Shareholder Information

Financial Calendar

12 September 2023 Annual General Meeting

29 September 2023 Payment of final dividend

December 2023 Announcement of Half-Yearly financial results

Selling shares

The Company’s shares can be bought and sold in the same way as any other company listed on the London

Stock Exchange, using a stockbroker. Disposing of shares may have tax implications, so Shareholders are urged

to contact their independent financial adviser before making a decision.

The Company has stated that it will, from time to time, consider making market purchases of its own shares, in

accordance with the policy set out in the Chairman’s Statement. At present, the Company only operates a share

buyback policy in respect of its Ventures, Healthcare and AIM Shares, as the other classes are in the process of

returning funds to Shareholders through dividends. If you are considering selling your shares or wish to buy

shares in the secondary market, you can contact the Company’s Corporate Broker, Panmure Gordon (UK)

Limited (“Panmure”) who can provide guidance on the likely timing of buyback and other details.

Panmure can be contacted as follows:

Chris Lloyd Paul Nolan

0207 886 2716 0207 886 2717

chris.lloyd@panmure.com paul.nolan@panmure.com

If you have any queries, Foresight’s Customer Team can be contacted at:

investorrelations@foresightgroup.eu or on 020 3667 8181

Dividends

Dividends will be paid by the registrar on behalf of the Company. Shareholders who wish to have dividends paid

directly into their bank account, rather than by cheque to their registered address, can complete a mandate form

for this purpose or do this via the Investor Hub at thames-ventures-vcts.cityhub.uk.com. Queries relating to

dividends, shareholdings, and requests for mandate forms should be directed to the Company’s registrar, whose

details can be found on the Company Information page.

Notification of change of address

Communications with Shareholders are mailed to the registered address held on the share register. In the event

of a change of address or other amendments this should be notified to the Company’s registrar or via the

Investor Hub.

Share scam warning

We are aware that a number of shareholders of VCTs continue to receive unsolicited telephone calls from a

company purporting to be acting on behalf of a client who is looking to acquire their VCT shares at an attractive

price. We believe these calls to be part of a “Boiler Room Scam”. Shareholders are warned to be very

suspicious if they receive any similar type of telephone call. The FCA has published information about

such scams at www.fca.org.uk/scamsmart

If you have any concerns, please contact Foresight Investor Relations on 020 3667 8181 or at

InvestorRelations@foresightgroup.eu

Other information for Shareholders

Up-to-date Company information (including financial statements, share prices, and dividend history) may be

obtained from Foresight’s website at:

www.foresightgroup.eu/products/thames-ventures-vct-2-plc

If you have any queries regarding your Shareholding in Thames Ventures 2 VCT plc, please contact the registrar.

Contents

Page

Company information 1

Financial highlights 2

Investment objectives and Directors 3

Chairman’s Statement 4

Ventures Share pool Summary 8

Investment Manager’s Report – Ventures Share pool 9

Review of investments – Ventures Share pool 12

Healthcare Share pool Summary 20

Investment Manager’s Report – Healthcare Share pool 21

Review of investments – Healthcare Share pool 24

AIM Share pool Summary 32

Investment Manager’s Report – AIM Share pool 33

Review of investments – AIM Share pool 34

DSO D Share pool Summary 35

Investment Manager’s Report – DSO D Share pool 36

Review of investments – DSO D Share pool 37

DP67 Share pool Summary 40

Investment Manager’s Report – DP67 Share pool 41

Review of investments – DP67 Share pool 42

Approach to Responsible Investment 45

Strategic Report 48

Report of the Directors 56

Directors’ Remuneration Report 62

Corporate Governance Statement 68

Independent Auditor’s Report 73

Income Statement 80

Balance Sheet 84

Statement of Changes in Equity 88

Cash Flow Statement 89

Notes to the Accounts 91

Notice of Annual General Meeting 113

Company Information

Registered number 6789187

Directors Sir Aubrey Brocklebank Bt. (Chairman)

Chris Allner

Steven Clarke

Andrew Mackintosh

Secretary and registered office Grant Whitehouse

Floor, St. Magnus House

3 Lower Thames Street

London EC3R 6HD

Investment Manager

(excluding the Healthcare share class)

Foresight Group LLP

The Shard

32 London Bridge Street

London SE1 9SG

www.foresightgroup.eu

Administration Manager and Investment Downing LLP

Manager of the Healthcare Share class 6

Floor, St. Magnus House

3 Lower Thames Street

London EC3R 6HD

www.downing.co.uk

Auditor BDO LLP

55 Baker Street

London

W1U 7EU

VCT status advisers Philip Hare & Associates LLP

Hamilton House

1 Temple Avenue, Temple

London EC4Y 0HA

Registrar The City Partnership (UK) Limited

The Mending Rooms

Park Valley Mills

Meltham Road

Huddersfield

HD4 7BH

01484 240 910

registrars@city.uk.com

Investor Hub: thames-ventures-vcts.cityhub.uk.com

Corporate broker Panmure Gordon (UK) Limited

Chris Lloyd Paul Nolan

0207 886 2716 0207 886 2717

chris.lloyd@panmure.com paul.nolan@panmure.com

Bankers Royal Bank of Scotland plc

Liverpool CSC, Stephenson Way

Wavertree, Liverpool, L13, 1HE

Financial Highlights

31 March

2023

31 March

2022

Pence Pence

Ventures Share pool

Net Asset Value (“NAV”) per Ventures Share 59.4

68.20

Cumulative distributions 8.0

5.25

Total Return

per Ventures Share

67.4

73.45

Healthcare Share pool

Net Asset Value (“NAV”) per Healthcare Share 61.60

84.40

Cumulative distributions 8.75

5.25

Total Return

per Healthcare Share

70.35

89.65

AIM Share pool

Net Asset Value (“NAV”) per AIM Share 101.1

99.9

Cumulative distributions -

Total Return

per AIM Share

101.1

99.9

DSO D Share pool

Net Asset Value (“NAV”) per DSO D Share

2.6

Cumulative distributions

102.0

Adjustment for Performance Incentive estimate

Total Return

per DSO D Share

104.6

DP67 Share pool

Net Asset Value (“NAV”) per DP67 Share

24.8

26.8

Cumulative distributions (since original launch)

67.8

Total Return

per DP67 Share

92.6

94.6

Based on Total Return to Shareholders at 31 March 2023, no Performance Incentive is expected to become due to management.

Alternative Performance Measure (see page 49).

A full explanation of the Performance Incentive arrangements for each share pool is given on pages 59 and 102.

Investment Objectives

The Company’s principal objectives are to:

 invest in a portfolio of venture capital investments and liquidity investments;

 provide a full exit for Planned Exit Shareholders within approximately six years at no discount to NAV;

 maintain VCT status; and

 target an annual dividend of at least 4% of the respective Ventures and Healthcare NAVs, from the

summer of 2021 onwards.

The detailed investment policy adopted to achieve the investment objectives is set out in the Strategic Report

on page 48.

Directors

Sir Aubrey Brocklebank Bt. (appointed 21 July 2015) (Chairman) qualified as a chartered accountant prior to

working for Guinness Mahon from 1981 to 1986, initially in its corporate finance department before helping to

establish a specialist development capital department. From 1986 to 1990 he was a director of Venture Founders

Limited, managing a £12 million venture capital fund and subsequently managed the Avon Enterprise Fund

Limited. Sir Aubrey assumed his first role within the VCT industry in 1997 and has since gone on to become one

of the most experienced VCT directors. Sir Aubrey maintains a wide range of business interests and has been a

director of six AIM listed companies. He is currently also a non-executive director of Edge Performance VCT plc.

Chris Allner (appointed 8 September 2021) has over 35 years of venture capital and private equity experience

and is currently a partner of Downing LLP and chairs their investment committee. Prior to joining Downing, he

was the head of private equity at Octopus Investments as well as a director at Beringea and Bridgepoint with

previous experience at 3i and Charterhouse. He has previously sat on the boards of a number of unquoted and

quoted companies across a variety of commercial sectors.

Steven Clarke (appointed 8 September 2021) has 30 years’ experience of investing in technology and data

businesses including 21 years as a private equity investor with 3i, August Equity and ICG. Steven now supports

founders through fundraising, international growth and exit as an investing non-executive director usually

alongside a growth equity fund. Steven is also chair of the investment committee for Bethnal Green Ventures, a

Tech for Good impact investor.

Andrew Mackintosh (appointed 8 September 2021) has had a distinguished career in industry and

investment as a former CEO of FTSE 250 company, Oxford Instruments, before later leading the creation of the

Royal Society Enterprise Fund, a pioneering initiative in bringing together scientific expertise and early-stage

investment. He was a board member of the Intellectual Property Office and a trustee of the Design Council. He

is also chairman of UKI2S, a government-backed venture capital fund supporting companies from the UK’s

scientific research base.

Andrew has a longstanding interest in enhancing the commercialisation and wider economic impact of UK

research and is the author of a report (‘The Mackintosh Report’) commissioned by HM Treasury and published in

April 2021.

All the Directors are non-executive and, with the exception of Chris Allner (who is a partner of one of the

Investment Managers, Downing LLP) are independent of the Investment Manager.

Chairman’s Statement

Introduction

I report on what has been an eventful year for your

Company, with the main Investment Manager

changing from Downing LLP to Foresight Group LLP

following the sale of Downing’s non-healthcare

ventures division to Foresight in a transaction that

completed on 4 July 2022.

The structure of the transaction has ensured a good

level of continuity with the core investment team

members moving to Foresight and Downing

continuing to provide investment management

services for the Healthcare share pool, quoted and

non-ventures investments, as well as administration

services for a handover period.

The Company changed its name to Thames

Ventures VCT 2 plc on 2 September 2022 following

the change of main Investment Manager.

Evergreen Share pool review

Ventures Share pool

The Ventures Share portfolio developed over the

year, with £5.1 million invested in 12 VCT-qualifying

companies, five of which were new additions to the

portfolio.

The Ventures Share NAV at the year-end was 59.4p,

representing a decrease of 6.1p per share or 8.9%

over the year. This is after adding back the dividend

of 2.75p per share, which was paid on 30 September

2022.

There has been a general decline in the portfolio

investment valuations across the year, in line with

sector trends for lower revenue and earnings

multiples, due to economic concerns. Net unrealised

losses for the period were £2.4 million.

There were four full exits during the year, plus a

partial exit from one investment where part of the

proceeds were rolled over into the acquirer. This

produced net realised gains over cost of £1.2

million.

A more detailed review of the Ventures Share pool

is included in the Investment Manager’s Report on

pages 8 to 19.

Healthcare Share pool

The Healthcare Share pool had a limited level of

activity over the year with one new investment and

two follow-ons made. There was also one full exit

and some deferred consideration collected on an

earlier investment.

The Healthcare Share NAV at the year-end was

61.6p, representing a decrease of 19.3p per share or

21.5% in NAV over the year after adjusting for the

Healthcare dividend of 3.50p per share, which was

paid on 30 September 2022.

The most significant movements in the portfolio

were a full provision of £1.8 million which was made

against Adaptix Limited, as well as falls in the share

prices of a small number of AIM-quoted stocks

(Arecor falling by £1.2 million, GENinCode by

£573,000 and Destiny Pharma by £98,000), which

accounted for the majority of the £4.1 million of net

unrealised losses for the period. The Healthcare

Share pool remains heavily exposed to the relatively

volatile AIM market, with more that 30% of the

pool’s value accounted for by two AIM-quoted

investments.

A more detailed review of the Healthcare Share pool

is included in the Investment Manager’s Report on

pages 20 to 31.

AIM Share pool

The AIM Share Pool launched in 2022 and is a small

pool with net assets of £2.7 million. Conditions for

VCT AIM investing since the launch have been weak,

with a very limited number of VCT eligible AIM

flotations and fundraisings.

Consequently, no AIM investments have been made

to date, although funds have been placed in a

money market fund and an equity income fund

pending improved conditions for AIM investing.

The AIM Share NAV stood at 101.1p at the year end,

representing an increase of 1.2p per share or 1.2% in

NAV over the year.

The Board will continue to consider how beneficial

the different share pools are for Shareholders. Any

proposals by the Board will be put to Shareholders

in due course.

Chairman’s Statement (continued)

Planned Exit Share pool review

The Company continues to hold two planned exit

share pools which hold a small number of

investments from which exits are sought in order to

return funds to shareholders and wind up those

share classes.

DSO D Share pool

The DSO D Share portfolio held two remaining

investments as at 31 March 2023.

The two remaining investments are in a pub

company Pearce and Saunders Limited and a

related business, which have both sold their main

assets. Attempts are being made to wind up both

companies and extract the small amount of

remaining value from them.

The DSO D Share NAV stood at 2.6p at the year

end, showing no movement over the year. The Total

Return to DSO Shareholders remains 104.6p per

share, as reported at 31 March 2022, compared to

the cost for Shareholders who invested in the

original DSO D Share offer of 100.0p, or 70.0p per

share net of income tax relief.

A more detailed review of the DSO D Share pool is

included in the Investment Manager’s Report on

pages 35 to 39.

DP67 Share pool

The remaining value in the DP67 Share portfolio is

in two investments which are both in the hospitality

sector.

As at 31 March 2023, the DP67 Share NAV stood at

24.8p and Total Return stood at 92.6p per share, a

decrease of 2.0p per share, equivalent to 2.1% in

Total Return terms since 31 March 2022.

We are expecting final proceeds from Gatewales

Limited in the near future. Cadbury House Holdings

Limited owns a leisure and hotel facility in Bristol.

The property is being marketed for sale although

the current market is weak and the Investment

Manager is keen to avoid a sale at undervalue.

A more detailed review of the DP67 Share pool is

included in the Investment Manager’s Report on

pages 40 to 44.

Responsible investment

The Board is pleased to note the Investment

Manager, Foresight Group’s, commitment to being

a “Responsible Investor”. Foresight places

Environmental, Social and Governance (ESG) criteria

at the forefront of its business and investment

activities in line with best practice and in order to

enhance returns for their investors.

Further detail on the Investment Manager’s

approach to responsible investment, including the

key principles and their screening approach, can be

found on pages 45 to 47.

Fundraising

As noted in the half yearly report, a new offer for

subscription was launched in September 2022. The

offer has raised £1.6 million to date between the

Ventures and Healthcare Share classes and is

scheduled to close on 31 July 2023.

Fundraising was impacted by the various changes to

the Company during the year and the Board is

reviewing with the Investment Manager plans for

renewed focus and momentum in the current year.

With a lower level of funds than expected raised,

supporting the existing portfolio will be prioritised

with the main impact being reduced potential for

new investments, albeit in a market in which

fundraising volumes are significantly reduced.

Dividends

Thames Ventures 2 has a target of seeking to pay

annual dividends for the Ventures and Healthcare

share classes of at least 4% of the respective NAVs

per annum.

The Board is now reviewing, with the new Manager,

how the Company can best achieve its objectives

for Shareholders, including future fundraising plans.

While this review is being undertaken, the Board

believes it is prudent to be cautious with the

Company’s uninvested funds until the plans of the

future become clearer. For this reason, the

proposed final dividends for the Ventures and

Healthcare share classes are being reduced from

their normal levels at this time.

The Board will,

however, give consideration to declaring further

dividends once this review is complete.

Chairman’s Statement (continued)

Dividends (continued)

The Board is proposing to pay final dividends of

1.25p per Ventures Share and 1.25p per Healthcare

Share on 29 September 2023, to Shareholders on

the register as at 1 September 2023. The proposed

dividends are subject to Shareholder approval at the

forthcoming AGM. Following the payment of the

proposed dividends, the Company will have paid

cumulative dividends of 9.25p per Ventures Share

and 10.0p per Healthcare Share.

Further dividends in respect of the Company’s

Planned Exit Share pools will be paid once further

realisations have taken place. No dividends are

expected to be paid by the AIM Share class in its

initial years.

Share buybacks

The Company usually operates a policy of buying

back its own shares that become available in the

market, subject to regulatory and liquidity factors.

The Board review these on a regular basis and will

make appropriate adjustments as it sees fit. Any

such purchases are undertaken at a price

approximately equal to NAV (i.e. at a nil discount).

As mentioned above, while the Board is reviewing

plans for the future of the Company. While this

review is undertaken, for a period, the Board does

not expect to undertake share buybacks in the

Ventures, Healthcare and AIM Share pools. This

review will allow a clear strategy for the allocation of

the Company’s cash resources to be drawn up. The

Board does, however, expect share buybacks to

resume in due course.

