plc as a separate C Share class.
2004
In August 2004, Foresight
Group LLP’s private equity
team was appointed to
manage Advent2VCT plc,
whichwassubsequently
renamedForesight 4 VCT plc.
ITA
2012
At the same time, Foresight
Clearwater VCT plc was merged
into the Ordinary Share class of
Foresight 4 VCT plc.
"Foresight Group is one of the longest serving VCT managers
in the industry, launching the fi rst Foresight VCT in 1997.
A combination of organic growth and strategic acquisitions
now makes Foresight one of the largest and most diverse VCT
managers in the industry."
VCT
8 FORESIGHT ENTERPRISE VCT PLC Annual Report and Accounts 31 December 20228 FORESIGHT ENTERPRISE VCT PLC Annual Report and Accounts 31 December 2022
2021
With eff ect from 8 July 2021, the
Company's name was changed
from Foresight 4 VCT plc to
Foresight Enterprise VCT plc.
2015
The C Shares were converted
into Ordinary Shares on
10August2015.
FORESIGHT ENTERPRISE VCT PLC Annual Report and Accounts 31 December 2022 9
2017
On 22 June 2017, Foresight3
VCT plc was merged into
Foresight4VCT plc. The enlarged
Foresight 4 VCT plc had combined
net assets of £77.0million.
2023
On 26 April 2023, theCompany
closed its latest off er for
subscription after raising
£21.7million after expenses.
GOVERNANCE FINANCIAL STATEMENTSSTRATEGIC REPORT
FORESIGHT ENTERPRISE VCT PLC Annual Report and Accounts 31 December 2022 9
GOVERNANCE FINANCIAL STATEMENTSSTRATEGIC REPORT
FORESIGHT ENTERPRISE VCT PLC Annual Report and Accounts 31 December 2022 9
GOVERNANCESTRATEGIC REPORT FINANCIAL STATEMENTS
COMPANY OBJECTIVES AND KPIS
Objective
Growth in Net Asset Value
Total Return above a 5%
target while continuing to
grow the Company’s assets
Progress against objective
•
During the year Net Asset Value per share
decreased by 6.1% from 69.1p at 31December2021
to 64.9p at 31December2022.
•
Including the payments of a 3.5p dividend made
on 30June2022 and a 3.8p dividend made on
30December2022, NAV Total Return per share
at 31 December 2022 was 72.2p, representing a
positive total return of 4.5%.
•
This positive movement is a result of the strategy
and business changes throughout the portfolio
alluded to in this report.
KPIs
4.5%
Movement in NAV
Total Return
in year to
31December2022
(2021: 18.0%)
18.0%
FY21
4.5%
FY22
£138.5m
Total net assets
as at 31 December 2022
(2021: £133.2m)
£133.2m
FY21
£138.5m
FY22
Objective
Payment of annual dividends
of at least 5% of the NAV
per share per annum based
on the opening NAV of that
financial year
Progress against objective
•
An interim dividend of 3.5p per share was declared
on 27May2022 based on an ex-dividend date of
16June2022 and a record date of 17June2022.
Thedividend was paid on 30June2022.
•
A special interim dividend of 3.8p per share
was declared on 8November2022 based on an
ex-dividend date of 15December2022 and a record
date of 16December2022. The dividend was paid
on 30December2022.
•
This total payout exceeded the minimum target
dividend per share of 5% of the NAV per share of
69.1p as at 31 December 2021.
KPIs
3.5p
Interim
dividendpaid
30 June 2022
(18 June 2021: 4.2p)
4.2p
FY21
3.5p
FY22
3.8p
Special
dividendpaid
30 December 2022
0.0p
FY21
3.8p
FY22
10 FORESIGHT ENTERPRISE VCT PLC Annual Report and Accounts 31 December 2022
Objective
Implementation of a
significant number of new
and follow-on qualifying
investments every year,
exceeding deployment
requirements to maintain
VCT status
Progress against objective
•
During the year the Manager completed four new
investments and three follow-on investments
costing £6.9million and £2.1million respectively.
•
The Board and the Manager are confident that
a number of new and follow-on investments can
be achieved in 2023 as the ongoing economic
difficulties and political turmoil are already
presenting unique investment opportunities.
Detailsof each of these new portfolio companies
can be found in the Manager’sReview.
KPIs
£6.9m
New investment
deployment
in year to
31December2022
(2021: £10.0m)
£10.0m
FY21
£6.9m
FY22
£2.1m
Follow-on
deployment
in year to
31December2022
(2021: £3.2m)
£3.2m
FY21
£2.1m
FY22
Objective
Maintaining a programme of
regular share buybacks at
a discount of 7.5% to NAV
Progress against objective
•
The Board is pleased to have achieved an average
discount across all buybacks of 7.5% to the Net Asset
Value per share in the year but continues to have an
objective of achieving and maintaining buybacks at
a discount of 5% over the medium term, subject to
market conditions.
KPIs
2,387,781
Number of shares
bought back
in year to
31December2022
(2021: 2,564,645)
2,564,645
FY21
2,387,781
FY22
7.5%
Average discount
onbuybacks
in year to
31December2022
(2021: 7. 5%)
7.5%
FY21
7.5%
FY22
FORESIGHT ENTERPRISE VCT PLC Annual Report and Accounts 31 December 2022 11
GOVERNANCESTRATEGIC REPORT FINANCIAL STATEMENTS
Performance and Key Performance
Indicators (“KPIs”)
The Board expects the Manager to deliver a performance
which meets the objectives of the Company. The KPIs
covering these objectives are growth in Net Asset Value
per share and dividend payments, which, whencombined,
give a positive overall NAV Total Return. Additional
KPIs and Alternative Performance Measures (“APMs”)
reviewed by the Board include the discount of the share
price relative to the Net Asset Value, which shows the
percentage by which the mid-market share price of the
Company is lower than the Net Asset Value per share,
and total expenses as a proportion of Shareholders’
funds. KPIs and APMs allow performance comparisons to
be made between VCTs.
A record of some of these indicators is contained in
the Key Metrics section on page 3 and the Company
Objectives and KPIs section on page 10.
The ongoing charges ratio for the year was 2.30% of net
assets after adding back special dividends paid during
the year to the year end net assets and adding back the
performance incentive accrual to total expenses for the
year. The Directors note that regular share buybacks at a
competitive discount to NAV is an essential KPI and also
accretive forexisting Shareholders. Share buybacks were
completed at an average discount of 7.5%. Further details
of the Company’s KPIs can be found in the Glossary of
Terms onpage 100.
A review of the Company’s performance during the
financial year, the position of the Company at the year
end and the outlook for the coming year is contained
within the Manager’s Review. The Board assesses
the performance of the Manager in meeting the
Company’s objective against the primary KPIs and
APMshighlightedabove.
Investments in unquoted companies at an early stage
oftheir development will involve some disappointments.
However, investing the Company’s funds in companies
with high growth characteristics with the potential to
become strong performers within their respective fields
creates an opportunity to provide investors with regular
dividends and capital growth.
COMPANY OBJECTIVES AND KPIS CONTINUED
INVESTMENT OBJECTIVE
To provide private investors with regular dividends and capital growth from a portfolio of
investments in fast‑growing unquoted companies in the UK. It is the intention to maximise
tax‑free income available to investors from a combination of dividends and interest received
on investments and the distribution of capital gains arising from trade sales or flotations.
Investment policy
The Company will target UK unquoted companies
which it believes will achieve the objective of
producing attractive returns for Shareholders.
Investment securities
The Company invests in a range of securities
including ordinary and preference shares, loan
stock, convertible securities, fixed-interest securities
and cash. Unquoted investments are usually
structured as a combination of ordinary shares and
loan stock. Cash is primarily held in interest-bearing
accounts as well as in a range of permitted liquidity
investments.
UK companies
Investments are primarily made in companies
which are substantially based in the UK, although
many will trade overseas. The companies in which
investments are made must satisfy a number of
tests set out in Part 6 of the Income Tax Act 2007
tobe classed as VCT qualifying holdings.
Asset mix
The Company aims to be significantly invested in
growth businesses, subject always to the quality
of investment opportunities and the timing of
realisations. Any uninvested funds are held in cash
and a range of permitted liquidity investments.
Risk diversification and maximum exposures
Risk is spread by investing in a range of different
businesses within different industry sectors at
different stages of development, using a mixture
of securities. The maximum amount invested in any
one company, including any guarantees to banks or
third parties providing loans or other investment to
such a company, is limited by VCT legislation to 15%
of the Company’s investments (which includes cash)
by VCT value at the time of investment.
Strategies for achieving
objectives
12 FORESIGHT ENTERPRISE VCT PLC Annual Report and Accounts 31 December 2022
Investment style
Investments are selected in the expectation
that value will be enhanced by the application
of private equity disciplines, including an active
management style for unquoted companies through
the placement of an investor director on investee
company boards.
Borrowing powers
The Company has a borrowing limit of an amount
not exceeding an amount equal to 50% of the
adjusted capital and reserves (being the aggregate
of the amount paid up on the issued share capital
of the Company and the amount standing to the
credit of its reserves). Whilst the Company does
not currently borrow, and has no plans to do so,
itsArticles allow it to do so.
VCT regulation
The investment policy is designed to ensure that the
Company continues to qualify and is approved as a VCT
by HMRC. Amongst other conditions, the Company may
not invest more than 15% of its total investments and cash
by VCT value, at the time of making the investment, in a
single company, must have at least 80% by VCT value of
its investments and cash throughout the year in shares
or securities in qualifying holdings and must invest 30%
of funds raised in qualifying holdings within 12 months
of the end of the year in which those funds were raised.
In addition, in aggregate, 70% of a VCT’s qualifying
investments (30% for investments made before 6 April
2018 from funds raised before 6 April 2011) by VCT value
must be in ordinary shares which carry no preferential
rights to assets on a winding up or to dividends (apart
from certain non-cumulative fixed preferential rights).
For each individual investment, a minimum of 10% of the
investment must be in ordinary shares of that company.
Dividend policy
The Board will endeavour to pay annual dividends of
at least 5% of the NAV per share based on the opening
NAV of that financial year. The aim of the Board and the
Manager is for future investment performance to support
this level of distribution, whilst also enhancing the NAV
per share at around its current level. This level of dividend
may be exceeded by the payment of additional “special”
dividends as and when particularly successful portfolio
disposals are made.
Share buyback policy
It is the Company’s policy, subject to adequate cash
availability and distributable reserves, to consider
repurchasing shares when they become available in
order to help provide liquidity to the market in the
Company’sshares at a discount of 7.5% to the prevailing
NAV per share.
Other funds managed by Foresight Group
The Company may invest alongside other funds managed
or advised by the Manager. Where more than one fund
is able to participate in an investment opportunity,
allocations will generally be made based on the
Manager’s allocation policy, other than where a fund has
a pre-existing investment where the incumbent fund will
have priority. Implementation of this policy will be subject
to the availability of monies to make the investment and
other portfolio considerations, such as the portfolio
diversity and the need to maintain VCT status.
The Manager provides investment management services
or advice to Foresight VCT plc, Foresight Solar &
Technology VCT plc, Foresight Nottingham Fund LP,
Foresight Solar Fund Limited, Foresight Inheritance Tax
Solutions, Foresight Energy Infrastructure EIS, Foresight
Regional Investment LP, Foresight WAE Technology
EIS Fund, Foresight Italian Green Bond Fund, MEIF
ESEM Equity LP, Scottish Growth Scheme – Foresight
Group Equity Partners LP, NI Opportunities LP, JLEN
Environmental Assets Group Limited, Foresight Regional
Investment II LP, Foresight Energy Infrastructure
Partners S.C.Sp, Foresight Regional Investment III LP,
NI Opportunities II LP, Foresight Sustainable Forestry
Company plc, Foresight Regional Investment IV LP,
Foresight Regional Investment V LP, AIB Foresight SME
Impact LP, Foresight WestYorkshire Business Accelerator
LP, FP Foresight Sustainable Future Themes Fund, FP
Foresight Global Real Infrastructure Fund, FP Foresight
Sustainable Real Estate Securities Fund, FP Foresight UK
Infrastructure Income Fund, Thames Ventures VCT 1 plc,
Thames Ventures VCT 2 plc and Thames Ventures EIS.
FORESIGHT ENTERPRISE VCT PLC Annual Report and Accounts 31 December 2022 13
GOVERNANCESTRATEGIC REPORT FINANCIAL STATEMENTS
Portfolio summary
The portfolio is diversified by sector, transaction type and
maturity profile. Details of the ten largest investments by
valuation, including an update on their performance, are
provided on pages 26 to 30.
In the year, the valuation of investments increased by
£8.7 million. Overall, the portfolio has performed well
despite uncertainty in the markets following the impact
of COVID-19 and subsequent geopolitical uncertainty and
price inflation.
In line with the Board’s strategic objectives, the
Investment Manager remains focused on growing the
Company through further development of NAV whilst
paying an annual dividend to Shareholders of at least 5%
of the NAV per share. In the year, net assets increased
3.9% to £138.5 million and an annual dividend of at least
5% of the NAV per share as at 31 December 2021 was
paid, meaning that the Company successfully met these
objectives.
New investments
2022 was a mixed year in the markets, with the
technology sector in particular performing strongly early
in 2022 but then seeing a significant softening. Many
investee management teams have successfully steered
their businesses through the uncertainty of 2022, whilst
developing clearer medium and longer-term growth
plans. The Manager has invested further in its origination
capabilities and identified a large number of potentially
attractive investment opportunities during the year.
Over the course of 2022, four new investments were
completed; a total investment of £6.9 million. New
investments were across compliance technology,
health services, advanced materials and insure-tech.
Behind these, there continues to be a strong pipeline of
opportunities that the Manager expects to convert during
the next 12 months. Follow-on investments totalling
£2.1million were also made in three existing investee
companies.
As at 31 December 2022 the Company’s portfolio
comprised 41 investments with a total cost of
£69.9million and a valuation of £112.0 million.
MANAGER’S REVIEW
Portfolio diversification
Sector by
cost
Sector by
valuation
Key:
Technology, Media &
Telecommunications
Healthcare
Consumer & Leisure
Industrials &
Manufacturing
Business Services
Other
36%
22%
15%
13%
12%
2%
27%
20%
13%
22%
12%
6%
14 FORESIGHT ENTERPRISE VCT PLC Annual Report and Accounts 31 December 2022
Homelink Healthcare Limited
In March 2022, the Company invested £1.1 million
in Homelink Healthcare, a specialist provider of
hospital-at-home and virtual ward services. The business
employs highly qualifi ed and experienced nurses and
rehabilitation teams to provide services to patients in
their own homes through contracts with the NHS. These
services deliver a range of clinical interventions, including
wound care, intravenous therapies, physiotherapy and
rehabilitation. The nurses are paid in-line with NHS
remuneration and the clinical services off ered alleviate
pressure on the NHS by freeing up vital bed space,
savingtime and reducingcosts.
So‑Sure Limited
In May 2022, the Company invested £1.6 million in
So-Sure, a digital tech platform that operates across the
entire insurance supply chain, automating much of the
process from distribution and policy administration to
fraud detection and claim management. The investment
will be used to scale up the business by investing
into marketing, technology and to improve platform
automation.
Strategic Software Applications Ltd
In August 2022, the Company invested £1.7 million in
Strategic Software Applications, which trades under
the name Ruleguard, a London-based SaaS technology
provider supporting fi nancial institutions in meeting their
regulatory compliance obligations. The platform enables
customers to navigate the ever-growing challenges of
increasing regulatory compliance requirements with
effi ciency, reduced risk and lower audit compliance
costs. The investment will help the company to develop
additional platform capabilities while scaling up sales and
marketing functions to capitalise on a large and growing
market opportunity.
Copptech UK Limited
In August 2022, the Company made a £2.5 million
investment in Copptech, a developer of environmentally
friendly antimicrobial technologies that kill bacteria,
fungi and viruses. Applications for the technology are
wide ranging and include diminishing the transmission
of viruses in medical facilities, extending the shelf life of
perishable goods, reducing discolouration and odour in
clothing and providing mould, fungi and termite-resistant
properties to building materials. The business has proven
itself to be highly scalable across Latin America and is
already seeing meaningful traction in the large North
American and European markets, where it is expanding
its sales teams and operations. The investment will enable
Copptech toscale the business and operate globally.
FORESIGHT ENTERPRISE VCT PLC Annual Report and Accounts 31 December 2022 15
GOVERNANCESTRATEGIC REPORT FINANCIAL STATEMENTS
Follow-on investments
The Manager had expected that more portfolio
companies would need additional capital to support
them through continued diffi cult trading conditions
resulting from macroeconomic challenges and political
uncertainty aff ecting energy and supply prices. However,
the portfolio has remained relatively resilient.
The Company made follow-on investments in three
companies during 2022, totalling £2.1 million. Further
details of each of these are provided below.
The additional equity injections in the year were mainly
used to support each company’s further growth plans,
such as launching new products or to expand into new
markets. In view of the diffi cult economic outlook, the
Manager remains vigilant about the health of the rest of
the portfolio and the need for follow-on funding over the
coming months.
Rovco Ltd
In March 2022, Rovco, a leading provider of autonomous
and cloud-managed robotics for subsea surveys in
off shore wind and oil fi eld decommissioning, received
a £0.5 million follow-on investment from the Company
as part of a larger round with various new institutional
investors. The investment will be used to further develop
Rovco’s technical capabilities and alleviate pressure on
working capital requirements.
Hexarad Group Limited
In August 2022, a £0.7 million follow-on investment was
made in Hexarad Group, an early-stage, high-growth
healthcare technology company, providing teleradiology
services to NHS Trusts and UK private healthcare
customers. The investment will be used to accelerate
the company’s growth plans in response to signifi cant
marketdemand.
Spektrix Limited
In November 2022, a follow-on investment of £0.9
million was made in Spektrix, alongside a US institutional
investor. Spektrix is an enterprise software company
providing ticketing, CRM, marketing and fundraising
software to companies in the performing arts sector.
The investment will be used to support growth plans
forthebusiness.
Realisations
The M&A climate was robust, particularly in the fi rst half
of 2022 and the Manager was pleased to report some
particularly strong realisations. The Manager continues
to engage with a range of potential acquirers of several
portfolio companies, with demand for these high-growth
businesses demonstrated by both private equity and
tradebuyers.
TFC Europe Limited
In June 2022, the Company sold its holding in TFC,
a market-leading manufacturing operations services
provider, to AFC, an Ohio-based distributor of fasteners
backed by Bertram Capital, a California-based mid-market
private equity house. This resulted in proceeds of £15.4
million at completion, representing a particularly strong
return of 12.4x the original investment made by the
Company and Foresight 3 VCT plc, which merged in
June2017.
With offi ces in the UK and Germany, TFC is predominantly
a supplier of technical fasteners across Europe. Since the
original investment, the Manager had taken a proactive
approach to supporting TFC, helping to extend its network
in the UK and Germany. TFC rapidly expanded its vendor
managed inventory service, grew its customer base, and
became a market-leading service provider to SMEs and
international global brands operating across a range of
industries. The Manager supported three acquisitions
as well as considerable investment in new and existing
facilities, opening new sites in England, Northern Ireland
and Czechia.
Codeplay Software Limited
In June 2022, the Company completed the sale of
Codeplay, one of the UK’s leading providers of solutions
for the semiconductor industry, to a leading US chip
manufacturer.
Since the Manager's investment in 2018, Codeplay
continued to develop a suite of high-performance software
assets and is positioned at the centre of an increasingly
important ecosystem that improves the performance
of chips, used in high-performance and low-power
environments, from supercomputers to self-driving cars.
It has also developed new routes to market, selling its
solutions to chip companies and downstream users, such
as manufacturers of diagnostic healthcare equipment.
This transaction generated proceeds of £4.3 million,
representing an exceptional return of 15.9x and an IRR
of nearly 100%.
MANAGER’S REVIEW CONTINUED
16
FORESIGHT ENTERPRISE VCT PLC Annual Report and Accounts 31 December 2022
Realisations in the year ended 31 December 2022
Accounting Valuation at
cost at date Realised 31 December
of disposal Proceeds gain 2021
Company Detail (£) (£) (£) (£)
TFC Europe Limited Full disposal 2,149,307 15,407,883 13,258,576 10,330,550
Codeplay Software Limited
1
Full disposal 300,000 4,300,599 4,000,599 1,697,425
Spektrix Limited Loan repayment 618,000 618,000 — 618,000
Specac International Limited Loan repayment 500,000 500,000 — 500,000
Positive Response Corporation Ltd Loan repayment 125,000 125,000 — 125,000
Total disposals 3,692,307 20,951,482 17,259,175 13,270,975
1. A further £418,000 of deferred consideration has been reflected in the accounts.
Pipeline
At 31 December 2022, the Company had cash reserves
of £24.8 million, which will be used to fund new
and follow-on investments, buybacks and running
expenses. The Manager is seeing its pipeline of potential
investments grow and has a number of opportunities
under exclusivity or in due diligence, which continue
toprogress.
The volatility caused by political uncertainty, rising
energy costs and broader price inflation resulted
in a challenging period for many companies, with
staff retention and exaggerated wage expectations
causing concern for many. This does, however, create
opportunities, and the Manager is well placed to consider
these as they arise, whilst supporting existing portfolio
companies with follow-on investments as needed.
In the medium term and long term, the Manager expects
that current unpredictability will present attractive
investment opportunities. It is able to access these
opportunities through its wide and proprietary network
of contacts around the country, and considers the
Company’s strategy to be well-suited to market volatility,
due to its balanced mix of companies across sectors and
stages, experienced investment team and network of
high-qualitychairs.
Post-year end activity
Sprintroom Limited
In January 2023, £1.0 million of growth capital was
invested in Sprintroom, which trades as Sprint Electric.
Thebusiness designs and manufactures drives for
controlling electric motors in light and heavy industrial
applications, as well as recovering and reusing otherwise
lost energy. The investment will be used to further
develop and commercialise novel alternating current
variable speed drive technology.
IMMJ Systems Limited
In February 2023, £0.7 million was invested in IMMJ,
a clinical electronic document management solution
supplier to the NHS. The investment will be used to grow
the leadership team and bolster the business’ abilities to
support the digitisation of records, providing easy and
efficient access to patient records for clinical care across
the NHS.
Firefish Software Limited
In March 2023, the Company invested £1.5million in
Firefish Software Limited, a Glasgow based customer
relationship management and marketing software
platform targeting the recruitment sector. The funding
will be used to further develop the platform in order
to attract a larger enterprise level customer base and
expand its outbound sales team.
FORESIGHT ENTERPRISE VCT PLC Annual Report and Accounts 31 December 2022 17
GOVERNANCESTRATEGIC REPORT FINANCIAL STATEMENTS
Post-year end activity continued
NorthWest EHealth Limited
In March 2023, the Company invested £1.5 million in
NorthWest EHealth, which provides software and services
to the clinical trials market, allowing pharmaceutical
companies and contract research organisations to
conduct feasibility studies, recruit patients and run trials.
The investment will be used to support the delivery of
a 100% growth in real world trial delivery in FY23, while
completing building the company's Connexon platform;
to be compatible with all UK healthcare data sources by
year end.
Ten Health & Fitness Limited
In March 2023, Ten Health, a multi-site operator in the
boutique health, wellbeing and fi tness market, received
an additional investment of £0.4 million. The funding
will enable the company to complete its new fl agship
Kings Cross site and support the company’s transition
toprofi tability from Q1 2023.
Five Wealth Limited
In March 2023, the Company invested £0.7 million in
Five Wealth, an established boutique fi nancial planning
business operating across the North West of England,
headquartered in Manchester. This growth capital
investment will be used to support increased marketing
and advertising to drive top line growth and greater
regulatory and compliance costs which are forecast to
increase commensurately with AUM.
Red Flag Alert Limited
In March 2023, the Company invested £1.8 million in
Reg Flag Alert, a Manchester based proprietary SaaS
intelligence platform with modular capabilities spanning
compliance, prospecting, risk management and fi nancial
health assessments. The growth capital will be used
to expand the sales team and alongside an increased
marketing budget is expected to accelerate new client
acquisition.
Additive Manufacturing Technologies Ltd ("AMT")
In April 2023, the Company invested £0.1 million in
AMT, which manufactures systems that automate the
post-processing of 3D printed parts. The investment
will be used to cover short-term working capital
requirements, as the business continues to grow sales
and pushes towards sustainable profi tability.
Innovation Consulting Group Limited ("GovGrant")
In March 2023, the Company announced the impressive
exit of GovGrant to Source Advisors, a US corporate buyer
backed by BV Investment Partners. GovGrant is one of the
UK’s leading providers of R&D tax relief, patent box relief
and other innovation services. The transaction generated
proceeds of £6.8 million at completion. When added to
£0.7 million of cash returned to date, this implies a total
cash-on-cash return of 4.5 times the capital of £1.65 million
invested in October 2015, equivalent to an IRR of 25%.
Since the original investment in 2015, the Manager had
helped GovGrant through a period of material growth
during which it supported the R&D activities of a growing
number of customers. GovGrant’s high levels of service
and innovative products, such as the growing patent box
off ering, have contributed to driving innovation in the UK
economy. The Manager had taken a proactive approach
to supporting the exceptional senior management team,
all of whom were introduced to the business during the
investment period.
Datapath Group Limited
In March 2023, the Company announced the notable
exit of Datapath, a global leader in the provision of
visual solutions. The transaction generated proceeds of
£10.2million at completion with an additional £2.3million
payable over the next 24 months. When added to
£10.8million of cash returned to date, this implies a total
cash-on-cash return of 11.7 times the original investment,
equivalent to an IRR of 38% since the initial investment
in2007.
Since the original investment, the Manager had supported
Datapath through a period of material growth with
revenues growing from approximately £7 million to
£25 million. Datapath has developed a market leading
hardware and software product suite for the delivery
of multi-screen displays and video walls which are sold
globally to a diverse customer base across a range
ofsectors.
MANAGER’S REVIEW CONTINUED
18
FORESIGHT ENTERPRISE VCT PLC Annual Report and Accounts 31 December 2022
GOVERNANCESTRATEGIC REPORT FINANCIAL STATEMENTS
FORESIGHT ENTERPRISE VCT PLC Annual Report and Accounts 31 December 2022 19
MANAGER’S REVIEW CONTINUED
Key portfolio developments
In the year, the valuation of investments increased by £8.7 million.
Material changes in valuation, defined as increasing or decreasing by £1.0 million or more since 31December2021,
are detailed below. Updates on these companies are included below, or in the Top TenInvestments section on
pages 26 to 30.
20 FORESIGHT ENTERPRISE VCT PLC Annual Report and Accounts 31 December 2022
Biotherapy Services Limited
Biotherapy Services is an early-stage biopharma
company that has developed a platform treatment for use
in wound healing, initially for the treatment of diabetic
foot ulcers but with additional use in cardiac issues and
lung treatments. The company had been progressing
aclinicaltrial.
31 December 2022 update
Recruitment into the RAPID gel trial has now been
stopped as a result of continued slow progress. The
trial will be formally closed to allow the publication of
positive interim data. The company is still attempting to
raise funds; however, despite several positive meetings,
no heads of terms have been received and there is a
substantial risk that no additional funding can be secured.
If no funding isreceived, the company will pursue a sale.
Key valuation changes in the year
Valuation
change
Company Valuation methodology (£)
Callen-Lenz Associates Limited Discounted revenue multiple 2,865,819
Hospital Services Group Limited Discounted earnings multiple 1,174,683
Spektrix Limited Price of last funding round 1,047,483
Innovation Consulting Group Limited
1
Discounted offer received (1,702,886)
Biofortuna Ltd Discounted revenue multiple (1,845,281)
Biotherapy Services Limited Nil value (2,378,376)
Datapath Group Limited
2
Discounted offer received (3,672,136)
1. £904,000 of this valuation decrease was recovered upon final exit in March 2023.
2. £1,941,000 of this valuation decrease was recovered upon final exit in March 2023.
Outlook
2022 has been a year of volatility for most asset
classes, as rising inflation, increased energy costs and
higher interest rates impacted business performance,
particularly in the second half of the year. In global equity
markets, the MSCI World Index fell by 10% over the
12months, while the tech-heavy NASDAQ fell by more
than30%.
In the UK, business and consumer confidence was dented
by political uncertainty and broader price inflation.
Russia’s invasion of Ukraine had a particularly acute
effect on the UK economy as the price of electricity rose
sharply due to the country’s reliance on natural gas for
power generation. In many markets, businesses began
to invest in growth after an uncertain COVID-19 period
at the same time that global supply chain issues resulted
in long lead times for products, weighing on sales and
increasing working capital requirements. Many businesses
in the Company’s portfolio faced challenges with both
staff retention and hiring, as the number of vacancies and
wage inflation drove staff churn. This required careful
attention from management teams and the Manager's
board members, but often presented an opportunity to
focus on efficiency by retaining the besttalent.
Despite this backdrop, the Company’s portfolio
performed strongly in the year, achieving a 4.5% NAV
Total Return for its Shareholders, with exceptional
exits from the likes of TFC and Codeplay contributing
in the Company's dividend of 7.3p per share for the
year, representing an attractive 12.5% dividend yield.
TheCompany’s strategy is well-suited to market volatility,
given its diverse sector allocation and the mix of later and
earlier-stage growth companies in the portfolio, many of
which are profitable and so typically more resilient in a
downturn.
Looking forward to 2023, the UK market is likely to
remain unpredictable. While some forecasters are
expecting interest rates to peak in the summer, the
labour market remains stubbornly tight and inflation
persistent, meaning that rates may remain elevated for
a longer period. While a recession has been avoided to
date, balancing rate increases with current low growth
and productivity rates is a difficult task for politicians
andrate-setters. The range of outcomes for SMEs is
likely to be wide, and so a balanced approach to portfolio
construction is prudent, alongside providing hands-on
support for management teams as they navigate this
environment.
This is not a reason to be pessimistic. The UK remains a
dynamic economy, attracting some of the best global
talent in technology, life sciences, engineering and
financial services among many others, while its cities
remain a destination for workers and tourists alike.
The Manager believes that the UK has great potential
in the medium and long term with many competitive
advantages over its neighbours and more distant
trading partners, and this temporary pullback is already
presenting unique investment opportunities, which we
are able to access through our wide and proprietary
network of contacts around the country. Aweaker
sterling also attracts overseas acquirers to the UK, such
as the US trade buyers for Codeplay, TFC and other exits.
The Manager is pleased with the overall performance
of the portfolio over the past 12 months, especially
in these challenging times, and looks forward to a
further improvement as labour markets loosen, inflation
reduces and interest rates peak and reverse. While the
market remains uncertain, the Manager expects to see
a sustained high level of activity from UK companies
seeking growth capital and expects VCTs to remain an
attractive source of capital for entrepreneurs. This is
driven by good relative performance of the Company,
supported by its diverse portfolio and high-touch
approach to supporting management teams and SMEs
inachieving their full potential.