As the focus for the two remaining Planned Exit

Share pools is on returning funds to Shareholders

via distributions, the Company will not undertake

any further buybacks in respect of those share

classes.

Panmure Gordon continues to act as the Company’s

corporate broker, operating the share buyback

process and ensuring that the quoted spread on the

Company’s shares remains at a reasonable level. If

you wish to sell or buy shares in the Company, the

contact details of Panmure Gordon can be found on

the Shareholder Information page.

During the year ended 31 March 2023, the Company

repurchased 3,014,102 Ventures Shares at an

average price of 66.9p per Share and 1,007,037

Healthcare Shares at an average price of 72.8p per

Share.

Annual General Meeting (“AGM”)

The Company invites Shareholders to attend this

year’s AGM in person once more. The AGM is

planned to take place at the offices of Foresight

Group LLP, The Shard, 32 London Bridge Street,

London, SE1 9SG at 3:30 p.m. on 12 September

2023.

Shareholders wishing to attend the AGM are

requested to please notify Downing LLP via email, to

tv2agm@downing.co.uk, in case there are changes

to arrangements which need to be communicated at

short notice.

Three items of special business are proposed at the

AGM as follows:

• one resolution in respect of the authority to buy

back shares as noted above; and

• two resolutions in respect of authority to allot

shares and disapply pre-emption rights to give

the Company flexibility in respect of further

fundraising plans.

This year Shareholders will be able submit proxy

votes electronically. The details required for voting

will be sent to each shareholder. The deadline for

proxy votes to be received is 3:30 p.m. on 8

September 2023.

Chairman’s Statement (continued)

Outlook

Although the main share classes have seen their

portfolios fall in value over the year, these

movements are not out of line with general market

conditions for young growth businesses. Increasing

interest rates, inflation and fears of recession have

knocked investor confidence about growth

prospects and valuation metrics.

The Board is cognisant that it takes time to nurture

and realise value from potential outperformer

companies whereas economic turmoil pushes

weaker companies into difficulty. By reviewing the

Managers’ portfolios and discussing proposed

actions, the Board is generally satisfied that the

Ventures and Healthcare portfolios have sufficient

weight of stronger investments to generate growth

in return for Shareholders in future.

The Board is committed to the Company’s strategy

of nurturing young growth businesses through the

stages of their development with the Managers

providing full support to the companies that have

the potential to deliver the targeted returns. The

Board and the Managers have agreed suitable

strategies for the available cash funds, with

appropriate allocation between existing portfolio

companies meriting further support, limited

investment in new companies as well as meeting

other demands on cash.

In respect of the planned exit share classes, the

Board is encouraging the Manager to pursue

transactions that will bring both share classes to a

close this year.

As mentioned above, the Board is now reviewing

possible options for the future of the Company,

seeking to identity a way to execute the Company's

strategy which will best serve Shareholders’

interests. I will, of course, report any significant

developments to this end to Shareholders as soon

as practicable.

Sir Aubrey Brocklebank Bt.

Chairman

31 July 2023

Ventures Share Pool

Share Pool Summary

31 March

2023

31 March

2022

Financial highlights Pence Pence

Net Asset Value per Ventures Share 59.40 68.20

Cumulative distributions 8.00 5.25

Total Return per Ventures Share 67.40 73.45

Forthcoming Dividend

A proposed final dividend of 1.25p per Ventures Share will be paid on 29 September 2023, to Shareholders on the

Dividend history

Period end

Date paid

Pence

per share

2020 Interim 25 September 2020 2.50

2021 Interim 24 September 2021 2.75

2022 Interim 30 September 2022 2.75

8.00

Share prices

The Company’s share prices can be found on various financial websites with the following TIDM/EPIC codes:

Ventures Shares

TIDM/EPIC codes TV2V

Latest share price (31 July 2023) 66.0p per share

Performance Incentive arrangements

Members of the management team have committed to subscribe for a number of Ventures Shares equal to 20%

of the total number of Ventures Shares in issue. The members of the management team have agreed to waive

any dividends on these Shares until the performance hurdles are met.

For the year ended 31 March 2023, the hurdle is met when Total Return (based on audited year end results) is in

excess of £1.09 per Ventures Share. For subsequent years, the Total Return hurdle increases by 3p per annum

such that for the year ended 31 March 2024 the Total Return hurdle will be £1.12, for the year ended 31 March

2025 the hurdle will be £1.15, etc. If the hurdle is met in any year, then members of the management team will

receive 20% of the dividends paid. The Total Return at 31 March 2023 was 67.4p and therefore no provision for a

performance incentive fee is necessary.

Investment Manager’s Report - Ventures Share Pool

i. Overview

Introduction

We present a review of the investment portfolio and

activity for the Ventures Share pool for the year

ended 31 March 2023.

This Investment Manager’s Report is split into three

sections comprising this overview, a review of the

Venture Capital Portfolio and a report on the

portfolio of Liquidity Investments.

Net Asset Value and results

As at 31 March 2023, the NAV of a Ventures Share

stood at 59.4p, a decrease of 6.1p (8.9%) for the

year after adding back the Ventures dividend of

2.75p per share, which was paid on 30 September

2022.

The return on ordinary activities for the Ventures

Share pool for the year was a loss of £3.2 million

(2022: gain of £1.8 million), comprising a revenue

loss of £494,000 (2022: loss of £491,000) and a

capital loss of £2.7 million (2022: gain of £2.3

million).

It is disappointing to report the Total Return to

Shareholders as at 31 March 2023 of 67.4p which

continues to be considered an underperformance

against our expectations for the Ventures Share

pool.

A final dividend of 1.25p per share is proposed to

be paid on 29 September 2023, to Shareholders on

the register at 1 September 2023.

Portfolio Overview

As at 31 March 2023, the Ventures Share pool held

a portfolio of 36 Venture Capital investments and

one Liquidity investment, with a combined value of

£27.8 million.

Following the impact of the pandemic, there have

continued to be challenges for businesses in the UK

and internationally, caused by the impact of the

economic downturn with rising rates of inflation

and interest.

The investment team continue to work closely with

portfolio companies to provide guidance and,

where appropriate, additional funding in support of

potential value growth. The stronger companies in

the portfolio have proven capable of delivering

good performances and positive updates which is

encouraging.

The valuation movements during the period are

discussed in more detail in the following sections of

this Investment Manager’s Report.

Portfolio Performance

Overall, several larger valuation uplifts in the

Venture Capital Portfolio were outweighed by a

number of valuation decreases during the period,

resulting in a net valuation decrease of £2.4 million

across the portfolio. The carrying value of the

Liquidity Investment portfolio has been adjusted to

reflect quoted prices as at 31 March 2023. This

resulted in a valuation decrease of £174,000 for the

period. Of the two Liquidity Investments brought

forward, one was exited during the period, details

of which are provided in the disposal table on page

13.

ii. Ventures Portfolio

Investment activity

During the period, a total of £5.1 million was

invested in 12 businesses, five of which are new VCT

Qualifying investments.

New Ventures investments

A total of £3.0 million was invested into new VCT

Qualifying investments during the year. A

description of each of these five companies is

shown below.

CommerceIQ Inc (£1,749,000) is a pioneer in

helping brands win on retail ecommerce channels.

Their unified platform applies machine learning and

automation across marketing, supply chain, and

sales operations to help brands gain market share

profitably.

Maestro Media Limited (£340,000) has developed

a talent-led, e-learning media platform of

multichannel e-commerce technology. This is a

subscription-based platform which has secured a

licence to use the BBC brand and has partnered

with a number of recognised celebrities across

various industries to deliver engaging content.

Investment Manager’s Report - Ventures Share Pool (continued)

ii. Venture Capital Portfolio (continued)

New Ventures investments (continued)

Vivacity Labs Limited (£493,000) provides traffic

management software to optimise traffic flow by

avoiding congestion and improve safety within

cities and traffic junctions.

Audioscenic Limited (£200,000) is a spin-out from

the University of Southampton’s Institute of Sound

and Vibrational Research and has developed a

software-based solution that unlocks the full

potential of 3D audio.

Glisser Limited (£200,000) has built a platform that

supports virtual and hybrid events.

Follow-on Ventures investments

A total of £2.1 million was invested as follow-on

capital into existing businesses in the Venture

Capital Portfolio, most notably:

FVRVS Limited (trading as Fundamental VR)

(£537,000) has developed a platform, Fundamental

Surgery, which is the market leading medical

education platform delivering multimodal

simulation and education across tethered and all-

in-one VR, mixed reality and mobile, harnessing the

very latest AI techniques.

Masters of Pie Limited (£219,000) developed

Radical, a software solution that enables remote

sharing and collaboration on large data sets.

Rated People Limited (£200,000) is an online

marketplace connecting homeowners with local

tradespeople.

Hackajob Limited (£1.0 million) is an online

recruitment platform for employers seeking

developers and engineers.

There were four full exits during the year from the

Venture Capital portfolio. Total proceeds of £5.3

million were generated, producing a gain over cost

of £1.1 million, although representing a loss over

holding value of £131,000.

E-Fundamentals Group Limited, a B2B developer

of a Software as a Service (SaaS) analytics platform

allowing ecommerce companies to accurately

assess the performance of their products, generated

proceeds of £3.7 million, realising a profit over cost

of £2.2 million however a loss over the opening

value of £137,000.

Firefly Learning Limited, an edtech e-learning

platform which allows teachers, students and

parents to share lesson plans and review

homework, was sold during the period, generating

proceeds of £1.0 million. The opening value of this

investment was held at cost therefore there was an

immaterial loss realised against both cost and value

of £32,000.

Streethub Limited (trading as Trouva), an online

marketplace for a curated range of homeware and

lifestyle products, was sold during the period,

generating proceeds of £242,000. The value of this

investment was written down in 2022 as a result of

the business trading significantly behind budget

therefore a gain over value of £100,000 was

realised. It should be noted, however, that this was

a disappointing overall loss against the original cost

of £1.1 million.

Fenkle Street LLP, a non-qualifying investment,

was created to fund the purchase of a property in

central Newcastle and carry out its subsequent

refurbishment under the Business Premises

Renovation Allowance (BPRA) scheme. This sale

generated proceeds of £343,000, realising a gain

over cost of £42,000 however a loss over the

opening value of £62,000.

Deferred consideration of £114,000 was also

received in relation to the exit of ADC

Biotechnology Limited which occurred in the year

ended 31 March 2021.

Investment Manager’s Report - Ventures Share Pool (continued)

Portfolio valuation

During the period, the Venture Capital portfolio of

the Ventures Share pool recognised an unrealised

loss in value of £2.4 million, including unrealised

foreign exchange gains of £286,000. Whilst there

have been a number of positive developments

within the Venture Capital portfolio, this was offset

by the reduction in value of several companies

predominantly due to underperformance in a

challenging macroeconomic environment. Of the

£2.4 million total unrealised loss, the most

significant movements are noted below.

The largest gain in value was in Cornelis Networks,

Inc, who delivers purpose-built high-performance

fabrics for High Performance Computing (HPC),

High Performance Data Analytics (HPDA) and

Artificial Intelligence (AI). During the period, the

company was uplifted by £1.5 million, including the

impact of foreign exchange. This revaluation is the

result of a calibration to the price set by a funding

round during the year.

Virtual Class Limited (trading as Third Space

Learning), a platform offering personalised online

lessons from specialist tutors, was uplifted by

£383,000 as a result of continued growth in

revenues and their customer base.

Ayar Labs Inc, the developer of components for

high performance computing and data centre

applications, was uplifted by £314,000, including the

impact of foreign exchange. This revaluation is the

result of a calibration to the price set by a funding

round during the year.

Bulbshare Limited, a company that enables brands

to build communities from their existing customers,

has performed well during the year with revenues

continuing to grow, resulting in a valuation uplift of

£178,000 as at the year end.

Disappointingly, there were a number of unrealised

losses recognised during the period. Some of these

came from the more vulnerable businesses within

the portfolio, however there were some material

losses recognised to account for funding and

liquidity risks faced by some of the larger portfolio

companies. The greatest unrealised loss in the

period was from Cambridge Touch Technologies, a

company developing pressure sensitive multi touch

technology. The investment suffered an unrealised

fair value loss of £764,000 as a result of the

challenging macroeconomic environment and

weaker access to funding.

FundingXchange Limited, a fintech platform

delivering SME lenders insights into their portfolio

trends, was revalued downwards by £510,000 to

calibrate to the price of last funding round.

Hackajob Limited, a marketplace for technical hires,

was revalued downwards by £358,000 to calibrate

to the price of last funding round.

Trinny London Limited, a cosmetics and skincare

brand, was revalued downwards by £306,000 due to

reduced confidence in consumer spending.

Carbice Corporation Inc. This company has

developed a suite of products based on its carbon

material called Carbice Carbon which is primarily

used as thermal management solutions to enable

greater thermal conductivity. The valuation was

reduced by £233,000, including the impact of

foreign exchange, as a result of the challenging

macroeconomic environment and access to

funding.

There were three investments that were written

down to nil during the year. These were Glisser

Limited, Hummingbird Technologies Limited and

Channel Mum Limited, resulting in a combined

unrealised loss over original cost of £1.7 million and

a loss over carrying value of £761,000.

The remaining investments in the Venture Capital

Portfolio were adjusted in value by a total net loss

of £1.4 million as at 31 March 2023, including the

impact of foreign exchange.

Liquidity Investments

The carrying value of the remaining Liquidity

Investment has been adjusted to reflect its quoted

price as at 31 March 2023. This resulted in a total

reduction of £174,000 for the year.

Foresight Group LLP

31 July 2023

Review of Investments – Ventures Share Pool

The following investments were held at 31 March 2023:

Cost

Valuation

movement

in period

% of

portfolio

Portfolio of investments £’000 £’000 £’000

Ventures investments

Cornelis Networks, Inc. 1,402 2,874 1,504 9.2%

Virtual Class Limited (Third Space Learning) 1,053 2,199 383 7.1%

Ayar Labs, Inc. 764 1,840 314 5.9%

Rated People Limited 1,582 1,821 (274) 5.8%

CommerceIQ Limited 1,749 1,731 (18) 5.6%

Imagen Limited 1,000 1,703 (60) 5.5%

Hackajob Limited 1,284 1,665 (358) 5.3%

Ecstase Limited (t/a ADAY) 1,000 1,000 (257) 3.2%

Trinny London Limited 219 934 (306) 3.0%

Upp Technologies Group Limited (previously Volo Commerce) 1,136 923 (213) 3.0%

Masters of Pie Limited 886 876 (10) 2.8%

Arecor Therapeutics plc^ 418 822 (319) 2.6%

Parsable, Inc. 766 753 42 2.4%

Limitless Technology Limited 757 703 (217) 2.3%

FVRVS Limited (t/a Fundamental VR) 787 678 (218) 2.2%

Cambridge Touch Technologies Limited 959 605 (764) 1.9%

Congenica Limited 734 605 (141) 1.9%

Vivacity Labs Limited 493 490 (3) 1.6%

Maverick Pubs (Holdings) Limited 1,000 444 (6) 1.4%

Bulbshare Limited 249 427 178 1.4%

BBC Maestro Limited 340 419 79 1.3%

Carbice Corporation 656 406 (233) 1.3%

MIP Discovery Limited 300 300 - 1.0%

FundingXchange Limited 1,050 276 (510) 0.9%

Distributed Limited 275 275 - 0.9%

Audioscenic Limited 200 200 - 0.6%

Destiny Pharma plc^ 500 88 (65) 0.3%

Lignia Wood Company Limited 1,778 - - -

Empiribox Holdings Limited 1,563 - - -

Live Better With Limited 1,211 - - -

Ormsborough Limited 900 - - -

Channel Mum Limited 757 - (311) -

Hummingbird Technologies Limited 750 - (250) -

Lineten Limited 400 - - -

Glisser Limited 200 - (200) -

London City Shopping Centre Limited* 30 - - -

29,148 25,057 (2,233) 80.4%

Liquidity investments

Downing Strategic Micro-Cap Investment Trust plc*^ 4,269 2,701 (174) 8.7%

33,417 27,758 (2,407) 89.1%

Cash at bank and in hand

3,430 10.9%

Total investments

31,188

100.0%

*non-qualifying investment

^listed and traded on the London Stock Exchange

All Ventures investments are incorporated in England and Wales, except Ayar Labs, Inc. Cornelis Networks, Inc. and Parsable,

Inc. which are incorporated in USA.