James Livingston
on behalf of Foresight Group LLP
Co-Head of Private Equity
28 April 2023
FORESIGHT ENTERPRISE VCT PLC Annual Report and Accounts 31 December 2022 21
GOVERNANCESTRATEGIC REPORT FINANCIAL STATEMENTS
Name Roxy Leisure Holdings Limited
Location Manchester
Website www.roxyleisure.co.uk
Industry Consumer & Leisure
Foresight Enterprise VCT
plc commitment
£2.5 million
Foresight Enterprise VCT
plc ownership %
5.6%
Stage Scale up stage
Investment date December 2019
Total Foresight Group LLP
commitment
£9.5 million (includes £2.5 million of co-investment
from Foresight VCT plc and £4.5 million
of co-investment from Foresight Regional
InvestmentLP)
ROXY LEISURE
HOLDINGS LIMITED
CASE STUDY
In December 2019, the Company invested £1.5 million in
Roxy Leisure, a competitive socialising bar group which
now operates 14 venues across nine cities throughout
theUK. The Company provided a further £1.0 million
offunding in December 2020.
Roxy Leisure is aligned to Sustainable Development
Goal8 (Decent Work and Economic Growth).
Awareness
As a small family-run business still in its development
stage, Roxy had limited awareness of ESG principles
at investment. Since investment, ESG awareness has
markedly increased, with key initiatives regularly
discussed at board level and now embedded within
thecompany’s processes.
Environment
Roxy has dramatically reduced single-use plastics across
the business. No plastic straws or drinks cups are used
and only canned and bottled drinks are sold, with all
related waste recycled.
Energy effi ciency has been a key focus since investment.
The business now employs a full-time maintenance
and site improvement team that has energy effi ciency
improvements as one of its key targets. All new sites are
built with LED lighting as standard whilst legacy sites are
being retrofi tted with LEDs.
Roxy has recently trialled a heat recapturing system at
its Sheffi eld site, which is intended to become a standard
feature in all new site builds if successful.
22 FORESIGHT ENTERPRISE VCT PLC Annual Report and Accounts 31 December 2022
Social
Since investment Roxy has created 319 jobs. Engagement
with both staff and customers is very strong and
embedded across the organisation, which is even more
important as the business grows. Weekly customer
feedback surveys are conducted, with results analysed
and presented to the board each month to support
continuous improvement. Internally, several staff systems
from staff -only social medial accounts to internal
communications tools, are utilised to ensure constant staff
engagement across all teams, supporting the company’s
strong culture.
Staff incentives are now also partially aligned with
engagement feedback scores to promote continuous
improvement.
Governance
Since investment, to strengthen the senior management
team, the Manager introduced Mark McQuater as chair. Mark
is a former chief executive of Revolution Bar Group, founder
chief executive of Barracuda Group, and managing director
of JD Wetherspoon. His signifi cant industry expertise and
senior leadership experience within a main list plc has
signifi cantly enhanced Roxy’s governance practices.
A managing director, fi nance director, fi nancial controller,
operations director and food & beverage manager are
amongst several senior management roles created since
investment that support improved compliance, policy
adoption and governance throughout the business.
Third-party interactions
The company, supported by its scale, now works closely
with key suppliers to plan ahead for future site builds and
refurbishment projects by ordering increased quantities
of key equipment and materials in advance, which
dramatically reduces the level of shipping costs and
carbon emissions associated with material transport.
All key equipment, such as bowling lanes, shuffl eboards
and arcade machines, comes from overseas suppliers.
Ordering in bulk and forward planning makes a signifi cant
diff erence to the logistical and environmental burden.
This is further supported by Roxy’s investment in a
warehousing facility for its projects team, which looks after
all new site development and maintenance. This storage
and development facility is key to enabling the shift to bulk
advanced ordering.
GOVERNANCESTRATEGIC REPORT FINANCIAL STATEMENTS
FORESIGHT ENTERPRISE VCT PLC Annual Report and Accounts 31 December 2022 23
Name NorthWest EHealth Limited
Location Manchester
Website www.nweh.co.uk
Industry Healthcare
Foresight Enterprise VCT
plc commitment
£3.0 million (£1.5 million invested post year end in
March 2023)
Foresight Enterprise VCT
plc ownership %
13.9%
Stage Growth stage
Investment date June 2021
Total Foresight Group LLP
commitment
£6.0 million (£3.0 million invested post year end in
March 2023; includes co-investment of £3.0 million
from Foresight VCT plc)
In May 2021, the Company invested £1.5 million
growth capital in NWEH, a Manchester-based
technology-enabled provider of software and services
to the real world clinical trials market. The Company
provided a further £1.5 million of funding in March 2023.
Awareness
The company’s products signifi cantly improve outcomes
for both pharmaceutical researchers and patients
alike, since NWEH allows better trial design and faster
recruitment of the most appropriate subjects, ultimately
resulting in faster and safer drug development.
Since investment, ESG awareness has improved, with
topics now regularly discussed at board level.
Third-party interactions
NWEH was originally established as a partnership
between two NHS organisations and Manchester
University. These parties remain closely involved in the
business as shareholders. NWEH leverages its ability to
build trusting relationships with data “nodes”, such as
NHS trusts, to improve outcomes for trial subjects and
customers.
NWEH’s products are focused on accessing healthcare
records in a compliant way. It is the only company to have
achieved regulatory approval for this in a stage 3 trial.
NWEH is therefore contributing to new governance and
regulatory standards in the sector.
NORTHWEST EHEALTH
LIMITED (“NWEH”)
CASE STUDY
24 FORESIGHT ENTERPRISE VCT PLC Annual Report and Accounts 31 December 2022
Social
NWEH’s aim is to introduce new ways of running clinical
trials to the global pharma market. The goal of this is
to reduce the cost of running clinical trials, increase the
chances of their success, and allow the effi cacy of drugs
to be tested in a real-world setting. All of these should
lead to an increase in the number of successful trials run,
which in turn should lead to more treatments coming to
market. NWEH’s core activity therefore has a societal
benefi t, contributing to a healthier population.
Governance
Due to operating in a highly regulated environment and
being backed by public sector bodies, NWEH already had
strong governance processes in place at investment. This
included a formal board and several sub-committees, as
well as monthly management reports and an annual audit.
However, management information and controls have
markedly improved in the past year with the Manager’s
support.
Environment
NWEH has a formalised environmental policy that
includes recycling and remote working. Whilst the
company itself has a minimal carbon footprint, the move
to real world trials should reduce in-clinic visits, which
will likely have a positive impact on the amount of travel
required bypatients.
GOVERNANCESTRATEGIC REPORT FINANCIAL STATEMENTS
FORESIGHT ENTERPRISE VCT PLC Annual Report and Accounts 31 December 2022 25
BY VALUE AS AT 31 DECEMBER 2022
SPECAC
INTERNATIONAL LIMITED
DATAPATH
GROUP LIMITED
HOSPITAL SERVICES
GROUP LIMITED
ROXY LEISURE
HOLDINGS LIMITED
KENT www.specac.com DERBYSHIRE www.datapath.co.uk
BELFAST www.hsl.ie LEEDS www.roxyleisure.co.uk
SECTOR: INDUSTRIALS & MANUFACTURING SECTOR: TECHNOLOGY, MEDIA
&TELECOMMUNICATIONS
SECTOR: HEALTHCARE SECTOR: CONSUMER & LEISURE
Specac International is a leading manufacturer of high
specifi cation sample analysis and preparation equipment
used in testing and research laboratories worldwide,
primarily supporting infrared spectroscopy.
Datapath Group is a UK manufacturer of multi-screen
computer graphics cards and video capture hardware
and software, specialising in video wall and data wall
technology.
Hospital Services Group (“HSL”) distributes, installs
and maintains high-quality healthcare equipment and
consumables from global partners such as Hologic,
Fujifi lm and Shimadzu. HSL has strengths in the radiology,
ophthalmic, endoscopy and surgical sectors, as well as a
building presence in telehealth and broader healthcare IT.
Roxy Leisure (“Roxy”) operates competitive socialising
bars throughout the UK. The venues contain a range of
games and activities from tenpin bowling, table tennis,
shuffl eboard and pool to more innovative activities such as
ice free curling and batting cages. As at December 2022 the
business operated 13 bars across eight cities.
31 December 2022 update
Specac International had a very strong year, bedding in
a much-improved team, including new engineering and
production managers, while focusing on improved sales
processes and best-in-class production. The business also
invested in its product development team to accelerate the
output from its R&D pipeline. Sales and EBITDA were both
ahead of budget and a good year of growth is forecast.
31 December 2022 update
The company’s new product, Aetria, is being rolled out, with
showrooms opening at strategically located sites globally.
Thepipeline continues to build, although at a slower pace than
forecast, partly due to temporarily subdued markets. Supply
chain shortages have had an impact on revenues and stock
management, which are likely to be temporary. The company’s
approach to managing these post pandemic issues refl ect
the strong cash position and long-term outlook. The board
continues to support the business as it navigates the steady
growth in this new product suite.
31 December 2022 update
HSL had an excellent year of trading, refl ecting resilience
in healthcare spending, with steady growth in maintainable
earnings. Although profi tability is below FY2020 levels,
the performance is now more sustainable as PPE sales now
make up a small fraction of the previous year. There was
a particularly strong performance from the MDI division
which experienced strong demand for ultrasound systems.
International supply chains have been volatile with longer
lead times and price infl ation, however trading continues
tobestrong.
31 December 2022 update
Roxy had a strong year delivering robust revenues from
existing sites whilst signifi cantly expanding the site footprint,
opening four new venues in Leeds, Edinburgh, Sheffi eld and
Bristol. The company has a strong pipeline of new openings in
2023 with a second site in Birmingham having opened early in
the new year.
Initial investment April 2015
Amount invested (£) 1,300,000
Accounting cost (£) 2,054,761
Valuation (£) 10,788,670
Basis of valuation Discounted earnings multiple
Equity held (%) 42.6%
Income received in the year (£) 96,315
Cash returned up to
31December 2022 (£) 1,383,016
Initial investment September 2007
Amount invested (£) 2,000,000
Accounting cost (£) 11,081,243
Valuation (£) 10,491,390
Basis of valuation Discounted off er received
Equity held (%) 26.7%
Income received in the year (£) —
Cash returned up to
31December 2022 (£) 10,770,283
Initial investment April 2015
Amount invested (£) 1,200,000
Accounting cost (£) 1,200,000
Valuation (£) 6,850,996
Basis of valuation Discounted earnings multiple
Equity held (%) 16.3%
Income received in the year (£) 98,257
Cash returned up to
31December 2022 (£) 221,280
Initial investment December 2019
Amount invested (£) 2,500,000
Accounting cost (£) 2,500,000
Valuation (£) 5,937,355
Basis of valuation Discounted earnings multiple
Equity held (%) 5.6%
Income received in the year (£) 29,490
Cash returned up to
31December 2022 (£) 29,490
£’000
Year ended
31 March
2022
Year ended
31 March
2021
Sales 13,727 11,093
Profi t before tax 1,785 733
Retained profi t 1,522 547
Net assets 5,776 4,673
£’000
Year ended
31 March
2022
Year ended
31 March
2021
Sales 25,878 21,845
Profi t before tax 3,816 2,265
Retained profi t 3,498 2,573
Net assets 29,609 26,111
£’000
Year ended
30 September
2021
Year ended
30 September
2020
Sales 30,789 44,965
Profi t before tax 1,755 6,113
Retained profi t 970 5,028
Net assets 4,687 3,663
£’000
Year ended
31 December
2021
Year ended
31 December
2020
Sales 12,136 1,712
Profi t/(loss) before tax 1,749 (2,269)
Retained profi t/(loss) 1,410 (2,269)
Net assets/(liabilities) 867 (394)
TOP TEN INVESTMENTS
Portfolio
For the investments below held by Foresight 3 VCT plc (“F3”) pre-merger on 22 June 2017, the amount invested refers
to the initial amount invested by F3 and the Company. The accounting cost includes both the initial investment by both
funds andalso the valuation of the F3 investment at the point it was transferred to the Company.
26 FORESIGHT ENTERPRISE VCT PLC Annual Report and Accounts 31 December 2022
SPECAC
INTERNATIONAL LIMITED
DATAPATH
GROUP LIMITED
HOSPITAL SERVICES
GROUP LIMITED
ROXY LEISURE
HOLDINGS LIMITED
KENT www.specac.com DERBYSHIRE www.datapath.co.uk
BELFAST www.hsl.ie LEEDS www.roxyleisure.co.uk
SECTOR: INDUSTRIALS & MANUFACTURING SECTOR: TECHNOLOGY, MEDIA
&TELECOMMUNICATIONS
SECTOR: HEALTHCARE SECTOR: CONSUMER & LEISURE
Specac International is a leading manufacturer of high
specifi cation sample analysis and preparation equipment
used in testing and research laboratories worldwide,
primarily supporting infrared spectroscopy.
Datapath Group is a UK manufacturer of multi-screen
computer graphics cards and video capture hardware
and software, specialising in video wall and data wall
technology.
Hospital Services Group (“HSL”) distributes, installs
and maintains high-quality healthcare equipment and
consumables from global partners such as Hologic,
Fujifi lm and Shimadzu. HSL has strengths in the radiology,
ophthalmic, endoscopy and surgical sectors, as well as a
building presence in telehealth and broader healthcare IT.
Roxy Leisure (“Roxy”) operates competitive socialising
bars throughout the UK. The venues contain a range of
games and activities from tenpin bowling, table tennis,
shuffl eboard and pool to more innovative activities such as
ice free curling and batting cages. As at December 2022 the
business operated 13 bars across eight cities.
31 December 2022 update
Specac International had a very strong year, bedding in
a much-improved team, including new engineering and
production managers, while focusing on improved sales
processes and best-in-class production. The business also
invested in its product development team to accelerate the
output from its R&D pipeline. Sales and EBITDA were both
ahead of budget and a good year of growth is forecast.
31 December 2022 update
The company’s new product, Aetria, is being rolled out, with
showrooms opening at strategically located sites globally.
Thepipeline continues to build, although at a slower pace than
forecast, partly due to temporarily subdued markets. Supply
chain shortages have had an impact on revenues and stock
management, which are likely to be temporary. The company’s
approach to managing these post pandemic issues refl ect
the strong cash position and long-term outlook. The board
continues to support the business as it navigates the steady
growth in this new product suite.
31 December 2022 update
HSL had an excellent year of trading, refl ecting resilience
in healthcare spending, with steady growth in maintainable
earnings. Although profi tability is below FY2020 levels,
the performance is now more sustainable as PPE sales now
make up a small fraction of the previous year. There was
a particularly strong performance from the MDI division
which experienced strong demand for ultrasound systems.
International supply chains have been volatile with longer
lead times and price infl ation, however trading continues
tobestrong.
31 December 2022 update
Roxy had a strong year delivering robust revenues from
existing sites whilst signifi cantly expanding the site footprint,
opening four new venues in Leeds, Edinburgh, Sheffi eld and
Bristol. The company has a strong pipeline of new openings in
2023 with a second site in Birmingham having opened early in
the new year.
Initial investment April 2015
Amount invested (£) 1,300,000
Accounting cost (£) 2,054,761
Valuation (£) 10,788,670
Basis of valuation Discounted earnings multiple
Equity held (%) 42.6%
Income received in the year (£) 96,315
Cash returned up to
31December 2022 (£) 1,383,016
Initial investment September 2007
Amount invested (£) 2,000,000
Accounting cost (£) 11,081,243
Valuation (£) 10,491,390
Basis of valuation Discounted off er received
Equity held (%) 26.7%
Income received in the year (£) —
Cash returned up to
31December 2022 (£) 10,770,283
Initial investment April 2015
Amount invested (£) 1,200,000
Accounting cost (£) 1,200,000
Valuation (£) 6,850,996
Basis of valuation Discounted earnings multiple
Equity held (%) 16.3%
Income received in the year (£) 98,257
Cash returned up to
31December 2022 (£) 221,280
Initial investment December 2019
Amount invested (£) 2,500,000
Accounting cost (£) 2,500,000
Valuation (£) 5,937,355
Basis of valuation Discounted earnings multiple
Equity held (%) 5.6%
Income received in the year (£) 29,490
Cash returned up to
31December 2022 (£) 29,490
£’000
Year ended
31 March
2022
Year ended
31 March
2021
Sales 13,727 11,093
Profi t before tax 1,785 733
Retained profi t 1,522 547
Net assets 5,776 4,673
£’000
Year ended
31 March
2022
Year ended
31 March
2021
Sales 25,878 21,845
Profi t before tax 3,816 2,265
Retained profi t 3,498 2,573
Net assets 29,609 26,111
£’000
Year ended
30 September
2021
Year ended
30 September
2020
Sales 30,789 44,965
Profi t before tax 1,755 6,113
Retained profi t 970 5,028
Net assets 4,687 3,663
£’000
Year ended
31 December
2021
Year ended
31 December
2020
Sales 12,136 1,712
Profi t/(loss) before tax 1,749 (2,269)
Retained profi t/(loss) 1,410 (2,269)
Net assets/(liabilities) 867 (394)
Company results are taken from the most recent
publicly available fi nancial statements.
FORESIGHT ENTERPRISE VCT PLC Annual Report and Accounts 31 December 2022 27
GOVERNANCESTRATEGIC REPORT FINANCIAL STATEMENTS
BY VALUE AS AT 31 DECEMBER 2022
TOP TEN INVESTMENTS CONTINUED
INNOVATION CONSULTING
GROUP LIMITED
CALLEN-LENZ
ASSOCIATES LIMITED
TLS
HOLDCO LIMITED
AEROSPACE TOOLING
CORPORATION LIMITED
HERTFORDSHIRE www.govgrant.co.uk SALISBURY www.callenlenz.com LONDON www.truelens.co.uk DUNDEE www.atlturbineservices.co.uk
SECTOR: BUSINESS SERVICES SECTOR: INDUSTRIALS & MANUFACTURING SECTOR: OTHER SECTOR: INDUSTRIALS & MANUFACTURING
Innovation Consulting Group, trading as GovGrant, provides
support services and advice to UK-based SME businesses
seeking to gain access to Government tax incentives.
Callen-Lenz develops, designs and manufactures air
vehicles, vehicle components and navigation and
communication software for high performance unmanned
aerial vehicles ("UAVs") globally.
True Lens Services (“TLS”) is based in Barwell,
Leicestershire and is a specialist provider of lens
manufacturing, refurbishment and servicing to the
filmandtelevision markets.
Founded in 2007, Aerospace Tooling Corporation (“ATL”) is
a niche engineering company based in Dundee. ATL provides
specialist inspection, maintenance, repair and overhaul
services for components in high-specification aerospace and
turbine engines.
31 December 2022 update
FY22 was a volatile year for trading due to changes in the
market around the R&D scheme. This resulted in a drop
in revenue and EBITDA. Trading has now stabilised and
GovGrant is currently on track to demonstrate growth in FY23.
The company is increasingly targeting larger customers in a
strategic shift.
31 December 2022 update
Callen-Lenz continues to see sustained revenue growth and is
investing in outsourced manufacturing to meet future demand
for aircraft. While orderbook growth has been modest, the
pipeline has grown significantly. Maintaining close links with
customers will be key for anticipating future demand, which is
supported by R&D work on defence programmes.
31 December 2022 update
The principal driver of TLS’ performance has been the lens
rehousing activities. The TV and film production market is
very active in the post-pandemic period due to the backlog
in content generation over the last 18 months; this has
created strong momentum and demand for TLS’ services.
Thebusiness has a healthy order book and has recently
acquired a new property which will facilitate further growth
over the next few years.
31 December 2022 update
ATL is performing solidly. Customer price increases are
beginning to flow through ahead of ATL’s increase in energy
prices from September 2023. A new UK-based sales director
has been appointed to focus on the domestic market which is
viewed as key to future growth.
Initial investment September 2015
Amount invested (£) 1,650,000
Accounting cost (£) 1,938,046
Valuation (£) 5,426,677
Basis of valuation Discounted offer received
Equity held (%) 36.7%
Income received in the year (£) —
Cash returned up to
31December 2022 (£) 656,248
Initial investment August 2021
Amount invested (£) 2,375,000
Accounting cost (£) 2,375,000
Valuation (£) 5,403,103
Basis of valuation Discounted revenue multiple
Equity held (%) 12.5%
Income received in the year (£) —
Cash returned up to
31December 2022 (£) —
Initial investment December 2015
Amount invested (£) 100
Accounting cost (£) 100
Valuation (£) 4 ,677,028
Basis of valuation Discounted earnings multiple
Equity held (%) 42.5%
Income received in the year (£) —
Cash returned up to
31December 2022 (£) —
Initial investment June 2013
Amount invested (£) 2,000,000
Accounting cost (£) 415,255
Valuation (£) 4,302,320
Basis of valuation Discounted earnings multiple
Equity held (%) 47.0%
Income received in the year (£) —
Cash returned up to
31December 2022 (£) 1,536,849
£’000
Year ended
30 September
2022
Year ended
30 September
2021
Sales N/A N/A
Profit before tax N/A N/A
Retained profit N/A N/A
Net assets 2,148 2,647
£’000
Year ended
28 February
2022
Year ended
28 February
2021
Sales N/A N/A
Profit before tax N/A N/A
Retained profit N/A N/A
Net assets 3,268 1,593
£’000
Year ended
31 December
2021
Year ended
31 December
2020
Sales — —
Profit before tax 3,235 167
Retained profit 2,620 136
Net assets 2,912 291
£’000
Year ended
30 June
2022
Year ended
30 June
2021
Sales 7,406 7,391
Profit before tax 927 1,120
Retained profit 864 1,207
Net assets 2,637 2,353
In accordance with Section 444 of the Companies Act 2006,
a statement of income has not been delivered in the financial
statements available on Companies House.
In accordance with Section 444 of the Companies Act 2006,
a statement of income has not been delivered in the financial
statements available on Companies House.
28 FORESIGHT ENTERPRISE VCT PLC Annual Report and Accounts 31 December 2022
INNOVATION CONSULTING
GROUP LIMITED
CALLEN-LENZ
ASSOCIATES LIMITED
TLS
HOLDCO LIMITED
AEROSPACE TOOLING
CORPORATION LIMITED
HERTFORDSHIRE www.govgrant.co.uk SALISBURY www.callenlenz.com LONDON www.truelens.co.uk DUNDEE www.atlturbineservices.co.uk
SECTOR: BUSINESS SERVICES SECTOR: INDUSTRIALS & MANUFACTURING SECTOR: OTHER SECTOR: INDUSTRIALS & MANUFACTURING
Innovation Consulting Group, trading as GovGrant, provides
support services and advice to UK-based SME businesses
seeking to gain access to Government tax incentives.
Callen-Lenz develops, designs and manufactures air
vehicles, vehicle components and navigation and
communication software for high performance unmanned
aerial vehicles ("UAVs") globally.
True Lens Services (“TLS”) is based in Barwell,
Leicestershire and is a specialist provider of lens
manufacturing, refurbishment and servicing to the
filmandtelevision markets.
Founded in 2007, Aerospace Tooling Corporation (“ATL”) is
a niche engineering company based in Dundee. ATL provides
specialist inspection, maintenance, repair and overhaul
services for components in high-specification aerospace and
turbine engines.
31 December 2022 update
FY22 was a volatile year for trading due to changes in the
market around the R&D scheme. This resulted in a drop
in revenue and EBITDA. Trading has now stabilised and
GovGrant is currently on track to demonstrate growth in FY23.
The company is increasingly targeting larger customers in a
strategic shift.
31 December 2022 update
Callen-Lenz continues to see sustained revenue growth and is
investing in outsourced manufacturing to meet future demand
for aircraft. While orderbook growth has been modest, the
pipeline has grown significantly. Maintaining close links with
customers will be key for anticipating future demand, which is
supported by R&D work on defence programmes.
31 December 2022 update
The principal driver of TLS’ performance has been the lens
rehousing activities. The TV and film production market is
very active in the post-pandemic period due to the backlog
in content generation over the last 18 months; this has
created strong momentum and demand for TLS’ services.
Thebusiness has a healthy order book and has recently
acquired a new property which will facilitate further growth
over the next few years.
31 December 2022 update
ATL is performing solidly. Customer price increases are
beginning to flow through ahead of ATL’s increase in energy
prices from September 2023. A new UK-based sales director
has been appointed to focus on the domestic market which is
viewed as key to future growth.
Initial investment September 2015
Amount invested (£) 1,650,000
Accounting cost (£) 1,938,046
Valuation (£) 5,426,677
Basis of valuation Discounted offer received
Equity held (%) 36.7%
Income received in the year (£) —
Cash returned up to
31December 2022 (£) 656,248
Initial investment August 2021
Amount invested (£) 2,375,000
Accounting cost (£) 2,375,000
Valuation (£) 5,403,103
Basis of valuation Discounted revenue multiple
Equity held (%) 12.5%
Income received in the year (£) —
Cash returned up to
31December 2022 (£) —
Initial investment December 2015
Amount invested (£) 100
Accounting cost (£) 100
Valuation (£) 4 ,677,028
Basis of valuation Discounted earnings multiple
Equity held (%) 42.5%
Income received in the year (£) —
Cash returned up to
31December 2022 (£) —
Initial investment June 2013
Amount invested (£) 2,000,000
Accounting cost (£) 415,255
Valuation (£) 4,302,320
Basis of valuation Discounted earnings multiple
Equity held (%) 47.0%
Income received in the year (£) —
Cash returned up to
31December 2022 (£) 1,536,849
£’000
Year ended
30 September
2022
Year ended
30 September
2021
Sales N/A N/A
Profit before tax N/A N/A
Retained profit N/A N/A
Net assets 2,148 2,647
£’000
Year ended
28 February
2022
Year ended
28 February
2021
Sales N/A N/A
Profit before tax N/A N/A
Retained profit N/A N/A
Net assets 3,268 1,593
£’000
Year ended
31 December
2021
Year ended
31 December
2020
Sales — —
Profit before tax 3,235 167
Retained profit 2,620 136
Net assets 2,912 291
£’000
Year ended
30 June
2022
Year ended
30 June
2021
Sales 7,406 7,391
Profit before tax 927 1,120
Retained profit 864 1,207
Net assets 2,637 2,353
In accordance with Section 444 of the Companies Act 2006,
a statement of income has not been delivered in the financial
statements available on Companies House.
In accordance with Section 444 of the Companies Act 2006,
a statement of income has not been delivered in the financial
statements available on Companies House.
FORESIGHT ENTERPRISE VCT PLC Annual Report and Accounts 31 December 2022 29
GOVERNANCESTRATEGIC REPORT FINANCIAL STATEMENTS
BY VALUE AS AT 31 DECEMBER 2022
TOP TEN INVESTMENTS CONTINUED
SPEKTRIX
LIMITED
BIOFORTUNA
LTD
LONDON www.spektrix.com WIRRAL www.biofortuna.com
SECTOR: TECHNOLOGY, MEDIA
&TELECOMMUNICATIONS
SECTOR: HEALTHCARE
Spektrix is an enterprise software company, providing
ticketing, CRM, marketing and fundraising software to
venues in the performing arts sector across the UK and US.
Biofortuna, established in 2008, is a molecular diagnostics
business based in the North West. The company has
developed unique expertise in the development and
manufacture of freeze dried, stabilised assays. Biofortuna
develops and contract manufactures on behalf of
customers from the in vitro diagnostics and broader
lifesciencessector.
31 December 2022 update
Spektrix has seen strong growth, with both new client wins in
the US and UK and the arts sector largely recovering following
the significant impact of COVID-19. The company continued
to develop its technology offering and invest in staff in the
UK and US. During the year the business attracted investment
from a US institutional investor to further accelerate growth in
market share.
31 December 2022 update
Biofortuna had a good year of trading; however, rising
energy costs across the UK has impacted profitability. There
continues to be significant projects in the pipeline which are
expected to result in further growth in the next quarter, and
the company plans to invest in new machinery to increase
project scope.
Initial investment December 2018
Amount invested (£) 2,998,350
Accounting cost (£) 2,380,350
Valuation (£) 4,295,837
Basis of valuation Price of last funding round
Equity held (%) 5.1%
Income received in the year (£) 211,507
Cash returned up to
31December 2022 (£) 829,507
Initial investment April 2012
Amount invested (£) 3,517,537
Accounting cost (£) 3,517,537
Valuation (£) 3,746, 570
Basis of valuation Discounted revenue multiple
Equity held (%) 45.0%
Income received in the year (£) —
Cash returned up to
31December 2022 (£) 997,040
£’000
Year ended
31 December
2021
Year ended
31 December
2020
Sales 9,248 7,201
Loss before tax (1,069) (2,268)
Retained loss (522) (2,013)
Net assets 546 1,068
£’000
Year ended
31 March
2022
Year ended
30 March
2021
Sales N/A N/A
Profit before tax N/A N/A
Retained profit N/A N/A
Net assets 5,072 7,704
In accordance with Section 444 of the Companies Act 2006,
a statement of income has not been delivered in the financial
statements available on Companies House.
30 FORESIGHT ENTERPRISE VCT PLC Annual Report and Accounts 31 December 2022
FORESIGHT ENTERPRISE VCT PLC Annual Report and Accounts 31 December 2022 31
GOVERNANCESTRATEGIC REPORT FINANCIAL STATEMENTS
PORTFOLIO OVERVIEW
31 December 2022
31 December 2021
Investment
(by value)
Date of
thefirst
investment Sector Valuation methodology
Investment
(byvalue)
Accounting
cost
£
Valuation
£
Accounting
cost
£
Valuation
£
Addition
£
Disposal
proceeds
£
Net valuation
movement
£
1. Specac International Limited 2015 Industrials & Manufacturing Discounted earnings multiple 1. 2,054,761 10,788,670
1
2,554,761 11,339,823 — (500,000) (51,153)
2. Datapath Group Limited 2007
Technology, Media and
Telecommunications
Discounted offer received 2. 11,081,243 10,491,390
1
11,081,243 14,163,526 — — (3,672,136)
3. Hospital Services Group Limited 2015 Healthcare Discounted earnings multiple 3. 1,200,000 6,850,996
1
1,200,000 5,676,313 — — 1,174,683
4. Roxy Leisure Holdings Limited 2019 Consumer & Leisure Discounted earnings multiple 4. 2,500,000 5,937, 355
1
2,500,000 4,972,145 — — 965,210
5. Innovation Consulting Group Limited 2015 Business Services Discounted offer received 5. 1,938,046 5,426,677
1
1,938,046 7,129,563 — — (1,702,886)
6. Callen-Lenz Associates Limited 2021 Industrials & Manufacturing Discounted revenue multiple 6. 2,375,000 5,403,103
1
2,375,000 2, 537,284 — — 2,865,819
7. TLS Holdco Limited 2015 Other Discounted earnings multiple 7. 100 4,677,028
1
100 3,880,846 — — 796,182
8.
Aerospace Tooling Corporation
Limited
2013 Industrials & Manufacturing Discounted earnings multiple 8. 415,255 4,302,320
1
415,255 4, 297,4 89 — — 4,831
9. Spektrix Limited 2018
Technology, Media and
Telecommunications
Price of last funding round 9. 2,380,350 4,295,837
1
2,118,000 2,986,004 880,350 (618,000) 1 ,047,483
10. Biofortuna Ltd 2012 Healthcare Discounted revenue multiple 10. 3,517,537 3,746,570
1
3,517,537 5,591,851 — — (1,845,281)
11. Fourth Wall Creative Limited 2019 Consumer & Leisure Discounted revenue multiple 11. 2,900,000 3,607,752 2,900,000 2,760,611 — — 847,141
12. Clubspark Group Ltd 2019
Technology, Media and
Telecommunications
Discounted revenue multiple 12. 1,860,000 3, 257, 564 1,860,000 3,269,395 — — (11,831)
13. PH Realisations 2020 Limited 2013
Technology, Media and
Telecommunications
Discounted earnings multiple 13. 2,162,929 2,633,592 2,162,929 2,633,592 — — —
14. Protean Software Limited 2015
Technology, Media and
Telecommunications
Discounted offer received 14. 1,795,229 2,629,229 1,795,229 3,047,422 — — (418 ,193)
15. IMMJ Systems Limited 2020 Healthcare Discounted revenue multiple 15. 1,750,000 2,575,331 1,750,000 1,817,836 — — 757,495
16. Copptech UK Limited 2022 Industrials & Manufacturing Price of last funding round 16. 2,455,000 2,455,000 — — 2,455,000 — —
17. Newsflare Limited 2021
Technology, Media and
Telecommunications
Discounted revenue multiple 17. 2,000,000 2,406,491 2,000,000 2,000,000 — — 406,491
18. Hexarad Group Limited 2021 Healthcare Price of last funding round 18. 1,549,999 2,378,829 850,000 850,000 699,999 — 828,830
19. NorthWest EHealth Limited 2021 Healthcare Discounted revenue multiple 19. 1,500,000 2,334,513 1,500,000 2,677,901 — — (343,388)
20. Ten Health & Fitness Limited 2019 Healthcare Discounted revenue multiple 20. 2,000,000 2,228,835 2,000,000 1,856,781 — — 372,054
21. Titania Group Limited 2020 Business Services Discounted revenue multiple 21. 1,250,000 1,922,333 1,250,000 1,753,007 — — 169,326
22. Itad (2015) Limited 2015 Business Services Discounted earnings multiple 22. 1,371,726 1,911,496 1,371,726 2,355,950 — — (444,454)
23. Steamforged Holdings Limited 2018 Consumer & Leisure Discounted revenue multiple 23. 1,600,000 1,889,053 1,600,000 1,751,287 — — 137,766
32 FORESIGHT ENTERPRISE VCT PLC Annual Report and Accounts 31 December 2022
31 December 2022
31 December 2021
Investment
(by value)
Date of
thefirst
investment Sector Valuation methodology
Investment
(byvalue)
Accounting
cost
£
Valuation
£
Accounting
cost
£
Valuation
£
Addition
£
Disposal
proceeds
£
Net valuation
movement
£
1. Specac International Limited 2015 Industrials & Manufacturing Discounted earnings multiple 1. 2,054,761 10,788,670
1
2,554,761 11,339,823 — (500,000) (51,153)
2. Datapath Group Limited 2007
Technology, Media and
Telecommunications
Discounted offer received 2. 11,081,243 10,491,390
1
11,081,243 14,163,526 — — (3,672,136)
3. Hospital Services Group Limited 2015 Healthcare Discounted earnings multiple 3. 1,200,000 6,850,996
1
1,200,000 5,676,313 — — 1,174,683
4. Roxy Leisure Holdings Limited 2019 Consumer & Leisure Discounted earnings multiple 4. 2,500,000 5,937, 355
1
2,500,000 4,972,145 — — 965,210
5. Innovation Consulting Group Limited 2015 Business Services Discounted offer received 5. 1,938,046 5,426,677
1
1,938,046 7,129,563 — — (1,702,886)
6. Callen-Lenz Associates Limited 2021 Industrials & Manufacturing Discounted revenue multiple 6. 2,375,000 5,403,103
1
2,375,000 2, 537,284 — — 2,865,819
7. TLS Holdco Limited 2015 Other Discounted earnings multiple 7. 100 4,677,028
1
100 3,880,846 — — 796,182
8.
Aerospace Tooling Corporation
Limited
2013 Industrials & Manufacturing Discounted earnings multiple 8. 415,255 4,302,320
1
415,255 4, 297,4 89 — — 4,831
9. Spektrix Limited 2018
Technology, Media and
Telecommunications
Price of last funding round 9. 2,380,350 4,295,837
1
2,118,000 2,986,004 880,350 (618,000) 1 ,047,483
10. Biofortuna Ltd 2012 Healthcare Discounted revenue multiple 10. 3,517,537 3,746,570
1
3,517,537 5,591,851 — — (1,845,281)
11. Fourth Wall Creative Limited 2019 Consumer & Leisure Discounted revenue multiple 11. 2,900,000 3,607,752 2,900,000 2,760,611 — — 847,141
12. Clubspark Group Ltd 2019
Technology, Media and
Telecommunications
Discounted revenue multiple 12. 1,860,000 3, 257, 564 1,860,000 3,269,395 — — (11,831)
13. PH Realisations 2020 Limited 2013
Technology, Media and
Telecommunications
Discounted earnings multiple 13. 2,162,929 2,633,592 2,162,929 2,633,592 — — —
14. Protean Software Limited 2015
Technology, Media and
Telecommunications
Discounted offer received 14. 1,795,229 2,629,229 1,795,229 3,047,422 — — (418 ,193)
15. IMMJ Systems Limited 2020 Healthcare Discounted revenue multiple 15. 1,750,000 2,575,331 1,750,000 1,817,836 — — 757,495
16. Copptech UK Limited 2022 Industrials & Manufacturing Price of last funding round 16. 2,455,000 2,455,000 — — 2,455,000 — —
17. Newsflare Limited 2021
Technology, Media and
Telecommunications
Discounted revenue multiple 17. 2,000,000 2,406,491 2,000,000 2,000,000 — — 406,491
18. Hexarad Group Limited 2021 Healthcare Price of last funding round 18. 1,549,999 2,378,829 850,000 850,000 699,999 — 828,830
19. NorthWest EHealth Limited 2021 Healthcare Discounted revenue multiple 19. 1,500,000 2,334,513 1,500,000 2,677,901 — — (343,388)
20. Ten Health & Fitness Limited 2019 Healthcare Discounted revenue multiple 20. 2,000,000 2,228,835 2,000,000 1,856,781 — — 372,054
21. Titania Group Limited 2020 Business Services Discounted revenue multiple 21. 1,250,000 1,922,333 1,250,000 1,753,007 — — 169,326
22. Itad (2015) Limited 2015 Business Services Discounted earnings multiple 22. 1,371,726 1,911,496 1,371,726 2,355,950 — — (444,454)
23. Steamforged Holdings Limited 2018 Consumer & Leisure Discounted revenue multiple 23. 1,600,000 1,889,053 1,600,000 1,751,287 — — 137,766
FORESIGHT ENTERPRISE VCT PLC Annual Report and Accounts 31 December 2022 33
GOVERNANCESTRATEGIC REPORT FINANCIAL STATEMENTS
PORTFOLIO OVERVIEW CONTINUED
31 December 2022
31 December 2021
Investment
(by value)
Date of
thefirst
investment Sector Valuation methodology
Investment
(byvalue)
Accounting
cost
£
Valuation
£
Accounting
cost
£
Valuation
£
Addition
£
Disposal
proceeds
£
Net valuation
movement
£
24. I-Mist Group Limited 2020 Industrials & Manufacturing Discounted revenue multiple 24. 1,614,500 1,764,252 1,614,500 1,761,491 — — 2,761
25. Strategic Software Applications Ltd 2022 Business Services Price of last funding round 25. 1,750,000 1,750,000 — — 1,750,000 — —
26.
Additive Manufacturing
Technologies Ltd
2021
Technology, Media and
Telecommunications
Discounted revenue multiple 26. 1,737,499 1,737,499 1,737,499 1,737,499 — — —
27. Positive Response Corporation Ltd 2014 Business Services Discounted revenue multiple 27. 884,195 1,710,657 1,009,195 1,592,454 — (125,000) 243,203
28. Homelink Healthcare Limited 2022 Healthcare Discounted revenue multiple 28. 1,075,000 1,693,115 — — 1,075,000 — 618,115
29. Crosstown Dough Ltd 2021 Consumer & Leisure Discounted revenue multiple 29. 1,500,000 1,636,110 1,500,000 1,500,000 — — 136,110
30. So-Sure Limited 2022 Consumer & Leisure Discounted revenue multiple 30. 1,600,000 1,600,000 — — 1,600,000 — —
31. Rovco Limited 2019
Technology, Media and
Telecommunications
Discounted price of last
funding round
31. 1,476,880 1,476,880 950,000 652,316 526,880 — 297,68 4
32. Iphigenie Limited 2015 Other Discounted earnings multiple 32. 100 1,261,403 100 1,272,341 — — (10,938)
33. ABL Investments Limited 2015 Business Services Discounted earnings multiple 33. 1,494,075 1,114,116 1,494,075 769,483 — — 344,633
34. Whitchurch PE 1 Limited 2014 Other Discounted earnings multiple 34. 378,000 632,533 378,000 650,320 — — (17,787)
35. Luminet Networks Limited 2018
Technology, Media and
Telecommunications
Discounted earnings multiple 35. 960,000 621,800 960,000 380,334 — — 241,466
36. Cole Henry PE 2 Limited 2014 Other Discounted earnings multiple 36. 200,000 356,557 200,000 367,766 — — (11,209)
37. Weduc Holdings Limited 2018
Technology, Media and
Telecommunications
Discounted revenue multiple 37. 23,750 258,471 23,750 204,355 — — 54,116
38. Kingsclere PE 3 Limited 2014 Other Discounted earnings multiple 38. 100,000 203,253 100,000 210,887 — — (7,634)
39. Sindicatum Carbon Capital Limited 2007 Other Nil value 39. 544,538 — 544,538 — — — —
40. Vio Healthtech Limited 2018 Healthcare Nil value 40. 675,578 — 675,578 384,544 — — (384,544)
41. Biotherapy Services Limited 2019 Healthcare Nil value 41. 2,250,000 — 2,250,000 2,378,376 — — (2,378,376)
42. TFC Europe Limited 2007 Industrials & Manufacturing Sold 42. — — 2,149,307 10,330,550 — (15,407,883) 5,077,333
43. Codeplay Software Limited 2018
Technology, Media and
Telecommunications
Sold 43. — — 300,000 1,697,425 — (4, 300, 599) 2,603,174
69,921,290 111,966,610 64,626,368 115,238,767 8,987,229 (20,951,482) 8,692,096
1. Top Ten Investments by value shown on pages 26 to 30.
34 FORESIGHT ENTERPRISE VCT PLC Annual Report and Accounts 31 December 2022
31 December 2022
31 December 2021
Investment
(by value)
Date of
thefirst
investment Sector Valuation methodology
Investment
(byvalue)
Accounting
cost
£
Valuation
£
Accounting
cost
£
Valuation
£
Addition
£
Disposal
proceeds
£
Net valuation
movement
£
24. I-Mist Group Limited 2020 Industrials & Manufacturing Discounted revenue multiple 24. 1,614,500 1,764,252 1,614,500 1,761,491 — — 2,761
25. Strategic Software Applications Ltd 2022 Business Services Price of last funding round 25. 1,750,000 1,750,000 — — 1,750,000 — —
26.
Additive Manufacturing
Technologies Ltd
2021
Technology, Media and
Telecommunications
Discounted revenue multiple 26. 1,737,499 1,737,499 1,737,499 1,737,499 — — —
27. Positive Response Corporation Ltd 2014 Business Services Discounted revenue multiple 27. 884,195 1,710,657 1,009,195 1,592,454 — (125,000) 243,203
28. Homelink Healthcare Limited 2022 Healthcare Discounted revenue multiple 28. 1,075,000 1,693,115 — — 1,075,000 — 618,115
29. Crosstown Dough Ltd 2021 Consumer & Leisure Discounted revenue multiple 29. 1,500,000 1,636,110 1,500,000 1,500,000 — — 136,110
30. So-Sure Limited 2022 Consumer & Leisure Discounted revenue multiple 30. 1,600,000 1,600,000 — — 1,600,000 — —
31. Rovco Limited 2019
Technology, Media and
Telecommunications
Discounted price of last
funding round
31. 1,476,880 1,476,880 950,000 652,316 526,880 — 297,68 4
32. Iphigenie Limited 2015 Other Discounted earnings multiple 32. 100 1,261,403 100 1,272,341 — — (10,938)
33. ABL Investments Limited 2015 Business Services Discounted earnings multiple 33. 1,494,075 1,114,116 1,494,075 769,483 — — 344,633
34. Whitchurch PE 1 Limited 2014 Other Discounted earnings multiple 34. 378,000 632,533 378,000 650,320 — — (17,787)
35. Luminet Networks Limited 2018
Technology, Media and
Telecommunications
Discounted earnings multiple 35. 960,000 621,800 960,000 380,334 — — 241,466
36. Cole Henry PE 2 Limited 2014 Other Discounted earnings multiple 36. 200,000 356,557 200,000 367,766 — — (11,209)
37. Weduc Holdings Limited 2018
Technology, Media and
Telecommunications
Discounted revenue multiple 37. 23,750 258,471 23,750 204,355 — — 54,116
38. Kingsclere PE 3 Limited 2014 Other Discounted earnings multiple 38. 100,000 203,253 100,000 210,887 — — (7,634)
39. Sindicatum Carbon Capital Limited 2007 Other Nil value 39. 544,538 — 544,538 — — — —
40. Vio Healthtech Limited 2018 Healthcare Nil value 40. 675,578 — 675,578 384,544 — — (384,544)
41. Biotherapy Services Limited 2019 Healthcare Nil value 41. 2,250,000 — 2,250,000 2,378,376 — — (2,378,376)
42. TFC Europe Limited 2007 Industrials & Manufacturing Sold 42. — — 2,149,307 10,330,550 — (15,407,883) 5,077,333
43. Codeplay Software Limited 2018
Technology, Media and
Telecommunications
Sold 43. — — 300,000 1,697,425 — (4, 300, 599) 2,603,174
69,921,290 111,966,610 64,626,368 115,238,767 8,987,229 (20,951,482) 8,692,096
1. Top Ten Investments by value shown on pages 26 to 30.
FORESIGHT ENTERPRISE VCT PLC Annual Report and Accounts 31 December 2022 35
GOVERNANCESTRATEGIC REPORT FINANCIAL STATEMENTS
In 2022, the Manager was voted “Best VCT
Investment Manager” at the Growth Investor Awards.
ABOUT THE MANAGER
James Livingston
Partner and Co-Head
ofPrivateEquity
Matt Smith
Partner and Co-Head
ofPrivateEquity
Claire Alvarez
Partner
James joined Foresight Group
in 2007 from Deloitte’s strategy
consulting team. James has
18 years of experience and is
a member of the investment
committee and the executive
committee. Alongside Matt Smith,
James manages the private
equity team. James is responsible
for originating, negotiating and
managing growth and buyout
investments in a variety of sectors.
During his time at Foresight
Group, James has led numerous
successful transactions including
growth and replacement capital
transactions. Notably, in 2016 he
led the investment into Simulity,
and nine months later its sale to
ARM, generating 3x return and
a 400% IRR. Other successfully
exited investments include FFX
and Channel Safety Systems.
James holds a Master’s degree in
Natural Sciences and Management
studies from Cambridge University
as well as the CIMA Advanced
Diploma in Management
Accounting.
Matt joined Foresight Group in
2010 from Rothschild, where
he spent six years advising
companies in a range of sectors
on a variety of transaction
types. Matt has 18 years of
experience and is a member
of the investment committee
and the executive committee.
Alongside James Livingston,
Matt manages the private equity
team. Matt is responsible for
originating, negotiating and
managing growth and buyout
investments in a variety of
sectors. He has a particular focus
on ESG considerations and has
helped develop Foresight Group’s
approach. Matt led on a number
of investments including ITAD,
Agar, MPR, Poppy & Jacks and
Mowgli. He has sold a number of
successful investments including
MPR, Flowrite, TFC, Mowgli and
Clubhouse Golf. Matt graduated
from Oxford University with a
Master’s degree in Biological
Sciences and a postgraduate
degree in Physiology.
Claire joined Foresight Group’s
Manchester office in 2016 from
Deloitte where she focused on
transaction and restructuring
services across a range of
corporate finance assignments.
Claire is responsible for sourcing
and executing investments and
providing ongoing strategic
and financial advice to existing
portfolio companies. Claire has
led on a number of investments
in Foresight Regional Investment
LPs including Argyle, DA
Languages, Hedges Direct and
Tudor Group. Claire holds an MBA
from Manchester Business School
as well as a Corporate Finance
Certificate from the Securities
and Investment Institute. She also
holds a degree in Management
from Lancaster University.
36 FORESIGHT ENTERPRISE VCT PLC Annual Report and Accounts 31 December 2022
Management
The Company has appointed Foresight Group LLP (“the Manager”) to provide investment management and
administration services.
The Manager prefers to take a lead role in the companies in which it invests. Larger investments may be syndicated
with other investing institutions, or strategic partners with similar investment criteria. In considering a prospective
investment in a company, particular regard will be paid to:
•
Evidence of high-margin products or services capable of addressing fast-growing markets
•
The company’s ability to sustain a competitive advantage
•
The strength of the management team
•
The existence of proprietary technology
•
The company’s prospects of being sold or achieving a fl otation within three to fi ve years
Foresight Group LLP was voted "Best VCT Investment Manager" at the Growth Investor Awards 2022. The Manager
was most recently shortlisted for “Environmental, Social and Governance – GP”, “UK Small-cap House of the Year
(EV on entry of less than €25m)” and “UK Small-cap Deal of the Year” for the Codeplay Software exit by Real Deals
Private Equity Awards 2022. The Manager was also shortlisted for “Best ESG Investment Fund: Private Equity” at
the ESG Investing Awards 2023, as well as “Venture/Growth Cap House of the year” at the Unquote British Private
Equity Awards 2022. Recent awards also include “Fund Manager of the Year 2018” by the PLC Awards and “Generalist
VCT of the Year” in 2018/19 by Investment Week Tax Effi cient Awards. The Manager was also shortlisted for “Best
EIS Investment Manager 2018” by EISA Awards and “Best Venture Capital Trust Provider 2018” by Moneyfactors
Investment Life & Pensions.
FORESIGHT ENTERPRISE VCT PLC Annual Report and Accounts 31 December 2022 37
GOVERNANCESTRATEGIC REPORT FINANCIAL STATEMENTS
Management continued
The growing private equity investment team of 51 is
proactive and hands-on, with a focus on investing up to
£5million in UK growth companies across a broad range
of sectors.
The team, based out of offices in London, Manchester,
Nottingham, Edinburgh, Leeds, Dublin and Cambridge,
with smaller satellite offices in Leicester and Milton
Keynes, searches for investment opportunities across the
whole of the UK.
Since inception, the Manager has worked intensively
to invest in, manage and realise a large number of
investments. The team completes a considerable
number of new deals and exits each year and supports
investee companies pursuing various different strategies,
including organic growth, buy & build and turnarounds.
The team combines executives from varying backgrounds
across corporate finance, consulting, accounting,
private equity and industry. Between them, they
have experience of more than 500 private equity and
corporate finance transactions and have managed more
than 200investments, the majority of these during their
timeat Foresight Group.
This team has c.350 years’ worth of collective investment
experience and combines investors’ capital and its
own expertise with the intention of creating long-term
Shareholder value and generating attractive returns
forShareholders.
The Manager has an active and direct portfolio
management approach, taking a non-executive
directorship position on each investee company
board. The Foresight Investor Director will influence,
support and, where necessary, strengthen or change
management, in order to protect and build Shareholder
value. This hands-on role involves regular dialogue
with the executive and non-executive team on growth,
markets, strategy, products and tactics and a continuous
evaluation of the performance of the team as a whole.
As a matter of policy, the Manager also has the right to
appoint a senior industry expert as chair.
The Manager works particularly closely with the investee
companies in the following areas:
•
Definition and review of strategy and its
implementation
•
Recruitment and incentivisation of key management
and board members
•
Planning for growth, international expansion and
newproduct/service introduction
•
Fundraising from banks and other external sources
•
Proactive monitoring
•
Merger, acquisition and exit planning
•
ESG compliance
ABOUT THE MANAGER CONTINUED
38 FORESIGHT ENTERPRISE VCT PLC Annual Report and Accounts 31 December 2022
CO-INVESTMENTS
Co-investments have been made by other funds that the Manager advises and manages, as follows:
Investment
Foresight
Enterprise VCT
Accounting cost
£
Foresight
VCT
Accounting cost
£
Other
Foresight
funds
Accounting cost
£
Total equity
managed by
Foresight
%
ABL Investments Limited 1,494,075 2,750,000 — 57. 3
Additive Manufacturing Technologies Ltd 1,737,499 1,720,296 5,275,002 25.0
Aerospace Tooling Corporation Limited 415,255 150,000 — 82.2
Biofortuna Ltd 3,517,537 1,172,517 — 59.8
Callen-Lenz Associates Limited 2,375,000 2,351,485 — 25.0
Clubspark Group Ltd 1,860,000 2,756,085 — 30.6
Cole Henry PE 2 Limited 200,000 100,000 — 50.0
Copptech UK Limited 2,455,000 2,430,694 — 10.1
Crosstown Dough Ltd 1,500,000 1,485,149 — 20.0
Datapath Group Limited 11,081,243 7, 563, 365 — 40.0
Fourth Wall Creative Limited 2,900,000 4,292,299 — 41.5
Hexarad Group Limited 1,549,999 1,534,653 — 22.5
Homelink Healthcare Limited 1,075,000 1,064,356 — 22.6
Hospital Services Group Limited 1,200,000 3,320,000 3,500,000 81.6
I-Mist Group Limited 1,614,500 1,598,515 1,271,000 39.7
IMMJ Systems Limited 1,750,000 1,732,674 — 21.0
Innovation Consulting Group Limited 1,938,046 1,605,000 — 72.4
Itad (2015) Limited 1,371,726 2,750,000 — 35.0
Kingsclere PE 3 Limited 100,000 100,000 — 50.0
Luminet Networks Limited 960,000 3,783,251 — 47.9
Newsflare Limited 2,000,000 1,980,198 — 16.3
NorthWest EHealth Limited 1,500,000 1,485,149 — 27.7
PH Realisations 2020 Limited 2,162,929 1,664,893 1,000,000 85.0
Positive Response Corporation Ltd 884,195 875,000 — 63.9
Protean Software Limited 1,795,229 2,500,000 — 63.5
Rovco Limited 1,476,880 1 ,457,630 3,130,774 16.2
Roxy Leisure Holdings Limited 2,500,000 2,467, 933 4,500,000 27.9
So-Sure Limited 1,600,000 1,584,158 1,000,000 18.7
Specac International Limited 2,054,761 800,000 — 85.2
Spektrix Limited 2,380,350 5,467,811 — 16.8
Steamforged Holdings Limited 1,600,000 2,364,532 1,000,000 31.9
Strategic Software Applications Ltd 1,750,000 1,732,673 — 26.3
Ten Health & Fitness Limited 2,000,000 2,958,591 — 44.1
Titania Group Limited 1,250,000 1, 237,624 — 16.7
Weduc Holdings Limited 23,750 54,145 — 28.7
Whitchurch PE 1 Limited 378,000 100,000 — 50.0
Companies valued at £nil have been excluded from the table above.
Where the Manager controls over 50% of an investment by virtue of its discretionary management of one or more
funds under management, decisions either have to be taken by the individual boards of the shareholding companies
inrespect of their individual holdings or voting is limited to 50%.
FORESIGHT ENTERPRISE VCT PLC Annual Report and Accounts 31 December 2022 39
GOVERNANCESTRATEGIC REPORT FINANCIAL STATEMENTS
DIRECTORS’ DUTY TO PROMOTE THE SUCCESS OF THE COMPANY
The Directors have a duty to promote the success of the
Company for the benefit of Shareholders as a whole and to
describe how they have performed this duty having regard to
matters set out in Section 172(1) of the Companies Act 2006.
STAKEHOLDERS AND S172
THE MANAGER SHAREHOLDERS
The principal relationship is with the Manager and
the Manager’s Review contains further information
on this. Its investment management service is
fundamental to the long-term success of the Company
through the pursuit of the investment objective.
TheBoard reviews the investment performance of the
Company and the ability of the Manager to produce
satisfactory investment performance. It seeks to
maintain a constructive working relationship with the
Manager and, on an annual basis, the Management
Engagement & Remuneration Committee reviews the
appropriateness of the Manager’s appointment.
The Board receives and reviews detailed presentations
and reports from the Manager to enable the
Directors to exercise effective oversight of the
Company’sactivities. As explained in more detail in
note 13, the Directors have prepared a calculation
incorporating estimated future dividends over the
vesting period and expect a performance incentive
fee to become payable during the vesting period.
Therefore, a liability of £280,000 has been recognised
as at 31 December 2022 (2021: £nil).
To help the Board in its aim to act fairly between the
Company’s members, it encourages communications
with all Shareholders. The Annual and Half-Yearly
Reports are issued to Shareholders and are available
on the Company’s website, together with other
relevantinformation including quarterly factsheets.
The Manager and members of the Board are available
to meet the Shareholders at investor forums held
throughout the year. Directors are also available to
meet with Shareholders at the AGM.
Shareholders’ views may also be considered during
the Board’s annual strategy reviews. The Board has
also established guidelines in accordance with which
the Manager implements share buybacks at a target
discount of 7.5% to the prevailing NAV per share.
Inaddition, the Board continues to adopt a target
dividend policy of at least 5% of the opening NAV
pershare ofthat financialyear.
Following the successful realisations of TFC Europe
and Codeplay Software, the Board declared a special
interim dividend of 3.8p per share 8 November 2022,
returning £8.1 million to Shareholders.
40 FORESIGHT ENTERPRISE VCT PLC Annual Report and Accounts 31 December 2022
In fulfilling this duty, the Directors consider the likely
consequences of their actions over the long term and
onotherstakeholders.
As a third-party-managed VCT, the Company
does not have employees. Its main stakeholders
therefore comprise its Shareholders, who are also its
customers,portfolio companies, the environment and
society and its principal suppliers.
These suppliers are external firms engaged by the
Board to provide, amongst other services, investment
management, secretarial, registrar, audit and legal
services.
PORTFOLIO COMPANIES OTHER SUPPLIERS
As described in more detail within the Corporate
Governance Report, theBoard is committed to
maintaining and demonstrating high standards of
corporate governance in relation to the Company’s
business conduct. TheBoard also expects high
standards at the companies in which the Company
is invested. In this regard, it is satisfied that the
Manager consistently and proactively engages with
investee companies on environmental, social and
governance matters, where these are material to
the investment case and therefore to the long-term
success of the Company. The team of 51 investment
professionals is well resourced and, collectively, has a
deep knowledge and understanding across corporate
finance, consulting, accountancy and private equity.
More detail on this can be found in the Responsible
Investment section of the Manager’sReview.
Where environmental, social and governance matters
impinge upon the investment case, the Manager
engages with investee companies to encourage the
issues to be addressed through that company’s “100-day
plan”. The Manager is well placed to undertake this
activity, which has always been an integrated element
of its investment process.
The Manager seeks to maintain constructive
relationships with the Company’s other suppliers
on behalf of the Company, typically through regular
communications and provision of relevant information.
While the Manager supports the aims and objectives
of the FRC’s Stewardship Code, it is not currently a
signatory. It is, however, working to ensure alignment
with the Stewardship Code, and will periodically review
its position regarding becoming a signatory in future.
A statement to that effect is noted on the Manager’s
website and can be found at:
www.foresightgroup.eu/stewardship-code.
In summary, the Board’s primary focus is to promote
the long-term success of the Company for the benefit
of its Shareholders, with a view to achieving the
investment objective in a manner consistent with its
stated investment policy and strategy. In doing so, and
as described above, it has due regard to the impact of its
actions on other stakeholders and the wider community.
FORESIGHT ENTERPRISE VCT PLC Annual Report and Accounts 31 December 2022 41
GOVERNANCESTRATEGIC REPORT FINANCIAL STATEMENTS
ESG values form an integral part of the Manager’s
day-to-day decision making, with all new investments
made since May 2018 subject to ESG due diligence and
ongoing ESG monitoring.
This accounts for 56% of the current portfolio, with the
view of reaching 100% as legacy investments are sold.
Central to its investment approach are five ESG Principles
which are used to evaluate investee companies.
Overall, 40 individual key performance indicators are
considered under the five Principles.
The Manager invests in a wide range of sectors and
believes its approach covers the key tests that should
be applied to assess a company’s ESG performance,
throughout the life cycle of an investment:
RESPONSIBLE INVESTMENT
Often referred to as Responsible Investment, Environmental,
Social and Governance principles ("ESG") provide not only
a key basis for generating attractive returns for investors,
but also to help build better quality businesses in the UK,
creating jobs and making a positive contribution to society.
Strategy and
awareness
Does the business
demonstrate a good
awareness of corporate
social responsibility?
Is this reflected
in its processes
and management
structure?
Environmental
Does the company
follow good
practice for limiting
or mitigating its
environmental impact,
in the context of its
industry?
How does it encourage
the responsible use of
the world’s resources?
Social
What impact does the
company have on its
employees, customers
and society as a
whole?
Is it taking steps to
improve the lives of
others, either directly,
such as through job
creation, or indirectly?
Governance
Does the company and
its leadership team
demonstrate integrity?
Are the correct policies
and structures in
place to ensure it
meets its legislative
and regulatory
requirements?
Third-party
interaction
Is the principle
of corporate
responsibility
evidenced in the
company’s supply
chain and customers?
How does it promote
ESG values and share
best practice?
42 FORESIGHT ENTERPRISE VCT PLC Annual Report and Accounts 31 December 2022
UN SDGs
The UN’s Sustainable Development Goals (“SDGs”) also
represent a key driver and important lens through which
corporate and investment activities are reviewed.
In May 2021, the Manager formalised its Impact Themes
for private equity investments into four areas:
•
Health
•
Quality Employment at Scale
•
Research and Innovation
•
Sustainable, Inclusive, Local Infrastructure and
theEnvironment
These outcome-focused themes are aligned with the UN’s
SDGs. They help the Manager assess any opportunities in
the business model, and by mapping its investments to
them the private equity team can identify the value and
benefi ts for the companies, society and the environment.
Each portfolio company is subject to an annual
assessment where progress against each of the fi ve
Principles and four Impact Themes are measured and an
evaluation matrix updated to allow progress to be tracked
and continuous improvement encouraged.
The diagram below shows the specifi c SDGs that
theManager has scope to contribute to across all
of its activities.
Credentials
The Manager has been a member of the UK Sustainable
Investment and Finance Association since 2009 and a
signatory to the Principles for Responsible Investment
(“PRI”) since 2013.
The Manager is an accredited Living Wage Employer
and a signatory of the HM Treasury Women in Finance
Charter, committing to implement recommendations to
improve gender diversity in fi nancial services. Portfolio
companies are encouraged to pursue similar objectives.
Climate Change Statement
The Manager has a long-term investing vision and its
strategy aligns with the UN’s Sustainable Development
Goals and the decarbonisation targets set out in the Paris
Agreement of 2015. As such, taking actions to mitigate
the risks posed by climate change, whilst also investing
to generate commercial returns for our investors, must
be done hand in hand. The Manager has been a signatory
to the United Nations-backed PRI since 2013. PRI is a
globally recognised voluntary framework concerned
with the incorporation of ESG considerations into the
investment decision-making process. It provides a basis
for potential and existing investors to judge the quality
of a company’s ESG processes and positioning within an
industry sector. In 2020, the Manager received an “A+”
for Strategy and Governance, and “A” for Private Equity
and Infrastructure investments.
The Board supports the Manager’s views on climate change
and ESG and its vigorous process in the evaluation of
an asset’s environmental and social impact during due
diligence and thereafter. For each material risk identifi ed
during due diligence, a mitigation plan is proposed in the
investment submission and these actions form part of each
portfolio company’s “100-day plan” post-investment.