Review of Investments – Ventures Share Pool (continued)

Investment movements for the year ended 31 March 2023

Cost

Additions £’000

Ventures investments

CommerceIQ Limited 1,749

Hackajob Limited 1,000

FVRVS Limited (t/a Fundamental VR) 537

Vivacity Labs Limited 493

BBC Maestro Limited 340

Masters of Pie Limited 219

Glisser Limited 200

Audioscenic Limited 200

Rated People Limited 200

Streethub Limited (t/a Trouva) 71

Upp Technologies Group Limited (previously Volo Commerce) 59

Channel Mum Limited 20

5,088

Cost

Valuation

01/04/22 Proceeds

(Loss)/

gain

vs. cost

Realised

gain/(loss)

Disposals £’000 £’000 £’000 £’000 £’000

Ventures investments

Streethub Limited (t/a Trouva) 1,350 142 242 (1,108) 100

E-Fundamentals (Group) Limited 1,508 3,847 3,710 2,202 (137)

Firefly Learning 1,047 1,047 1,015 (32) (32)

Fenkle Street LLP* 301 405 343 42 (62)

ADC - deferred proceeds

- - 114 114 114

Loan note conversions

Hackajob Limited 500 500 500 - -

FVRVS Limited (t/a Fundamental VR) 125 125 125 - -

Liquidity investments

MI Downing UK Micro-Cap Growth Fund B Accum* 123 116 139 16 23

4,954 6,182 6,188 1,234 6

*non-qualifying investment

Review of Investments – Ventures Share Pool

(continued)

Further details of the ten largest Ventures investments held by the Ventures Share pool:

Cornelis Networks, Inc.

www.cornelisnetworks.com

Cost at 31/03/23: £1,402,000 Valuation at 31/03/23: £2,874,000

Cost at 31/03/22: £1,402,000 Valuation at 31/03/22: £1,370,000

Date of first investment: Sep-20 Valuation

method:

alibration to price of

recent investment

Investment comprises:

Equity: £1,402,000 % of total shares in issue/total

voting rights

2.8%

Summary financial information not publicly available.

Cornelis Networks is a provider of purpose-built interconnects focused on high

performance computing (HPC), high performance data analytics (HPDA), and artificial

intelligence (AI). Cornelis Networks is an independent company spun out from Intel’s

Omni-Path Architecture Business. Omni-Path Architecture enables quicker processing

and output with minimal lag and power consumption – a critical element with the

increasing data requirements in next-gen technology.

Virtual Class Limited

(Third Space Learning)

www. thirdspacelearning.com

Cost at 31/03/23: £1,053,000 Valuation at 31/03/23: £2,199,000

Cost at 31/03/22: £1,053,000 Valuation at 31/03/22: £1,816,000

Date of first investment: Apr-18 Valuation

method:

Multiple

Investment comprises:

Equity: £1,053,000 % of total shares in issue 4.5%

% of total voting rights

7.8%

Summary financial information from statutory accounts to 31 July:

2022 2021

Net assets: £1.4m £1.8m

Third Space Learning has developed an online educational platform that provides

mathematics tuition to pupils studying for their exams, offering online 1-to-1 maths

intervention and high-quality resources that help develop the building blocks to

success in maths.

Ayar labs, Inc.

www.ayarlabs.com

Cost at 31/03/23: £764,000 Valuation at 31/03/23: £1,840,000

Cost at 31/03/22: £764,000 Valuation at 31/03/22: £1,526,000

Date of first investment: Aug-20 Valuation

method:

Calibration to price of

recent investment

Investment comprises:

Equity: £764,000 % of total shares in issue/total

voting rights

5.0%

Summary financial information not publicly available.

Ayar Labs is developing a solution to overcome the power/performance scaling

challenges of semiconductors as well as the interconnect bandwidth bottleneck

between those devices, through the use of its Optical I/O technology.

Review of Investments – Ventures Share Pool

(continued)

Further details of the ten largest Ventures investments held by the Ventures Share pool:

Rated People Limited

www.ratedpeople.com

Cost at 31/03/23: £1,582,000 Valuation at 31/03/23: £1,821,000

Cost at 31/03/22: £1,382,000 Valuation at 31/03/22: £1,895,000

Date of first investment: Nov-18 Valuation

method:

Discounted cash flow -

investment

Investment comprises:

Equity: £1,382,000 % of total shares in issue 1.2%

Convertible loan stock: £200,000 % of total voting rights 3.0%

Summary financial information from statutory accounts to 31 December:

2021 2020

Turnover: £11.0m £11.6m

Loss before tax: (£1.0m) £nil

Net liabilities: (£4.8m) (£4.3m)

Rated People is an online home services marketplace that aims to connect

homeowners with high quality local tradespeople. The company offers access to more

than 50,000 tradespeople, representing over 30 trades, and covering the whole of the

UK.

CommerceIQ Limited

www.commerceiq.ai

Cost at 31/03/23: £1,749,000 Valuation at 31/03/23: £1,731,000

Cost at 31/03/22: n/a Valuation at 31/03/22: n/a

Date of first investment: Jul-22 Valuation

method:

Calibration to price of

recent investment

Investment comprises:

Equity: £1,749,000 % of total shares in issue/total

voting rights

0.2%

Summary financial information not publicly available.

CommerceIQ supports brands on retail ecommerce channels such as Amazon. Its

unified platform applies machine learning and automation across marketing, supply

chain, and sales operations to help brands gain market share profitably. The holding in

CommerceIQ was received as part of a disposal transaction for E Fundamentals

Limited.

Imagen Limited

www.imagenevp.com

Cost at 31/03/23: £1,000,000 Valuation at 31/03/23: £1,703,000

Cost at 31/03/22: £1,000,000 Valuation at 31/03/22: £1,763,000

Date of first investment: Dec-18 Valuation method: Multiple

Investment comprises:

Equity: £1,000,000 % of total shares in issue/total

voting rights

4.9%

Summary financial information from statutory accounts to 31 May:

2022 2021

Net liabilities: (£4.6m) (£1.9m)

Imagen is a SaaS video management platform which holds both current and archive

footage for major sporting organisations and news outlets, including Premier League,

World Tennis Association and the BBC. The platform helps sports, media and

enterprise businesses to manage their expanding video and content libraries on its

cloud-based technology.

Review of Investments – Ventures Share Pool

(continued)

Further details of the ten largest Ventures investments held by the Ventures Share pool:

Hackajob Limited

www.hackajob.co

Cost at 31/03/23: £1,284,000 Valuation at 31/03/23: £1,665,000

Cost at 31/03/22: £784,000 Valuation at 31/03/22: £1,523,000

Date of first investment: Oct-18 Valuation

method:

Calibration to price of

recent investment

Investment comprises:

Equity: £784,000 % of total shares in issue/total

voting rights

3.3%

Convertible loan stock: £500,000

Summary financial information from statutory accounts to 31 October:

2021 2020

Net liabilities: (£2.6m) (£1.2m)

Hackajob provides an online, automated recruitment platform for software

engineers that leverages software, rather than people, to source, screen and hire

candidates.

Ecstase Limited

(t/a ADAY)

www.thisisaday.com

Cost at 31/03/23: £1,000,000 Valuation at 31/03/23: £1,000,000

Cost at 31/03/22: £1,000,000 Valuation at 31/03/22: £1,257,000

Date of first investment: Nov-19 Valuation

method:

Calibration to price of

recent investment

Investment comprises:

Equity: £1,000,000 % of total shares in issue/total

voting rights

4.2%

Summary financial information from statutory accounts to 30 June:

2021 2020

Net assets: £8.6m £9.0m

ADAY is an e-commerce clothing brand creating versatile, seasonless garments using

fabrics and factories with a low environmental footprint. Founded in 2015, the

company creates and sells direct to consumer multi-functional clothes for professional

women using ‘technical’ fabrics more commonly used for sports attire, and where

possible, incorporating the latest innovation in sustainable materials and sustainable

manufacturing.

Review of Investments – Ventures Share Pool (continued)

Further details of the ten largest Ventures investments held by the Ventures Share pool:

Trinny London

www.trinnylondon.com

Cost at 31/03/23: £219,000 Valuation at 31/03/23: £934,000

Cost at 31/03/22: £219,000 Valuation at 31/03/22: £1,240,000

Date of first investment: Jul-20 Valuation

method:

Discounted cash flow -

business

Investment comprises:

Equity: £219,000 % of total shares in issue/total

voting rights

0.5%

Summary financial information from statutory accounts to 31 March:

2022 2021

Turnover:

£50.6m £44.2m

(Loss)/profit before tax:

(£0.8m) £3.4m

Net assets:

£7.2m £7.1m

Trinny Woodall founded Trinny London in 2017, developing a portable, versatile

range of makeup, with colours to suit every woman.

Upp Technologies

Group Limited

(previously Volo

Commerce)

www.upp.ai

Cost at 31/03/23: £1,136,000 Valuation at 31/03/23: £923,000

Cost at 31/03/22: £1,077,000 Valuation at 31/03/22: £1,077,000

Date of first investment: Aug-17 Valuation method: Discounted cash

flow - business

Investment comprises:

Equity: £1,077,000 % of total shares in issue 3.7%

Loan stock: £59,000 % of total voting rights 5.4%

Summary financial information from statutory accounts to 31 December:

2022 2021

Net assets: £4.7m £3.5m

Upp Technologies has developed an AI and machine learning platform automating

and optimising on-line advertising spend, principally enabling brands and retailers to

connect Google’s Ads data with their product performance data.

Note: net asset, turnover and pre-tax profit figures are stated where this information is publicly available. The

proportion of the total shares in issue/total voting rights are stated on an individual Share pool basis.

Review of Investments – Ventures Share Pool (continued)

Summary of loan interest income and interest on advances

Loan interest and interest on advances receivable in the year £’000

Fenkle Street LLP 32

Rated People Limited 7

Fundamental VR Limited 2

Analysis of investments by type

The allocation of the Ventures Share funds compared to the target split is summarised as follows:

Actual

portfolio split at

31 March

2023

Target

portfolio split at

31 March

2023

VCT Qualifying Investments

Qualifying loans 2% 25%

Qualifying equity 77% 60%

Total 79% 85%

Non-Qualifying Investments

Liquidity investments and Non-Qualifying loans 12% 5%

Total 12% 90%

Cash 9% 10%

100% 100%

The split of the Ventures Share pool investment portfolio by commercial sector (by cost and by value at 31

March 2023) are shown on the next page.

Review of Investments – Ventures Share Pool

(continued)

E-commerce

13.9%

Business services

12.0%

OEICs/Trusts

11.5%

Education

7.1%

High performance computing

5.9%

Content management

3.6%

Fin-tech

2.9%

Advanced Materials

4.4%

Healthcare: Diagnostics

2.8%

Healthcare: Drug discovery

/ Therapeutics

2.5%

Recruitment

3.5%

Agriculture

2.0%

Enterprise collaboration

2.4%

Pubs

5.2%

Development Finance

0.1%

Marketing services

2.1%

Healthcare: Medical devices

2.1%

Manufacturing

4.8%

Electronic & Electrical Equipment

0.5%

Data Analytics

1.3%

Cash at bank

9.4%

Ventures Share Pool

Analysis of investments by sector based on cost

E-commerce

15.0%

Business

services

12.5%

OEICs/Trusts

8.7%

Education

7.1%

High performance computing

15.1%

Content management

6.8%

Fin-tech

0.9%

Advanced Materials

3.2%

Healthcare: Diagnostics

2.9%

Healthcare: Drug discovery

/ Therapeutics

2.9%

Recruitment

5.3%

Enterprise collaboration

2.8%

Pubs

1.4%

Healthcare: Medical devices

2.2%

Electronic & Electrical Equipment

0.6%

Data Analytics

1.6%

Cash at bank

11.0%

Ventures Share Pool

Analysis of investments by sector based on value

Healthcare Share Pool

Share Pool Summary

31 March

2023

31 March

2022

Financial highlights Pence Pence

Net Asset Value per Healthcare Share 61.60 84.40

Cumulative distributions 8.75 5.25

Total Return per Healthcare Share 70.35 89.65

Forthcoming Dividend

A proposed final dividend of 1.25p per Healthcare Share will be paid on 29 September 2023, to Shareholders on

the register at 1 September 2023.

Dividend history

Period end

Date paid

Pence

per share

2020 Interim 25 September 2020 2.50

2021 Interim 24 September 2021 2.75

2022 Interim 30 September 2022 3.50

8.75

Share prices

The Company’s share prices can be found on various financial websites with the following TIDM/EPIC codes:

Healthcare Shares

TIDM/EPIC codes TV2H

Latest share price (31 July 2023) 67.5p per share

Performance Incentive arrangements

Members of the management team have committed to subscribe for a number of Healthcare Shares equal to

20% of the total number of Healthcare Shares in issue. The members of the management team have agreed to

waive any dividends on these Shares until the performance hurdles are met.

For the year ended 31 March 2023, the hurdle is met when Total Return (based on audited year end results) is in

excess of £1.09 per Healthcare Share. For subsequent years, the Total Return hurdle increases by 3p per annum

such that for the year ended 31 March 2024 the Total Return hurdle will be £1.12, for the year ended 31 March

2025 the hurdle will be £1.15, etc. If the hurdle is met in any year, then members of the management team will

receive 20% of the dividends paid. The current Total Return is 76.7p and therefore no provision for a

performance incentive fee is necessary.

Investment Manager’s Report- Healthcare Share Pool

i. Overview

Introduction

We present a review of the investment portfolio and

activity for the Healthcare Share pool over the year

ended 31 March 2023.

This Investment Manager’s Report is split into three

sections comprising this overview, a review of the

Healthcare Portfolio and a report on the portfolio of

Liquidity Investments.

Net Asset Value and results

As at 31 March 2023, the NAV of a Healthcare share

stood at 61.6p, a decrease of 19.3p (21.5%) over the

year after adding back the Healthcare dividend, of

3.50p per share, which was paid on 30 September

2022.

The loss on ordinary activities for the Healthcare

Share pool for the year was £4.3 million (2022:

return of £3.7 million), being a revenue loss of

£272,000 (2022: £314,000) and a capital loss of £4.0

million (2022: £4.0 million gain).

The Total Return to Shareholders as at 31 March

2023, of 70.35p, continues to be considered an

underperformance against our expectations for the

Healthcare Share pool.

A proposed final dividend of 1.25p per share will be

paid on 29 September 2023, to Shareholders on the

Portfolio Overview

As at 31 March 2023, the Healthcare Share pool

held a portfolio of 15 Healthcare investments and

one Liquidity investment, with a combined value of

£12.4 million.

However, there are a number of risks which have

continued through the year, including continued

impact of growth of inflation and interest rates. We

will continue to monitor the situation alongside our

investee companies in order to minimise the risk

exposure as much as possible and to provide

guidance and support as necessary. The valuation

movements during the period are discussed in

more detail in the following sections of this

Investment Manager’s Report.

Portfolio Performance

There were several valuation movements in the

Venture Capital Portfolio during the year, resulting

in a net unrealised loss of £4.1 million, as at 31

March 2023.

The carrying value of the one Liquidity Investment,

Downing Strategic Micro-Cap Investment Trust plc,

has been adjusted to reflect its quoted price as at

31 March 2023, resulting in a valuation decrease of

£30,000 for the year.

ii. Healthcare Portfolio

Investment activity

During the year, a total of £1.6 million was invested

in three businesses, one of which was a new VCT

Qualifying investment.

New Healthcare investments

Qkine Limited (£303,000) is a manufacturer of

animal-free, highly bioactive and innovative

proteins and growth factors for life science

applications. The products help to tackle

fundamental biological and scale-up challenges for

the fast-growing stem cell, organoid, regenerative

medicine, and cellular agriculture sectors.

Follow-on Healthcare investments

A further £824,000 was invested in FVRVS Limited

(trading as Fundamental VR) which provides surgery

simulation software for enterprise clients and

hospitals. A further £427,000 was invested in

Invizius Limited which is developing novel primers

with the aim of reducing adverse inflammatory

responses.

Portfolio valuation

During the period, the Healthcare portfolio of the

Share pool decreased in value by a total of £4.1

million.

Investment Manager’s Report- Healthcare Share Pool (continued)

Portfolio valuation (continued)

Arecor, which is listed on AIM, has reduced in value

by £1.2 million. We continue to believe that the

company has a bright future as its star asset AT247

reads out its Phase 1 in Q4-23 in addition to its

early-stage assets progressing through the clinic.

Arecor also has partnered on-market assets which

are expected to yield positive news flow through to

2025.