From an environmental perspective, analysis relating to the
implementation of good industry practice in limiting and
mitigating the potentially adverse environmental impact of
acompany’s operations has four principal components:
•
Environmental policy and track record
•
Energy and resource usage and environmental impact
•
Environmental impact of products and services
•
Environmental performance improvements
Regular monitoring post-investment ensures that standards
are maintained in respect of ESG issues where there is a
change in either the regulatory or operating environment or
the composition of the managementteam.
GOVERNANCE FINANCIAL STATEMENTSSTRATEGIC REPORT
FORESIGHT ENTERPRISE VCT PLC Annual Report and Accounts 31 December 2022 43
Climate Change Statement continued
The FCA reporting requirements consistent with the Task
Force on Climate-related Financial Disclosures (“TCFD”)
commencing from 1 January 2021 do not currently apply to
the Company. They will, however, be kept under review and
the Board and Manager will take noteofanyrecommended
changes. The Manager continues its journey to full alignment
with the recommendations of the TCFD. Further details
are noted in the Foresight Group Holdings Limited Annual
Report and Accounts and can be found at:
www.foresightgroup.eu
Environmental, human rights, employee, social
and community issues
The Board recognises the requirement under Section
414 of the Companies Act 2006 to provide information
about environmental matters (including the impact of
the Company’s business on the environment), employee,
human rights, social and community issues; and
information about any policies it has in relation to these
matters and the effectiveness of these policies.
The Company does not have any policies in place for
human rights, environmental, social and community
issues due to having no office premises, no employees
and its purchases being services as opposed to
tangible products. The Manager’s policies in respect
of all the above issues can be found on its website
www.foresightgroup.eu.
Diversity
The Board currently comprises one female and three
male Directors. There is no formal diversity policy in
place, however the Board is conscious of the need for
diversity and will actively seek and encourage male and
female candidates from all ethnic backgrounds when
appointing new Directors.
The Manager has an equal opportunities policy and, as
at 31 December 2022, employed 214 men (2021: 165) and
134women (2021: 103).
Global greenhouse gas emissions
The Company has no greenhouse gas emissions to report
from the operations of the Company, nor does it have
responsibility for any other emissions sources under the
Companies Act 2006 (Strategic Report and Directors’
Reports) Regulations 2013.
We believe in delivering sustainable growth and
incorporate ESG into our management process.
RESPONSIBLE INVESTMENT CONTINUED
44 FORESIGHT ENTERPRISE VCT PLC Annual Report and Accounts 31 December 2022
PRINCIPAL RISKS, RISK MANAGEMENT AND REGULATORY ENVIRONMENT
RISKS
The Board carries out half-yearly reviews of the risk
environment, including emerging risks, in which the
Company operates.
The principal risks and uncertainties identified by the
Board which might affect the Company’s business and
future performance, and the steps taken with a view to
their mitigation, are set out below. Emerging risks that
have also been considered include those of climate change,
inflationary pressures, energy prices, the cost of living
crisis, interest rates, supply chain issues, energy prices and
the Russian invasion of Ukraine. In addition, tensions are
increasing in the relationship between the United States and
China over the future of Taiwan, where a large proportion of
sophisticated microchips are manufactured and exported
to businesses in the West, including those in the Company's
portfolio. While emerging risks are by nature difficult to
predict, the Board and Manager's response to issues that
may directly or indirectly effect the portfolio is immediate
and evolves constantly.
The Board, with the help of the Manager’s extensive
research resources and market intelligence, surveys the
full risk landscape of the Company in order to identify
increasing and emerging risks to which the Company may
be exposed to in the future. The Board questions which
parts of the Company’s business may be vulnerable to
disruption, including the business models of its investee
companies and third party suppliers.
Analysis performed, including the portfolio's exposure
to Russia and Ukraine and the effect of interest rates on
individual investee companies in the year, is circulated
to the Board and a best course of action decided. The
impact of such risks on the Company's portfolio is under
continuous assessment by the Manager. The Board and
Manager therefore believe that emerging risks are mitigated
and monitored to the best extent possible.
Further details of the Board’s climate change considerations
are provided in the Climate Change Statement in the
Responsible Investment section on pagepages 43 and 44.
MARKET RISK
Risk description:
Macroeconomic changes, geopolitical developments,
including the risk of war, or external shocks affect the
investment community in general and lead to a fall
in the valuation of investee companies, a drop in the
Company’s share price or widening discount to Net
Asset Value, resulting in capital losses for Shareholders.
Key controls and mitigation:
The Manager ensures the portfolio is diversified and
the Board reviews it at least quarterly. The Company
also maintains sufficient cash reserves to be able to
provide additional funding to investee companies
where appropriate and to repurchase its own shares.
STRATEGIC AND PERFORMANCE RISK
Risk description:
The Board fails to set appropriate strategic objectives
and fails to monitor the Company’s implementation of
strategy which leads to poor performance.
Unattractive objectives or prolonged poor
performance leads to a lack of investor demand for the
Company’s shares, resulting in difficulty raising new
capital, a lack of cash available to fund buybacks and
an inability to control a widening discount.
Key controls and mitigation:
The Board and the Manager meet on an annual basis
for a specific session to assess the Company’s strategy.
Investment strategy and performance are further
monitored quarterly at Board meetings.
Newly identified Increased level of risk Decreased level of risk Similar level of risk
FORESIGHT ENTERPRISE VCT PLC Annual Report and Accounts 31 December 2022 45
GOVERNANCESTRATEGIC REPORT FINANCIAL STATEMENTS
INTERNAL CONTROL RISK
Risk description:
The control environments at service providers,
including the Manager, have inadequate procedures
for the identification, evaluation and management of
risks, cyber security and data protection, putting the
Company’s assets and data at risk.
Key controls and mitigation:
The Board carries out semi-annual reviews of the
system of internal and cyber controls, both financial
and non-financial, operated by the Manager and
other service providers and asks the external auditor
to report on the Manager’s control procedures.
These include controls designed to ensure that the
Company’s assets are safeguarded and that proper
accounting records are maintained.
LEGISLATIVE AND REGULATORY RISK
Risk description:
The Company fails to comply with applicable laws and
regulations including VCT Rules, UK Listing Authority
Rules, AIC Code on Corporate Governance, Stewardship
Code, Companies Act, Bribery Act, Market Abuse
Regulations, data protection rules, Criminal Finances
Act and relevant Taxes Acts and as a result loses its
approval as a VCT.
Radical changes to VCT rules limit satisfactory
investment returns and the ability to issue new shares,
leading to a reduction in the sale of investee companies.
This leads to a cash flow issue which restricts dividend
payments or share buybacks and the Company’s ability
to control a widening discount.
The "Sunset Clause" for EIS and VCT reliefs has to
be reviewed by the government by 6 April 2025. The
clause provides that income tax relief will no longer be
given to subscriptions made on or after 6 April 2025,
unless the legislation is amended to make the scheme
permanent, or the “sunset clause” is extended. In
extreme circumstances, the current VCT regime ending
on 5 April2025 is not renewed or extended, causing
shareholders to cease to benefit from tax-free dividends
and capital gains tax exemption after that date.
Key controls and mitigation:
The Manager is contracted to provide company
secretarial, accounting and administration services
through qualified professionals and the Board
receives regular updates on compliance with relevant
regulations.
The Company, the Manager and the VCT status adviser
are, between them, members of the VCT Managers
Association, EIS Association and the AIC and are
regularly consulted by HMRC and Treasury, or reply
to consultations, before changes in legislation take
place, often enabling a middle ground to be agreed
onlegislative changes.
The Board and Manager review corporate governance
and regulatory changes on a continual basis and seek
additional advice as and when required.
The government has the power to extend or remove
the sunset clause through secondary legislation,
which would allow the VCT & EIS schemes to operate
in their current form beyond the current expiry date
of the scheme. The then Chancellor Kwasi Kwarteng
announced during his mini-budget of 23 September
2022 that venture capital schemes will be safeguarded
beyond 2025 but no further details were given as
to how this will be implemented. To date, the now
Chancellor Jeremy Hunt has yet to clarify. However,
through correspondence with the Treasury Select
Committee, the Chancellor has stated that it is the
government's firm intention to extend the VCT and
EIS schemes beyond the sunset on 6 April 2025 and
that further details will be provided in due course.
The Treasury Select Committee also notes that the
UK should be able to extend the scheme without
European Commission approval, clarified by the
recently announced Northern Ireland Protocol, the
Windsor Framework.
Newly identified Increased level of risk Decreased level of risk Similar level of risk
RISKS CONTINUED
46
FORESIGHT ENTERPRISE VCT PLC Annual Report and Accounts 31 December 2022
VCT QUALIFYING STATUS RISK
Risk description:
The Company is required at all times to observe the
conditions laid down in the Income Tax Act 2007 for
the maintenance of approved VCT status. Theloss of
such approval could lead to the Company ceasing to
be exempt from corporation tax on capital gains, to
investors being liable to pay income tax on dividends
received from the Company and capital gains
tax on the disposal of their shares, and, in certain
circumstances, to investors being required to repay
theinitial income tax relief on their investment.
Key controls and mitigation:
Legal advice is taken for each transaction to ensure
all investments are qualifying. Advance assurance,
where appropriate, is sought from HMRC ahead
of completion. The Manager keeps the Company’s
VCT qualifying status under continual review,
seeking to take appropriate action to maintain it
where required, and its reports are reviewed by
the Board on a quarterly basis. The Board has also
retained Shakespeare Martineau LLP to undertake
anindependent VCT status monitoring role.
INVESTMENT VALUATION AND
LIQUIDITY RISK
Risk description:
Most of the Company’s investments are in small and
medium-sized unquoted companies which are VCT
qualifying holdings, and which by their nature entail
a higher level of risk, subjective valuations and lower
liquidity than investments in larger quoted companies.
Unquoted companies have no published market price
for their shares. The value of the shares needs to be
calculated based on other information using estimates
and judgements, and is reliant on the accuracy and
completeness of some information provided by
investee companies. As the Manager's remuneration
is based on the Company's Net Asset Value, there
is an inherent conflict of interest in valuations of the
portfolio by the Manager.
The Company may not be able to sell its investments
in unquoted companies. Insufficient capital realisations
and the Company’s inability to raise new capital
could prevent the Company from meeting its financial
objectives and restrict dividends and buybacks.
Key controls and mitigation:
The Manager aims to limit the risk attaching to
the portfolio as a whole by careful selection, close
monitoring and timely realisation of investments, by
carrying out rigorous due diligence procedures and
maintaining a spread of holdings in terms of industry
sector. The Board reviews the investment portfolio
and its realisation profile with the Manager on a
quarterlybasis.
Valuations are prepared in accordance with the IPEV
Valuation Guidelines, as discussed in more detail in
note 1 to the accounts. Sensitivity analysis is disclosed
in note 14. The Board reviews portfolio valuations
quarterly and the external auditor performs an annual
review, as noted in the auditor’s report.
FORESIGHT ENTERPRISE VCT PLC Annual Report and Accounts 31 December 2022 47
GOVERNANCESTRATEGIC REPORT FINANCIAL STATEMENTS
In accordance with principle 21 of the AIC Code
of Corporate Governance published by the AIC in
February 2019, the Directors have assessed the
prospects of the Company over the three-year period
to 31December2025. This three-year period is used
bythe Board during the strategic planning process and
is considered reasonable for a business of its nature
andsize.
In making this statement, the Board carried out a robust
assessment of the principal risks facing the Company,
including those that might threaten its business model,
future performance, solvency or liquidity. The Board
concentrated its eff orts on the major factors that aff ect
the economic, regulatory and political environment.
The Board also considered the ability of the Company
to raise fi nance and deploy capital. This assessment
took account of the availability and likely eff ectiveness
of the mitigating actions that could be taken to avoid
or reduce the impact of the underlying risks, including
the Manager adapting its investment process to take
account of the more restrictive VCT investment rules
thatcurrentlyapply.
The Directors have also considered the Company’s
income and expenditure projections and underlying
assumptions for the next three years and found these
tobe realistic and sensible.
Stress testing on the cash fl ow forecast has not been
performed, due to the discretionary nature of the main
infl ows and outfl ows. If fewer funds are raised, and
fewer realisations achieved, then fewer investments and
buybacks can be made and reduced dividends can be
paid. The contracted ongoing costs of the Company
aresuffi ciently covered for the next three years.
Based on the Company’s processes for monitoring cash
fl ow, share price discount, review of the investment
objective and policy, asset allocation, sector weightings
and portfolio risk profi le, the Board has 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 three years to31December2025.
VIABILITY STATEMENT
This Strategic Report has been prepared in accordance
with the requirements of Section 414 of the Companies
Act 2006 and best practice. Its purpose is to inform
the members of the Company and help them to assess
how the Directors have performed their duty to
promote the success of the Company, in accordance
with Section172 of the Companies Act 2006.
Future strategy
The Board and the Manager believe that the strategy
of continuing to qualify as a VCT and focusing on
growth private equity investments is currently in
the best interests of Shareholders and the historical
information reproduced in this report is evidence of
positive recent performance in this area.
The Company’s performance relative to its peer
group will depend on the Manager’s ability to allocate
the Company’s assets eff ectively, make successful
investments and manage its liquidity appropriately.
This Strategic Report has been approved for issue by
the Board.
Raymond Abbott
Chair
28 April 2023
48 FORESIGHT ENTERPRISE VCT PLC Annual Report and Accounts 31 December 2022
WHAT’S IN THIS SECTION
BOARD OF DIRECTORS 50
DIRECTORS’ REPORT 52
CORPORATE GOVERNANCE 58
AUDIT COMMITTEE REPORT 62
DIRECTORS’
REMUNERATION REPORT 64
STATEMENT OF DIRECTORS’
RESPONSIBILITIES 68
GOVERNANCE
FORESIGHT ENTERPRISE VCT PLC Annual Report and Accounts 31 December 2022 49
GOVERNANCESTRATEGIC REPORT FINANCIAL STATEMENTS
BOARD OF DIRECTORS
Appointed
22 June 2017
Experience
Raymond previously served as chair of Foresight 3VCT plc
from 2014 until the merger with the Company. Prior to this
he was a Non-Executive Director of the Company
.
Raymond has over 30 years’ experience in private
equity covering fund investment, direct venture
investment, growth capital and buyouts. This includes
as managing director of Alliance Trust Equity Partners,
developing a £300 million fund of funds programme
for Alliance Trust focused on Western European
lower to mid-market buyout funds. Raymondfounded
Albany Ventures, with a focus on software and
healthcare investments, which was acquired by
Alliance Trust.
Raymond has gained extensive experience as a
non-executive director in public and private companies
helping with strategy, finance and governance.
Other positions
Chair of Integrated Environmental Solutions Limited.
Non-executive director of Schroder UK Public Private
Trust PLC.
Beneficial shareholding
60,818 shares
Appointed
10 September 2020
Experience
Gay is a Chartered Accountant with over 30 years
of experience in private and public sector finance.
Sheis Chair of the Audit Committee and has extensive
experience of governance, compliance and risk
management.
She is very familiar with the challenges of stakeholder
management, business growth and development.
She was part of the founding team at the £140million
award-winning Eden Project, leading the funding and
setting up the innovative social enterprise structure.
After 13 years as managing director at Eden she went
on to join the Royal Botanic Gardens, Kew as director
of public programmes, responsible for rebranding the
gardens and growing the commercial income streams.
She was director of finance at Plymouth University for
five years prior to joining Eden, encouraging spin-out
companies and enterprise initiatives.
Other positions
Director of Lowland Investment Company plc, director
of Asia Dragon Trust plc and director of the Secured
Income Fund plc.
Beneficial shareholding
Nil shares
Raymond Abbott
Chair of the Board
Gaynor Coley
Non-Executive Director
50 FORESIGHT ENTERPRISE VCT PLC Annual Report and Accounts 31 December 2022
Appointed
3 October 2014
Experience
Simon spent 28 years at Robert Fleming Holdings and
subsequently at Fleming Family and Partners where
he focused on private equity investing. Prior to this he
joined Glenwood Management, a Californian-based
venture capital fund, and subsequently joined Robert
Fleming on the fund management side. He then joined
Fleming Family and Partners Asset Management
Limited (“FF&P”) where he was responsible
for $500million of private equity investments,
including both fund investments and directly
heldco-investments.
Simon served as Chair of the Company from
31March2017 to 22 June 2017.
Other positions
Simon chairs an investment committee of a US family
office and co-chairs an investment committee of an
African-focused private equity manager, 54Capital.
Beneficial shareholding
34,841 shares
Appointed
14 February 2017
Experience
Michael has extensive experience in funds, banking
and other capital markets. He was most recently the
regional managing director, corporate banking for
RBS International with responsibility for The Royal
Bank of Scotland’s Corporate Banking Business in the
Crown Dependencies and British Overseas Territories.
In a career spanning 31 years with The Royal Bank of
Scotland Group plc, Michael has undertaken a variety
of roles including that of auditor, and has extensive
general management and lending experience across
anumber of industries.
Michael is a Fellow of The Chartered Institute
of Bankers in Scotland and a qualified
corporatetreasurer.
Other positions
Michael is a non-executive director of Triton
Investment Management Ltd, a non-executive director
of JTC plc, an advisory board member of Japanese
private equity group, J-Star, and a non-executive
director of the FTSE 250 listed GCP Infrastructure
Investments Limited.
Beneficial shareholding
28,448 shares
Simon Jamieson
Non-Executive Director
Michael Gray
Non-Executive Director
Sector by
cost
Sector by
cost
100% non-
executive
22 years
combined
tenure
Audit Committee
Management Engagement
& Remuneration Committee
Nomination Committee
Chair
25% female
GOVERNANCESTRATEGIC REPORT FINANCIAL STATEMENTS
FORESIGHT ENTERPRISE VCT PLC Annual Report and Accounts 31 December 2022 51
Activities and status
The principal activity of the Company during the year was
the making of investments in unquoted companies in the
UK. The Company is not an investment company within
the meaning of Section 833 of the Companies Act 2006.
It has satisfied the requirements as a VCT under Sections
274–280A of the Income Tax Act 2007. Confirmation of
the Company’s qualification as a VCT has been received
up to 31 December 2021 and the Directors have managed
and intend to continue to manage the Company’s affairs
in such a manner as to comply with these regulations.
Results and dividends
The total profit attributable to Shareholders for the
year amounted to £6,222,000 (2021: £21,577,000).
TheBoard paid an interim dividend of 3.5p per share
on 30June2022 and a special interim dividend of 3.8p
per share on 30 December 2022 following successful
realisations of TFC Europe and CodeplaySoftware.
Net Asset Value Total Return
During the year ended 31 December 2022, the Company’s
principal indicator of performance, NAV Total Return,
increased 4.5% (2021: 18.0%) from 69.1p per share
as at 31 December 2021 to 72.2p per share as at
31December2022.
Share issues
During the year 20,149,160shares and 2,748,080shares
were issued pursuant to an offer for subscription
and the dividend reinvestment scheme respectively.
Shareswere issued at issue prices ranging from
63.70p to 74.92ppershare. At 31December2022,
theCompanyhad 213,316,422shares in issue.
Share buybacks
During the year the Company repurchased 2,387,781
shares for cancellation at a cost of £1,471,000. No shares
bought back by the Company are held in treasury.
Sharebuybacks have been completed at an average
discount of7.5%.
Principal risks, risk management and
regulatory environment
A summary of the principal risks faced by the Company
isset out in the Strategic Report on pages 45 to 47.
Financial instruments
Details of all financial instruments used by the Company
during the year are given in note 15 to the accounts.
Policy of paying creditors
The Company does not subscribe to a particular code but
follows a policy whereby suppliers are paid by the due
date and investment purchases are settled in accordance
with the stated terms. At the year end, trade creditors
represented an average credit period of two days
(2021:less than one day).
Management
The Company has appointed Foresight Group LLP
(“the Manager”) to provide investment management,
accounting and administration services.
Annually, the Management Engagement & Remuneration
Committee reviews the appropriateness of the
Manager’s appointment. In carrying out its review, the
Management Engagement & Remuneration Committee
considers the investment performance of the Company
and the ability of the Manager to produce satisfactory
investment performance. It also considers the length
of the notice period of the investment management
contract and fees payable to the Manager, together with
the standard of other services provided, which include
company secretarial services. It is the Board’s opinion
that the continuing appointment of the Manager on
the terms agreed is in the interests of Shareholders as
a whole. Thelast review was undertaken in April2023.
Theprincipal terms of the management agreement are
set out in note 3 to the accounts.
DIRECTORS' REPORT
The Directors present their report and the financial
statements of the Company for theyear ended
31December 2022.
52 FORESIGHT ENTERPRISE VCT PLC Annual Report and Accounts 31 December 2022
The annual expenses cap is 2.4% of net assets, which is
one of the lower expenses caps of any VCT with total
assets over £50 million.
No Director has an interest in any contract to which the
Company is a party other than their own appointment.
Foresight Group LLP was appointed as Manager on
27January 2020 and earned fees of £2,724,000 in
the year to 31 December 2022 (2021: £2,416,000).
Foresight Group LLP received £178,000 excluding VAT
(2021:£161,000) during the year in respect of secretarial,
administrative, accounting and custodian services to
theCompany. A performance incentive fee of £280,000
(2021: £nil) has been provided for at the year end.
Foresight Group LLP also received from investee
companies arrangement fees of £261,000 (2021:
£395,000) and directors’ fees of £706,000 (2021:
£554,000).
£
Management fee 2,724,000
Directors’ fees 706,000
Performance incentive fee 280,000
Arrangement fees 261,000
Secretarial fee 178,000
4,149,000
All amounts are stated, where applicable, net of VAT.
The Manager is also a party to the performance incentive
agreements described in note 13 to the accounts.
At the time of writing, officers and staff of the Manager
held a total of 248,313 shares in the Company.
Performance-related incentives
The Manager is entitled to a payment equal to 15% of
dividends paid to Shareholders, subject to the total
return (Net Asset Value plus cumulative dividends paid
per share) exceeding 100.0p (‘‘High Watermark’’),
bothimmediately before and after the performance
incentive fee is paid.
After each distribution is made to Shareholders where
a performance incentive is paid, the High Watermark
required to be achieved by the Company to trigger
a further performance incentive fee will be amended
to take account of the dividend paid. As a result of
performance incentive fee payments made in previous
years, the High Watermark at as 31 December 2022
was108.5p (2021: 108.5p). Further details can be found
innote 13 to the accounts.
The performance incentive fee may be satisfied by
either a cash payment or the issue of shares (or by a
combination of both) ultimately at the Board’s discretion
and, as such, qualifies as a share-based payment.
Any new shares to be issued to the Manager would
be calculated by dividing the performance fee cash
equivalent amount by the latest Net Asset Value per
share after adding the cumulative dividends to be paid.
No performance incentive fee was paid in the year
(2021:£nil). A performance incentive fee accrual of
£280,000 (2021: £nil) has been provided for as at the
year end as the Company expects the total return to
reach the High Watermark after the next dividend
payment date. Further details can be found in note
13 to the accounts.
Venture Capital Trust status
Foresight Enterprise VCT plc has been granted approval
as a Venture Capital Trust (“VCT”) under Sections
274-280A of the Income Tax Act 2007 for the year
ended 31December 2021. The next complete review
willbe carried out for the year ended 31 December 2022.
Itisintended that the business of the Company be
carried onso as to maintain its VCT status.
The Board and the Manager have managed, and
continue to manage, the business in order to comply
with the legislation applicable to VCTs. The Board has
appointed Shakespeare Martineau LLP to monitor
and provide continuing advice in respect of the
Company’s compliance with applicable VCT legislation
and regulation. Reviews of prospective investments
are carried out by advisers assisting on the relevant
investment transaction. As at 31 December 2022,
theCompany had 100.0% (by VCT value) of its
applicablefunds in such VCT qualifying holdings.
GOVERNANCESTRATEGIC REPORT FINANCIAL STATEMENTS
FORESIGHT ENTERPRISE VCT PLC Annual Report and Accounts 31 December 2022 53
DIRECTORS' REPORT CONTINUED
VCT tax benefit for Shareholders
To obtain VCT tax reliefs on subscriptions up to
£200,000 per annum, a VCT investor must be a
“qualifying” individual over the age of 18 with UK
taxable income. The tax reliefs for subscriptions
since6April2006 are:
•
Income tax relief of up to 30% on subscription
byqualifying investors for new shares
•
VCT dividends (including capital distributions of
realised gains on investments) are not subject to
income tax in the hands of qualifying investors
•
Capital gains on disposal of VCT shares by qualifying
investors are tax-free, whenever the disposal occurs
The upfront income tax relief will be forfeited by
Shareholders if the shares are not held for five years or
the Company loses its approval as a VCT in that period.
The other tax reliefs will similarly be lost if the Company
loses its approval as a VCT.
Substantial shareholdings
So far as the Board is aware, there were no individual
shareholdings representing 3% or more of the Company’s
issued share capital at the date of this report.
Likely future developments
Please refer to the Manager’s Review on page 21 for
moredetails on likely future developments.
Alternative Investment Fund Managers
Directive (“AIFMD”)
The AIFMD came into force on 22 July 2013 and sets out
the rules for the authorisation and ongoing regulation of
managers (“AIFMs”) that manage alternative investment
funds (“AIFs”) in the EU. The Company qualifies as a small
authorised AIF and so is required to comply, although
additional costs and administration requirements are
not material. The Company’s approval was confirmed
in August2014. This has not affected the current
arrangements with the Manager, who continues to report
to the Board and manage the Company’s investments on
adiscretionarybasis.
Valuation policy
Investments held by the Company have been valued
in accordance with the International Private Equity
and Venture Capital (“IPEV”) Valuation Guidelines
(December2022 and further COVID-19 guidance for
March 2020) developed by the British Venture Capital
Association and other organisations. Throughthese
guidelines, investments are valued as defined at
“fairvalue”. Wherethe investment being valued was
made recently, its cost would normally provide a
good starting point for estimating fair value. Ateach
measurement date, fairvalue is estimated using
appropriate valuation techniques. Investments quoted or
traded on a market are valued at bid price. The portfolio
valuations are prepared by the Manager, reviewed and
approved by theBoard quarterly and are subject to
annual review by the external auditor.
Statutory Instrument 2008/410
schedule 7 part 6
The following disclosures are made in accordance with
Statutory Instrument 2008/410 Schedule 7 Part 6.
Capital structure
The Company’s issued share capital as at 28April2023
was 235,358,591 Ordinary Shares of 1 penny
each. Further information on the share capital
oftheCompanyisdetailed in note 11 to the accounts.
Voting rights in the Company’s shares
Details of the voting rights in the Company’s shares at
thedate of this report are given in note 5 in the Notice of
Annual General Meeting on page 98.
Notifiable interests in the Company’s voting rights
At the date of this report no notifiable interests had been
declared in the Company’s voting rights.
Auditor
Pursuant to Section 487(2) of the Companies Act 2006,
the Board has decided to propose the reappointment of
Deloitte LLP as auditor and a resolution concerning this
will be proposed at the Annual General Meeting.
54 FORESIGHT ENTERPRISE VCT PLC Annual Report and Accounts 31 December 2022
Audit information
Pursuant to Section 418(2) of the Companies Act 2006,
each of the Directors confirms that (a) so far as they are
aware, there is no relevant audit information of which the
Company’s auditor is unaware; and (b) they have taken all
steps they ought to have taken to make themselves aware
of any relevant audit information and to establish that the
Company’s auditor is aware of such information.
Companies Act 2006 disclosures
In accordance with Schedule 7 of the Large and
Medium-sized Companies and Groups (Accounts and
Reports) Regulations 2008, as amended, the Directors
disclose thefollowing information:
•
The Company’s capital structure and voting rights are
summarised above, and there are no restrictions on
voting rights nor any agreement between holders of
securities that result in restrictions on the transfer of
securities or on voting rights
•
There exist no securities carrying special rights with
regard to the control of the Company
•
The rules concerning the appointment and
replacement of Directors, amendment of the Articles
of Association and powers to issue or buy back the
Company’s shares are contained in the Articles of
Association of the Company and the Companies
Act2006
•
The Company does not have any employee share
scheme
•
There exist no agreements to which the Company
is party that may affect its control following a
takeoverbid
•
There exist no agreements between the Company and
its Directors providing for compensation for loss of
office that may occur following a takeover bid or for
any other reason
Conflicts of interest
The Directors have declared any conflicts or potential
conflicts of interest to the Board which has the authority
to approve such conflicts. The Company Secretary
maintains the Register of Directors’ Conflicts of Interest
which is reviewed quarterly by the Board and when
changes are notified. The Directors advise the Company
Secretary and Board as soon as they become aware of
any conflicts of interest. Directors who have conflicts of
interest do not take part in discussions concerning their
own conflicts.
Whistleblowing
The Board has been informed that the Manager has
arrangements in place in accordance with the UK
Corporate Governance Code’s recommendations
by which staff may, in confidence, raise concerns
within theirrespective organisations about possible
improprieties in matters of financial reporting or
othermatters.
On the basis of that information, adequate arrangements
are in place for the proportionate and independent
investigation of such matters and, where necessary,
forappropriate follow-up action to be taken.
Going concern
The Company’s business activities, together with
the factors likely to affect its future development,
performance and position, are set out in the Strategic
Report. The financial position of the Company, its cash
flows, liquidity position and borrowing facilities are
referred to in the Chair’s Statement, Strategic Report and
Notes to the Accounts. In addition, the Annual Report
and Accounts include the Company’s objectives, policies
and processes for managing its capital; its financial
risk management objectives; details of its financial
instruments and hedging activities; and its exposures
tocredit risk and liquidity risk.
GOVERNANCESTRATEGIC REPORT FINANCIAL STATEMENTS
FORESIGHT ENTERPRISE VCT PLC Annual Report and Accounts 31 December 2022 55
DIRECTORS' REPORT CONTINUED
Going concern continued
The Company has adequate financial resources together
with investments and income generated therefrom across
a variety of industries and sectors. As a consequence,
the Board believes that the Company is able to manage
itsbusiness risks.
Three year cash flow projections to 31 December 2025
have been reviewed and show that the Company has
sufficient funds to meet both its contracted expenditure
and its discretionary cash outflows in the form of share
buybacks and dividends. The Company has no external
loan finance in place and therefore is not exposed to any
gearing covenants, although its underlying investments
may have external loan finance.
The Directors have considered the impact of the difficult
economic outlook, inflationary pressures, energy costs,
COVID-19, Brexit and Russia’s invasion of Ukraine during
their assessment of going concern and have reasonable
expectation that the Company has adequate resources
to continue in operational existence for the foreseeable
future. Thus they continue to adopt the going concern
basis of accounting in preparing the annual accounts.
Post-balance sheet events are disclosed in note 20.
Directors’ remuneration
Following changes to the Companies Act 2006, UK
investment companies must comply with new regulations
in relation to Directors’ remuneration. Directors’ fees can
only be paid in accordance with a remuneration policy
which has been approved by Shareholders. The Company
must also publish a Directors’ Remuneration Report
that complies with a new set of disclosure requirements.
Seepages 64 to 67.
Directors’ indemnification and insurance
To the extent permitted by law, the Directors have the
benefit of indemnities under the Articles of Association
of the Company against liabilities they may incur acting
intheir capacity as Directors of the Company.
An insurance policy is maintained by the Company which
indemnifies the Directors of the Company against certain
liabilities that may arise in the conduct of their duties.
There is no cover against fraudulent or dishonest actions.
Annual General Meeting
A formal notice convening the Annual General Meeting
on8 June 2023 can be found on pages 96 to 99.
Resolutions 1 to 8 will be proposed as ordinary
resolutions, meaning that for each resolution to be
passed more than half of the votes cast at the meeting
must be in favour of the resolution. Resolutions 9 and 10
will be proposed as special resolutions, meaning that for
each resolution to be passed at least 75% of the votes
cast at the meeting must be in favour of the resolution.
Resolutions 8 to 10 renew share issue and buyback
authorities granted at previous general meetings of the
Company and are explained in further detail below. The
Directors believe that the proposed resolutions are in the
interests of Shareholders and accordingly recommend
Shareholders to vote in favour ofeach resolution.
Resolution 8
Resolution 8 will authorise the Directors to allot relevant
securities generally, in accordance with Section 551 of
the Companies Act 2006, up to an aggregate nominal
amount of 1,150,000 (representing 48.9% of the issued
share capital of the Company as at the date of this Annual
Report). This authority will be used for the purposes
listed under the authority requested under Resolution 9.
This includes authority to issue shares pursuant to the
dividend reinvestment scheme operated by the Company,
performance incentive fee arrangements with Foresight
Group LLP and relevant individuals of the Foresight
Group LLP investment team and further top-up offers
for subscription to raise new funds for the Company
if the Board believes this to be in the best interests of
the Company. All new offers are intended to be at an
offer price linked to NAV. The authority conferred by
Resolution 8 is in substitution for all existing authorities
and will expire (unless renewed, varied or revoked by the
Company in a general meeting) on the fifth anniversary
of the passing of the resolution save that the Company
may allot equity shares after such date in pursuant of a
contract or contracts made prior to the expiration of this
authority.
56 FORESIGHT ENTERPRISE VCT PLC Annual Report and Accounts 31 December 2022
Resolution 9
Resolution 9 will sanction, in a limited manner, the
disapplication of pre-emption rights in respect of the
allotment of equity securities (i) with an aggregate
nominal amount of up to £550,000 pursuant to offer(s)
for subscription, (ii) with an aggregate nominal amount
of up to 10% of the issued share capital pursuant to the
dividend reinvestment scheme operated by the Company
at a subscription price per share which may be less than
the Net Asset Value per share, as may be prescribed by
the scheme terms, (iii) with an aggregate nominal amount
of up to £100,000 pursuant to performance incentive
arrangements with Foresight Group LLP and relevant
individuals of the Foresight Group LLP investment team
at a subscription price which may be less than the Net
Asset Value per share and (iv) with an aggregate nominal
amount of up to 10% of the issued share capital from
time to time for general purposes, in each case where
the proceeds of such issue may be used in whole or
part to purchase the Company’s shares. The authority
conferred by Resolution 9 is in substitution for all existing
authorities and will expire (unless renewed, varied or
revoked by the Company in a general meeting) at the
conclusion of the Annual General Meeting to be held in
2024 or, if earlier, on the date falling 15 months after the
passing of the resolution, save that the Company shall be
entitled to make offers or agreements before the expiry
of such authority which would or might require equity
securities to be allotted after such expiry and Directors
shall be entitled to allot equity securities pursuant to any
such offers or agreements as if the authority conferred
hereby had not expired.
Resolution 10
It is proposed by Resolution 10 that the Company be
authorised to make market purchases of the Company’s
own shares. Under this authority the Directors may
purchase up to 35,280,252 shares (representing
approximately 14.99% of the Company’s shares in issue at
the date of this Annual Report) or, if lower, such number
of shares (rounded down to the nearest whole share)
as shall equal 14.99% of the issued share capital at the
date the resolution is passed. When buying shares, the
Company cannot pay a price per share which is more
than 105% of the average of the middle market quotation
for a share taken from the London Stock Exchange daily
official list on the five business days immediately before
the day on which shares are purchased or, if greater, the
amount stipulated by Article 5(6) of the Market Abuse
Regulation (EU) 596/2014 (as such Regulation forms part
of UK law and as amended). The authority conferred by
Resolution 10 is in substitution for all existing authorities
and will expire (unless renewed, varied or revoked by
the Company in a general meeting) at the conclusion
of the Annual General Meeting to be held in 2024 or, if
earlier, on the date falling 15 months after the passing
of the resolution, save that the Company may purchase
its shares after such date in pursuance of a contract or
contracts made prior to the expiration of this authority.
Front-end VCT income tax relief is only obtainable by an
investor who makes an investment in new shares issued
by the Company. This means that investors may be willing
to pay more for new shares issued by the Company
than they would pay to buy shares from an existing
Shareholder. Therefore, in the interest of Shareholders
who may wish to sell shares from time to time, the
Company proposes to renew the authority to buy-in
shares, as it enables the Board to provide a degree of
liquidity in the Company’s shares.
Whilst, generally, the Company does not expect that
Shareholders will want to sell their shares within five
years of subscribing for them because this would lead to
a loss of tax relief, the Directors anticipate that from time
to time a Shareholder may need to sell shares within this
period. In making purchases the Company will deal only
with member firms of the London Stock Exchange and
at a discount to the then prevailing Net Asset Value per
share of the Company’s shares to ensure that existing
Shareholders’ interests are protected.
This report has been approved for issue by the Board.
Foresight Group LLP
Secretary
28 April 2023
GOVERNANCESTRATEGIC REPORT FINANCIAL STATEMENTS
FORESIGHT ENTERPRISE VCT PLC Annual Report and Accounts 31 December 2022 57
The AIC Code addresses the Principles and Provisions
set out in the UK Corporate Governance Code
(“theAICCode”) issued by the Financial Reporting
Council, as well as setting out additional Provisions on
issues that are of specific relevance to the Company.
The Board considers that reporting against the
Principles and Provisions of the AIC Code, which has
been endorsed by the Financial Reporting Council,
provides more relevant information to Shareholders.
The Company has complied with the Principles and
Provisions of the AIC Code.
The AIC Code is available on the AIC website
(www.theaic.co.uk). It includes an explanation of how
the AIC Code adapts the Principles and Provisions
set out in the AIC Code to make them relevant for
investment companies.
Unless noted as an exception below, the requirements
ofthe AIC Code were complied with throughout the
yearended 31 December 2022.
The Board
The Board comprises four Directors, all of whom are
non-executive and independent in accordance with
AIC guidelines and Listing Rules. The Board actively
encourages Directors to hold shares in the Company,
ensuring that their personal interests are aligned with
theinterests of Shareholders. The Board does not
feel that such holdings call into question Directors'
independence. The Chair has served on the Board for
less than nine years from the date of his appointment
in June 2017. The Board therefore considers the
Chair independent in character and judgement and
his re-election is sought every year. The Nomination
Committee meets annually to discuss the appropriateness
of the Board appointments and considers there to be
no circumstances which are likely to impair the Chair’s
independence.
The Directors have significant relevant experience
of similar investment funds to VCTs, regulatory
organisations, corporate governance of listed
companies, the private equity industry and investing in
small companies.
Division of responsibilities
The Board is responsible to Shareholders for the proper
management of the Company and meets at least
quarterly and on an ad hoc basis as required. It has
formally adopted a schedule of matters that are required
to be brought to it for decision, thus ensuring that it
maintains full and effective control over appropriate
strategic, financial, operational and compliance issues.
Amanagement agreement between the Company and
the Manager sets out the matters over which the Manager
has authority, including monitoring and managing the
existing investment portfolio and the limits above which
Board approval must be sought. All other matters are
reserved for the approval of the Board of Directors.
TheManager, in the absence of explicit instruction from
the Board, is empowered to exercise discretion in the use
of the Company’s voting rights.
Individual Directors may, at the expense of the Company,
seek independent professional advice on any matter that
concerns them in the furtherance of their duties.
The Board has access to the officers of the Company
Secretary who also attend Board meetings.
Representatives of the Manager attend all formal Board
meetings although the Directors may on occasion meet
without representatives of the Manager being present.
Informal meetings with the Manager are also held
between Board meetings as required. Attendance by
Directors at Board and Committee meetings is detailed
inthe table opposite.
The Company Secretary provides full information on
the Company’s assets, liabilities and other relevant
information to the Board in advance of each Board
meeting.
In addition to the meetings on the following page, 18
further meetings were held in relation to the publication
of corporate documents, fundraising, share issues,
investments and Company strategy.
The Board of Foresight Enterprise VCT plc has
considered the Principles and Provisions of the
AIC Code of Corporate Governance (the “AIC Code”).
CORPORATE GOVERNANCE
58 FORESIGHT ENTERPRISE VCT PLC Annual Report and Accounts 31 December 2022
Board Audit Nomination
Management
Engagement &
Remuneration
Raymond Abbott 4/4 2/2 1/1 1/1
Gaynor Coley 4/4 2/2 1/1 1/1
Michael Gray 4/4 2/2 1/1 1/1
Simon Jamieson 4/4 2/2 1/1 1/1
In light of the responsibilities retained by the Board and its committees and of the responsibilities delegated to the
Manager, Shakespeare Martineau LLP and other service providers, the Company has not appointed a chief executive
officer, deputy chair or a senior independent non-executive director as recommended by the AIC Code. The provisions
of the AIC Code which relate to the division of responsibilities between a chair and a chief executive officer are,
accordingly, not applicable to the Company.
Board committees
The Board has adopted formal terms of reference, which are available to view by writing to the Company Secretary
atthe registered office, for three standing committees which make recommendations to the Board in specificareas.
The Audit Committee comprises Gaynor Coley (Chair), Raymond Abbott, Michael Gray and Simon Jamieson, allof
whom are considered to have sufficient recent and relevant financial experience to discharge the role, andmeets at
least twice a year to consider, amongst other things, the following:
•
Review the valuation of unquoted investments
•
Monitor the integrity of the Annual and Half-Yearly Reports of the Company and recommend the accounts to the
Board for approval
•
Review the Company’s internal control and risk management systems
•
Make recommendations to the Board in relation totheappointment of the external auditor
•
Review and monitor the external auditor’s independence
•
Implement and review the Company’s policy on the engagement of the external auditor to supply non-audit
services
In the prior year, the Shareholders reappointed Deloitte LLP asthe Company’s auditor as proposed by the Board.
The Audit Committee has performed an assessment of the audit process and the auditor’s report in the Audit
Committee Report. The Directors have decided to recommend the reappointment of Deloitte LLP as auditor and a
resolution concerning this will be proposed at the Annual General Meeting. Blick Rothenberg Limited provides the
Company’s taxation services.
The Management Engagement & Remuneration Committee comprises Michael Gray (Chair), Raymond Abbott,
GaynorColey and Simon Jamieson and meets atleast annually to consider the levels of remuneration ofthe Directors.
More details can be found in the Directors’ Remuneration Report. The Management Engagement &Remuneration
Committee also reviews theappointment and terms of engagement of the Manager. The Board has decided that the
entire Board of Directors should fulfil the role of the Management Engagement &Remuneration Committee due to
itssize.
The Nomination Committee comprises Michael Gray (Chair), Raymond Abbott, Gaynor Coley and Simon Jamieson and
meets at least annually to consider the composition and balance of skills, knowledge and experience of the Board and
to make nominations to the Board in the event of a vacancy. The Board has decided that the entire Board of Directors
should fulfil the role ofthe Nomination Committee due to its size.
GOVERNANCESTRATEGIC REPORT FINANCIAL STATEMENTS
FORESIGHT ENTERPRISE VCT PLC Annual Report and Accounts 31 December 2022 59
CORPORATE GOVERNANCE CONTINUED
Board committees continued
The Board believes that, as a whole, it has an appropriate
balance of skills, experience and knowledge. The Board
believes that diversity of experience and approach,
including gender diversity, amongst Board members is
important and it is the Company’s policy to give careful
consideration to issues of Board balance and diversity
when making new appointments. The Board currently
comprises three male Directors and one female Director.
There is no formal diversity policy in place, however
the Board is conscious of the need for diversity and
will consider both male and female candidates from all
ethnic backgrounds when making new appointments.
The Nomination Committee makes recommendations to
the Board on the Company’s succession plans and also
considers the resolutions for the re-election of Directors.
Board evaluation
The Board undertakes a formal annual evaluation of
its own performance and that of its committees, as
recommended by the AIC Code. Initially, the evaluation
takes the form of a questionnaire for the Chair and
individual Directors. The Chair then discusses the results
with the Board (and its committees) and following
completion of this stage of the evaluation, the Chair will
take appropriate action to address any issues arising from
the process.
Additionally, the Board intends for an external evaluation
of its own performance and that of its committees to take
place in 2023, which has been pushed back by one year
to allow for the Board to be refreshed.
Internal control
The Directors have overall responsibility for the
Company’s system of internal control and for reviewing
its effectiveness.
The internal controls system is designed to manage
rather than eliminate the risks of failure to achieve the
Company’s business objectives. The system is designed
to meet the particular needs of the Company and
the risks to which it is exposed and by its nature can
provide reasonable, but not absolute, assurance against
misstatement or loss.
The Manager has an established system of financial
control, including internal financial controls, to ensure
that proper accounting records are maintained and that
financial information for use within the business and for
reporting to Shareholders is accurate and reliable and
that the Company’s assets are safeguarded.
The Manager was appointed as Company Secretary in
2017 with responsibilities relating to the administration of
the non-financial systems of internal control. All Directors
have access to the advice and services of the officers of
the Company Secretary, who is responsible to the Board
for ensuring that Board procedures and applicable rules
and regulations are complied with.
Pursuant to the terms of its appointment, the Manager
invests the Company’s assets and has physical custody
ofdocuments of title relating to equity investments.
There is a continuous process for identifying, evaluating
and managing the significant risks faced by the Company,
that has been in place for the year under review and up to
the date of approval of the Annual Report and Accounts,
and this process is regularly reviewed by the Board
and accords with the guidance. The process is based
principally on the Manager’s existing risk-based approach
to internal control whereby a risk register is created that
identifies the key functions carried out by the Manager
and other service providers, the individual activities
undertaken within those functions, the risks associated
with each activity and the controls employed to counter
those risks. A residual risk rating is then applied.
The Board is provided with reports highlighting
all changes to the risk ratings and confirming the
action that has been, or is being, taken. This process
covers consideration of the key business, operational,
compliance and financial risks facing the Company and
includes consideration of the risks associated with the
Company’s arrangements with the Manager, Shakespeare
Martineau LLP and other service providers.
The Audit Committee has carried out a review of the
effectiveness of the system of internal control, together
with a review of the operational and compliance controls
and risk management, as it operated during the year, and
reported its conclusions to the Board (which was satisfied
with the outcome of the review).
Such review procedures have been in place throughout
the full financial year and up to the date of approval
of the accounts, and the Board is satisfied with their
effectiveness. These procedures are designed to manage,
rather than eliminate, risk and, by their nature, can only
provide reasonable, but not absolute, assurance against
material misstatement or loss. The Board monitors the
investment performance of the Company against its
objectives at each Board meeting.
60 FORESIGHT ENTERPRISE VCT PLC Annual Report and Accounts 31 December 2022
The Board also reviews the Company’s activities since the
last Board meeting to ensure that the Manager adheres to
the agreed investment policy and approved investment
guidelines and, if necessary, approves changes to such
policy and guidelines.
The Board has reviewed the need for an internal audit
function. It has decided that the systems and procedures
employed by the Manager, the Audit Committee and
other third-party advisers provide sufficient assurance
that a sound system of internal control, which safeguards
Shareholders’ investments and the Company’s assets,
is maintained. In addition, the Company’s financial
statements are audited by external auditors. The Board
has therefore concluded that it is not necessary to
establish an internal audit function at present, but this
policy will be kept under review.
UK Stewardship Code
While the Manager supports the aims and objectives
of the FRC’s Stewardship Code, it is not currently a
signatory. It is, however, working to ensure alignment
with the Stewardship Code, and will periodically review
its position regarding becoming a signatory in future.
A statement to that effect is noted on the Manager’s
website and can be found at:
www.foresightgroup.eu/stewardship-code.
Relations with Shareholders
The Company communicates with Shareholders and
solicits their views where it considers it is appropriate
to do so. The Manager hosts regular investor forums
for Shareholders and publishes quarterly factsheets,
as well as information on new investments, on the
Company’swebsite.
Individual Shareholders are welcomed, to the Annual
General Meeting, where they have the opportunity to ask
questions of the Directors, including the Chair, as well
as the Chairs of the Audit, Nomination and Management
Engagement & Remuneration Committees. There is also
an open invitation for Shareholders to meet the Manager.
For more information on the Directors’ relations with
Shareholders please refer to the Section 172(1) statement
in the Strategic Report on pages 40 and 41.
Raymond Abbott
Chair
28 April 2023
GOVERNANCESTRATEGIC REPORT FINANCIAL STATEMENTS
FORESIGHT ENTERPRISE VCT PLC Annual Report and Accounts 31 December 2022 61
AUDIT COMMITTEE REPORT
The Audit Committee has identified and considered the
following key areas of risk in relation to the business
activities and financial statements of the Company:
•
Valuation of unquoted investments
•
Existence of unquoted investments
•
Venture Capital Trust status
These issues were discussed with the Manager and the
auditor at the conclusion of the audit of the financial
statements, as explained below:
Valuation of unquoted investments
The Directors have met quarterly to assess the
appropriateness of the estimates and judgements
made by the Manager in the investment valuations.
AsaVCT, the Company’s investments are predominantly
in unquoted securities, which can be difficult to value
and require the application of skill, knowledge and
judgement by the Board and Audit Committee. During
the valuation process the Manager follows the valuation
methodologies for unlisted investments as set out in
the IPEV Valuation Guidelines and appropriate industry
valuation benchmarks. These valuation policies are set
out in note 1 of the accounts. These were then further
checked by the auditor and reviewed and challenged
by the Audit Committee. The Manager confirmed to the
Audit Committee that the investment valuations had been
calculated consistently with prior years and in accordance
with published industry guidelines, taking account of the
latest available information about investee companies
and current market data.
Existence of unquoted investments
For all investments made, both share certificates and
loan stock documentation are held by the Manager in
the Company’s own name and regular reconciliations
are carried out by the Manager to ensure that valid
documents of title are held.
Venture Capital Trust status
Maintaining VCT status and adhering to the tax rules of
Section 274 of ITA 2007 is critical to both the Company
and its Shareholders for them to retain their VCT
taxbenefits.
The Manager confirmed to the Audit Committee that
the conditions for maintaining the Company’s status
as an approved VCT had been met throughout the
year. TheManager seeks legal advice in advance for
all qualifying investments and reviews the Company’s
qualifying status in advance of realisations being made
and throughout the year. The Audit Committee is in
regular contact with the Manager and any potential issues
with VCT status would be discussed at or between formal
meetings. In addition, an external third-party review
of VCT status is conducted by Shakespeare Martineau
LLP on a quarterly basis and this is reported to both the
Board, Audit Committee and the Manager.
Gaynor Coley
Chair of the Audit Committee
62 FORESIGHT ENTERPRISE VCT PLC Annual Report and Accounts 31 December 2022
Auditor’s assessment
The Manager and auditor confirmed to the Audit
Committee that they were not aware of any material
misstatements. Having reviewed the reports received
from the Manager and auditor, the Audit Committee
is satisfied that the key areas of risk and judgement
have been addressed appropriately in the financial
statements and that the significant assumptions used in
determining the value of assets and liabilities have been
properly appraised and are sufficiently robust. TheAudit
Committee considers that Deloitte LLP has carried out its
duties as auditor in a diligent and professional manner.
During the year, the Audit Committee assessed the
effectiveness of the current external audit process by
assessing and discussing specific audit documentation
presented to it in accordance with guidance issued
by the Auditing Practices Board. The audit partner is
rotated every five years, ensuring that objectivity and
independence is not impaired.
The current audit partner, Chris Hunter, assumed
responsibility for the audit in 2019. Deloitte LLP was
appointed as auditor in November 2019, with its first audit
for the year ended 31 March 2020. No tender for the audit
of the Company has been undertaken since this date and
the Audit Committee does not intend to put the audit
out to tender during the current financial year. As part of
its review of the continuing appointment of the auditor,
the Audit Committee considers the need to put the
audit out to tender, its fees and independence from the
Manager along with any matters raised during each audit.
DeloitteLLP is not engaged for non-audit services.
The Audit Committee considered the performance of
the auditor during the year and agreed that Deloitte
LLP continued to provide a good level of service and
maintained a good knowledge of the VCT market, making
sure audit quality continued to be maintained.
The Audit Committee met in April 2022 to review
the Annual Report and Accounts for the year ended
31December 2021 and the Company’s risk register,
inSeptember 2022 to review the Half-Yearly Report,
theaudit plan for the year ended 31 December 2022 and
the Company’s risk register, and in April 2023 to review
the Annual Report and Accounts for the year ended
31December 2022.
Gaynor Coley
Chair of the Audit Committee
28 April 2023
GOVERNANCESTRATEGIC REPORT FINANCIAL STATEMENTS
FORESIGHT ENTERPRISE VCT PLC Annual Report and Accounts 31 December 2022 63
Introduction
The Board has prepared this report in accordance
with the requirements of Schedule 8 of the Large and
Medium-sized Companies and Groups (Accounts and
Reports) Regulations 2008. An ordinary resolution to
approve this report will be put to the members at the
forthcoming Annual General Meeting.
The law requires the Company’s auditor, Deloitte LLP,
to audit certain of the disclosures provided. Where
disclosures have been audited, they are indicated as
such. The auditor’s opinion is included in the Independent
Auditor’s Report.
Annual Statement from the Chair of the
Management Engagement & Remuneration
Committee
The Board, which is profiled on pages 50 and 51, consists
solely of Non-Executive Directors and considers at least
annually the level of the Directors’ fees.
During the year, remuneration for the Directors was
increased following Shareholder approval of the
remuneration policy and remuneration report at the
Annual General Meeting.
In April 2023, the Committee concluded, following a
review of the level of Directors’ fees, there would be an
increase of 2.5% to the base salary of Directors effective
1 July 2023. This followed a 4.0% increase in the base
fee of Directors, effective 1 July 2022, agreed by the
Committee in April 2022.
Consideration by the Directors of matters
relating to Directors’ remuneration
The Management Engagement & Remuneration
Committee comprises four Directors: Michael
Gray (Chair), Raymond Abbott, Gaynor Coley
andSimonJamieson.
The Management Engagement & Remuneration
Committee meets at least annually to consider the levels
of remuneration of the Directors, specifically reflecting
the time commitment and responsibilities of the role.
The Management Engagement & Remuneration
Committee also undertakes external comparisons and
reviews to ensure that the levels of remuneration paid
are broadly in line with industry standards and members
have access to independent advice where they consider
it appropriate. During the year neither the Board nor the
Management Engagement & Remuneration Committee
has been provided with external advice or services by any
person, but has received industry comparison information
from the Manager and industry research carried out by
third parties in respect of Directors’ remuneration.
The remuneration policy set by the Board is described
on the following page. Individual remuneration packages
are determined by the Management Engagement &
Remuneration Committee within the framework of
thispolicy.
Directors are not involved in deciding their own individual
remuneration.
Michael Gray
Chair of the Management Engagement & Remuneration Committee
DIRECTORS’ REMUNERATION REPORT
64 FORESIGHT ENTERPRISE VCT PLC Annual Report and Accounts 31 December 2022
Remuneration policy
The Board’s policy is that the remuneration of
Non-Executive Directors should reflect time spent
and the responsibilities borne by the Directors for the
Company’s affairs and should be sufficient to enable
candidates of high calibre to be recruited. The levels of
Directors’ fees paid by the Company for the year ended
31 December 2022 were agreed during the year.
It is considered appropriate that no aspect of Directors’
remuneration should be performance related in light of
the Directors’ non-executive status, and Directors are not
eligible for bonuses or other benefits. The Company’s
policy is to pay the Directors monthly in arrears, to the
Directors personally (or to a third party if requested
by any Director, although no such request has been
made). None of the Directors have a service contract
but, under letters of appointment dated 22June2017 for
Raymond Abbott, 10September2020 for Gaynor Coley,
14February2017 for Michael Gray and 3October2014
for Simon Jamieson, they may resign by giving six
months’ notice in writing to the Board or by mutual
consent. Nocompensation is payable to Directors on
leavingoffice.
The above remuneration policy was last approved
by Shareholders at the Annual General Meeting on
9June2022 and it is the intention of the Board that the
above remuneration policy will, subject to Shareholder
approval, come into effect immediately following the
Annual General Meeting of the Company on 8June2023.
Shareholders’ views in respect of Directors’ remuneration
may be communicated at the Company’s Annual General
Meeting and are taken into account in formulating the
Directors’ remuneration policy. At the last Annual General
Meeting, 87.9% of Shareholders voted for the resolution
approving the Directors’ Remuneration Report, showing
significant Shareholder support.
Please refer to page 67 for the Directors’
remunerationtables.
Retirement by rotation
All Directors retire and may offer themselves
forre-election every year.
Details of individual emoluments and
compensation
The emoluments in respect of qualifying services of
each person who served as a Director during the year
are shown on page 67. No Director has waived or agreed
towaive any emoluments from the Company in either
thecurrent or previous year.
No other remuneration was paid or payable by the
Company during the current or previous year, nor were
any expenses claimed by or paid to them other than for
expenses incurred wholly, necessarily and exclusively in
furtherance of their duties as Directors of the Company.
The Company’s Articles of Association do not set an
annual limit on the level of Directors’ fees but fees must
be considered within the wider remuneration policy
notedabove.
Directors’ liability insurance is held by the Company
inrespect of the Directors.
GOVERNANCESTRATEGIC REPORT FINANCIAL STATEMENTS
FORESIGHT ENTERPRISE VCT PLC Annual Report and Accounts 31 December 2022 65
DIRECTORS’ REMUNERATION REPORT CONTINUED
Share Price Total Return
The graph below charts the total Shareholder return to 31 December 2022, on the hypothetical value of £100 invested
on 1 January 2018. The return is compared to the total Shareholder return on a notional investment of £100 in the AIC
VCT Generalist sector.
Share Price Total Return (pence)
140
130
80
150
160
31 December
2017
31 December
2018
31 December
2019
31 December
2020
31 December
2021
31 December
2022
Foresight EnterpriseVCT plc Share Price Total Return
AIC VCT Generalist sector Share Price Total Return
100
90
110
120
Share Price Total Return (pence) (rebased)
Directors
The Directors who held offi ce during the year or up to the date of signing the Annual Report and their interests in the
issued shares of 1p each of the Company were as follows:
31 December 2022 31 December 2021
Shares Shares
Raymond Abbott 60,818
1
60,818
1
Gaynor Coley — —
Michael Gray 28,448 28,448
Simon Jamieson 34,841 34,841
Total 124,107 124,107
1. 10,744 shares held by Raymond Abbott’s wife and 17,837 shares held through an Interactive Investor account.
All the Directors’ share interests shown above were held benefi cially.
There have been no changes in the Directors’ share interests between 31 December 2022 and the date of this report.
In accordance with the UK Corporate Governance Code and the Board’s policy, Mr Abbott, Ms Coley, Mr Gray and
MrJamieson retire annually and, being eligible, off er themselves for re-election. Biographical notes on the Directors
are given on pages 50 and 51.
The Board believes that Mr Abbott’s, Ms Coley’s and Mr Gray’s skills, experience and knowledge continue to
complement each other and benefi t the Company and recommends their re-election to the Board. None of the
Directors has a contract of service with the Company.
66 FORESIGHT ENTERPRISE VCT PLC Annual Report and Accounts 31 December 2022
Audited information
The information below has been audited. See the Independent Auditor’s Report on pages 70 to 75.
Directors’ fees Directors’ taxable Total remuneration Total remuneration
year ended benefits
1
year ended year ended year ended
31 December 2022 31 December 2022 31 December 2022 31 December 2021
(£) (£) (£) (£)
2
Raymond Abbott 33,925 — 33,925 32,950
Gaynor Coley 30,675 3,054 33,729 29,775
Michael Gray 26,400 720 27,120 25,650
Simon Jamieson 25,150 — 25,150 23,983
Total 116,150 3,774 119,924 112,358
1. Relates to expenses incurred for attending meetings at the Company’s principal place of business.
2. There were no taxable benefits received by Directors in the year.
The Directors are not eligible for pension benefits, share options or long-term incentive schemes. Directors’ fees are
reviewed annually, and fees were last increased on 1 July 2022 after consideration of fees paid to other VCT directors
and available independent research.
Votes cast For and Against the Directors’ Remuneration Report for the year ended 31 December 2021:
Shares and percentage Shares and percentage
of votes cast of votes cast Number of
For Against votes withheld
87. 9% 12.1%
9,516,979 votes 1,309,139 votes 260,470 votes
In accordance with Companies Act 2006 legislation, the table below sets out the relative importance of spend on pay
when compared to distributions to Shareholders in the form of dividends and share buybacks.
Year ended Year ended
31 December 2022 31 December 2021
Dividends £14,983,000 £8,086,000
Share buybacks £1,471,000 £1,481,000
Total Shareholder distributions £16,454,000 £9,567,000
Directors’ fees excluding employer's National Insurance contributions £116,150 £112,358
Directors’ fees % of Shareholder distributions 0.7% 1.2%
Approval of report
An ordinary resolution for the approval of this Directors’ Remuneration Report will be put to Shareholders at the
forthcoming Annual General Meeting.
This Directors’ Remuneration Report was approved by the Board on 28 April 2023 and is signed on its behalf by
Michael Gray (Director).
On behalf of the Board
Michael Gray
Chair of the Management Engagement & Remuneration Committee
28 April 2023
GOVERNANCESTRATEGIC REPORT FINANCIAL STATEMENTS
FORESIGHT ENTERPRISE VCT PLC Annual Report and Accounts 31 December 2022 67
Statement of Directors’ responsibilities in
respect of the Annual Report and Accounts
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 year. Under that law they
have elected to prepare the financial statements in
accordance with UK Accounting Standards including FRS
102, the Financial Reporting Standard applicable in the
UK and Republic of Ireland.
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 its profit or loss for that year. In preparing
these financial statements, the Directors are required to:
•
Select suitable accounting policies and then apply
them consistently
•
Make judgements and estimates that are reasonable
•
State whether applicable UK Accounting Standards
have been followed, subject to any material departures
disclosed and explained in the financial statements
•
Assess the Company’s ability to continue as a going
concern, disclosing, as applicable, matters related to
going concern
•
Use the going concern basis of accounting unless they
either intend to liquidate the Company or to cease
operations, or have no realistic alternative but to do so
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 responsible for such internal control as
they determine is necessary to enable the preparation
of financial statements that are free from material
misstatement, whether due to fraud or error, and
have general responsibility for taking such steps as
are reasonably open to them to safeguard the assets
of theCompany and to prevent and detect fraud and
otherirregularities.
Under applicable law and regulations, the Directors
are also responsible for preparing a Strategic Report,
Directors’ Report, Directors’ Remuneration Report and
Corporate Governance Statement that complies with
thatlaw and those regulations.
The Directors are responsible for the maintenance
andintegrity of the corporate and financial information
included on the Company’s website. Legislation in the
UK governing the preparation and dissemination of
financial statements may differ from legislation in other
jurisdictions.