A full provision of £1.8 million was made against the

investment in Adaptix Limited, when, after the

period end, it became clear the company would not

be able to complete its planned funding round and

the business would need to urgently evaluate its

options.

The valuation of FVRVS Limited (trading as

Fundamental VR) decreased by £373,000 in order to

calibrate to the most recent funding round.

The valuation of Congenica Limited has been

written down by £350,000 as at 31 March 2023 to

reflect trading performance tracking behind the

business plan. Remedial actions have since been

taken, including appointment of a new CEO who

has been focused on commercials: partnering with

notable organisations and improving revenues

significantly. His go-to-market strategy with

channel partners and government programs is

beginning to deliver, which gives us more

confidence of potential value being realised.

Destiny Pharma plc, which is listed on AIM, was

reduced in value by £98,000. The company

completed a much-awaited first out-licensing deal

with Sebela Pharmaceuticals during the year and is

now seeking partners for its other drug

programmes. The Sebela deal provides a long-term

path to value creation.

DiA Imaging Analysis has agreed an offer for

acquisition from a large med-tech company in the

space, with final completion of this transaction

anticipated in Q2-23. The valuation has been

increased by £135,000 to reflect the closing share

price for the transaction subject to final working

capital adjustments, which are anticipated to be de

minimis.

GENinCode plc (“GENinCode”) which is listed on

AIM, was reduced in value by £573,000. The

business has continued to underperform against its

targets; it is yet to make meaningful progress in the

US and the European growth has not gained

momentum. The business recently acquired

Abcodia for no upfront cost, but we are yet to see

the benefits of this acquisition. We continue to wait

for meaningful US regulatory and market access

progress.

The valuations of Invizius Limited and Qkine

Limited have been increased by £71,000 and

£76,000 respectively in order to calibrate to the

most recent funding rounds.

Open Bionics Limited is an award-winning

designer, manufacturer and supplier of bionic limbs.

The company uses 3D printing and scanning

technology to produce custom-made prosthetics at

a lower manufacturing cost relative to existing

technologies. The valuation has increased by

£49,000 to reflect the position in the cap table and

the shareholders participating preference terms.

There were no other valuation movements in the

Venture Capital portfolio.

iii. Liquidity Investments

The value of the Healthcare Share pool’s holding in

Downing Strategic Micro-Cap Investment Trust

plc (“DSM”) decreased in value by £30,000 during

the period. As at 31 March 2023, DSM’s mid-market

share price traded at a discount to NAV of 18.1%,

representing potential unrealised value in the

company’s share price.

MI Downing Micro-Cap Growth Fund (“DMCG”) was

exited during the year for a modest profit over cost

of £4,000.

The Healthcare Share class, and its underlying

portfolio of companies, is exposed to these sector

factors and as a result we are focusing our attention

for the coming 12 months on ensuring that our

portfolio companies are adequately financed to

enable them to continue to grow.

Investment Manager’s Report- Healthcare Share Pool (continued)

Outlook

Macroeconomic factors continue to impact the

financial markets with a knock-on impact on the

venture capital funding environment as many

venture funds choose to focus on supporting their

existing portfolios rather than looking to add new

positions.

We may start to add new positions towards the end

of the year if conditions turn more favourable.

Despite the sector headwinds, many of the

companies in the portfolio are starting to make real

commercial progress and are becoming attractive

targets, as evidenced by the recent agreement to

sell DiA to a large medtech corporate following the

year end.

Downing LLP – Healthcare Ventures Team

31 July 2023

Review of Investments – Healthcare Share Pool

The following investments were held at 31 March 2023:

Cost

Valuation

movement

in period

% of

portfolio

Portfolio of investments £’000 £’000 £’000

Healthcare investments

Arecor Therapeutics plc^ 1,533

3,015

(1,171) 22.8%

Open Bionics Limited 1,000 1,428 49 10.8%

FVRVS Limited (t/a Fundamental VR) 1,324 1,169 (373) 8.8%

GENinCode plc^ 1,202

1,051

(573) 8.0%

Invizius Limited 927 998 71 7.6%

Congenica Limited 1,184 865 (350) 6.5%

Tidalsense Limited 800 800 - 6.1%

Closed Loop Medicine Limited 650

650

- 4.9%

DiA Imaging Analysis Limited 415 564 135 4.3%

The Electrospinning Company Limited 478 544 - 4.1%

Qkine Limited 303

379

76 2.9%

MIP Discovery Limited 300 300 - 2.3%

Destiny Pharma plc^ 750 131 (98) 1.0%

Live Better With Limited 1,106

- -

Adaptix Limited 1,056 - (1,843) -

13,028 11,894 (4,077) 90.1%

Liquidity Investments

Downing Strategic Micro-Cap Investment Trust plc*^ 729 461 (30) 3.5%

13,757

12,355

(4,107) 93.6%

Cash at bank and in hand 860 6.4%

Total investments 13,215 100.0%

*non-qualifying investment

^listed and traded on the London Stock Exchange

Review of Investments – Healthcare Share Pool (continued)

Investment movements for the year ended 31 March 2023

Cost

Additions

£’000

Healthcare investments

FVRVS Limited (t/a Fundamental VR) 824

Invizius Limited 427

Qkine Limited 303

1,554

Cost

Valuation at

01/04/22 Proceeds

Gain

vs. cost

Realised

gain

Disposals £’000 £’000 £’000 £’000 £’000

Healthcare investments

Future Health Works Limited (t/a MyRecovery) 528 750 798 270 48

FVRVS Limited (t/a Fundamental VR) 250 250 250

ADC - deferred proceeds - - 195 195 195

Liquidity investments

MI Downing UK Micro-Cap Growth Fund B Accum* 40 37 44 4 7

818 1,037 1,287 469 250

*non-qualifying investment

Review of Investments – Healthcare Share Pool

(continued)

Further details of the ten largest Healthcare investments held by the Healthcare Share pool:

Arecor Therapeutics plc

www.arecor.com

Cost at 31/03/23: £1,533,000 Valuation at 31/03/23: £3,015,000

Cost at 31/03/22: £1,533,000 Valuation at 31/03/22: £4,186,000

Date of first investment: Sep-18 Valuation method: Quoted

Investment comprises:

Equity £1,533,000 % of total shares in

issue/total voting rights

5.0%

Summary financial information from statutory accounts to 31 December:

2021 2020

Net assets: £23.9m £0.9m

Arecor is a leader in developing superior biopharmaceuticals through the application

of its innovative formulation technology platform. The company also provides the

use of its platform as a service to drug development customers.

On 3 June 2023, Arecor admitted its shares to trading on AIM and raised a further

£20 million via a new placing. The proceeds will be used to facilitate the

development of its internal proprietary diabetes and specialty hospital products.

Open Bionics Limited

www.openbionics.com

Cost at 31/03/23: £1,000,000 Valuation at 31/03/23: £1,428,000

Cost at 31/03/22: £1,000,000 Valuation at 31/03/22: £1,379,000

Date of first investment: Dec-18 Valuation

method:

Calibration to price of

recent investment

Investment comprises:

Equity: £1,000,000 % of total shares in

issue/total voting rights

6.4%

Summary financial information from statutory accounts to 31 December:

2021 2020

Net assets: £0.8m £2.1m

Open Bionics is a Bristol-based engineering start-up that designs and manufactures

affordable bionic prosthetic hands by using 3D scanning and printing. Founded in

2014, their current focus is on becoming the market leader for bionic hands, before

entering new higher-growth prosthetic/orthotic markets.

FVRVS Limited

(t/a Fundamental VR)

www.FundamentalVR.com

Cost at 31/03/23: £1,324,000 Valuation at 31/03/23: £1,169,000

Cost at 31/03/22: £750,000 Valuation at 31/03/22: £968,000

Date of first investment: Oct-19 Valuation

method:

Calibration to price of

recent investment

Investment comprises:

Equity: £1,324,000 % of total shares in

issue/total voting rights

6.2%

Summary financial information from statutory accounts to 31 December:

2021 2020

Net (liabilities)/assets: (£0.1m) £1.3m

Fundamental VR supply virtual reality enabled surgery simulation software into

hospitals, medical schools and pharmaceutical companies. The software has

proprietary in-built haptics functionality (i.e. touch sensations closely mimicking real

life textures) and connects seamlessly into off-the-shelf hardware that many

hospitals already have on site.

Review of Investments – Healthcare Share Pool (continued)

Further details of the ten largest Healthcare investments held by the Healthcare Share pool:

GENinCode plc

www.genincode.com

Cost at 31/03/23: £1,202,000 Valuation at 31/03/23: £1,051,000

Cost at 31/03/22: £1,202,000 Valuation at 31/03/22: £1,624,000

Date of first investment: Jul-20 Valuation method: Quoted

Investment comprises:

Equity: £1,202,000 % of total shares in

issue/total voting rights

6.6%

Summary financial information from group statutory accounts to 31 December:

2021 2020

Turnover: £1.2m £1.0m

Loss before tax: (£4.1m) (£1.1m)

Net assets/(liabilities): £15.2m £2.4m

GENinCode products combine genetic and clinical data to risk assess patients and

provide healthcare practitioners with advanced clinical information to evaluate and

predict the onset of cardiovascular disease. GENinCode predictive technology

provides patients and physicians with globally leading preventative care and

treatment strategies. On 22 July 2021 GENinCode Limited admitted its shares to

trading on AIM.

Invizius Limited

www.invizius.com

Cost at 31/03/23: £927,000 Valuation at 31/03/23: £998,000

Cost at 31/03/22: £750,000 Valuation at 31/03/22: £968,000

Date of first investment: Mar-21 Valuation

method:

Calibration to price of

recent investment

Investment comprises:

Equity: £927,000 % of total shares in

issue/total voting rights

6.0%

Summary financial information from statutory accounts to 31 December:

2021 2020

Net assets: £4.4m £1.4m

Invizius is a developer of new coating technologies for dialysers to minimise

the side effects of dialysis and help improve patient outcomes. The business is

still at the R&D Stage.

Congenica Limited

www.congencia.com

Cost at 31/03/23: £1,184,000 Valuation at 31/03/23: £865,000

Cost at 31/03/22: £1,184,000 Valuation at 31/03/22: £1,215,000

Date of first investment: Oct-19 Valuation

method:

Calibration to price of

recent investment

Investment comprises:

Equity £1,184,000 % of total shares in

issue/total voting rights

2.0%

Summary financial information from group statutory accounts to 31 December:

2022 2021

Turnover: £4.2m £1.2m

Loss before tax: (£14.7m) (£14.9m)

Net assets: £10.6m £23.0m

Congenica has developed a genomics-based diagnostic decision support platform

which helps doctors identify rare diseases in patients. The platform analyses DNA

sequence data to suggest a diagnosis, speed up the time to diagnosis, and support

clinical trials and drug development. Congenica has partnered with leading

institutions and customers in the UK, US, China and Europe to better serve different

patient populations and, as a result, is revenue generating.

Review of Investments – Healthcare Share Pool

(continued)

Further details of the ten largest Healthcare investments held by the Healthcare Share pool:

Tidalsense Limited (formerly

Cambridge Respiratory

Innovations Limited)

www.tidalsense.com

Cost at 31/03/23: £800,000 Valuation at 31/03/23: £800,000

Cost at 31/03/22: £800,000 Valuation at 31/03/22: £800,000

Date of first investment: Nov-20 Valuation

method:

Calibration to price

of recent investment

Investment comprises:

Equity: £800,000 % of total shares in

issue/total voting rights

1.4%

Summary financial information from statutory accounts to 31 December:

2021 2020

Net liabilities:

£2.8m £1.7m

Tidalsense is a leading medtech company that creates ground‐breaking

respiratory technologies. In December 2021 it received funding from BGF and

Downing Ventures to fast-track research and development of its award‐winning

N‐Tidal device to help medical professionals diagnose and monitor respiratory

conditions. The N‐Tidal device is a first‐in‐kind, connected, handheld

capnometer incorporating unique patented sensor technology, that can accurately

measure carbon dioxide levels in exhaled breath during normal breathing. The data

is transmitted wirelessly using mobile networks and is analysed using CRI’s

intelligent cloud‐based analytics software. This information can be used to

provide novel insights into lung health.

Closed Loop Medicine

Limited

www.closedloopmedicine.com

Cost at 31/03/23: £650,000 Valuation at 31/03/23: £650,000

Cost at 31/03/22: £650,000 Valuation at 31/03/22: £650,000

Date of first investment: Oct-21 Valuation

method:

Calibration to price

of recent investment

Investment comprises:

Equity: £650,000 % of total shares in

issue/total voting rights

2.3%

Summary financial information from statutory accounts to 31 December:

2021 2020

Net assets: £12.6m £0.7m

Closed Loop Medicine has developed an integrated healthcare technology

intended to improve patient outcomes and health system performance by

combining drugs/medicines with its digital platform for greater precision in

treatment that is personalised to the individual.

DiA Imaging Analysis

Limited

www.dia-analysis.com

Cost at 31/03/23: £415,000 Valuation at 31/03/23: £564,000

Cost at 31/03/22: £415,000 Valuation at 31/03/22: £429,000

Date of first investment: Nov 18 Valuation

method:

Calibration to price

of recent investment

Investment comprises:

Equity: £415,000 % of total shares in

issue/total voting rights

1.5%

Summary financial information not publicly available.

DiA develops and sells AI ultrasound imaging analysis solutions with the aim of

assisting current operators and reducing the experience and technical know-how

required for future operators. Its products facilitate the trend towards point of care

diagnostics.

Review of Investments – Healthcare Share Pool

(continued)

Further details of the ten largest Healthcare investments held by the Healthcare Share pool:

The Electrospinning

Company Limited

www.electrospinning.co.uk

Cost at 31/03/23: £478,000 Valuation at 31/03/23: £544,000

Cost at 31/03/22: £478,000 Valuation at 31/03/22: £544,000

Date of first investment: Apr-19 Valuation

method:

Calibration to price

of recent investment

Investment comprises:

Equity: £478,000 % of total shares in

issue/total voting rights

4.7%

Summary financial information from statutory accounts to 30 June:

2022 2021

Net assets: £3.2m £4.7m

The Electrospinning Company is a supplier and manufacturer of clinical-grade

biomaterials. A biomaterial is a biological or synthetic substance that can be

introduced into body tissue as part of an implanted medical device or used to

replace an organ or bodily function for a wide range of medical use cases. These

biomaterials act as synthetic scaffolds for implantation within the body tissue to

promote and facilitate tissue repair, typically post-trauma or surgery.

Note: net asset, turnover and pre-tax profit figures are stated where this information is publicly available. The

proportion of the total shares in issue/total voting rights are stated on an individual share pool basis.

Review of Investments – Healthcare Share Pool (continued)

Summary of loan interest income and interest on advances

Loan interest and interest on advances receivable in the year £’000

Fundamental VR Limited 4

Analysis of investments by type

The allocation of the Healthcare Share funds by cost compared to the target split is summarised as follows:

Actual

portfolio split at

31 March

2023

Target

portfolio split at

31 March

2023

VCT Qualifying Investments

Qualifying loans - 25%

Qualifying shares 89% 60%

Total 89% 85%

Non-Qualifying Investments

Liquidity investments 5% 5%

Total 94% 90%

Cash 6% 10%

100% 100%

Review of Investments – Healthcare Share Pool

(continued)

Medical devices

29.4%

Drug discovery /

Therapeutics

15.6%

Diagnostics

18.4%

Digital health /

Medical devices

12.8%

OEICs/Trusts 5.0%

Pharma

Services 5.3%

E-commerce

7.6%

Cash at bank

5.9%

Healthcare Share Pool

Analysis of investments by sector based on cost

Medical devices

27.2%

Drug discovery /

Therapeutics

23.8%

Diagnostics

16.8%

Digital health /

Medical devices

15.2%

OEICs/Trusts

3.5%

Pharma

Services

7.0%

Cash at bank

6.5%

Healthcare Share Pool

Analysis of investments by sector based on value

Review of Investments – AIM Share Pool

Share Pool Summary

31 March

2023

31 March

2022

Financial highlights Pence Pence

Net Asset Value per AIM Share 101.1 99.9

Cumulative distributions - -

Total Return per AIM Share 101.1 99.9

Dividend history

No dividends paid to date. Dividends are unlikely to be paid in respect of the AIM Share Class in its initial years.

Share prices

The Company’s share prices can be found on various financial websites with the following TIDM/EPIC codes:

AIM Shares

TIDM/EPIC codes TV2A

Latest share price (31 July 2023) 100.5p per share

Performance Incentive arrangements

There are no performance incentive arrangements in place in respect of the AIM Share class.