Statement of the Directors in respect
of the Annual Report
We confirm that to the best of our knowledge:
•
The financial statements, prepared in accordance with
the applicable accounting standards, give a true and
fair view of the assets, liabilities, financial position and
profit or loss of the Company
•
The Directors’ Report and the Strategic Report include
a fair review of the development and performance
of the business and the position of the issuer,
together with a description of the principal risks and
uncertainties that they face
We consider the Annual Report and Accounts, taken as a
whole, are fair, balanced and understandable and provide
the information necessary for Shareholders to assess the
Company’s position and performance, business model
and strategy.
On behalf of the Board
Raymond Abbott
Chair
28 April 2023
STATEMENT OF DIRECTORS’ RESPONSIBILITIES
68 FORESIGHT ENTERPRISE VCT PLC Annual Report and Accounts 31 December 2022
WHAT’S IN THIS SECTION
INDEPENDENT AUDITOR'S REPORT 70
INCOME STATEMENT 76
RECONCILIATION OF MOVEMENTS
IN SHAREHOLDERS’ FUNDS 77
BALANCE SHEET 78
CASH FLOW STATEMENT 79
NOTES TO THE ACCOUNTS 80
NOTICE OF ANNUAL
GENERAL MEETING 96
GLOSSARY OF TERMS 100
FINANCIAL CONDUCT AUTHORITY 101
CORPORATE INFORMATION 102
SHAREHOLDER INFORMATION 103
ADDITIONAL INFORMATION 104
FINANCIAL
STATEMENTS
GOVERNANCE FINANCIAL STATEMENTSSTRATEGIC REPORT
FORESIGHT ENTERPRISE VCT PLC Annual Report and Accounts 31 December 2022 69
Report on the audit of the financial
statements
1. Opinion
In our opinion the financial statements of Foresight
Enterprise VCT plc (the “Company”):
•
Give a true and fair view of the state of the Company’s
affairs as at 31 December 2022 and of its return for the
year then ended
•
Have been properly prepared in accordance with
United Kingdom Generally Accepted Accounting
Practice, including Financial Reporting Standard 102
“The Financial Reporting Standard applicable in the
UK and Republic of Ireland”
•
Have been prepared in accordance with the
requirements of the Companies Act 2006
We have audited the financial statements which comprise:
•
The Income Statement
•
The Balance Sheet
•
The Statement of Changes in Equity
•
The Cash Flow Statement
•
The related Notes 1 to 20
The financial reporting framework that has been
applied in their preparation is applicable law and
United Kingdom Accounting Standards, including
Financial Reporting Standard 102 “The Financial
Reporting Standard applicable in the UK and Republic
of Ireland” (United Kingdom Generally Accepted
Accounting Practice).
2. Basis for opinion
We conducted our audit in accordance with
International Standards on Auditing (UK) (ISAs
(UK)) and applicable law. Our responsibilities
under those standards are further described in the
auditor’s responsibilities for the audit of the financial
statements section of our report.
We are independent of the Company in accordance
with the ethical requirements that are relevant to our
audit of the financial statements in the UK, including
the Financial Reporting Council’s (the ‘FRC’s’) Ethical
Standard as applied to listed public interest entities,
and we have fulfilled our other ethical responsibilities in
accordance with these requirements. We confirm that
we have not provided any non-audit services prohibited
by the FRC’s Ethical Standard to the Company.
We believe that the audit evidence we have obtained
is sufficient and appropriate to provide a basis for our
opinion.
TO THE MEMBERS OF FORESIGHT ENTERPRISE VCT PLC
INDEPENDENT AUDITOR'S REPORT
3. Summary of our audit approach
Key audit matters
The key audit matter that we identified in the current year was the valuation of
unquoted investments.
Within this report, key audit matters are identified as follows:
Newly identified
Increased level of risk
Similar level of risk
Decreased level of risk
Materiality The materiality that we used in the current year was £2.7m, which was determined
on the basis of 2% of the Net Asset Value of the Company at year end.
Scoping Audit work to respond to the risks of material misstatement was performed directly
by the engagement team.
Significant changes
inour approach
There were no significant changes to our audit approach in the current year.
70 FORESIGHT ENTERPRISE VCT PLC Annual Report and Accounts 31 December 2022
4. Conclusions relating to going concern
In auditing the financial statements, we have
concluded that the Directors’ use of the going
concern basis of accounting in the preparation of the
financial statements is appropriate.
Our evaluation of the Directors’ assessment of the
Company’s ability to continue to adopt the going
concern basis of accounting included:
•
Considering as part of our risk assessment the nature
of the Company, its business model and related
risks including where relevant the impact of the
evolving economic landscape, the requirements of
the applicable financial reporting framework and the
system of internal control
•
Challenging the underlying data and key assumptions
through assessing the forecasted cash flows and the
impact of external market forces, and evaluating the
Directors’ plans for future actions in relation to their
going concern assessment
•
Assessing the relevant disclosures about whether the
Directors considered it appropriate to adopt the going
concern basis of accounting in preparing the Financial
Statements
Based on the work we have performed, we 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 a period of at least
twelve months from when the financial statements are
authorised for issue.
In relation to the reporting on how the Company has
applied the UK Corporate Governance Code, we have
nothing material to add or draw attention to in relation
to the Directors’ statement in the financial statements
about whether the Directors considered it appropriate
to adopt the going concern basis of accounting.
Our responsibilities and the responsibilities of the
Directors with respect to going concern are described
in the relevant sections of this report.
5. Key audit matters
Key audit matters are those matters that, in our
professional judgement, were of most significance in
our audit of the financial statements of the current
period and include the most significant assessed
risks of material misstatement (whether or not due
to fraud) that we identified. These matters included
those which had the greatest effect on: the overall
audit strategy, the allocation of resources in the audit;
and directing the efforts of the engagement team.
These matters were addressed in the context of our
audit of the financial statements as a whole, and in
forming our opinion thereon, and we do not provide a
separate opinion on these matters.
5.1. Valuation of unquoted investments
Key audit
matter
description
The Company holds unquoted investments of £112 million representing 80.7% of the entity’s net
assets (2021: £115.2 million, 86.5%).
The valuation of the investments held by the VCT, due to materiality in the context of the
financial statements as a whole, is considered to be one of the areas which has the greatest
effect on our overall audit strategy and allocation of resources in planning and completing our
audit. The unquoted investments are valued in line with IPEV Guidelines and carry a higher
degree of judgement. We have identified current economic conditions as being a factor
potentially impacting the valuation of certain investments. Specifically, factors such as high
inflation and energy prices, increasing interest rates and supply chain issues may result in
increased risk over the valuation of certain investments. Therefore, we have pinpointed the key
audit matter to the valuation of unquoted investments which have been particularly impacted
by one or more of these factors, with the valuation of the remaining portfolio being classified
as higher risk.
Refer to note 1b to the financial statements for the accounting policy on unquoted investments
and details of the investments are disclosed in note 8 to the financial statements. Critical
accounting judgement and key sources of estimation uncertainty is disclosed in note 1l. The
valuation of investment risk is included within the Audit Committee report on page 62.
GOVERNANCESTRATEGIC REPORT FINANCIAL STATEMENTS
FORESIGHT ENTERPRISE VCT PLC Annual Report and Accounts 31 December 2022 71
TO THE MEMBERS OF FORESIGHT ENTERPRISE VCT PLC
INDEPENDENT AUDITOR'S REPORT CONTINUED
5. Key audit matters continued
5.1. Valuation of unquoted investments continued
How the scope
of our audit
responded to
the key audit
matter
We have performed the following testing to address the key audit matter:
•
Obtained an understanding of relevant controls in place over the valuation of unquoted
investments through enquiry of management and detailed review of documentation of
relevant controls
•
Assessed the valuation methodology applied for compliance with the IPEV Guidelines and
assessed the assumptions adopted
•
Tested the judgemental inputs around maintainable Revenue/EBITDA by performing back
testing against latest financial information and historical performance where available, to
assess and evaluate the appropriateness of the assumption on those inputs
•
Evaluated any adjustments made in relation to the impact of inflation and other market risks
on the performance of the investee companies, scrutinising cash position and forecasts as
relevant
•
Assessed the suitability and accuracy of the multiple from a basket of comparable
transactions/quoted companies
•
Tested a sample of unquoted investee company data (e.g. financial information and capital
structures) to supporting documentation
•
Assessed whether any critical judgement or sources of estimation uncertainty are applied
and appropriately disclosed
Key
observations
Based on our testing, we concluded that the valuation of the unquoted investments is
reasonable.
6. Our application of materiality
6.1. Materiality
We define materiality as the magnitude of misstatement in the financial statements that makes it probable that the
economic decisions of a reasonably knowledgeable person would be changed or influenced. We use materiality
both in planning the scope of our audit work and in evaluating the results of our work.
Based on our professional judgement, we determined materiality for the financial statements as a whole as follows:
Materiality £2.7m (2021: £2.66m)
Basis for
determining
materiality
2% (2021: 2%) of Net Asset Value.
Rationale
for the
benchmark
applied
Net Asset Value is the primary
measure used by the shareholders
in assessing the performance of the
Company as an investment entity.
NAV Materiality
Nav
£138.5m
Materiality
£2.7m
Audit Committee
reporting threshold
£135k
6.2. Performance materiality
We set performance materiality at a level lower than materiality to reduce the probability that, in aggregate, uncorrected
and undetected misstatements exceed the materiality for the Financial Statements as a whole. Performance materiality
was set at 70% of materiality for the 2022 audit (2021: 70%). In determining performance materiality, we considered
the quality of the Company’s overall control environment and management’s willingness to correct identified errors in
previous audits.
6.3. Error reporting threshold
We agreed with the Audit Committee that we would report to the Committee all audit differences in excess of
£135k (2021: £133k), as well as differences below that threshold that, in our view, warranted reporting on qualitative
grounds. We also report to the Audit Committee on disclosure matters that we identified when assessing the overall
presentation of the Financial Statements.
72 FORESIGHT ENTERPRISE VCT PLC Annual Report and Accounts 31 December 2022
7. An overview of the scope of our audit
7.1. Scoping
Our audit was scoped by obtaining an understanding
of the entity and its environment, including
internal control, and assessing the risks of material
misstatement. Audit work to respond to the risks of
material misstatement was performed directly by the
audit engagement team.
7.2. Our consideration of the control environment
The investment management and accounting and
reporting operations were undertaken by the Manager,
the safeguarding of assets resides with the Manager.
We have obtained an understanding of the Manager’s
systems of internal control and reviewed the Manager’s
controls report. In the current year, we took a controls
reliance strategy over the valuation of unquoted
investments. This consisted of testing the relevant
controls over the review, challenge and approval of the
unquoted investment valuation.
7.3. Our consideration of climate-related risks
As part of our risk assessment, we have considered
the potential impact of climate change on the VCT’s
business and its financial statements. We obtained an
understanding of the process for identifying climate-
related risks, the processes and controls in place, as
well as the determination of any mitigating actions.
The Manager continues to develop its assessment
of the potential impact of environmental, social and
governance (“ESG”) related risks, including climate
change. As outlined in the strategic report on page
45, the Board considers climate change to be an
emerging risk within the business. As part of our
assessment of our key audit matter, we considered
whether there was a heightened element of climate
risk in relation to the key judgements in the valuation
of unquoted investments.
Details of the Board’s climate change considerations
are provided in the Climate Change Statement in the
Responsible Investment section on pages 43 and
44. We have assessed whether the risks identified by
the entity are consistent with our understanding of
the business and read the disclosures in the Annual
Report to consider whether they are materially
consistent with the financial statements and our
knowledge obtained in the audit.
8. Other information
8.1. Scoping
The other information comprises the information
included in the Annual Report, other than the financial
statements and our auditor’s report thereon. The
Directors are responsible for the other information
contained within the Annual Report.
Our opinion on the financial statements does not cover
the other information and, except to the extent otherwise
explicitly stated in our report, we do not express any form
of assurance conclusion thereon.
Our responsibility is to read the other information and,
in doing so, consider whether the other information is
materially inconsistent with the financial statements or
our knowledge obtained in the course of the audit, or
otherwise appears to be materially misstated.
If we identify such material inconsistencies or apparent
material misstatements, we are required to determine
whether this gives rise to a material misstatement in the
financial statements themselves. If, based on the work
we have performed, we conclude that there is a material
misstatement of this other information, we are required to
report that fact.
We have nothing to report in this regard.
9. Responsibilities of Directors
As explained more fully in the Directors’ responsibilities
statement, the Directors are responsible for the
preparation of the financial statements and for being
satisfied that they give a true and fair view, and for such
internal control as the Directors determine is necessary to
enable the preparation of financial statements that are free
from material misstatement, whether due to fraud or error.
In preparing the financial statements, the Directors are
responsible for assessing the Company’s ability to continue
as a going concern, disclosing as applicable, matters
related to going concern and using the going concern
basis of accounting unless the Directors either intend to
liquidate the Company or to cease operations, or have no
realistic alternative but to do so.
10. Auditor’s responsibilities for the audit of the
financial statements
Our objectives are to obtain reasonable assurance about
whether the financial statements as a whole are free from
material misstatement, whether due to fraud or error,
and to issue an auditor’s report that includes our opinion.
Reasonable assurance is a high level of assurance, but is
not a guarantee that an audit conducted in accordance
with ISAs (UK) will always detect a material misstatement
when it exists. Misstatements can arise from fraud or
error and are considered material if, individually or
in the aggregate, they could reasonably be expected
toinfluence the economic decisions of users taken on
thebasis of these financial statements.
A further description of our responsibilities for the
audit of the financial statements is located on the FRC’s
website at: www.frc.org.uk/auditorsresponsibilities. This
description forms part of our auditor’s report.
GOVERNANCESTRATEGIC REPORT FINANCIAL STATEMENTS
FORESIGHT ENTERPRISE VCT PLC Annual Report and Accounts 31 December 2022 73
TO THE MEMBERS OF FORESIGHT ENTERPRISE VCT PLC
INDEPENDENT AUDITOR'S REPORT CONTINUED
In addition, we considered provisions of other laws
and regulations that do not have a direct effect on the
financial statements but compliance with which may be
fundamental to the Company’s ability to operate or to
avoid a material penalty. These included the Company’s
compliance with VCT regulations.
11.2. Audit response to risks identified
As a result of performing the above, we identified the
valuation of unquoted investments as a key audit matter
related to the potential risk of fraud. The key audit
matters section of our report explains the matter in more
detail and also describes the specific procedures we
performed in response to that key audit matter.
In addition to the above, our procedures to respond to
risks identified included the following:
•
Reviewing the financial statement disclosures and testing
to supporting documentation to assess compliance with
provisions of relevant laws and regulations described as
having a direct effect on the financial statements
•
Enquiring of management and the Audit Committee
concerning actual and potential litigation and claims
•
Performing analytical procedures to identify any unusual
or unexpected relationships that may indicate risks of
material misstatement due to fraud
•
Reading minutes of meetings of those charged with
governance, and reviewing correspondence with HMRC
and the FCA
•
In addressing the risk of fraud through management
override of controls, testing the appropriateness of journal
entries and other adjustments; assessing whether the
judgements made in making accounting estimates are
indicative of a potential bias; and evaluating the business
rationale of any significant transactions that are unusual
oroutside the normal course of business
We also communicated relevant identified laws and
regulations and potential fraud risks to all engagement
team members, including internal specialists,
and remained alert to any indications of fraud or
non-compliance with laws and regulations throughout
theaudit.
Report on other legal and regulatory
requirements
12. Opinions on other matters prescribed by
the Companies Act 2006
In our opinion the part of the Directors’ remuneration
report to be audited has been properly prepared in
accordance with the Companies Act 2006.
11. Extent to which the audit was considered
capable of detecting irregularities, including
fraud
Irregularities, including fraud, are instances of
non-compliance with laws and regulations. We design
procedures in line with our responsibilities, outlined
above, to detect material misstatements in respect
of irregularities, including fraud. The extent to which
our procedures are capable of detecting irregularities,
including fraud is detailed below.
11.1. Identifying and assessing potential risks
related to irregularities
In identifying and assessing risks of material
misstatement in respect of irregularities, including
fraud and non-compliance with laws and regulations,
we considered the following:
•
The nature of the industry and sector, control
environment and business performance including the
design of the Company’s remuneration policies, key
drivers for Directors’ remuneration, bonus levels and
performance targets
•
Results of our enquiries of management and the
Audit Committee about their own identification and
assessment of the risks of irregularities including those
that are specific to the Company's sector
•
Any matters we identified having obtained and
reviewed the Company’s documentation of their
policies and procedures relating to:
•
Identifying, evaluating and complying with laws and
regulations and whether they were aware of any
instances of non-compliance
•
Detecting and responding to the risks of fraud
and whether they have knowledge of any actual,
suspected or alleged fraud
•
The internal controls established to mitigate risks of
fraud or non-compliance with laws and regulations
•
The matters discussed among the audit engagement
team regarding how and where fraud might occur in
the Financial Statements and any potential indicators
of fraud
As a result of these procedures, we considered
the opportunities and incentives that may exist
within the organisation for fraud and identified the
greatest potential for fraud in the following areas:
valuation of unquoted investments. In common with
all audits under ISAs (UK), we are also required to
perform specific procedures to respond to the risk of
management override.
We also obtained an understanding of the legal and
regulatory framework that the Company operates in,
focusing on provisions of those laws and regulations
that had a direct effect on the determination of material
amounts and disclosures in the financial statements. The
key laws and regulations we considered in this context
included the UK Companies Act and Listing Rules.
74 FORESIGHT ENTERPRISE VCT PLC Annual Report and Accounts 31 December 2022
•
Adequate accounting records have not been kept, or
returns adequate for our audit have not been received from
branches not visited by us
•
The financial statements are not in agreement with the
accounting records and returns
We have nothing to report in respect of these matters.
14.2. Directors’ remuneration
Under the Companies Act 2006 we are also required to
report if in our opinion certain disclosures of Directors’
remuneration have not been made or the part of the
Directors’ remuneration report to be audited is not in
agreement with the accounting records and returns.
We have nothing to report in respect of these matters.
15. Other matters which we are required to address
15.1. Auditor tenure
Following the recommendation of the Audit Committee,
we were appointed by the Board of Directors on 30
August 2019 to audit the financial statements for the
year ending 31 December 2019 and subsequent financial
periods. The period of total uninterrupted engagement
including previous renewals and reappointments of the
firm is 4 years, covering the years ending 31 December
2019 to 31 December 2022.
15.2. Consistency of the audit report with the
additional report to the Audit Committee
Our audit opinion is consistent with the additional report
to the Audit Committee we are required to provide in
accordance with ISAs (UK).
16. Use of our report
This report is made solely to the Company’s members,
as a body, in accordance with Chapter 3 of Part 16 of
the Companies Act 2006. Our audit work has been
undertaken so that we might state to the Company’s
members those matters we are required to state to them
in an auditor’s report and for no other purpose. To the
fullest extent permitted by law, we do not accept or
assume responsibility to anyone other than the Company
and the Company’s members as a body, for our audit
work, for this report, or for the opinions we have formed.
Chris Hunter CA (Senior statutory auditor)
For and on behalf of Deloitte LLP
Statutory Auditor
Edinburgh, United Kingdom
28 April 2023
In our opinion, based on the work undertaken in the
course of the audit:
•
The information given in the strategic report and the
Directors’ report for the financial year for which the
financial statements are prepared is consistent with
the financial statements
•
The strategic report and the Directors’ report have
been prepared in accordance with applicable legal
requirements
In the light of the knowledge and understanding
of the Company and its environment obtained in
the course of the audit, we have not identified any
material misstatements in the strategic report or the
Directors’ report.
13. Corporate Governance Statement
The Listing Rules require us to review the Directors'
statement in relation to going concern, longer-term
viability and that part of the Corporate Governance
Statement relating to the Company’s compliance with
the provisions of the UK Corporate Governance Code
specified for our review.
Based on the work undertaken as part of our audit, we
have concluded that each of the following elements
of the Corporate Governance Statement is materially
consistent with the financial statements and our
knowledge obtained during the audit:
•
The Directors’ statement with regards to the
appropriateness of adopting the going concern basis
of accounting and any material uncertainties identified
set out on pages 55 and 56
•
The Directors’ explanation as to its assessment of the
Company’s prospects, the period this assessment
covers and why the period is appropriate set out on
page 48
•
The Directors' statement on fair, balanced and
understandable set out on page 68
•
The Board’s confirmation that it has carried out a
robust assessment of the emerging and principal risks
set out on pages 45 to 47
•
The section of the Annual Report that describes
the review of effectiveness of risk management and
internal control systems set out on pages 60 and 61
•
The section describing the work of the Audit
Committee set out on pages 59 and 60
14. Matters on which we are required to report
by exception
14.1. Adequacy of explanations received and
accounting records
Under the Companies Act 2006 we are required to
report to you if, in our opinion:
•
we have not received all the information and
explanations we require for our audit; or
GOVERNANCESTRATEGIC REPORT FINANCIAL STATEMENTS
FORESIGHT ENTERPRISE VCT PLC Annual Report and Accounts 31 December 2022 75
76 FORESIGHT ENTERPRISE VCT PLC Annual Report and Accounts 31 December 2022
FOR THE YEAR ENDED 31 DECEMBER 2022
INCOME STATEMENT
Year ended Year ended
31 December 2022 31 December 2021
Revenue Capital Total Revenue Capital Total
Notes £’000 £’000 £’000 £’000 £’000 £’000
Realised gains on investments 8 — 17,493 17,493 — 5,763 5,763
Investment holding (losses)/gains 8 — (8,465) (8,465) — 17,449 17,449
Income 2 871 — 871 1,408 — 1,408
Investment management fees 3 (681) (2,323) (3,004) (604) (1,812) (2,416)
Other expenses 4 (673) — (673) (627) — (627)
(Loss)/return on ordinary
activities before taxation (483) 6,705 6,222 177 21,400 21,577
Taxation 5 — — — — — —
(Loss)/return on ordinary
activities after taxation (483) 6,705 6,222 177 21,400 21,577
(Loss)/return per share 7 (0.2)p 3.3p 3.1p 0.1p 11.1p 11.2p
The total columns of this statement are the profit and loss account of the Company and the revenue and capital
columns represent supplementary information.
All revenue and capital items in the above Income Statement are derived from continuing operations. No operations
were acquired or discontinued in the year.
The Company has no recognised gains or losses other than those shown above, therefore no separate statement
oftotal comprehensive income has been presented.
The Company has only one class of business and one reportable segment, the results of which are set out in the
Income Statement and Balance Sheet.
There are no potentially dilutive capital instruments in issue and, therefore, no diluted earnings per share figures are
relevant. The basic and diluted earnings per share are, therefore, identical.
The notes on pages 80 to 95 form part of these financial statements.
FORESIGHT ENTERPRISE VCT PLC Annual Report and Accounts 31 December 2022 77
Share Capital
Called-up premium redemption Distributable Capital Revaluation
Year ended share capital account reserve reserve
1
reserve
1
reserve Total
31 December 2022 Notes £’000 £’000 £’000 £’000 £’000 £’000 £’000
As at 1 January 2022 1,928 52,996 549 74,246 (47,963) 51,490 133,246
Share issues in the year
2
11 229 15,681 — — — — 15,910
Expenses in relation
to share issues
3
— (474) — — — — (474)
Repurchase of shares 11 (24) — 24 (1,471) — — (1,471)
Realised gains on
disposal of investments 8 — — — — 17,493 — 17,493
Investment holding losses 8 — — — — — (8,465) (8,465)
Dividends paid 6 — — — (14,983) — — (14,983)
Management fees
charged to capital 3 — — — — (2,323) — (2,323)
Revenue loss for the year — — — (483) — — (483)
As at 31 December 2022 2,133 68,203 573 57,309 (32,793) 43,025 138,450
Share Capital
Called-up premium redemption Distributable Capital Revaluation
Year ended share capital account reserve reserve
1
reserve
1
reserve Total
31 December 2021 Notes £’000 £’000 £’000 £’000 £’000 £’000 £’000
As at 1 January 2021 1,939 67,458 523 68,307 (51,914) 34,041 120,354
Share issues in the year
2
15 918 — — — — 933
Expenses in relation
to share issues
3
— (51) — — — — (51)
Repurchase of shares (26) — 26 (1,481) — — (1,481)
Cancellation
of share premium — (15,329) — 15,329 — — —
Realised gains on
disposal of investments — — — — 5,763 — 5,763
Investment holding gains — — — — — 17,449 17,449
Dividends paid 6 — — — (8,086) — — (8,086)
Management fees
charged to capital 3 — — — — (1,812) — (1,812)
Revenue return for the year — — — 177 — — 177
As at 31 December 2021 1,928 52,996 549 74,246 (47,963) 51,490 133,246
1. Reserve is available for distribution; total distributable reserves at 31 December 2022 total £24,516,000 (2021: £26,283,000).
2. Includes the dividend reinvestment scheme.
3. Expenses in relation to share issues includes trail commission for prior years’ fundraising.
The notes on pages 80 to 95 form part of these financial statements.
RECONCILIATION OF MOVEMENTS
IN SHAREHOLDERS' FUNDS
GOVERNANCESTRATEGIC REPORT FINANCIAL STATEMENTS
BALANCE SHEET
AT 31 DECEMBER 2022
Registered number: 03506579
As at As at
31 December 31 December
2022 2021
Notes £’000 £’000
Fixed assets
Investments held at fair value through profit or loss 8 111,966 115,238
Current assets
Debtors 9 2,152 1,028
Cash and cash equivalents 24,814 17,113
26,966 18,141
Creditors
Amounts falling due within one year 10 (482) (133)
Net current assets 26,484 18,008
Net assets 138,450 133,246
Capital and reserves
Called-up share capital 11 2,133 1,928
Share premium account 68,203 52,996
Capital redemption reserve 573 549
Distributable reserve 57,309 74, 246
Capital reserve (32,793) (47,963)
Revaluation reserve 43,025 51,490
Equity Shareholders’ funds 138,450 133,246
Net Asset Value per share 12 64.9p 69.1p
The financial statements were approved by the Board of Directors and authorised for issue on 28 April 2023 and were
signed on its behalf by:
Raymond Abbott
Chair
28 April 2023
The notes on pages 80 to 95 form part of these financial statements.
78 FORESIGHT ENTERPRISE VCT PLC Annual Report and Accounts 31 December 2022
Year ended Year ended
31 December 31 December
2022 2021
Notes £’000 £’000
Cash flow from operating activities
Loan interest received from investments 2 653 346
Dividends received from investments 2 38 1,022
Deposit and similar interest received 2 202 2
Investment management fees paid 3 (2,766) (2,416)
Secretarial fees paid 4 (178) (161)
Other cash payments 4 (433) (447)
Net cash outflow from operating activities (2,484) (1,654)
Cash flow from investing activities
Purchase of investments 8 (9,987) (13,163)
Proceeds on sale of investments 8 20,951 12,700
Proceeds on deferred consideration 8 234 —
Net cash inflow/(outflow) from investing activities 11,198 (463)
Cash flow from financing activities
Proceeds of fundraising 13,987 —
Expenses of fundraising (361) (36)
Repurchase of own shares (1,467) (1,444)
Equity dividends paid 6 (13,172) (7,152)
Net cash outflow from financing activities (1,013) (8,632)
Net inflow/(outflow) of cash for the year 7,701 (10,749)
Reconciliation of net cash flow to movement in net funds
Increase/(decrease) in cash and cash equivalents for the year 7,701 (10,749)
Net cash and cash equivalents at start of year 17,113 27, 862
Net cash and cash equivalents at end of year 24,814 17,113
Analysis of changes in net debt
At At
1 January 31 December
2022 Cash flow 2022
£’000 £’000 £’000
Cash and cash equivalents 17,113 7,701 24,814
The notes on pages 80 to 95 form part of these financial statements.
CASH FLOW STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2022
GOVERNANCESTRATEGIC REPORT FINANCIAL STATEMENTS
FORESIGHT ENTERPRISE VCT PLC Annual Report and Accounts 31 December 2022 79
1 Accounting policies
Foresight Enterprise VCT plc is a public limited company
incorporated in England and Wales and its registered
office is at The Shard, 32 London Bridge Street, London,
United Kingdom, SE1 9SG.
The Company has been approved as a Venture Capital
Trust by HMRC under Section 259 of the Income Taxes Act
2007. The shares of the Company were first admitted to
the Official List of the UK Listing Authority and trading on
the London Stock Exchange on 3 February 1998.
The Company's principal activity is to provide private
investors with regular dividends and capital growth from
a portfolio of investments in fast-growing unquoted
companies in the UK.
A summary of the principal accounting policies, all of
which have been applied consistently throughout the year,
is set out below:
a) Basis of accounting
The financial statements have been prepared under the
Companies Act 2006, and in accordance with United
Kingdom Generally Accepted Accounting Practice
(“UKGAAP”) including FRS 102 “TheFinancial Reporting
Standard applicable intheUK and Republic of Ireland”
and the Statement of Recommended Practice (“SORP”):
Financial Statements of Investment Trust Companies
and Venture Capital Trusts issued in November 2014
andupdated in October 2019 and July 2022.
The financial statements have been prepared under the
historical cost convention as modified by the revaluation
ofinvestments.
The Company presents its Income Statement in a
three-column format to give Shareholders additional detail
of the performance of the Company split between items of
a revenue or capital nature.
As permitted by FRS 102, paragraph 14.4, investments are
held as part of an investment portfolio, and their value to
the Company is through their marketable value as part of a
portfolio of investments, rather than as a medium through
which the Company carries out its business. Therefore,
the investments are not considered to be associated
undertakings.
Where the Company’s interest in an investment is greater
than 50% of the investee company’s total equity, specific
clauses are included in the investee company’s articles
of association to prevent the Company from exercising
control. Therefore, these investments are not considered to
be subsidiary undertakings. The Company is exempt from
preparing consolidated accounts under the investment
entities exemption as permitted by FRS 102.
Going concern
The Company’s business activities, together with the
factors likely to affect its future development, performance
and position, are set out in the Strategic Report. The
financial position of the Company, itscash flows, liquidity
position and borrowing facilities are referred to in the
Chair’s Statement, Strategic Report and Notes to the
Accounts. In addition, the Annual Report and Accounts
include the Company’s objectives, policies and processes
formanaging its capital; its financial risk management
objectives; details of its financial instruments and hedging
activities; and its exposures to credit risk andliquidity risk.
The Company has sufficient financial resources together
with investments and income generated therefrom across
a variety of industries and sectors. As a consequence, the
Board believes that the Company is able to manage its
business risks.
Cash flow projections have been reviewed and show
that the Company has sufficient funds to meet both
its contracted expenditure and its discretionary cash
outflows in the form of share buybacks and dividends.
The Company has no external loan finance in place
and therefore is not exposed to any gearing covenants,
although its underlying investments may have external
loan finance.
The Directors have considered the impact of the difficult
economic outlook, inflationary pressures, energy prices,
COVID-19, Brexit, the Russian invasion of Ukraine and
mounting tensions with China during their assessment
of going concern and have reasonable expectation that
the Company has adequate resources to continue in
operational existence for the foreseeable future. Thus they
continue to adopt the going concern basis of accounting in
preparing the annual financialstatements.
b) Assets held at fair value through profit
or loss – investments
All investments held by the Company are classified as
“fair value through profit or loss”. The Board values
investments in accordance with the International Private
Equity and Venture Capital (“IPEV”) Valuation Guidelines,
as updated in December 2022 including further COVID-19
guidance in March 2020. This classification is followed as
the Company’s business is to invest in financial assets with
a view to profiting from their total return in the form of
capital growth and income.
Purchases and sales of unlisted investments are
recognised when the contract for acquisition or sale
becomes unconditional.
FOR THE YEAR ENDED 31 DECEMBER 2022
NOTES TO THE ACCOUNTS
80 FORESIGHT ENTERPRISE VCT PLC Annual Report and Accounts 31 December 2022
Unquoted investments are stated at fair value by the
Board in accordance with the following rules, which are
consistent with the IPEV Valuation Guidelines. When
valuing an unquoted investment at fair value the following
factors will be considered:
(i) Where a value is indicated by a material arms-length
transaction by an independent third party in the
shares of a company, this value will be used
(ii) In the absence of (i), and depending upon both the
subsequent trading performance and investment
structure of an investee company, the valuation basis
will usually move to either:
a) An earnings multiple basis. The shares may be
valued by applying a suitable price-earnings ratio
to that company’s historic, current or forecast
earnings before interest, tax, depreciation
and amortisation (“EBITDA”) (theratio used
being based on a comparable sector but the
resulting value being adjusted to reflect points of
difference identified by the Manager compared
to the sector including, inter alia, illiquidity)
b) Where a company’s under-performance against
plan indicates a diminution in the value of the
investment, a write down against cost is made,
as appropriate. Where the value of an investment
has fallen permanently below cost, the loss is
treated as a permanent write down and as a
realised loss, even though the investment is
still held. The Board assesses the portfolio for
such investments and, after agreement with the
Manager, will agree the values that represent
the extent to which a realised loss should be
recognised. This is based upon an assessment
of observable evidence of that investment’s
prospects, to determine whether there is
potential for the investment to recover in value
(iii) Premiums on loan stock investments are accrued at
fair value when the Company receives the right to the
premium and when considered recoverable
(iv) Where an earnings multiple or cost less impairment
basis is not appropriate and overriding factors apply,
discounted cash flow, a net asset valuation, a price
of a recent or the last funding round, venture capital
method or industry-specific valuation benchmarks
may be applied. An example of an industry-specific
valuation benchmark would be the application of a
multiple to that company’s historic, current or forecast
revenue (the multiple being based on a comparable
sector but with the resulting value being adjusted
to reflect points of difference including, inter alia,
illiquidity). The venture capital method (“VCMethod”)
of valuation calculates and discounts the present value
of the expected exit proceeds from an investment,
taking account of both time and risk
(v) In estimating the fair value of the investments held, the
Manager has considered the COVID-19 pandemic, the
Russian invasion of Ukraine, inflationary pressures and
the difficult economic outlook which may impact the
fair value of the investments and the sectors in which
they operate. The COVID-19 pandemic and the Russian
invasion of Ukraine have had a significant impact
in many sectors across the globe. The Manager has
applied assumptions based on a best estimate of likely
outcome for each individual investment and applied
discounts where itisconsidered necessary
c) Income
Dividends receivable on unquoted equity shares are
brought into account when the Company’s rights
to receive payment are established and there is no
reasonable doubt that payment will be received.
Otherincome such as interest is included on an
accruals basis. Loan interest income is calculated using
the effective interest method and recognised onan
accruals basis.
d) Expenses
All expenses (inclusive of VAT) are accounted for on
an accruals basis. Expenses are charged through the
revenue column of the Income Statement, with the
exception that 75% of the fees payable to the Manager
for management fees are allocated against the capital
column of the Income Statement. The basis of the
allocation of management fees is expected to reflect
the revenue and capital split of long-term returns in the
portfolio.
GOVERNANCESTRATEGIC REPORT FINANCIAL STATEMENTS
FORESIGHT ENTERPRISE VCT PLC Annual Report and Accounts 31 December 2022 81
1 Accounting policies continued
e) Share-based payments
The Manager is entitled to a performance incentive fee
equal to 15% of dividends paid to Shareholders, subject
to the total return (Net Asset Value plus cumulative
dividends paid per share) exceeding a High Watermark,
both immediately before and after the performance
incentive fee is paid.
The performance incentive fee may be satisfied by
either a cash payment or the issue of shares (or by
a combination of both) ultimately at the Board’s
discretion, and therefore falls within the definition of a
share-based payment under FRS 102.26. However, the
Board considers that the incentive fee arrangement
should be accounted for as a cash-settled transaction;
with the option of settling in shares in the event of any
cash flow restrictions.
The fair value of the amount payable to the Manager
is recognised as an expense, with a corresponding
increase in liabilities (or equity if the share-based
payment is settled by the issue of shares), over the year
in which the Manager becomes unconditionally entitled
to payment or when the Board considers it likely such
payment will become due over the medium term. The
liability (or equity) is remeasured at each balance sheet
date and at settlement date. Any changes in the fair
value of the liability (or equity) are recognised as a
performance incentive fee in the Income Statement.
f) Basic financial instruments
Trade and other debtors
Trade and other debtors are recognised initially at
transaction price less attributable transaction costs.
Subsequent to initial recognition they are measured
at amortised cost less any impairment losses. If the
arrangement constitutes a financing transaction,
for example if payment is deferred beyond normal
business terms, then it is measured at the present
valueof future payments, discounted at a market rate
of interest for a similar debt instrument.
Trade and other creditors
Trade and other creditors are recognised initially at
transaction price plus attributable transaction costs.
Subsequent to initial recognition they are measured
at amortised cost. If the arrangement constitutes
a financing transaction, for example if payment is
deferred beyond normal business terms, then it is
measured at the present value of future payments,
discounted at a market rate of interest for a similar
debt instrument.
Investments in preference and ordinary shares
Investments in preference and ordinary shares are
measured initially at transaction price less attributable
transaction costs. Subsequent to initial recognition,
investments that can be measured reliably are
measured at fair value with changes recognised in
profit or loss. Other investments are measured at cost
less impairment in profit or loss.
Cash and cash equivalents
Cash and cash equivalents comprise cash balances,
calldeposits, money market funds and fixed-term
funds.
g) Other financial instruments
Other financial instruments not meeting the definition
of basic financial instruments include non-current
investments and are recognised initially at fair value.
Subsequent to initial recognition, other financial
instruments are measured at fair value with changes
recognised in profit or loss except investments in
equity instruments that are not publicly traded and
whose fair value cannot otherwise be measured
reliably shall be measured at cost less impairment.
h) Taxation
Any tax relief obtained in respect of management fees
allocated to capital is reflected in the capital column
of the Income Statement and a corresponding amount
is charged against the revenue column. The tax relief
is the amount by which corporation tax payable is
reduced as a result of these capital expenses.
i) Deferred taxation
Provision is made for corporation tax at the current
rates on the excess of taxable income over allowable
expenses. A provision is made on all material timing
differences arising from the different treatment of
items for accounting and tax purposes. A deferred tax
asset is recognised only to the extent that there will be
taxable profits in the future against which the asset can
be offset. It is considered too uncertain that this will
occur and, therefore, no deferred tax asset has been
recognised.
NOTES TO THE ACCOUNTS CONTINUED
FOR THE YEAR ENDED 31 DECEMBER 2022
82 FORESIGHT ENTERPRISE VCT PLC Annual Report and Accounts 31 December 2022
j) Reserves
The capital and revenue reserves are made up of the
following elements:
(i) Capital reserve
The following are accounted for in this reserve:
•
Gains and losses on realisation of investments, including
the reversal of prior year revaluation reserves
•
Permanent diminution in value of investments
•
75% of management fee expense, together with the
related tax effect to this reserve in accordance with the
policies
•
Income and costs for the year (capital items)
(ii) Revaluation reserve (unrealised capital reserve)
Increases and decreases in the valuation of investments
held at the year end are accounted for in this reserve,
except to the extent that the diminution is deemed
permanent.
(iii) Distributable reserve
The following are accounted for in this reserve:
•
Repurchase of shares
•
Cancellation of share premium
•
Dividends paid
•
Income and costs for the year (revenue items)
In accordance with stating all investments at fair value
through profit and loss, all such movements through
both the revaluation and capital reserves are shown
within the Income Statement for the year.
k) Investment recognition and derecognition
Investments are recognised at the trade date, being
the date that the risks and rewards of ownership are
transferred to the Company. Upon initial recognition,
investments are held at the fair value of the
consideration payable. Transaction costs in respect of
acquisitions made are recognised directly in the Income
Statement. Investments are derecognised when the
risks and rewards of ownership are deemed to have
transferred to a third party. Upon realisation, the gain or
loss on disposal is recognised in the Income Statement.
l) Critical accounting judgement and key sources of
estimation uncertainty
The preparation of the financial statements requires the
Board to make judgements and estimates that affect the
application of policies and reported amounts of assets,
liabilities, income and expenses. In the Board’s opinion,
there was no critical accounting judgement applied.
TheBoard considers that the only area where the
Manager makes critical estimates and assumptions that
may have a significant effect on the financial statements
relates to the fair valuation of unquoted investments.
Trading results of investee companies may differ from
the estimates made. The underlying assumptions are
reviewed on each valuation date.
The Board considers that the fair value of investments
not quoted in an active market involves critical estimates
and assumptions because they are determined by the
Manager, using valuation methods and techniques
generally recognised as standard within the industry.
Valuations use observable data to the extent practicable.
However, they also rely on significant unobservable
inputs about the maintainable earnings; comparable
multiples and discounts. Furthermore, changes in these
inputs and assumptions could affect the reported fair
value of unquoted investments. The determination
of what constitutes “observable” requires significant
judgement by the Manager. The Manager considers
observable data to be market data that is readily
available, regularly distributed or updated, reliable and
verifiable, not proprietary, and provided by independent
sources that are actively involved in the relevant market.
Both the Audit Committee and the auditor review the
Manager’s valuations in detail. Sensitivity analysis is
performed on the portfolio as a whole and for more
detail on this please refer to note15.
The Board notes that the Manager also makes estimates
relating to the share-based payment expense and
liability but does not consider this to have a significant
effect on the financial statements.
GOVERNANCESTRATEGIC REPORT FINANCIAL STATEMENTS
FORESIGHT ENTERPRISE VCT PLC Annual Report and Accounts 31 December 2022 83
2 Income
Year ended Year ended
31 December 31 December
2022 2021
£’000 £’000
Loan stock interest 631 381
Deposit and similar interest received 202 2
Dividends receivable 38 1,025
871 1,408
3 Investment management fees
Year ended Year ended
31 December 31 December
2022 2021
£’000 £’000
Investment management fees charged to the revenue account 681 604
Investment management fees charged to the capital account
1
2,323 1,812
3,004 2,416
1. Included within investment management fees is an accrual of £280,000 (2021: £nil) relating to performance incentive fees charged
to the capital account.
The Manager advises the Company on investments under an agreement dated 27 January 2020. The Manager receives
an annual investment management fee, paid quarterly in advance, of an amount equal to 2% of net assets of the
Company. If the annual expenses of the Company exceed 2.35% of the Company’s net assets, the excess is borne by
the Manager through a reduction in its fees. The excess at 31 December 2022 was £nil (2021: £nil).
This agreement may be terminated by either party giving to the other not less than 12 months’ notice, at any time after
the third anniversary, being 27 January 2023.
Details of the performance incentive fees are given in note 13.
4 Other expenses
Year ended Year ended
31 December 31 December
2022 2021
£’000 £’000
Accounting and secretarial services (excluding VAT) 178 161
Directors’ remuneration including employer’s National Insurance contributions 121 117
Auditor’s remuneration (excluding VAT)
1
53 50
Other 321 299
673 627
1. The auditor’s remuneration relates to the audit of the financial statements. There were no non-audit fees paid to the Company’s
auditor during the year (2021: £nil).
The Manager is responsible for external costs such as legal and accounting fees incurred on transactions that do not
proceed to completion (“abort expenses”). In line with common practice, the Manager retains the right to charge
arrangement and syndication fees and Directors’ or monitoring fees to companies in which the Company invests.
The Manager is the Company Secretary and received annual fees, paid quarterly in advance, for administration
services provided of £178,000 (2021: £161,000). The annual administration fee is adjusted annually in line with the
UKRetail Prices Index.
The normal annual running costs of the Company are capped at an amount equal to 2.35% of the net assets of the
Company as at the end of each financial year, with any excess being borne by the Manager.
FOR THE YEAR ENDED 31 DECEMBER 2022
NOTES TO THE ACCOUNTS CONTINUED
84 FORESIGHT ENTERPRISE VCT PLC Annual Report and Accounts 31 December 2022
5 Tax on ordinary activities
Year ended 31 December 2022 Year ended 31 December 2021
Revenue Capital Total Revenue Capital Total
£’000 £’000 £’000 £’000 £’000 £’000
Current tax
Corporation tax — — — — — —
Total current tax — — — — — —
Deferred tax — — — — — —
Total tax — — — — — —
Factors affecting the total tax charge for the year:
The tax assessed for the year is lower (2021: lower) than the standard rate of corporation tax in the UK of 19%
(2021:19%).
The differences are explained below:
Year ended Year ended
31 December 31 December
2022 2021
£’000 £’000
Profit on ordinary activities before taxation 6,222 21,577
Corporation tax at 19% (2021: 19%) 1,182 4,100
Effect of:
Realised capital gains not allowable (3,324) (1,095)
Unrealised capital losses/(gains) not taxable 1,608 (3,315)
Unutilised management expenses 541 505
Dividend income not taxable (7) (195)
Total tax charge for the year — —
As a qualifying VCT the Company is exempt from tax on capital gains; therefore, no provision for deferred tax has
been recognised in respect of any capital gains or losses arising on the revaluation or disposal of investments.
A deferred tax asset is recognised only to the extent that there will be taxable profits in the future against which
the asset can be offset. It is considered too uncertain that this will occur and, therefore, no deferred tax asset has
been recognised for surplus management expenses. At year end, there is an unrecognised deferred tax asset of
approximately £5,623,000 (2021: £4,916,000).
6 Dividends
Year ended Year ended
31 December 31 December
2022 2021
£’000 £’000
Dividends – paid in the year 14,983 8,086
The dividends paid in the year were split between a cash dividend of £13,213,000 (2021: £7,152,000) and the value of
the dividend reinvestment scheme of £1,811,000 (2021: £934,000) offset by the receipt of historic unclaimed dividends
from the Registrar, which have remained unclaimed for at least 12 years and hence automatically forfeited pursuant to
the Articles of Association, totalling £41,000 in the year (2021: £nil).
As at 31 December 2022, reserves available for dividend distribution total £24,516,000 (2021: £26,283,000)
comprising the capital and distributable reserves.
In accordance with Section 259 of the Income Tax Act 2007, a VCT may not retain more than 15% of its qualifying
income in any one accounting year. The payment of the dividends noted above satisfies this requirement.
GOVERNANCESTRATEGIC REPORT FINANCIAL STATEMENTS
FORESIGHT ENTERPRISE VCT PLC Annual Report and Accounts 31 December 2022 85
FOR THE YEAR ENDED 31 DECEMBER 2022
NOTES TO THE ACCOUNTS CONTINUED
7 Return per share
Year ended Year ended
31 December 31 December
2022 2021
£’000 £’000
Total return after taxation 6,222 21,577
Total return per share (note a) 3.1p 11.2p
Revenue (loss)/profit from ordinary activities after taxation (483) 177
Revenue (loss)/profit per share (note b) (0.2)p 0.1p
Capital profit from ordinary activities after taxation 6,705 21,400
Capital profit per share (note c) 3.3p 11.1p
Weighted average number of shares in issue in the year (note d) 198,639,819 193,445,500
Notes:
a) Total profit per share is total profit after taxation divided by the weighted average number of shares in issue during
the year
b) Revenue (loss)/profit per share is revenue (loss)/profit after taxation divided by the weighted average number of
shares in issue during the year
c) Capital profit per share is capital profit after taxation divided by the weighted average number of shares in issue
during the year
d) The weighted average number of shares is calculated by taking the number of shares issued and bought back
during the year, multiplying each by the percentage of the year for which that share number applies and then
totalling with the number of shares in issue at the beginning of the year
8 Investments held at fair value through profit or loss
31 December 31 December
2022 2021
£’000 £’000
Unquoted investments 111,966 115,238
£’000
Book cost at 1 January 2022 64,626
Investment holding gains 50,612
Valuation at 1 January 2022 115,238
Movements in the year:
Purchases at cost 8,987
Disposal proceeds
1
(20,951)
Realised gains
2
17, 259
Investment holding losses
3
(8,567)
Valuation at 31 December 2022 111,966
Book cost at 31 December 2022 69,921
Investment holding gains 42,045
Valuation at 31 December 2022 111,966
1. The Company received £20,951,000 (2021: £12,700,000) from the disposal of investments during the year. The book cost of these
investments when they were purchased was £3,692,000 (2021: £6,937,000). These investments have been revalued over time and
until they were sold any unrealised gains or losses were included in the fair value of the investments.
2. Realised gains in the Income Statement include deferred consideration receipts from Hallmarq Limited (£1,000), Accrosoft Limited
(£23,000), FFX Group Limited (£79,000) and Ixaris Systems Ltd (£131,000).
3. Investment holding losses in the Income Statement include the deferred consideration debtor increase of £102,000. The debtor
movement reflects the recognition of amounts receivable in respect of Codeplay Software Limited (£418,000) andFFX Group
Limited (£79,000), offset by receipts in respect of Accrosoft Limited (£23,000), FFX Group Limited (£79,000) and Ixaris Systems
Ltd(£131,000) andprovisions made against balances in respect of Mologic Ltd. (£157,000) and Accrosoft Limited (£5,000).
86 FORESIGHT ENTERPRISE VCT PLC Annual Report and Accounts 31 December 2022
9 Debtors
31 December 31 December
2022 2021
£’000 £’000
Accrued interest 25 46
Prepayments 60 17
Deferred consideration 980 878
Other debtors 1,087 87
2,152 1,028
10 Creditors: amounts falling due within one year
31 December 31 December
2022 2021
£’000 £’000
Trade creditors 19 3
Accruals 141 90
Other creditors 42 40
Provision for performance incentive payment 280 —
482 133
11 Called-up share capital
31 December 31 December
2022 2021
£’000 £’000
Allotted, called-up and fully paid:
213,316,422 shares of 1p each (2021: 192,806,963) 2,133 1,928
Share issues and share buybacks
During the year 20,149,160 shares and 2,748,080 shares were issued pursuant to an offer for subscription and the
dividend reinvestment scheme respectively. Shares were issued at issue prices ranging from 63.70p to 74.92p per
share.
This share issue was under the VCT provisions that commenced on 6 April 2006, namely: 30% upfront income tax
relief which can be retained by qualifying investors if the shares are held for the minimum five-year holding period.
As part of the Company’s buyback programme, during the year, 2,387,781 shares were purchased for cancellation
atacost of £1,471,000.
Shares No.
Share capital at 1 January 2022 192,806,963
Shares allotted 20,149,160
Dividend reinvestment 2,748,080
Share buybacks (2,387,781)
Share capital at 31 December 2022 213,316,422
GOVERNANCESTRATEGIC REPORT FINANCIAL STATEMENTS
FORESIGHT ENTERPRISE VCT PLC Annual Report and Accounts 31 December 2022 87
FOR THE YEAR ENDED 31 DECEMBER 2022
NOTES TO THE ACCOUNTS CONTINUED
12 Net Asset Value per share
The Net Asset Value per share is based on net assets at the end of the year and on the number of shares in issue
atthat date.
31 December 31 December
2022 2021
Net assets £138,450,000 £133,246,000
No. of shares at year end 213,316,422 192,806,963
Net Asset Value per share 64.9p 69.1p
13 Share-based payments
The Manager is entitled to a performance incentive fee, designated a share-based payment due to its nature, equalto
15% of dividends paid to Shareholders, subject to the total return (Net Asset Value plus cumulative dividends paid
per share on or after 11 January 2011) exceeding 100p (“High Watermark”), both immediately before and after the
performance incentive fee is paid.
After each distribution is made to Shareholders where a performance incentive is paid, the High Watermark required
to be achieved by the Company to trigger a further performance incentive fee will be amended to take account of the
dividend paid.
As a result of performance incentive fee payments made in previous years, the High Watermark as at
31December2022 was 108.5p (2021: 108.5p). The total return as at 31 December 2022 was 109.3p (2021: 106.1p).
Noperformance incentive fee or share-based payment was paid during the year (2021: £nil). However,asat
31December 2022, the Company has accrued an amount of £280,000 in relation to future performance incentive fees
asitisconsidered likely such payment will become due over the medium term.
The terms and conditions of the grant are as follows:
Grant date: Date that the total return is greater than the High Watermark.
Vesting conditions: Expected total return is greater than the High Watermark both before and after the performance
incentive fee. Vesting period: 24 February 2012 – 31 December 2025.
Method of settlement accounting: Cash (with the option of settling in shares in the event of any cash flow restrictions).
The expected volatility is based on the historical performance and dividends of the fund, adjusted for any expected
changes to future performance and dividends of the fund.
The vesting period is limited to three years from the balance sheet date as the Directors do not consider that the
future performance of the fund and the future dividends to be paid by the fund can be accurately estimated beyond
that date.
The Directors have prepared a calculation incorporating estimated future dividends over the vesting period and
expect a performance incentive fee to become payable during the vesting period. Therefore, a liability of £280,000
hasbeenrecognised as at 31December2022 (2021: £nil).
14 Contingent assets and liabilities
The Company had no contingent assets or contingent liabilities at 31 December 2022 (2021: £nil).
88 FORESIGHT ENTERPRISE VCT PLC Annual Report and Accounts 31 December 2022
15 Financial instrument risk management
The Company’s financial instruments comprise:
•
Equity shares, debt securities and fixed interest securities that are held in accordance with the Company’s
investmentobjective as set out in the Directors’ Report
•
Cash, liquid resources, short-term debtors and creditors that arise directly from the Company’s operations
Classification of financial instruments
The Company held the following categories of financial instruments at fair value, as at 31 December 2022:
31 December 31 December
2022 2021
£’000 £’000
Investment portfolio 111,966 115,238
Cash and cash equivalents 24,814 17,113
Total 136,780 132,351
The investment portfolio consists of unquoted investments. Unquoted investments consist of equity in and loans to
investee companies and are valued at fair value through profit or loss.
The main financial risks arising from the Company’s financial instruments are market price risk, interest rate risk, credit
risk and liquidity risk. The Board regularly reviews and agrees policies for managing each of these risks which are
summarised below.
Market price risk
Market price risk arises from uncertainty about the future prices of financial instruments held in accordance with the
Company’s investment objectives. It represents the potential loss that the Company might suffer through holding
investments in the face of adverse market movements. The Board manages market price risk through the application
ofventure capital disciplines and investment structuring delegated to the Manager.
The investments in equity and loan stocks of unquoted companies are rarely traded and as such the prices are more
difficult to determine than those of more widely traded securities. In addition, the ability of the Company to realise
the investments at their carrying value will at times not be possible if there are no willing purchasers. The ability of
the≈Company to purchase or sell investments is also constrained by the requirements set down for VCTs. The potential
maximum exposure to market price risk, being the value of the investment portfolio as at 31 December 2022, was
£111,966,000 (2021: £115,238,000). Market price risk sensitivity analysis can be found on page 92.
Interest rate risk
The fair value of the Company’s fixed rate securities and the net revenue generated from the Company’s floating rate
securities may be affected by interest rate movements. Investments are often in early-stage businesses, which are
relatively high-risk investments sensitive to interest rate fluctuations. Due to the short time to maturity of some of the
Company’s fixed rate investments, it may not be possible to reinvest in assets which provide the same rates as those
currently held. When making investments of an equity and debt nature, consideration is given during the structuring
process to the potential implications of interest rate risk and the resulting investment is structured accordingly.
Themaximum exposure to interest rate risk was £37,463,000, being the total value of the loan stock investments
and cash as at 31 December 2022 (2021: £31,026,000). Floating rate investments relate to the interest-bearing
deposit account which earned interest based on the Bank of England rate of 3.5% at 31 December 2022. As at
31December2022, if the interest rate increased or decreased by 10 basis points the interest earned would increase
ordecrease by£24,814.
GOVERNANCESTRATEGIC REPORT FINANCIAL STATEMENTS
FORESIGHT ENTERPRISE VCT PLC Annual Report and Accounts 31 December 2022 89
FOR THE YEAR ENDED 31 DECEMBER 2022
NOTES TO THE ACCOUNTS CONTINUED
15 Financial instrument risk management continued
Interest rate risk continued
Total Weighted average Weighted average
portfolio interest rate time for which rate is fixed
31 December 31 December 31 December 31 December 31 December 31 December
2022 2021 2022 2021 2022 2021
Company portfolio £’000 £’000 % % Days Days
Loan stock
– exposed to fixed interest rate risk 12,649 13,913 9.9 9.8 352 502
Loan stock
– exposed to variable interest rate risk — — — — — —
Cash 24,814 17,113 2.7 0.1 — —
Total exposed to interest rate risk 37,463 31,026
Credit risk
Credit risk is the risk of failure by counterparties to deliver securities or cash to which the Company is entitled.
TheCompany has exposure to credit risk in respect of the loan stock investments it has made in investee companies,
most of which have no security attached to them, and where they do, such security ranks beneath any bank debt
that an investee company may owe. The Board manages credit risk in respect of cash and cash equivalents by
ensuring there is a spread of cash balances such that none exceed 15% of the Company’s total investment assets by
VCT value. These cash and cash equivalents are investment grade funds, and so credit risk is considered to be low.
The Manager receives management accounts from portfolio companies, and members of the Manager’s investment
management team often sit on the boards of unquoted portfolio companies; this enables the close identification,
monitoring and management of investment-specific credit risk. The maximum exposure to credit risk at 31 December
2022 was £39,555,000 (2021:£32,037,000) based on cash and cash equivalents and other receivables (amounts due
on investments, dividends and interest). As at 31 December 2022, the Company’s assets are held in its own name in
certificated form and therefore custodian default risk is negligible.
An analysis of the Company’s assets exposed to credit risk is provided in the table below:
31 December 31 December
2022 2021
£’000 £’000
Loan stock investments 12,649 13,913
Deferred consideration 980 878
Other debtors 1,112 133
Cash and cash equivalents 24,814 17,113
Total 39,555 32,037
90 FORESIGHT ENTERPRISE VCT PLC Annual Report and Accounts 31 December 2022
Liquidity risk
The investments in equity and fixed interest stocks of unquoted companies that the Company holds are not traded
and they are not readily realisable. The Company may not be able to realise the investments at their carrying value if
there are no willing purchasers. The Company’s ability to sell investments may also be constrained by the qualification
requirements set down for VCTs. The maturity profile of the Company’s loan stock investments disclosed below
indicates that these assets are also not readily realisable until dates up to five years from the year end.
To counter these risks to the Company’s liquidity, the Manager maintains sufficient cash and money market funds to
meet running costs and other commitments. The Company typically invests its surplus funds in high-quality money
market and fixed-term funds which are all accessible within seven days, in line with VCT rules.
31 December 31 December
2022 2021
Maturity analysis: £’000 £’000
– in one year or less 33,028 25,426
– in more than one year but no more than two years 1,484 675
– in more than two years but no more than three years 1,894 1,763
– in more than three years but no more than four years 800 2,362
– in more than four years but no more than five years 257 800
Total 37,463 31,026
Sensitivity analysis
Equity price sensitivity
The Board believes the Company’s investments are mainly exposed to equity price risk, as the Company holds 100%
ofits investments in the form of sterling-denominated investments in small companies.
All of the investments made in unquoted companies, irrespective of the instruments the Company holds (whether
shares or loan stock), carry a full equity risk, even though some of the loan stocks may be secured on assets (as they
will be behind any prior ranking bank debt in the investee company).
The Board considers that even the loan stocks are “quasi-equity” in nature, as the value of the loan stocks is
determined by reference to the enterprise value of the investee company. Such value is considered to be sensitive
to changes in quoted share prices, in so far as such changes eventually affect the enterprise value of unquoted
companies. The table below shows the impact on profit and net assets if there were to be a 15% (2021: 15%) movement
in overall share prices, which might in part be caused by changes in interest rate levels, but it is not considered
practical to evaluate separately the impact of changes in interest rates upon the value of the Company’s portfolio
ofinvestments in unquoted companies.
The sensitivity analysis below assumes that each of these sub-categories of investments (shares and loan stocks) held
by the Company produces an overall movement of 15%, and that the portfolio of investments held by the Company is
perfectly correlated to this overall movement in share prices. This percentage reflects a number of factors, including
the performance of the underlying investee companies as well as the wider market uncertainties associated with
the difficult economic outlook, inflationary pressures, energy prices, Brexit, the spread of COVID-19 and Russia’s
invasion of Ukraine. However, Shareholders should note that this level of correlation would not be the case in reality.
Movements may occur in the value of both quoted and unquoted companies and result from changes in the market or
alternatively as a result of assumptions made when valuing the portfolio or a combination of the two.
GOVERNANCESTRATEGIC REPORT FINANCIAL STATEMENTS
FORESIGHT ENTERPRISE VCT PLC Annual Report and Accounts 31 December 2022 91
FOR THE YEAR ENDED 31 DECEMBER 2022
NOTES TO THE ACCOUNTS CONTINUED
15 Financial instrument risk management continued
Sensitivity analysis continued
Equity price sensitivity continued
31 December 31 December
2022 2021
Return and Return and
net assets net assets
If overall share prices fell by 15% (2021: 15%), with all other variables held constant
– decrease (£’000) (16,795) (17,286)
Decrease in Net Asset Value per share (in pence) (7. 87)p (8.97)p
31 December 31 December
2022 2021
Return and Return and
net assets net assets
If overall share prices increased by 15% (2021: 15%), with all other variables held constant
– increase (£’000) 16,795 17, 286
Increase in Net Asset Value per share (in pence) 7.87p 8.97p
The impact of a change of 15% has been selected as this is considered reasonable given the current level of volatility
observed both on a historical basis and market expectations for future movement. The range in equity prices is
considered reasonable given the historic changes that have been observed.
Interest rate sensitivity
Although the Company holds investments in loan stocks that pay interest, the Board does not believe that the value
of these instruments is interest rate sensitive. This is because all of the interest is fixed, so not at risk of interest rate
movements (2021: no interest rate risk).
Fair value hierarchy
The following table shows financial instruments recognised at fair value, analysed between those whose fair value is
based on:
•
Quoted prices (unadjusted) in active markets for identical assets or liabilities (Level 1)
•
Inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (as
prices) or indirectly (derived from prices) (Level 2)
•
Inputs for the instrument that are not based on observable market data (unobservable inputs) (Level 3)
Level 1 Level 2 Level 3 Total
As at 31 December 2022 £’000 £’000 £’000 £’000
Unquoted investments — — 111,966 111,966
Financial assets — — 111,966 111,966
Level 1 Level 2 Level 3 Total
As at 31 December 2021 £’000 £’000 £’000 £’000
Unquoted investments — — 115,238 115,238
Financial assets — — 115,238 115,238
Transfers
During the year there were no transfers between Levels 1, 2 or 3.
92 FORESIGHT ENTERPRISE VCT PLC Annual Report and Accounts 31 December 2022
16 Management of capital
The Company’s objectives when managing capital are to safeguard the Company’s ability to continue as a going
concern, so that it can provide an adequate return to Shareholders.