Investment Manager’s Report- AIM Share Pool

Introduction

The fundraising for the AIM Share Class was

launched in August 2021 at a time when markets

were performing well, as the economy started to

rebound from the release of the constraints of the

pandemic. At that time, we were seeing a steady

flow of potentially attractive IPOs on AIM which

were eligible for investment by VCTs.

The world has changed dramatically since then with

the Ukraine conflict, recessionary fears, continued

high inflation and increasing interest rates

combining to shake investor confidence, resulting in

an extended period when there were no suitable

investment opportunities for the share class.

In view of the lack of AIM-IPOs we invested a

proportion of the funds raised in a cash fund and

equity income fund looking to produce some

returns from the uninvested funds.

Net Asset Value and results

As at 31 March 2023, the NAV of an AIM share

stood at 101.1p, an increase of 1.2p (1.2%) over the

year.

Outlook

Despite the frustrations of not being able to invest

the share pool’s funds as planned, it is pleasing to

be able to report a positive return when, over the

same period, the AIM market in general has

suffered substantial losses.

With the challenge of investing the share pool’s

funds and the fact that the pool is very small in size,

we are discussing plans for the future of the pool

with the Board and seeking to find a strategy which

is in in Shareholders’ best interests.

Downing Fund Managers

31 July 2023

Review of Investments – AIM Share Pool

The following investments were held at 31 March 2023:

Cost

Valuation

movement

in period

% of

portfolio

Portfolio of investments £’000 £’000 £’000

Liquidity Investments

BlackRock Cash Fund Class D Accumulating* 1,157 1,172 15 42.7%

Vanguard FTSE U.K. Equity Income Index Fund GBP Acc* 643 721 78 26.3%

1,800 1,893 93 69.0%

Cash at bank and in hand 850 31.0%

Total investments 2,743 100.0%

*non-qualifying investment

DSO D Share Pool

Share Pool Summary

31 March

2023

31 March

2022

Financial highlights Pence Pence

Net Asset Value per DSO D Share 2.6 2.6

Cumulative distributions 102.0 102.0

Adjustment for Performance Incentive estimate - -

Total Return per DSO D Share 104.6 104.6

Dividend history

Period end

Date paid

Pence

per share

2012 Final 27 September 2012 2.5

2013 Interim 25 January 2013 2.5

2013 Final 13 September 2013 2.5

2014 Interim 24 January 2014 2.5

2014 Final 30 September 2014 2.5

2015 Interim 30 January 2015 2.5

2015 Second interim 30 September 2015 2.5

2016 Interim 23 December 2015 2.5

2016 Final 30 September 2016 2.5

2017 Interim 6 January 2017 2.5

2017 Final 29 September 2017 2.5

2018 Special 2 November 2017 25.0

2018 Interim 13 August 2018 24.0

2021 Special 29 November 2019 18.0

2022 Special 28 January 2022 7.5

102.0

Share prices

The Company’s share prices can be found on various financial websites with the following TIDM/EPIC codes:

DSO D Shares

TIDM/EPIC codes DO1D

Latest share price (31 July 2023) 3.25p per share

Structure of shareholdings

The Company’s DSO D Share offer for subscription was open between 31 August 2011 and 17 August 2012. For

every £1 invested, Shareholders received one DSO D Share.

Performance Incentive arrangements

When cumulative dividends to DSO D Shareholders exceed 100.0p and the IRR on the Shareholders’ investment

exceeds 7% per annum, a Performance Incentive becomes payable to the management team. The fee is calculated

at 3% on the first 100.0p of Shareholder proceeds, plus 20% of the excess above 100.0p. The fee is capped at a

maximum of 7.0p per DSO D Share. Should the remaining investments be exited at their carrying value, it is

estimated that no Performance Incentive is payable as, although the proceeds hurdle will have been exceeded,

the compound return hurdle will not have been met.

Investment Manager’s Report - DSO D Share Pool

Introduction

THE DSO D Share pool now has two investments

left which we need to exit allow the share pool to

wind up. This process is unfortunately taking some

time to complete.

Net Asset Value and results

The Net Asset Value (“NAV”) per DSO D Share at 31

March 2023 stood at 2.6p, showing no movement

over the year. A performance incentive fee is not

expected to become payable and so a deduction for

this is not applicable. However, should the

performance incentive fee hurdles ultimately be

met, a fee could become due.

Total Return stands at 104.6p per share compared

to initial cost to Shareholders, net of income tax

relief, of 70.0p per share. We consider this to be

satisfactory performance when compared to the

initial NAV of 100p.

The loss on ordinary activities after taxation for the

year was £8,000 (2022: £3,000), comprising a

revenue profit of £20,000 (2022: loss of £16,000)

and a capital loss of £28,000 (2022: gain of £13,000).

Investments

As at 31 March 2023, the DSO D Share pool held

two investments with a total value of £16,000.

Portfolio valuation

During the year, the carrying value of the portfolio

of investments held by the DSO D Share pool was

reduced by £27,000.

Pearce and Saunders Limited and Pearce and

Saunders DevCo Limited are the only remaining

investments in the portfolio. The final pub was sold

some time ago and an Insolvency Practitioner is

being appointed to distribute funds via a

liquidation. The valuation has been reduced by

£27,000 as at 31 March 2023 to reflect expected

value of future distributions.

Outlook

We are hopeful that the formal process now being

undertaken to wind up the remaining companies

will allow this process to complete in the near

future. Once this is done, a final distribution will be

made to DSO D Shareholders.,

Foresight Group LLP

31 July 2023

Review of Investments - DSO D Share Pool

The following investments were held at 31 March 2023:

Cost

Valuation

movement

in year

% of

Portfolio

Portfolio of investments £’000 £’000 £’000

Pearce and Saunders DevCo Limited* 19 16 - 8.3%

Pearce and Saunders Limited 255 - (27) -

274 16 (27) 8.3%

Cash at bank and in hand 176 91.7%

Total investments 192 100.0%

* non-qualifying investment

All investments are incorporated in England and Wales.

Review of Investments – DSO D Share Pool

(continued)

Further details of the investments held by the DSO D Share pool:

Pearce & Saunders DevCo

Limited

Cost at 31/03/23: £19,000 Valuation at 31/03/23: £16,000

Cost at 31/03/22: £19,000 Valuation at 31/03/22: £16,000

Date of first investment: Jun-15 Valuation method: Net assets

Investment comprises:

Equity: £19,000 % of total shares in issue 8.4%

% of total voting rights 3.5%

Summary financial information from statutory accounts to 31 August:

2021 2020

Net assets: £0.2m £0.2m

Pearce & Saunders DevCo Limited was established for the purpose of acquiring

and developing a piece of land adjacent to The Eltham GPO, a Downing-backed

public house managed by Antic London and owned by Pearce & Saunders Limited.

Pearce & Saunders Limited

Cost at 31/03/23: £255,000 Valuation at 31/03/23: Nil

Cost at 31/03/22: £255,000 Valuation at 31/03/22: £27,000

Date of first investment: Apr-14 Valuation method: Net assets

Investment comprises:

Equity: £216,000 % of total shares in issue 8.4%

Loan notes £39,000 % of total voting rights 3.5%

Summary financial information from statutory accounts to 30 June:

2021 2020

Net assets: £0.2m £1.2m

Pearce and Saunders Limited is a freehold pub company that is managed by the

Antic London team and was funded by the Downing VCTs. It was incorporated to

acquire the freehold pubs of three South East London sites. All three pubs have

been sold and we are now awaiting a final tax sign off from HMRC before

making distributions.

Note: net asset, turnover and pre-tax profit figures are stated where this information is publicly available.

Review of Investments – DSO D Share Pool

(continued)

Summary of loan interest income and interest on advances

£’000

Loan interest and interest on advances receivable in the year

Pearce & Saunders Limited 24

Portfolio by commercial sector

The split of the DSO D Share pool investment portfolio by commercial sector (by cost and by value at 31 March

2023) is as follows:

DP67 Share Pool

Share Pool Summary

31 March

2023

31 March

2022

Financial highlights Pence Pence

Net Asset Value per DP67 Share 24.8 26.8

Cumulative distributions 67.8 67.8

Total Return per DP67 Share 92.6 94.6

Dividend history

Period end

Date paid

Pence

per share

Pre-merger dividends 21.8

2016 Interim 23 December 2015 2.0

2016 Final 30 September 2016 2.0

2017 Interim 6 January 2017 2.0

2017 Final 29 September 2017 2.0

2018 Special 16 March 2018 20.0

2021 Special 29 November 2019 18.0

67.8

Share prices

The Company’s share prices can be found on various financial websites with the following TIDM/EPIC codes:

DP67 Shares

TIDM/EPIC codes D467

Latest share price (31 July 2023) 14.0p per share

Structure of shareholdings

The original Share offers under Downing Planned Exit VCT 6 plc and Downing Planned Exit VCT 7 plc launched in

July 2007 and were followed by a Share Realisation and Reinvestment Programme (“SRRP”) in 2013, under which

many investors committed for a further five years. For every £1 invested, Shareholders received one Downing

Planned Exit VCT 6 Share or one Downing Planned Exit VCT 7 Share. Each Share was converted to a Thames

Ventures 2 DP67 Share as part of the merger in July 2015.

Performance Incentive arrangements

The are no Performance Incentive arrangements in place in respect of this Share pool.

Investment Manager’s Report - DP67 Share Pool

Introduction

The process of seeking to realise the remaining

investments for optimal proceeds and returning

funds to DP67 Shareholders continues.

Net Asset Value and results

The Net Asset Value (“NAV”) per DP67 Share at

31 March 2023 stood at 24.8p, a decrease of 2.0p

or 2.1% in Total Return terms during the year.

Total Return stands at 92.6p per DP67 Share,

compared to initial cost to Shareholders, net of

income tax relief, of 70.0p per share. Compared

to the initial NAV of 100p, we consider the Total

Return to be an underperformance against the

original expectations for the DP67 Share pool.

The loss on ordinary activities after taxation for

the year was £221,000 (2022: gain of £934,000),

comprising a revenue loss of £92,000 (2022: gain

of £1.2 million) and a capital loss of £129,000

(2022: £247,000).

Investments

As at 31 March 2023, the DP67 Share pool held a

portfolio of two investments of value, with that

value totalling £1.1 million.

Portfolio activity

There was one realisation during the year ended

31 March 2023. £644,000 was received in respect

of Fenkle Street LLP, which represents a healthy

gain over cost of £239,000.

Portfolio valuation

The DP67 portfolio showed no movement in

value during the year ended 31 March 2023.

Following a distribution from the underlying

business which sold its hotel asset, in which

Gatewales Limited holds an interest, it is

estimated that the DP67 share pool will shortly

receive £344,000. However, a significant provision

against loan interest due from Gatewales Limited

has had to be made during the period as the

overall proceeds are expected to fall below

previous estimates.

Attempts by Cadbury House Holdings to sell its

conference centre and hotel property have been

ongoing for some months now. During the year,

no offers have been received that match the

target valuation and therefore, the decision was

made to continue to market the property until an

buyer is found with an offer at an appropriate

price. The DP67 Share pool’s holding remains

held at the same value as reported at the end of

last year and loan interest continues to be

recognised in full, providing the share pool with

£193,000 of income during the year.

Outlook

The challenge now is to achieve an exit from

Cadbury House Holdings Limited at an

acceptable valuation. The market for this type of

assets is weak currently but we believe it is in the

best interests of shareholders not to sell at

undervalue even if this means the final exit takes

longer. Further dividends will be paid once the

final realisations have taken place.

Foresight Group LLP

31 July 2023

Review of Investments – DP67 Share Pool

The following investments were held at 31 March 2023:

Cost

Valuation

movement

in year

% of

portfolio

Portfolio of investments £’000 £’000 £’000

Cadbury House Holdings Limited 1,409 791 - 41.6%

Gatewales Limited* 343 344 - 18.1%

Yamuna Renewables Limited 400 - - 0.0%

London City Shopping Centre Limited** 99 - - 0.0%

2,251 1,135 - 59.7%

Cash at bank and in hand 766 40.3%

Total investments 1,901 100.0%

* partially qualifying investment

** non-qualifying investment

All investments are incorporated in England and Wales.

Cost

Valuation at

01/04/22 Proceeds

Gain

vs. cost

Realised

gain

Disposals £’000 £’000 £’000 £’000 £’000

Fenkle Street LLP* 405 759 644 239 (115)

405 759 644 239 (115)

*non-qualifying investment

Review of Investments – DP67 Share Pool

(continued)

Further details of the investments held by the DP67 Share pool:

Cadbury House Holdings

Limited

Cost at 31/03/23: £1,409,000 Valuation at 31/03/23: £791,000

Cost at 31/03/22: £1,409,000 Valuation at 31/03/22: £791,000

Date of first investment: Oct-06 Valuation method: Net assets

Investment comprises:

Equity: £882,000 % of total shares in issue/total

voting rights:

27.5%

Loan notes: £527,000 % of loan notes held: 27.5%

Summary financial information from statutory accounts to 30 September:

2021 2020

Turnover: £4.9m £10.4m

Loss before taxation: (£1.1m) (£2.7m)

Net assets: £3.6m £4.7m

Cadbury House Holdings Limited owns and operates a health club, restaurant and

conference centre at Cadbury House, near Bristol. The restaurant trades as a Marco

Pierre-White Steakhouse Bar and Grill.

Gatewales Limited

Cost at 31/03/23: £343,000 Valuation at 31/03/23: 344,000

Cost at 31/03/22: £343,000 Valuation at 31/03/22: £344,000

Date of first investment: Mar-07 Valuation method: Net assets

Investment comprises:

Loan notes: £343,000 % of loan notes held: 84.9%

Summary financial information from statutory accounts to 31 March:

2022 2021

Net liabilities: (£10.3m) (£8.2m)

Gatewales Limited is a member of Fenkle Street LLP, which undertook a

refurbishment contract on a hotel in Newcastle during 2011 and 2012. Payment for

this contract depends on the performance of the hotel and is being paid over a

period of time as the bank debt is reduced.

Note: net asset, turnover and pre-tax profit figures are stated where this information is publicly available.

Review of Investments – DP67 Share Pool (continued)

Summary of loan interest income and interest on advances

Loan interest and interest on advances receivable in the year £’000

Cadbury House Holdings Limited 193

Fenkle Street LLP 6

Gatewales Limited (8)

191

Portfolio by commercial sector

The split of the DP67 Share pool investment portfolio by commercial sector (by cost and by value at 31 March

2023) is as follows:

Travel &

Leisure

46.6%

Renewable Energy

13.3%

Development

finance

14.7%

Cash at bank

25.4%

DP67 Share Pool

Analysis of investments by sector based on cost

Travel &

Leisure

41.6%

Development finance

18.1%

Cash at

bank

40.3%

DP67 Share Pool

Analysis of investments by sector based on value

Approach to 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.

ESG values form an integral part of the principal

Investment Manager, Foresight Group’s, day-to-day

decision making, with all new investments made

subject to ESG due diligence and ongoing ESG

monitoring. Downing LLP, the Healthcare Share

Pool manager, operates on a broadly similar basis.

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, Foresight formalised its Impact

Themes for private equity investments into four

areas:

• Health

• Quality Employment at Scale

• Research and Innovation

• Sustainable, Inclusive, Local Infrastructure and

the Environment

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.

Foresight 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:

These outcome-focused themes are aligned with

the UN’s SDGs. They help Foresight assess any

opportunities in the business model, and by

mapping its investments to them the private equity

team can identify the value and benefits for the

companies, society and the environment.

Strategy and

awareness

Environmental

Governance

Third-party

interaction

Approach to Responsible Investment

(continued)

UN SDGs (continued)

Each portfolio company is subject to an annual

assessment where progress against each of the

five 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 specific SDGs that

Foresight has scope to contribute to across all of

its activities.

Credentials

Foresight 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.

Foresight 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

financial services. Portfolio companies are

encouraged to pursue similar objectives.

Climate Change Statement

Foresight 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. Foresight 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, Foresight received an

“A+” for Strategy and Governance, and “A” for

Private Equity and Infrastructure investments.

The Board supports Foresight’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 identified 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 a company’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 management team.

Approach to Responsible Investment (continued)

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 Foresight

will take note of any recommended changes.

Foresight 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. Foresight’s policies

in respect of all the above issues can be found on

its website: www.foresightgroup.eu.

Diversity

Foresight has an equal opportunities policy and, as

at 31 March 2023, employed 225 men (2022: 165)

and 150 women (2022: 103).

The VCT Board currently comprises four male

Directors, all of which are of white British ethnicity.

The Board does not yet meet the targets set out in

the Listing Rules, for 40% of the individuals on its

board of directors to be women;

at least one of the

senior positions on its board of directors is held by

a woman; and at least one individual on its board of

directors is from a minority ethnic background.

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 in future.

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.

Strategic Report

The Directors present the Strategic Report for the

year ended 31 March 2023. The Board has prepared

this report in accordance with the Companies Act

2006 (Strategic Report and Directors’ Reports)

Regulations 2013.

Principal objectives and strategy

The Company’s principal investment objective is to

provide Shareholders with an attractive level of tax-

free capital gains and income generated from a

portfolio of investments in a range of different

sectors.

The Company’s strategy for achieving its principal

investment objective is to:

 invest in a portfolio of investments across a

range of differing sectors, primarily in the UK

and EU; and

 comply with the VCT regulations to enable

Shareholders to retain the initial income tax

relief and ongoing tax reliefs.

As a Venture Capital Trust, Investors are required to

hold their shares for a minimum period of five years

in order to retain their income tax relief.

Business review and developments

Ventures Share pool

The Ventures Share pool began the year with £31.3

million of investments and ended the year with

£27.8 million spread across a portfolio of 36

Ventures investments and one liquidity investment.

The Share pool began the year with cash resources

of £4.3 million and ended the year with cash

resources of £3.4 million, after paying dividends

totalling £1.5 million.

The loss on ordinary activities after taxation for the

year was £3.2 million, comprising a revenue loss of

£494,000 and a capital loss of £2.7 million.

Healthcare Share pool

The Healthcare Share pool began the year with

£15.9 million of investments and ended the year

with £12.3 million spread across a portfolio of 15

Healthcare investments and one liquidity

investment.

The Share pool began the year with cash resources

of £2.5 million and ended the year with cash

resources of £860,000, after paying dividends of

£789,000.

The loss on ordinary activities after taxation for the

year was £4.3 million, comprising a revenue loss of

£272,000 and a capital loss of £4.0 million.

AIM Share pool

The AIM Share class launched in the previous year,

with the first shares allotted in January 2022. During

the year, two liquidity investments were made. The

gain on ordinary activities for the year was £36,000,

comprising a revenue loss of £39,000 and a capital

gain of £75,000.

DSO D Share pool

The DSO D Share pool began the year with £43,000

of investments and ended the year with £16,000

spread across a portfolio of two investments.

The loss on ordinary activities after taxation for the

year was £8,000, comprising revenue gain of

£20,000 and a capital loss of £28,000.

DP67 Share pool

The DP67 Share pool began the year with £1.9

million of investments and ended the year with £1.1

million, spread across a portfolio of four

investments.

The loss on ordinary activities after taxation for the

year was £221,000, comprising a revenue loss of

£92,000 and a capital loss of £129,000.

The Company’s business and developments during

the year are reviewed further within the Chairman’s

Statement, Investment Manager’s reports and the

Review of Investments for each Share pool.

Strategic Report (continued)

Key performance indicators

At each Board meeting, the Directors consider a

number of performance measures to assess the

Company’s success in meeting its objectives. The

Board believes the Company’s key performance

indicators are Net Asset Value, dividends per share

(see Financial Highlights on page 2) and Total

Return (NAV plus cumulative dividends paid to

date). Further consideration of the above key

performance indicators is included in the

Investment Manager’s Reports under Net Asset

Value and results.

The performance of the VCT’s Share pools,

measured by historic Share Price Total Return, is

shown in the graphs on pages 65 to 67.

Net Asset Value per share and Total Return are

defined as Alternative Performance Measures as

they are not defined or specified by FRS 102. The

Board considers these two measures to be the

primary indicators of future and historical

performance.

The Chairman’s Statement and Investment

Manager’s Reports include further commentary on

the Company’s activities and future prospects.

Principal risks and uncertainties

The Board have carried out a robust assessment of

the emerging and principal risks facing the

Company, including those that would threaten its

business model, future performance, solvency, or

liquidity. The Board has ensured that there are

policies in place for managing each of these risks.

The principal financial risks faced by the Company,

which include interest rate, investment price, credit

and liquidity risks, are summarised within note 15 to

the financial statements. Note 15 also includes an

analysis of the sensitivity of the NAV to changes in

investment valuations.

Other principal risks faced by the Company have

been assessed by the Board and grouped into the

key categories outlined below:

• Investment performance;

• Regulatory;

• Operational; and

• Economic, political and other external factors.

Investment performance

(similar level of risk)

The Company holds investments in unquoted and

quoted companies. Poor investment decisions or a

lack of effective monitoring and management of

investments could result in a reduction in the

carrying values of the Company’s investments.

The Investment Manager has significant experience

in investing in unquoted UK companies and

engages reputable and experienced advisers at

each stage of the investment process. Furthermore,

the Board regularly reviews the performance of the

portfolio.

Strategic Report (continued)

Principal risks and uncertainties (continued)

Regulatory

(similar level of risk)

The Company, as a fully listed Company on the

London Stock Exchange with a premium listing and

as a Venture Capital Trust, operates in a complex

regulatory environment and therefore faces several

related risks. A breach of the VCT Regulations could

result in the loss of VCT status and consequent loss

of tax reliefs currently available to Shareholders and

the Company being subject to capital gains tax.

Serious breaches of other regulations, such as the

Listing Rules of the Financial Conduct Authority and

the Companies Act, could lead to suspension from

the Stock Exchange and damage to the Company’s

reputation.

The Board receives quarterly reports from the

Investment and Administration Manager, and places

reliance on them to provide updates in the

intervening periods. These policies have remained

unchanged since the beginning of the financial

year.

Philip Hare & Associates provides regular

independent reviews of the Company’s VCT status,

as well as advice on VCT compliance issues as and

when they arise.

In order to further mitigate this risk, the Board

monitors regulatory and legislative developments.

The Company also has a strong compliance culture

and systems in place to ensure that the Company

complies with all of its regulatory requirements.

Further detail on VCT Status is provided on page 57.

Operational

(similar level of risk)

The Company relies on the Investment Manager,

Administration Manager and other third parties to

fulfil many of its operational requirements and

duties. A provision of inferior services by one or

more of these parties could lead to inadequate

systems and controls or inefficient management of

the Company, its assets and its reporting

requirements.

The Company, the Investment Manager and the

Administration Manager engage experienced and

reputable service providers, the performance of

which is reviewed on an annual basis by the Board.

In addition, the Audit Committee reviews the

Internal Control and Corporate Governance Manual

on an annual basis.

Economic, political and other external factors

(similar level of risk)

Fluctuations in the stock market due to the Ukrainian

conflict, economic recession, continued high

inflation or monetary policy could affect the

valuations of quoted investments, even if such

companies are performing to plan. With respect to

the Liquidity investments, the impact of this is

mitigated by the active management and

diversification of the underling portfolios.

Wider political and economic events also have the

potential to impact the performance, and therefore

valuations of, the unquoted companies in the

portfolio as a result of a deterioration in business and

consumer confidence. This is mitigated by holding a

diversified portfolio of investments across a wide

range of sectors and subsectors.

The emerging risks faced by the Company are

outlined on the following pages.

Strategic Report (continued)

Principal risks and uncertainties (continued)

Emerging risks

Risk Mitigation

Interest rate rises and inflation

The company’s investments could be

impacted negatively as a result of

increasing interest rates and high inflation,

particularly wages and other costs.

The Investment Manager’s close relationship with the investee

companies allows it to ensure that the businesses properly assess

the potential impact of increasing costs, particularly wages, and

the extent to which these may or may not be able to be passed on

to the end customer. The Board and the Investment Manager

considers the net impact to be at a manageable level and shall

continue to monitor developments closely across all investee

companies.

Geopolitical risks

Geopolitical developments such as the

risk of war. For example, the continuing

conflict in Ukraine and the impact of

sanctions placed on Russian businesses

and individuals, may have some impact on

the returns of the Company.

The Investment Manager’s hands on approach with the investee

companies ensures that they are well placed to assess the

exposure of the business such developments. The Board considers

exposure to the Ukraine conflict and associated developments be

low and any direct impact on the Company’s performance is not

expected to be significant. The Board along with the Investment

Manager shall continue to review the evolving situation as part of

its ongoing activities.

Climate change

The effects of climate change or those of

changing legislation as the world looks to

transition towards net zero emissions may

impact the returns generated by the

portfolio companies.

Whilst the Company itself, as a Venture Capital Trust, has

negligible exposures to climate change risk, the Investment

Manager works with the investee companies to ensure that

climate change risk and transition risk is appropriately addressed.

The Board together with the Investment Manager believe that the

risks within the current portfolio to be manageable and gives

consideration to this in reviewing new investment decisions and

will continue to assess developments in legislation and their

potential impact on portfolio companies.

Developments in accounting and disclosure regulations impacting

the Company are monitored by the Investment Manager and

Administration Manager to ensure full compliance.

Bank collapse

Towards the end of the accounting year,

the failure of Silicon Valley Bank and

Signature Bank could negatively impact

investments who have significant

exposure to either bank, particularly

accounts held with them.

The Investment Manager’s close relationship with the investee

companies allows it to assess its exposure to different banks. The

Investment Manager, Foresight, has implemented a number of

mitigating factors in order to mitigate risk, including:

- Ensuring portfolio companies operate at least two bank

accounts with top tier institutions; and

- Ensuring portfolio companies include a treasury

management and banking exposure risk item within

investee board packs.

Strategic Report (continued)

Principal risks and uncertainties

(continued)

Viability statement

In accordance with Corporate Governance best

practice, the Directors have carried out a robust

assessment of the emerging and principal risks of

the Company over a longer period than the 12

months required by the ‘Going Concern’ provision.

The Board has conducted this review for the period

covering the expected remaining life of each of the

Planned Exit Share pools, and the minimum

expected holding period in respect of the three

Evergreen Share pools, encompassing all Ventures,

Healthcare and AIM Shareholders. The longer of

these two time horizons is six years from the

balance sheet date.

The six-year review considers the principal risks

facing the Company, which are summarised on

page 49 and within note 15, as well as the

Company’s cash flows, dividend cover and VCT

monitoring compliance over the period. This

includes the impact of the coronavirus pandemic

and any other risks which may adversely impact its

business model, future performance, solvency or

liquidity. The six-year review makes assumptions

about the normal level of capital recycling likely to

occur, which include the following: -

- Dividends are paid in accordance with the 4%

of NAV targets for the evergreen Share Pools;

- Planned Exit Share pool distributions are paid

out as realisations take place from the

portfolios; and

- New and follow on investments are made as

further capital is raised or existing investments

are exited, whilst considering availability of

cash for expenses, which are estimated based

on the results to 31 March 2023.

The Board has considered the Company’s cash flow

projections and found these to be realistic and

reasonable. This includes forecasting the potential

impact of coronavirus on the Company’s cash flows.

The Directors believe that the Company is well

placed to manage its business risks successfully.

Based on the results, the Board believes that, taking

into account the Company’s current position, and

subject to the principal risks faced by the business,

the Company will be able to continue in operation

and meet its liabilities as they fall due for the period

under review.

Business model

The Company operates as a Venture Capital Trust to

ensure that its Shareholders can benefit from the

tax reliefs available.

The business of the Company is to act as an

investment company, investing in a portfolio which

meets the conditions set out within its Investment

Policy, as shown below.

Investment policy

Asset allocation

It is intended that at least 80% of each of the

Evergreen share pools’ funds are invested in VCT

Qualifying Investments, within three years of the

close of the relevant Offer. The remainder of the

funds will be held in Non-Qualifying investments, as

described below.

For the Planned Exit share pools, the Manager is

working on plans to exit from the remaining

investments, such that funds can be returned to

Shareholders.

Venture Capital investments

New Venture Capital investments will normally

comprise investments in businesses that are less

than seven years old and require funding to support

the growth of the business. Investments may be in a

range of sectors which are allowable under the VCT

Regulations.

The Company will focus on development and

expansion funding for unquoted businesses and

will not usually undertake very early stage or start-

up investments.

Specific share pools may have a Ventures focus or

may focus on certain sectors according to the

strategy of that specific share pool.

Venture Capital Investments made in 2015 and

earlier were made under previous VCT Regulations

and focused on investments in UK businesses that

own substantial assets (over which a charge could

be taken by the Company) or have predictable

revenue streams from financially sound customers.

Non-Qualifying Investments

The funds not deployed in VCT Qualifying

investments will be invested in Non-Qualifying

investments, as allowed by the VCT Regulations.

These will typically be cash deposits and

investments in quoted securities, investment trusts

or OEICS.

Strategic Report (continued)

Investment policy (continued)

Non-Qualifying Investments

Liquidity investments are made with the aim of

producing capital appreciation or income. The

intended profit arising from the disposal or maturity

of liquidity investments typically gives rise to capital

gains, which are tax-free for the Company and can

be distributed tax-free to Shareholders.

Risk Diversification

The Directors control the overall risk of the

Company. The Investment Manager ensures that

the Company has exposure to a diversified range of

VCT Qualifying investments from different sectors

and adheres to the holding limit that no investment

in a company may represent more than 15% by

value of the Company’s total investments at the

time of investment.

Changes to the VCT Regulations in recent years

have sought to strengthen the availability of capital

for innovative growth businesses in the UK. This

inherently increases the risk profile of the new

investments made by the Evergreen share pools,

which stand in contrast to those in which the

Company’s Planned Exit share pools have

historically invested. However, whilst new

investments will generally be in businesses which

are not asset-backed, and are therefore higher risk,

these new investments will have the potential to

offer greater rewards. The principal risks faced by

the Company are considered in more detail on

pages 49 to 52.

Pursuant to the introduction of the 80% VCT

Qualification test on 1 April 2022, the target

allocation of the Company’s funds is summarised as

follows:

VCT Qualifying Investments 85%

Non-Qualifying Investments 15%

100%

The qualification test is measured on the Company

as a whole and not on any individual share class.

As two of the five active share pools are in an exit

stage, ongoing adherence to the VCT Qualification

test has come to rest on the combined VCT

Qualification status of the Ventures and Healthcare

Share pools. As such, when building the Ventures,

Healthcare and AIM Share pools, the Manager is

working towards a long term VCT Qualification

target of 85% for these pools, as outlined in the

respective Reviews of Investments.

Listing rules

In accordance with the listing rules:

(i) the Company may not invest more than 10% in

aggregate, of the value of total assets of the

Company at the time an investment is made in

other listed closed-ended investment funds,

except listed closed-ended investment funds

which have published investment policies

which permit them to invest no more than 15%

of their total assets in other closed-ended

investment funds;

(ii) the Company must not conduct any trading

activity which is significant in the context of the

Company; and

(iii) the Company must, at all times, invest and

manage its assets in a way which is consistent

with its objective of spreading investment risk

and in accordance with its published

investment policy set out in this document.

Venture Capital Trust Regulations

In continuing to maintain its VCT status, the

Company complies with a number of regulations as

set out in Part 6 of the Income Tax Act 2007.

An analysis of the compliance with the applicable

VCT regulations for the year ended 31 March 2023

is set out on page 57.

Strategic Report (continued)

Statement on section 172

Under section 172 of the Companies Act 2006, the

Board has a duty to promote the success of the

Company, and when making decisions for the long

term, have regard to a range of matters including:

 the likely consequences of any decision in the

long term;

 the interest of the Company’s employees;

 the need to foster the Company’s business

relationships with suppliers, customers and

others;

 the impact of the Company’s operations on the

environment and community;

 the desirability of the Company maintaining a

reputation for high standards of business

conduct; and

 the need to act fairly between Shareholders of

the Company.

However, the Company has no employees (other

than its Directors) and no customers in the

traditional sense. It is normal practice for Venture

Capital Trusts to delegate authority for day-to-day

management and administration of the Company to

third parties. The Board will then engage with the

third parties in setting, approving and overseeing

the execution of the business strategy and related

policies. In accordance with the Company’s nature

as a Venture Capital Trust, the Board’s principal

concern has been, and continues to be, the interest

of the Company’s Shareholders taken as a whole, as

well as continuing to monitor portfolio

management in light of the Company’s objectives.