In accordance with VCT requirements, the Company must have at least 80% of its total assets (as measured under
VCT rules) in qualifying holdings (these being investments in a relatively high-risk asset class of small UK companies
meeting VCT requirements). Effective 6 April 2018, where new funds are raised, the Company must invest 30% of
such funds in qualifying holdings within 12 months following the end of the accounting year in which that capital was
subscribed, with the balance being invested within approximately three years of that capital being subscribed. The
Company accordingly has limited scope to manage its capital structure in light of changes in economic conditions and
the risk characteristics of the underlying assets. Subject to this overall constraint upon changing the capital structure,
the Company may adjust the amount of dividends paid to Shareholders, issue new shares, or sell assets if so required
to maintain a level of liquidity to remain agoingconcern.
Although, as the investment policy implies, the Board may consider borrowing, there are no current plans to do
so. Itregards the net assets of the Company as the Company’s capital, as the level of liabilities is small and the
management of them is not directly related to managing the return to Shareholders. There has been no change
inthisapproach from the previous year.
17 Related party transactions
No Director has an interest in any contract to which the Company is a party other than their appointment and
remuneration as Directors. Please refer to page 67 for the Directors’ remuneration tables.
18 Transactions with the Manager
Foresight Group LLP was appointed as Manager in January 2020 and earned fees of £2,724,000 in the year ended
31December 2022 (2021: £2,416,000). Although no performance fee was paid in the year (2021: £nil), aliability of
£280,000 has been recognised as at the year end (2021: £nil).
Foresight Group LLP is the Company Secretary (appointed in November 2017) and received accounting and company
secretarial services fees of £178,000 during the year (2021: £161,000).
At 31 December 2022, the amount due to Foresight Group LLP was £nil (2021: £nil).
No amounts have been written off in the year in respect of debts due to or from the Manager.
GOVERNANCESTRATEGIC REPORT FINANCIAL STATEMENTS
FORESIGHT ENTERPRISE VCT PLC Annual Report and Accounts 31 December 2022 93
FOR THE YEAR ENDED 31 DECEMBER 2022
NOTES TO THE ACCOUNTS CONTINUED
19 Related undertakings
Under Section 409 of the Companies Act 2006, the Company is required to disclose specified details of all
its related undertakings, including significant holdings which are undertakings where the Company’s holding
amounted to 20% or more of the nominal value of any class of shares as at 31 December 2022. These are listed
below. The percentage holding does not reflect the percentage voting rights in the Company as a whole. All
holdings are direct.
Please note that where holdings stated are above 50%, this is as a result of (i) holding 50% or more of a particular
share class as opposed to the entire share capital, (ii) holding 50% or more of the share capital but with restricted
rights, or (iii) is a legacy, historic, permitted non-qualifying holding and, therefore, not in breach of VCT rules.
Investee company name
Latest accounts
year end
Profit/(loss)
after tax for year
£’000
Aggregate capital
and reserves
£’000
Class and percentage
of shares held
ABL Investments Limited 31/12/2021 N/A
1
(2,318) A Ordinary 34.9%
Aerospace Tooling
CorporationLimited
30/06/2022 864 2,637 A Ordinary 57.1%
Biofortuna Ltd 31/03/2022 N/A
1
5,072 A Ordinary 86.4%
B Ordinary 39.4%
Biotherapy Services Limited 30/06/2022 N/A
1
(227) A Ordinary 50.0%
Callen-Lenz Associates Limited 28/02/2022 N/A
1
3,268 A Ordinary 50.0%
Clubspark Group Ltd 31/03/2022 N/A
1
1,930 A Ordinary 40.0%
AA Ordinary 40.0%
Cole Henry PE 2 Limited 31/03/2022 (22) 463 Ordinary 50.0%
Copptech UK Limited N/A
2
N/A N/A B Ordinary 29.9%
Crosstown Dough Ltd 31/01/2022 (318) 3,749 A Ordinary 50.0%
Datapath Group Limited 31/03/2022 3,498 29,609 A Ordinary 66.7%
Fourth Wall Creative Limited 30/09/2021 N/A
1
8,205 A Ordinary 40.0%
Hexarad Group Limited 30/06/2021 N/A
1
1,943 AB Ordinary 50.0%
AD Ordinary 35.0%
Homelink Healthcare Limited 31/12/2021 N/A
1
(1,038) A Ordinary 38.7%
Hospital Services Group Limited 30/09/2021 1,173 4,687 A Ordinary 26.5%
I-Mist Group Limited 31/12/2021 N/A
1
3,118 A Ordinary 35.9%
IMMJ Systems Limited 31/03/2022 N/A
1
(3,214) A Ordinary 50.0%
Innovation Consulting
GroupLimited
30/09/2022 N/A
1
2,148 A Ordinary 50.8%
Iphigenie Limited 31/12/2021 10 472 A Ordinary 100.0%
Itad (2015) Limited 31/01/2022 836 (783) A Ordinary 31.2%
Kingsclere PE 3 Limited 31/03/2022 (15) 373 Ordinary 50.0%
Luminet Networks Limited 31/03/2022 (1,238) (6,640) A Ordinary 20.0%
Newsflare Limited 31/07/2021 N/A
1
(969) Series B Ordinary 38.2%
NorthWest EHealth Limited 31/12/2021 (7) 6,968 AB Ordinary 50.0%
PH Realisations 2020 Limited 31/12/2018
(In administration)
(1,522) (3,361) A Ordinary 50.0%
Positive Response Corporation Ltd 31/03/2022 N/A
1
261 A Ordinary 50.0%
Protean Software Limited 31/03/2022 N/A
1
905 A Ordinary 37.5%
Rovco Limited 31/12/2021 N/A
1
(1,610) A Ordinary 24.4%
94 FORESIGHT ENTERPRISE VCT PLC Annual Report and Accounts 31 December 2022
Investee company name
Latest accounts
year end
Profit/(loss)
after tax for year
£’000
Aggregate capital
and reserves
£’000
Class and percentage
of shares held
Roxy Leisure Holdings Limited 31/12/2020 (2,269) (394) A Ordinary 20.0%
So-Sure Limited 31/12/2021 N/A
1
541 A Ordinary 38.1%
Specac International Limited 31/03/2022 1,493 5,776 A Ordinary 50.0%
Spektrix Limited 31/12/2021 (533) 546 B Ordinary 30.0%
Steamforged Holdings Limited 31/03/2021 (1,131) (1,035) A Ordinary 32.0%
Strategic Software
ApplicationsLtd
31/03/2022 N/A
1
(674) A Ordinary 50.0%
Ten Health & Fitness Limited 31/12/2021 N/A
1
(1,767) A Ordinary 40.0%
AA Ordinary 40.0%
Titania Group Limited 30/04/2022 N/A
1
2,539 A Ordinary 50.0%
TLS Holdco Limited 31/12/2021 2,620 2,912 A Ordinary 100.0%
Vio Healthtech Limited 31/12/2022 N/A
1
424 C Ordinary 21.7%
Weduc Holdings Limited N/A
2
N/A N/A A Ordinary 30.0%
AB Ordinary 26.7%
Whitchurch PE 1 Limited 31/03/2022 (36) 627 Ordinary 50.0%
1. In accordance with Section 444 of the Companies Act 2006, a statement of income has not been delivered in the financial
statements available on Companies House.
2. The company is yet to deliver financial statements to Companies House.
20 Post-balance sheet events
The Company announced a £20 million Prospectus offer on 14 October 2022, implemented the use of the £10 million
over-allotment facility on 17 March 2023 and made the following issues of Ordinary Shares post year end:
Ordinary NAV to calculate
Date Shares issue price
19 January 2023 1,449,747 63.7p
23 February 2023 3,136,556 63.7p
15 March 2023 2,975,995 63.7p
28 March 2023 3,632,401 63.7p
5 April 2023 8,693,406 66.5p
26 April 2023 2,154,064 66.5p
22,042,169
The offer was closed to new applications on 24 April 2023 and the final allotment was made on 26 April 2023 having
raised gross proceeds of £22.6 million, £21.7 million after expenses.
In advance of the allotment of Ordinary Shares on 5 April 2023, the Board announced that the unaudited NAV as at
5 April 2023 was 66.5p per share. The increase of 2.5% in NAV since 31 December 2022 was a result of the successful
realisations of Innovation Consulting Group Limited on 31 March 2023 and Datapath Group Limited on 31 March 2023.
GOVERNANCESTRATEGIC REPORT FINANCIAL STATEMENTS
FORESIGHT ENTERPRISE VCT PLC Annual Report and Accounts 31 December 2022 95
8 JUNE 2023
NOTICE OF ANNUAL GENERAL MEETING
Order of events
1.00pm Manager presentation
Immediately following the Manager presentation Formal business of the Annual General Meeting
Notice is hereby given that the Annual General Meeting of Foresight Enterprise VCT plc (“the Company”) will be held
on 8 June 2023 at 1.00pm at the offices of Foresight Group LLP, The Shard, 32 London Bridge Street, London SE1 9SG
for the purpose of considering and, if thought fit, passing the following resolutions, of which Resolutions 1 to 8 will be
proposed as ordinary resolutions and Resolutions 9 and 10 will be proposed as special resolutions.
Resolution 1
To receive the Report and Accounts for the year ended 31 December 2022.
Resolution 2
To approve the Directors’ Remuneration Report.
Resolution 3
To approve the Directors’ Remuneration Policy.
Resolution 4
To re-elect Raymond Abbott as a Director.
Resolution 5
To re-elect Gaynor Coley as a Director.
Resolution 6
To re-elect Michael Gray as a Director.
Resolution 7
To reappoint Deloitte LLP as auditor and to authorise the Directors to fix the auditor’s remuneration.
Resolution 8
That, in substitution for all existing authorities, the Directors be and they are generally and unconditionally authorised
in accordance with Section 551 of the Companies Act 2006 to exercise all the powers of the Company to allot shares
of 1p each in the capital of the Company (“Shares”) and to grant rights to subscribe for, or to convert any security
into, Shares (“Rights”), up to an aggregate nominal amount of £1,150,000, provided that this authority shall expire
(unless renewed, varied or revoked by the Company in a general meeting) on the fifth anniversary of the date of the
passing of this resolution, save that the Company shall be entitled to make offers or agreements before the expiry
of such authority which would or might require Shares to be allotted or Rights to be granted after such expiry and
the Directors shall be entitled to allot Shares and grant Rights pursuant to any such offers or agreements as if this
authority had not expired.
96 FORESIGHT ENTERPRISE VCT PLC Annual Report and Accounts 31 December 2022
Resolution 9
That, in substitution for all existing authorities, the Directors be and they are empowered pursuant to Section 570
and Section 573 of the Companies Act 2006 to allot equity securities (within the meaning of Section 560 of that Act)
for cash either pursuant to the authority conferred by Resolution 8 above or by way of a sale of treasury shares as if
Section 561(1) of that Act did not apply to any such allotment, provided that this power shall be limited to:
(a) The allotment of equity securities with an aggregate nominal amount of up to but not exceeding £550,000 pursuant
to offer(s) for subscription;
(b) The allotment of equity securities with an aggregate nominal amount of up to but not exceeding an amount equal
to 10% of the issued share capital from time to time pursuant to the dividend reinvestment scheme operated by
the Company at a subscription price per Share which may be less than the net asset value per Share, as may be
prescribed by the scheme terms;
(c) The allotment of equity securities with an aggregate nominal amount of up to but not exceeding £100,000 by way
of an issue of Shares (which may be at a subscription price per Share which is less than the net asset value per
Share) pursuant to performance incentive arrangements with Foresight Group LLP and relevant individuals of the
Foresight Group LLP investment team; and
(d) The allotment (otherwise than pursuant to sub-paragraphs (a) to (c) of this resolution) to any person or persons
of equity securities with an aggregate nominal amount of up to but not exceeding an amount equal to 10% of the
issued share capital from time to time.
In each case where the proceeds may be used in whole or part to purchase shares in the capital of the Company, and
shall expire (unless renewed, varied or revoked by the Company in a general meeting) on the conclusion of the Annual
General Meeting of the Company to be held in the year 2024, or, if earlier, on the date falling 15 months after the
passing of this resolution, save that the Company shall be entitled to make offers or agreements before the expiry of
such authority which would or might require equity securities to be allotted after such expiry and the Directors shall
be entitled to allot equity securities pursuant to any such offers or agreements as if the authority conferred hereby had
not expired.
Resolution 10
That, in substitution for all existing authorities, the Company be empowered to make market purchases (within the
meaning of Section 693(4) of the Companies Act 2006) of its own shares on such terms and in such manner as the
Directors shall from time to time determine, provided that:
(i) The aggregate number of Shares to be purchased shall not exceed 35,280,252 or, if lower, such number of Shares
(rounded down to the nearest whole Share) as shall equal 14.99% of the Company’s Shares in issue at the date of
passing of this resolution;
(ii) The minimum price which may be paid for a Share is 1p (the nominal value thereof);
(iii) The maximum price which may be paid for a Share is the higher of (1) an amount equal to 105% of the average of the
middle market quotation for a Share taken from the London Stock Exchange daily official list for the five business
days immediately preceding the day on which the Shares are purchased and (2) the amount stipulated by Article
5(6) of the Market Abuse Regulation (EU) 596/2014 (as such Regulation forms part of UK law and as amended);
(iv) The authority conferred by this resolution shall expire (unless renewed, varied or revoked by the Company in a
general meeting) on the conclusion of the Annual General Meeting of the Company to be held in the year 2024 or,
ifearlier, on the date falling 15 months after the passing of this resolution; and
(v) The Company may make a contract to purchase Shares under the authority conferred by this resolution prior to the
expiry of such authority which will or may be executed wholly or partly after the expiration of such authority and
may make a purchase of Shares pursuant to such contract.
By order of the Board
Foresight Group LLP
Company Secretary
28 April 2023
The Shard
32 London Bridge Street
London
SE1 9SG
GOVERNANCESTRATEGIC REPORT FINANCIAL STATEMENTS
FORESIGHT ENTERPRISE VCT PLC Annual Report and Accounts 31 December 2022 97
NOTES
1. No Director has a service contract with the Company. Directors’ appointment letters with the Company will be
available for inspection at the registered office of the Company until the time of the meeting and from 15minutes
before the meeting at the location of the meeting, as well as at the meeting.
2. Pursuant to Regulation 41 of the Uncertificated Securities Regulations 2001, entitlement to attend and vote at
the meeting and the number of votes that may be cast thereat will be determined by reference to the Register
of Members of the Company at the close of business on the day which is two days (excluding non-working days)
before the end of the meeting or adjourned meeting. Changes to the Register of Members of the Company
after the relevant deadline shall be disregarded in determining the rights of any person to attend and vote at
themeeting.
3. A member entitled to attend and vote at the meeting is entitled to appoint a proxy or proxies to attend, speakand
vote on their behalf. A proxy need not also be a member but must attend the meeting to represent you. Details of
how to appoint the Chair of the meeting or another person as your proxy using the form of proxy are set out in the
notes on the form of proxy which is enclosed. If you wish your proxy to speak on your behalf at the meeting, you
will need to appoint your own choice of proxy (not the Chair) and give your instructions directly tothem.
4. You may appoint more than one proxy, provided each proxy is appointed to exercise rights attached to different
shares. You may not appoint more than one proxy to exercise rights attached to any one share. To appoint more
than one proxy, (an) additional form(s) of proxy may be obtained by contacting Computershare Investor Services
plc on 0370 703 6385. Please indicate in the box next to the proxy holder’s name the number of shares in relation
to which they are authorised to act as your proxy. Please also indicate by ticking the box provided if the proxy
instruction is one of multiple instructions being given. All forms must be signed and returned together in the
sameenvelope.
5. As at 27 April 2023 (being the last business day prior to the publication of this notice), the Company’s issued share
capital was 235,358,591 shares of 1p each in the capital of the Company, carrying one vote each. Therefore, the
total voting rights in the Company as at 27 April 2023 was 235,358,591.
6. Any person to whom this notice is sent who is a person nominated under Section 146 of the Companies Act 2006
to enjoy information rights (a “Nominated Person”) may, under an agreement between them and the member
bywhom they were nominated, have a right to be appointed (or to have someone else appointed) as a proxy for
the meeting. If a Nominated Person has no such proxy appointment right or does not wish to exercise it,
they may, under any such agreement, have a right to give instructions to the Shareholder as to the exercise
ofvotingrights.
7. The statement of the rights of members in relation to the appointment of proxies in paragraphs 3 to 4 above does
not apply to Nominated Persons. The rights described in those paragraphs can only be exercised by members of
the Company.
8. Appointment of a proxy will not preclude a member from subsequently attending and voting at the meeting should
they subsequently decide to do so. You can only appoint a proxy using the procedures set out in these notes and
the notes to the form of proxy.
9. The Register of Directors’ Interests will be available for inspection at the meeting. Where the Company holds a
virtual meeting, the Register of Directors’ Interests will be available for inspection on the Company’s website
www.foresightenterprisevct.com.
10. Information regarding the meeting, including the information required by Section 311A of the Companies Act 2006,
is available from www.foresightenterprisevct.com.
11. A vote withheld is not a vote in law, which means that the vote will not be counted in the calculation of votes for or
against the resolution. If you either select the “Discretionary” option or if no voting indication is given, your proxy
will vote or abstain from voting at their discretion. Your proxy will vote (or abstain from voting) as they think fit in
relation to any other matter which is put before the meeting.
98 FORESIGHT ENTERPRISE VCT PLC Annual Report and Accounts 31 December 2022
12. A form of proxy and reply paid envelope is enclosed. To be valid, it should be lodged with the Company’s registrar,
Computershare Investor Services plc, The Pavilions, Bridgwater Road, Bristol BS99 6ZY or the proxy must be
registered electronically at www.investorcentre.co.uk/eproxy, in each case so as to be received no later than
48hours (excluding non-business days) before the time appointed for holding the meeting or any adjourned
meeting. To vote electronically, you will be asked to provide your Control Number, Shareholder Reference Number
and PIN, which are detailed on your proxy form. This is the only acceptable means by which proxy instructions may
be submitted electronically.
CREST members who wish to appoint a proxy or proxies through the CREST electronic proxy appointment service
may do so for the meeting (and any adjournment of the meeting) by following the procedures described in the
CREST Manual (available via www.euroclear.com). CREST Personal Members or other CREST sponsored members
(and those CREST members who have appointed a voting service provider) should refer to their CREST sponsor or
voting service provider, who will be able to take the appropriate action on their behalf.
In order for a proxy appointment or instruction made by means of CREST to be valid, the appropriate CREST
message (a “CREST Proxy Instruction”) must be properly authenticated in accordance with Euroclear UK &
International Limited’s (“EUI”) specifications and must contain the information required for such instructions, as
described in the CREST Manual. The message (regardless of whether it constitutes the appointment of a proxy or
an amendment to the instruction given to a previously appointed proxy) must, in order to be valid, be transmitted
so as to be received by the issuer’s agent (ID 3RA50) by the latest time(s) for receipt of proxy appointments
specified in note 3 above. For this purpose, the time of receipt will be taken to be the time (as determined by
the timestamp applied to the message by the CREST Applications Host) from which the issuer’s agent is able
to retrieve the message by enquiry to CREST in the manner prescribed by CREST. After this time any change of
instructions to a proxy appointed through CREST should be communicated to them by other means.
CREST members (and, where applicable, their CREST sponsors or voting service providers) should note that EUI
does not take available special procedures in CREST for any particular messages. Normal system timings and
limitations will therefore apply in relation to the input of CREST Proxy Instructions. It is the responsibility of the
CREST member concerned to take (or, if the CREST member is a CREST personal member or sponsored member
or has appointed a voting service provider, to procure that their CREST sponsor or voting service provider takes)
such action as shall be necessary to ensure that a message is transmitted by means of the CREST system by any
particular time. In this connection, CREST members (and, where applicable, their CREST sponsors or voting service
providers) are referred, in particular, to those sections of the CREST Manual concerning practical limitations of the
CREST system and timings. The Company may treat as invalid a CREST Proxy Instruction in the circumstances set
out in Regulation 35(5)(a) of the Uncertificated Securities Regulations 2001.
13. Under Section 319A of the Companies Act 2006, the Company must answer any question you ask relating to
the business being dealt with at the meeting unless answering the question would interfere unduly with the
preparation for the meeting or involve the disclosure of confidential information or the answer has already been
given on a website in the form of an answer to a question or it is undesirable in the interests of the Company or the
good order of the meeting that the question be answered.
14. Pursuant to Chapter 5 of Part 16 of the Companies Act 2006 (Sections 527 to 531), where requested by a member
or members meeting the qualification criteria, the Company must publish on its website, a statement setting out
any matter that such members propose to raise at the meeting relating to the audit of the Company’s accounts
(including the auditor’s report and the conduct of the audit) that are to be laid before the meeting. Where
the Company is required to publish such a statement on its website it may not require the members making
the request to pay any expenses incurred by the Company in complying with the request, it must forward the
statement to the Company’s auditor no later than the time the statement is made available on the Company’s
website and the statement may be dealt with as part of the business of the meeting.
GOVERNANCESTRATEGIC REPORT FINANCIAL STATEMENTS
FORESIGHT ENTERPRISE VCT PLC Annual Report and Accounts 31 December 2022 99
GLOSSARY OF TERMS
VCT
A Venture Capital Trust as defined
intheIncome Tax Act 2007.
Net Asset Value
or NAV
The Net Asset Value (“NAV”) is the
amount by which total assets exceed
total liabilities, i.e. the difference
between what the Company owns and
what it owes. It is equal to Shareholders’
equity, sometimes referred to as
Shareholders’funds.
Net Asset Value
per share or NAV
per share
Net Asset Value expressed as an amount
per share.
Movement
in NAV Total
Return
This is the movement in the NAV per
share at the start of the year to the
NAV per share at the end of the year
plus all dividends paid per share in the
year. TheNAV at the start of the year
was 69.1p (2021: 62.1p), dividends paid
during the year were 7.3p (2021: 4.2p)
with NAV at the end of the year being
64.9p (2021: 69.1p). As such, NAV Total
Return at the end of the year was 72.2p
(2021: 73.3p). Therefore, the movement
in NAV Total Return in the year was 4.5%
(2021:18.0%).
Share Price Total
Return
The sum of the current share price of
58.5p (2021: 61.5p) plus all dividends paid
per share since the share consolidation
in 2005 being 66.8p (2021:59.5p).
Thisgiving a Share Price Total Return
of125.3p (2021: 121.0p).
Discount to NAV
A discount to NAV is the percentage
by which the mid-market share price
of the Company of 58.5p (2021: 61.5p)
is lower than the Net Asset Value per
share of 64.9p (2021: 69.1p). This giving
adiscount to NAV of 9.9% (2021: 11.0%).
Dividends paid
in the year
The total dividends paid in the year per
share of 7.3p (2021: 4.2p).
Dividend yield
The sum of dividends paid during the
year of 7.3p (2021: 4.2p) expressed as
a percentage of the mid-market share
price at the year-end date of 58.5p
(2021:61.5p). This giving a dividend yield
of 12.5% (2021: 6.8%).
Shares bought
back in the year
The total number of shares which were
bought back in the year, being 2,387,781
(2021: 2,564,645).
Average
discount on
buybacks
The average of the percentage by which
the buyback price is lower than the Net
Asset Value per share at the point of the
buyback.
Ongoing charges
ratio
The sum of expenditure incurred in
the ordinary course of business after
adding back the performance incentive
provision to total expenses in the year
being £3.3million (2021: £3.0 million)
expressed as a percentage of the Net
Asset Value at the end of the year
after adding back special dividends
paid during the year to the year end
net assets being £145.5million (2021:
£133.2million).
Qualifying
Company
A company satisfying certain conditions
under the VCT legislation. Theconditions
are detailed but include that the company
must be unquoted (companies listed
on AIM or AQUIS can qualify), have a
permanent establishment in the UK, apply
the money raised for the purposes of
growth and development of a qualifying
trade within a certain time period and not
be controlled by another company. There
are additional restrictions relating to the
size and stage of the company to focus
investment into earlier-stage businesses,
as well as maximum investment limits
(certain of such restrictions and limits
being more flexible for “knowledge
intensive” companies). VCT funds cannot
be used by a Qualifying Company to
acquire shares in another company or a
trade.
Qualifying
investment
An investment which consists of shares or
securities first issued to the VCT (and held
by it ever since) by a Qualifying Company
and satisfying certain conditions under
the VCT legislation.
Manager
Foresight Group LLP.
100 FORESIGHT ENTERPRISE VCT PLC Annual Report and Accounts 31 December 2022
Report a scam
If you are approached by fraudsters
please tell theFCA using the share
fraud reporting form at
www.fca.org.uk/scams, where you
can fi nd out more about investment
scams.
You can also call the FCA Consumer
Helpline on 0800111 6768.
If you have already paid money to
share fraudsters you should contact
Action Fraud on 0300 123 2040.
In association with
5,000 people contact the Financial
Conduct Authority about share
fraud each year, with victims losing
an average of £20,000.
Beware of share fraud
Fraudsters use persuasive and high-pressure tactics to lure investors
intoscams.
They may off er to sell shares that turn out to be worthless or non-existent,
or to buy shares at an infl ated price in return for an upfrontpayment.
While high profi ts are promised, ifyou buy or sell shares in this way you
will probably lose your money.
How to avoid share fraud
•
Keep in mind that fi rms authorised by the FCA are unlikely to contact you
out of the blue with an off er to buy or sell shares.
•
Do not get into a conversation, note the name of the person and fi rm
contacting you and then end thecall.
•
Check the Financial Services Register from www.fca.org.uk to see
if theperson and fi rm contacting you is authorised by the FCA.
•
Beware of fraudsters claiming to befrom an authorised fi rm, copying
its website or giving you false contact details.
•
Use the fi rm’s contact details listed on the Register if you want to call
itback.
•
Call the FCA on 0800 111 6768 if the fi rm does not have contact details
on the Register or you are told they are out of date.
•
Search the list of unauthorised fi rms to avoid at www.fca.org.uk/scams.
•
Consider that if you buy or sell shares from an unauthorised fi rm you will
not have access to the Financial Ombudsman Service orFinancial Services
Compensation Scheme.
•
Think about getting independent fi nancial and professional advice before
you hand over any money.
•
Remember: if it sounds too good tobe true, it probably is!
FINANCIAL CONDUCT AUTHORITY
GOVERNANCESTRATEGIC REPORT FINANCIAL STATEMENTS
FORESIGHT ENTERPRISE VCT PLC Annual Report and Accounts 31 December 2022 101
CORPORATE INFORMATION
COMPANY NUMBER
03506579
DIRECTORS
Raymond Abbott (Chair)
Gaynor Coley
Michael Gray
Simon Jamieson
COMPANY SECRETARY
Foresight Group LLP
The Shard
32 London Bridge Street
London
SE1 9SG
MANAGER
Foresight Group LLP
The Shard
32 London Bridge Street
London
SE1 9SG
AUDITOR
Deloitte LLP
20 Castle Terrace
Edinburgh
EH1 2DB
SOLICITORS AND VCT STATUS ADVISERS
Shakespeare Martineau LLP
No. 1 Colmore Square
Birmingham
B4 6AA
and
60 Gracechurch Street
London
EC3V 0HR
REGISTRAR
Computershare Investor Services plc
The Pavilions
Bridgwater Road
Bristol
BS99 6ZY
MARKET MAKER
Panmure Gordon & Co
One New Change
London
EC4M 9AF
102 FORESIGHT ENTERPRISE VCT PLC Annual Report and Accounts 31 December 2022
SHAREHOLDER INFORMATION
Foresight Enterprise VCT plc, formerly Foresight 4
VCT plc, is a Venture Capital Trust aiming to provide
investors with regular dividends and capital growth
from a portfolio of investments infast-growing
unquoted companies in the UK.
For details on the Company’s investment policy
pleaserefer to the Strategic Report.
www.foresightenterprisevct.com
Enquiries
The Board and Manager are always keen to hear from
investors. If you have any feedback about the service you
receive or any queries relating to Foresight Enterprise
VCT plc, please contact the Investor Relations team:
020 3667 8181
InvestorRelations@Foresightgroup.eu
www.foresightgroup.eu
Annual and Half-Yearly Reports, as well as quarterly
factsheets and information on new investments, can
beviewed online.
As part of the Manager’s investor communications
policy, investor forums are held throughout the year.
Shareholders can also arrange a mutually convenient time
to meet the Manager’s investment team. Please contact
Investor Relations if you are interested.
Dividends
All cash dividends will be credited to your nominated
bank/building society account. Your options are:
•
Receive your dividends in sterling via direct credit
to a UK domiciled bank account
•
Reinvest your dividends for additional shares in
the Company through our dividend reinvestment
scheme
www.investorcentre.co.uk
Investors can manage their shareholding online using
Investor Centre, Computershare’s secure website.
Shareholders just require their Shareholder
Reference Number (“SRN”), which can be found
on any communications previously received from
Computershare, to access the following:
Holding enquiry Balances l Values History l Payments
lReinvestments
Payments enquiry Dividends l Other payment types
Address change Change registered address to which
allcommunications are sent
Bank details update Please ensure bank details are up
todate in order to receive your dividends
Outstanding payments Reissue payments using our
online replacement service
Downloadable forms for Dividend mandates l Stock
transfer l Dividend reinvestment l Change of address
Alternatively, you can contact Computershare by
phoneon 0370703 6388
Key dates
Annual General Meeting 8 June 2023
Half-Yearly results to 30 June 2023 September 2023
Annual results to 31 December 2023 April 2024
GOVERNANCESTRATEGIC REPORT FINANCIAL STATEMENTS
FORESIGHT ENTERPRISE VCT PLC Annual Report and Accounts 31 December 2022 103
ADDITIONAL INFORMATION
Important information
Foresight Enterprise VCT plc currently conducts its
affairs so that its shares can be recommended by IFAs
to ordinary retail investors in accordance with the FCA’s
rules in relation to non-mainstream pooled investment
products and intends to continue to do so for the
foreseeable future.
The shares are excluded from the FCA’s restrictions
which apply to non-mainstream pooled investment
products because they are shares in a VCT.
Past performance is not necessarily a guide to future
performance. Stock markets and currency movements
may cause the value of investments and the income from
them to fall as well as rise and investors may not get back
the amount they originally invested. Where investments
are made in unquoted securities and smaller companies,
their potential volatility increases the risk to the value of,
and the income from, the investment.
Trading shares
The Company’s shares are listed on the London Stock
Exchange. Share price information is available on the
Manager’s website and can also be obtained from many
financial websites.
The Company’s shares can be bought and sold in the
same way as any other quoted company on the London
Stock Exchange via a stockbroker. The primary market
maker for Foresight Enterprise VCT plc is Panmure
Gordon & Co.
You can contact Panmure Gordon by phone on
0207886 2716 or 0207 886 2717
Investment in VCTs should be seen as a long-term
investment and Shareholders selling their shares within
five years of original subscription may lose any tax reliefs
claimed. Investors who are in any doubt about selling their
shares should consult their independent financial adviser.
Please contact the Manager if you or your adviser have
any questions about this process.
Privacy policy
We respect your privacy and are committed to protecting your personal data. If you would like to find out more
about the measures the Manager takes in processing your personal information, please refer to the privacy policy,
which can be found at www.foresightgroup.eu/privacy-policy.
104 FORESIGHT ENTERPRISE VCT PLC Annual Report and Accounts 31 December 2022
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Foresight Enterprise VCT plc
The Shard
32 London Bridge Street
London
SE1 9SG
www.foresightenterprisevct.com
FORESIGHT ENTERPRISE VCT PLC Annual Report and Financial Statements 31 December 2022