In addition to this, the Board has a responsible

governance culture and has due regard for broader

matters, so far as they apply including the

expectations of its regulators. Specifically, the Board

engages with the Investment Manager at every

Board meeting, where it will review the financial and

operational performance, as well as legal and

regulatory compliance. The Board also reviews its

relationships with other service providers at least

annually, as well as other areas over the course of

the financial year including the Company’s key risks;

stakeholder-related matters; diversity and

inclusivity; environmental matters; and corporate

responsibility and governance.

The Investment and Administration Manager

engages with Shareholders by producing half-yearly

reports and reporting back to the Board. The Board

also usually encourages Shareholders to attend the

AGM and welcomes any other communications

from Shareholders. Its main stakeholders therefore

comprise the Shareholders, the Investment

Manager, other service providers and investee

companies.

The principal decisions made or approved by the

Directors during the year are set out below. In

taking these decisions, the Directors considered

their duties under section 172 of the Act. Principal

decisions have been defined as those that have a

material impact to the Company and its key

stakeholders.

Dividend declarations

For the Ventures and Healthcare Share classes, the

Directors target an annual dividend of at least 4% of

net assets per annum, subject to sufficient

distributable reserves and capital resources. The

AIM share class will not pay any dividends in its

initial years. The Board closely monitors the level of

dividends and proposes to pay a final dividend of

1.25p per Ventures Share and 1.25p per Healthcare

Share, equivalent to 2.1% and 2.0% respectively

based on the net asset values at 31 March 2023.

Strategic Report (continued)

Statement on section 172 (continued)

Launch of offers for subscription

An offer for subscription was launched in

September 2022, which is now scheduled to close

on 31 July 2023. To date, the offer has raised [£0.3]

million in the Ventures Share class and [£1.3] million

in the Healthcare Share class. The additional funds

raised will allow the Manager to expand the

portfolios and provide support where necessary to

the existing investee companies.

Communication with Shareholders

The Board communicates with its shareholders in a

number of ways including, but not limited to:

- the Company’s annual and half yearly

reports;

- regulatory announcements;

- information on the Company’s website; and

- the Annual General Meeting.

The Board continues to encourage all Shareholders

to attend the AGM and welcomes communication

form Shareholders. The Board is pleased to

continue to hold the 2023 AGM in person at the

Investment Managers office to facilitate this

interaction. In person AGMs will continue, where

possible, to allow Shareholders to ask questions

and hear updates from the Board and Investment

Adviser.

Borrowings

Under its Articles, the Company has the ability to

borrow a maximum amount equal to 15% of the

aggregate amount paid on any shares issued by the

Company (together with any share premium

thereon), currently equal to approximately £7.8

million.

Although the Board does not intend to borrow, it

has the flexibility to do so. In particular, because the

Board intends to minimise cash balances, the

Company may borrow on a short-term basis for

cash flow purposes.

Global greenhouse gas emissions

The Company has no greenhouse emissions to

report from its operations, nor does it have

responsibility for any other emission producing

sources under the Companies Act 2006 (Strategic

Report and Director’s Reports) Regulations 2013.

Environmental, social, and human rights

policy

The Company seeks to conduct its affairs

responsibly. Where appropriate, the Board and the

Manager take environmental, social and human

rights factors into consideration when making

investment decisions. Further details on the

Investment Manager’s approach to responsible

investment can be found on pages 45 to 47.

The FCA reporting requirements consistent with the

Task Force on Climate-related Financial Disclosures

(“TCFD”) do not currently apply to the Company.

The Board and Investment Manager acknowledge

the recommendations which will be reviewed over

future periods.

Directors and senior management

The Company does not have any employees,

including senior management, other than the Board

of four non-executive directors. All directors are

male.

Events after the end of the reporting

period

Important events affecting the Company since 31

March 2023 have been disclosed in the Chairman’s

Statement and in note 20 to the financial

statements.

Future prospects

The Company’s future prospects are set out in the

Chairman’s Statement and Investment Manager’s

Reports.

By order of the Board

Grant Whitehouse

Secretary of Thames Ventures 2 VCT plc

Company number: 06789187

Registered office:

Floor, St. Magnus House

3 Lower Thames Street

London, EC3R 6HD

31 July 2023

Report of The Directors

The Directors present the Annual Report and

Accounts of the Company for the year ended 31

March 2023.

Share capital

At the year end, the Company had in issue

66,852,564 Ventures Shares (including Management

Shares), 27,544,877 Healthcare Shares (including

Management Shares), 2,695,803 AIM Shares,

7,867,247 DSO D Shares and 11,192,136 DP67

Shares.

Every Shareholder is entitled to receive notice of, to

attend, speak and vote at any general meeting.

Shareholders who are present in person or by proxy

can vote on a show of hands and will have one vote

each. On a poll, every Shareholder present in

person or by proxy is entitled to the number of

votes per share as set out in the table below:

Class of share

Number of votes

per share

DSO D Share 232

DP67 Share 375

Ventures Share 860

Healthcare Share 860

AIM Share 1,146

If the Net Asset Value of the Share class moves by

more than 25%, the number of votes per share shall

correspondingly increase or decrease, as set out in

the Articles of the Company.

The Company operates a policy, subject to certain

restrictions, of buying Ventures, Healthcare and AIM

Shares that become available in the market at a

price equal to the latest published NAV (i.e. at a nil

discount). As the planned exit pools are in an exit

phase, the Company does not intend to buy back

shares of any other class.

During the year the Company repurchased 3,014,102

Ventures Shares at an average price of 66.9p and

1,007,037 Healthcare Shares at an average price of

72.8p. These shares were subsequently cancelled.

At the AGM that took place on 27 September 2022,

the Company was authorised to make market

purchases of its shares up to a limit of 1,172,220

DSO D Shares, 1,667,628 DP67 Shares, 8,329,785

Ventures Shares, 3,404,390 Healthcare Shares and

401,675 AIM Shares, which represented

approximately 14.9% of the issued DSO D Share

capital, DP67 Share capital, Ventures Share capital,

Healthcare Share capital and AIM Share capital, as at

the date of the AGM.

At the current date, authority remains for 1,172,220

DSO D Shares, 1,667,628 DP67 Shares, 5,315,683

Ventures Shares, 2,397,353 Healthcare Shares and

401,675 AIM Shares. A resolution to renew this

authority will be put to Shareholders at the AGM

taking place on 12 September 2023.

The minimum price which may be paid for a DSO D

Share, a DP67 Share, a Ventures Share, Healthcare

Share or an AIM Share is 0.1p, exclusive of all

expenses, and the maximum price which may be

paid for a DSO D Share, a DP67 Share, a Ventures

Share, a Healthcare Share or an AIM Share is an

amount, exclusive of all expenses, equal to 105% of

the average of the middle market quotations.

Results and dividends

(Loss)/return for the year:

£’000

Pence

per

DSO D Share

(8)

(0.1p)

DP67 Share (221) (2.0p)

Ventures Share (3,173) (6.5p)

Healthcare Share

(4,290)

(21.4p)

AIM Share 36 3.9p

Dividends paid during

the current period:

£’000

Pence

per

Ventures Share 1,516 2.75p

Healthcare Share 789 3.50p

Final dividends proposed to be paid 29 Sept

2023

Ventures Share 665 1.25p

Healthcare Share 294 1.25p

As the Planned Exit share pools are in an exit phase,

further dividends will be declared as and when

realisations are completed.

Report of The Directors (continued)

Directors

In accordance with the Company’s Director tenure

policy and corporate governance best practice,

Directors are subject to annual re-election.

All Directors were re-elected at the previous AGM.

Sir Aubrey Brocklebank, Andrew Mackintosh, Steven

Clarke and Chris Allner will each retire and offer

themselves for re-election at the forthcoming AGM.

Each has continued to make a valuable contribution

during the year and is expected to continue to drive

the Company’s long-term success.

Sir Aubrey Brocklebank entered into a letter of

appointment in July 2016. Steven Clarke, Andrew

Mackintosh and Chris Allner entered into a latter of

appointment dated 8 September 2021. The

appointments are terminable on three months’

notice by either side. Each Director is required to

devote such time to the affairs of the Company as

the Board reasonably requires.

The Company provides Directors’ and Officers’

liability insurance, giving appropriate cover for legal

action brought against its directors, and has also

agreed to indemnify Directors in circumstances

where they are not considered to be culpable. The

indemnity, which is a qualifying third-party indemnity

provision for the purpose of the Companies Act, is

for the benefit of all of the Company’s current

Directors.

VCT status

The Company has retained Philip Hare & Associates

LLP to advise it on compliance with VCT

requirements, including evaluation of investment

opportunities, as appropriate, and regular review of

the portfolio. Although Philip Hare & Associates LLP

work closely with the Investment Manager, they

report directly to the Board.

Compliance with the main VCT regulations (as

described in the Investment policy) as at 31 March

2023, and for the year then ended, is summarised as

follows:

1. 80% of its investments held in

qualifying companies;

94.5%

2. At least 70% of the Company’s

qualifying investments are held in

“eligible shares” for funds raised on

or after 6 April 2011;

98.9%

3. At least 10% of each investment in a

qualifying company is held in

eligible shares;

Complied

4. At least 30% of the of the proceeds

of shares issued after 1 April 2019

must be invested in VCT Qualifying

companies within 12 months of the

next year end;

Complied

5. No investment constitutes more

than 15% of the Company’s

portfolio;

Complied

6. Income for the year is derived

wholly or mainly from shares and

securities; and

100.0%

7. The Company distributes sufficient

revenue dividends to ensure that

not more than 15% of the income

from shares and securities in any

one year is retained.

Complied

Report of The Directors (continued)

Investment management and

administration fees

With effect from 4 July 2022, Foresight Group LLP

(“Foresight”) was appointed as Investment Manager

to the Company following agreement by the

Company’s former Investment Manager, Downing

LLP, to sell its non-healthcare ventures division to

Foresight, with Downing continuing to provide

investment management services for the Healthcare

share pool.

Foresight is paid a fee equivalent to 1.5% of the DSO

D Share net assets per annum, 1.35% of DP67 Share

net assets per annum, 2.0% of Ventures Share net

assets per annum, and 1.75% of AIM Share net

assets per annum.

The management of the Healthcare Share pool

remains with the company’s previous investment

manager, Downing LLP. Downing is paid a fee

equivalent to 2.5% of the Healthcare Share net

assets per annum.

Under the Administration Management agreement

Foresight provide administration services to the

Company for a fee calculated as follows: (i) a basic

fee of £47,550; (ii) A fee of 0.1% of NAV per annum

on funds in excess of £10 million; (iii) £5,000 per

additional Share pool, excluding the DSOD share

pool.

The agreement may be terminated by either side

giving not less than 12 months’ notice in writing.

During the year, a total of £1.1 million (2022: £1.2

million payable to Downing LLP) was payable to

Foresight and Downing for investment management

and administration fees.

Foresight and Downing also receive arrangement

and monitoring (non-executive directorship) fees

from the investee companies. Arrangement and

monitoring fees paid to the Investment Managers

from Thames Ventures VCT 2 portfolio companies

were as below:

Arrangement

fees

Monitoring

fees

£’000 £’000

Year ended 31 March 2023

Foresight 13 60

Downing 11 67

24 127

Year ended 31 March 2022

Downing 58 697

These fees also relate to investments made into

these companies by other funds managed by

Foresight and Downing and so are only partly

attributable to Thames Ventures 2 investments.

The annual running costs of the Company, for the

year, are also subject to a cap of 3.0% of net assets

of the Company for all Share pools, with the

exception of the DP67 and Healthcare Share pools,

which are subject to caps of 2.9% and 3.5%,

respectively. Any excess costs over each of the

relevant caps are met by the Investment Manager

through a reduction in fees.

The Ongoing Charges value for the Company as a

whole for the year (calculated in accordance with the

AIC guidance) was 2.2% (2022: 2.9%).

Report of The Directors (continued)

Performance Incentives

DSO D Share pool

The DSO D Shares enable a payment, by way of a

fee, of the Performance Incentive to the

management team.

No Performance Incentive will be payable until

Shareholders:

i) receive proceeds, by way of dividends/

distributions/share buybacks (“Total Proceeds”),

of at least 100.0p per £1 invested; and

ii) achieve a tax-free compound return of at least

7% per annum (after allowing for income tax

relief on investment).

Subject to these conditions (“the Hurdles”) being

met, the Performance Incentive will be 3.0p per DSO

D Share plus 20% above 100.0p per DSO D Share, of

the funds available for distribution to DSO D

Shareholders.

The Performance Incentive will only be paid to the

extent that the Hurdles continue to be met and will

be subject to a maximum amount, over the life of

the Company, equivalent to 7.0p per DSO D Share

(based on the number of DSO D Shares in issue at

the close of the Offers). After the Hurdles have been

met, the Performance Incentive will be deducted

from the Total Return figure.

It is currently estimated that no performance fee will

be payable as the compound return hurdle is

unlikely to be met.

Ventures and Healthcare Share pools

A Performance Incentive scheme is in place in

respect of the Ventures and Healthcare

Management Shares, which will represent 20% of

the total number of Ventures and Healthcare Shares

in issue. As part of the arrangement, in order to

prevent dilution to the Shareholders of the Ventures

and Healthcare Shares, the management team will

waive their voting rights granted by these

Management Shares at any general meeting of the

Company and income or capital distributions

otherwise payable on these Management Shares will

be waived unless the Total Return hurdle is met.

For the year ended 31 March 2023, the hurdle is met

when Total Return (based on audited year end

results) is in excess of £1.09 per share. For

subsequent years, the Total Return hurdle increases

by 3.0p per annum, such that for the year ended 31

March 2024 the Total Return hurdle will be £1.12,

and for the year ended 31 March 2025 the hurdle

will be £1.15.

AIM Share Pool

There is no performance incentive scheme in place

for the AIM Share pool.

Further details of the Performance Incentive

arrangements are set out on page 102.

Ongoing promoter fee (trail fee)

The Company has an agreement to pay an ongoing

promoter fee (trail fee) annually to the Investment

Manager in connection with applicable funds raised

under the Company’s previous offers for

subscription, out of which there is an obligation to

pay a trail commission to intermediaries. The trail

fee is calculated at between 0.25% and 0.5% of the

Net Asset Value of those offer shares in respect of

which adviser commission is payable at each period

end.

Going Concern

The Directors confirm that they are satisfied that the

Company has adequate resources to continue in

business for at least the next 12 months, as further

detailed in the Corporate Governance Statement

report on page 71.

Substantial interests

As at 31 March 2023, and the date of this report, the

Company had not been notified of any beneficial

interest exceeding 3% of the issued share capital.

Auditor

A resolution proposing the reappointment of BDO

LLP as the Company’s Auditor will be submitted at

the Annual General Meeting.

Annual General Meeting

The AGM will be held at the offices of Foresight

Group LLP, The Shard, 32 London Bridge Street,

London, SE1 9SG at 3:30 p.m. on 12 September

2023. Full details of this are included in the Notice of

the Annual General Meeting, which can be found at

the back of this document.

Report of The Directors (continued)

Directors’ responsibilities

The Directors are responsible for preparing the

Report of the Directors, the Directors’ Remuneration

Report and the financial statements in accordance

with applicable law and regulations. The Directors

are also responsible for ensuring that the Annual

Report includes information required by the Listing

Rules of the Financial Conduct Authority.

Company law requires the Directors to prepare

financial statements for each financial year. Under

that law, the Directors have elected to prepare the

financial statements in accordance with United

Kingdom Generally Accepted Accounting Practice

(United Kingdom accounting standards and

applicable law) including Financial Reporting

Standard 102, the financial reporting standard

applicable in the UK and Republic of Ireland (FRS

102). Under company law, the Directors must not

approve the financial statements unless they are

satisfied that they give a true and fair view of the

state of affairs of the Company and of the profit or

loss of the Company for that period.

In preparing these financial statements, the

Directors are required to:

 select suitable accounting policies and then

apply them consistently;

 make judgments and accounting estimates

that are reasonable and prudent;

 state whether applicable UK accounting

standards have been followed, subject to

any material departures disclosed and

explained in the financial statements;

 prepare the financial statements on the

going concern basis unless it is

inappropriate to presume that the Company

will continue in business;

 prepare a directors’ report, a strategic report

and directors’ remuneration report which

comply with the requirements of the

Companies Act 2006; and

 carry out a robust assessment of the

principal risks facing the Company, as set out

in the Strategic Report on page 52.

The Directors are responsible for keeping adequate

accounting records that are sufficient to show and

explain the Company’s transactions, to disclose with

reasonable accuracy at any time the financial

position of the Company and to enable them to

ensure that the financial statements comply with the

Companies Act 2006. They are also responsible for

safeguarding the assets of the Company and hence

for taking reasonable steps for the prevention and

detection of fraud and other irregularities.

In addition, each of the Directors considers that the

Annual Report, taken as a whole, is fair, balanced

and understandable and provides the information

necessary for Shareholders to assess the Company’s

position, performance, business model and strategy.

The Directors are responsible for the maintenance

and integrity of the corporate and financial

information included on the Company’s website.

Legislation in the United Kingdom governing the

preparation and dissemination of the financial

statements and other information included in the

Annual Reports may differ from legislation in other

jurisdictions.

Directors’ statement pursuant to the

Disclosure Guidance and Transparency

Rules

Each of the Directors, whose names and functions

are listed on page 3, confirms that, to the best of

each person’s knowledge:

 the financial statements, which have been

prepared in accordance with the applicable set

of accounting standards, give a true and fair view

of the assets, liabilities, financial position and

profit or loss of the Company; and

 the management report included within the

Report of the Directors, Strategic report,

Chairman’s Statement, Investment Manager’s

Report, and Review of Investments includes a fair

review of the development and performance of

the business and the position of the company,

together with a robust assessment of the

principal risks and uncertainties that it faces.

Report of The Directors (continued)

Directors’ responsibilities (continued)

Website publication

The directors are responsible for ensuring the

Annual Report and the financial statements are

made available on a website. Financial statements

are published on the website of the Investment

Manager (www.foresightgroup.eu) in accordance

with legislation in the United Kingdom governing

the preparation and dissemination of financial

statements, which may vary from legislation in other

jurisdictions.

The Directors' responsibility also extends to the

ongoing integrity of the financial statements

contained therein.

Corporate Governance

The Company’s compliance with, and departures

from, the AIC Code of Corporate Governance

(www.theaic.co.uk) is shown on page 72.

Responsible Investing

The day-to-day management of the Company’s

investments is delegated to the Investment

Manager, Foresight Group LLP (“Foresight”).

Foresight’s report on its approach to responsible

investment is included on pages 45 to 47.

Streamlined Energy and Carbon

Reporting (‘SECR’)

As the company has no employees and primarily

conducts its business at the London office of the

Investment and Administration Manager, Foresight

Group LLP, the company is not directly responsible

for the consumption of electricity and gas in the UK,

nor is the company directly responsible for

greenhouse gas emissions related to transport in the

UK. As the company did not consume more than

40,000 kWh of energy during the year ended 31

March 2023, it has nothing to report under the

Companies (Directors’ Report) and Limited Liability

Partnerships (Energy and Carbon Report)

Regulations 2018.

Global greenhouse gas emissions

The Company has no greenhouse gas emissions to

report from its operations, nor does it have any

other emission producing sources under the

Companies Act 2006 (Strategic Report and Directors’

Reports) Regulations 2013.

Insurance cover

Directors’ and Officers’ liability insurance cover is

held by the Company in respect of the Directors.

Other matters

Information in respect of financial instruments,

principal risks, future prospects, dividends and

subsequent events, which were previously disclosed

within the Directors Report, has been disclosed

within the Strategic Report on pages 48 to 55.

Statement as to disclosure of

information to Auditors

The Directors in office at the date of the report have

confirmed, as far as they are aware, that there is no

relevant audit information of which the Auditor is

unaware. Each of the Directors has confirmed that

they have taken all the steps that they ought to have

taken as Directors in order to make themselves

aware of any relevant audit information and to

establish that it has been communicated to the

Auditor.

By order of the Board

Grant Whitehouse

Secretary of Thames Ventures 2 VCT plc

Company number: 06789187

Registered office:

Floor, St. Magnus House

3 Lower Thames Street

London, EC3R 6HD

31 July 2023

Directors’ Remuneration Report

The Board has prepared this report in accordance

with the requirements of Sections 420 to 422 of the

Companies Act 2006. A resolution to approve this

report will be put to the Shareholders at the AGM to

be held on 12 September 2023.

Under the requirements of Section 497, the

Company’s Auditor is required to audit certain

disclosures contained within the report. These

disclosures have been highlighted and the audit

opinion thereon is contained within the Auditor’s

Report on pages 73 to 79.

Statement by the Chairman of the

Remuneration Committee

The Remuneration Committee comprises Sir Aubrey

Brocklebank, Andrew Mackintosh, Steven Clarke and

Chris Allner. The current fee structure has been in

effect since 1 April 2022.

The committee reviews the fee structure as and when

required, to ensure that the levels in place are

commensurate with the size of the Company and the

time commitments required of each of the Directors.

Directors’ remuneration policy

Below is the Company’s current remuneration policy,

which was last put to a Shareholder vote at the AGM

in 2020. In accordance with regulations, Shareholders

must vote on the remuneration policy every three

years or sooner if the Company wants to make

changes to the policy. The policy will next be put to

Shareholders at the AGM in 2023.

Directors’ remuneration is calculated in accordance

with the Company’s Articles of Association as follows:

 The Directors shall be paid out of the funds of the

Company, by way of fees for their services, an

aggregate sum not exceeding £150,000 per

annum. The Directors shall also receive by, way of

additional fees, such further sums (if any) as the

Company, in General Meeting, may from time to

time determine. Such fees shall be divided among

the Directors in such proportion and manner as

they may determine and, in default of the

determination, equally.

 The Directors shall be entitled to be repaid all

reasonable travelling, hotel and other expenses

incurred by them respectively in or about the

performance of their duties as Directors. This

includes any expenses incurred in attending

meetings of the Board, Committees of the Board

or General Meetings. If, in the opinion of the

Directors, it is desirable that any of their number

should make any special journeys or perform any

special services on behalf of the Company or its

business, the Director or Directors may be paid

reasonable additional remuneration and expenses

as the Directors may from time to time determine.

No payment for loss of office will be made to a

current or former Director except in exceptional

circumstances, and the Directors will consider any

such position on an ad-hoc basis.

The Company’s policy is that fees payable to Directors

should reflect their expertise, responsibilities and time

spent on Company matters. In determining the level of

remuneration, market equivalents are considered in

comparison to the overall activities and size of the

Company. There is no performance related pay criteria

applicable to Directors.

The Directors’ Remuneration policy is available for

inspection in the Annual Reports, which can be found

on the website of the Investment Manager or the

Administrator.

Service contracts

Each of the Directors has entered into a consultancy

agreement for the fixed term of three years from the

date of their appointment and thereafter on a three-

month rolling notice.

Directors’ Remuneration Report

(continued)

Directors’ remuneration (audited)

Directors’ remuneration for the Company for the

year under review was as follows:

Current

annual fee

(excl. VAT)

£’000

2023

fee

£’000

Change

in gross

fee

2022

fee

£’000

Change

in gross

fee

2021

fee

£’000

Change

in gross

fee

Sir Aubrey

Brocklebank 30 30 50% 20 - 20 -

Andrew

Mackintosh 24 24 20% 12 - - -

Steven Clarke 24 24 20% 12 - - -

Chris Allner^ 20 15 - - - - -

Lord Flight* - 15 25% 20 - 20 -

Russell Catley** - - - 8 - 18 -

VAT on the

above - 2 - 3 - 3 -

98 110 75 61

between the years ending 31 March 2023 and 31 March 2022

between the years ending 31 March 2022 and 31 March 2021

between the years ending 31 March 2021 and 31 March 2020

*Resigned 27 September 2022

**Resigned 8 September 2021

^ Under the transfer of the investment management

agreement to Foresight, from 1 July 2022 Chris Allner is

being paid an annual fee of £20,000 which is rechargeable

to Downing LLP for two years.

The current fee structure was last reviewed in the

year ended 31 March 2022, with the current fees

effective from 1 April 2022.

No other emoluments, pension contributions or life

assurance contributions were paid by the Company

to, or on behalf of, any Director. The Company does

not have any share options in place.

Statement of voting at AGM

Shareholders’ views in respect of Directors’

remuneration communicated at the Company’s

AGM are taken into account in formulating the

Directors’ remuneration policy.

At the last AGM on 27 September 2022, the votes in

respect of the resolution to approve the Directors’

Remuneration Report were as follows:

In favour 90.9%

Against 9.1%

At the 2021 AGM, when the remuneration policy

was last put to a Shareholder vote, 93.2% voted for

the resolution and 6.8% against, showing significant

Shareholder support.

Relative importance of spend on pay

The difference in actual spend between the year ended

31 March 2022 and the year ended 31 March 2023 on

remunerations for all employees, in comparison to

distributions (dividends and share buybacks) and other

significant spend, are set out in the graph below:

nb £20,000 of the Directors’ emoluments is reimbursed by

Downing LLP

2,305

943

2,455

1,061

500

1,000

1,500

2,000

2,500

Dividends and

Share Buybacks

Directors'

emoluments

Investment

management

fees

Year end 31 March 2023

Year end 31 March 2022

Relative spend on pay (£'000)

Directors’ Remuneration Report (continued)

Directors share interest (audited)

The Directors of the Company during the year and

their beneficial interests (including connected

persons) in the issued shares of the Company at 31

March 2023, and at the date of this report, are as

follows:

No. of shares at 31/03/23 (audited)

Share class

Sir Aubrey

Brockleban

Steven

Clarke

Chris

Allner

Andrew

Mackintosh

DSO D -

DP67 -

Ventures 32,679

8,000

Healthcare 5,000

2,000

AIM

- -

No. of shares at 31/03/22 (audited)

Share class

Sir Aubrey

Brockleban

Steven

Clarke

Chris

Allner

Andrew

Mackintosh

DSO D -

DP67 -

Ventures 32,679

8,000

Healthcare 5,000

2,000

AIM

- -

There is no requirement for Directors to own shares

in the company.

Performance graphs

The charts on the following pages represent the

performance of the DSO D, DP67, Ventures,

Healthcare and AIM Share pools over the period

since the shares were first listed on the London

Stock Exchange and compare the Total Return of the

Company (Net Asset Value plus dividends) to a

rebased FTSE AIM All Share Index, including

dividends reinvested. The index has been rebased to

100.0p at the launch date of each respective pool.

As there is no publicly available VCT index, we have

selected the FTSE AIM All Share Index as a

comparison as it is a publicly available broad equity

index which focuses on smaller companies and is

more relevant than most other publicly available

indices.

By order of the Board

Grant Whitehouse

Company Secretary

Floor, St. Magnus House

3 Lower Thames Street

London, EC3R 6HD

31 July 2023

Directors’ Remuneration Report

(continued)

Performance graphs (continued)

Directors’ Remuneration Report

(continued)

Performance graphs (continued)

Directors’ Remuneration Report

(continued)

Performance graphs (continued)

Note: It is a requirement to show the above charts including Share Price Total Return with dividends reinvested

at the prevailing share price at the time of the dividend. This method can give a distorted result for the Planned

Exit Share pools, as they are in the process of returning funds to Shareholders.

Corporate Governance Statement

The Board has considered the principles and

recommendations of the AIC Code of Corporate

Governance (“AIC Code”), being the principles of

good governance and the code of best practice, as

set out in the annex to the Listing Rules of the UK

Listing Authority. The AIC Code addresses all

principles and provisions set out in the UK

Corporate Governance Code, as well as setting out

additional principles and recommendations on

issues that are of specific relevance to the Company.

The Board considers that reporting against the

principles and recommendations of the AIC Code,

will provide better information to Shareholders.

The Board

The Company has a Board comprising four non-

executive Directors. The Chairman is Sir Aubrey

Brocklebank. Biographical details of all Board

members are shown on page 3.

The Board has assessed the independence of each

of the Directors, all of which are considered to be

independent, with the exception of Chris Allner (who

is a partner of one of the Investment Managers,

Downing LLP), in accordance with the provisions and

recommendations set out in the AIC Code.

Full Board meetings take place quarterly and

additional meetings are held as required, to address

specific issues, including considering

recommendations from the Investment Managers,

making all decisions concerning the acquisition or

disposal of investments, and reviewing periodically

the terms of engagement of all third-party advisers

(including the Investment and Administration

Manager). The Board has a formal schedule of

matters specifically reserved for its decision.

As the Company has a small Board of non-executive

Directors, all Directors sit on each Committee. The

Chairman of the Audit Committee is Andrew

Mackintosh, and the Chairman of the Nomination

and Remuneration Committees is Sir Aubrey

Brocklebank. The Audit Committee normally meets

twice yearly, and the Remuneration and Nomination

Committees meet as required. All Committees have

defined terms of reference and duties.

The Board has also established procedures whereby,

Directors wishing to do so in the furtherance of their

duties, may take independent professional advice at

the Company’s expense.

All Directors have access to the advice and services

of the Company Secretary. The Company Secretary

provides the Board with full information on the

Company’s assets and liabilities and other relevant

information requested by the Chairman, in advance

of each Board meeting.

The Board has authority to make market purchases

of the Company’s own shares. This authority for up

to 14.9% of the Company’s issued share capital was

granted at the AGM on 8 September 2022. A

resolution will be put to Shareholders to renew this

authority at the forthcoming AGM.

The capital structure of the Company is disclosed on

page 56.

Audit Committee

The Company has an Audit Committee comprising

Andrew Mackintosh (Chairman), Sir Aubrey

Brocklebank, Steven Clarke and Chris Allner. This

Committee has defined terms of reference and

duties.

Sir Aubrey Brocklebank was considered independent

on appointment as Chairman of the Company in

January 2019 and is therefore also a member of the

Audit Committee.

The Audit Committee is responsible for:

 monitoring the Company’s financial reporting

and any formal announcements relating to the

company’s financial performance;

 providing advice on whether the annual report

and accounts, taken as a whole, are fair balanced

and understandable;

 reviewing internal controls and risk management

systems; and

 matters regarding audit and external auditors.

Corporate Governance Statement (continued)

Audit Committee (continued)

Financial Reporting

The Committee is responsible for reviewing and

agreeing the Half-Yearly and Annual Reports

(including those figures presented within) before

they are presented to the Board for final approval.

In particular, the Committee reviews, challenges

(where appropriate) and agrees the basis for the

carrying value of the unquoted investments, as

prepared by the Investment Manager, for

presentation within the Half-Yearly and Annual

Reports.

The Committee also takes into careful consideration

comments on matters regarding valuation, revenue

recognition and disclosures arising from the

Auditors Report to the Audit Committee, as part of

the finalisation process for the Annual Accounts.

The Committee has considered the Annual Report

for the year ended 31 March 2023 and has reported

to the Board that it considers it to be fair, balanced

and understandable, providing the information

necessary for Shareholders to assess the Company’s

performance, business model and strategy.

Internal audit and control

The Committee has considered the need for an

internal audit function and has concluded that such

a function is not appropriate for a company of this

size and structure. The Committee seeks to satisfy

itself that there is a proper system and allocation of

the responsibilities for the day-to-day monitoring of

financial controls by receiving representations and

information (either upon request or voluntarily) from

the Investment Manager. This is covered more fully

under Risk Management and Internal Control.

Whistleblowing procedures

As the Company has no staff, other than Directors,

there are no procedures in place relating to

whistleblowing. The Audit Committee understands

that the Investment Manager has whistleblowing

procedures in place.

External auditor

The Committee reviews and agrees the audit

strategy paper, presented by the Auditor in advance

of the audit, which sets out the key risk areas to be

covered during the audit, confirms their status of

independence and includes the proposed audit fee.

The Committee confirms that the main area of risk

for the year under review is the valuation of

unquoted investments. The Committee also carefully

examines the treatment of quoted investments and

loan note interest revenue recognition.

The Committee, after taking into consideration

comments from the Investment Manager, Foresight

Group LLP, regarding the effectiveness of the audit

process; immediately before the conclusion of the

annual audit, will recommend to the Board either

the re-appointment or removal of the auditors.

Under the Competition and Markets Authority

regulations, there is a requirement that an audit tender

process be carried out every ten years and mandatory

rotation at least every twenty years. The last audit tender

took place in respect of the year ended 31 March 2020

and therefore mandatory tender will be required in

respect of the year ended 31 March 2030. Following

assurances received from the Manager at completion of

the audit for the year ended 31 March 2023, and taking

discussions held with the engagement Partner at BDO

LLP into consideration, the Committee has

recommended they be re-appointed at the forthcoming

AGM.

Non-audit services

The Committee will approve the provision of ad-hoc

work and the maximum expected fee before being

undertaken, to ensure the Auditors objectivity and

independence are safeguarded.

As part of its annual review procedures, the

Committee has obtained sufficient assurance from

their own evaluation, the audit feedback

documentation and from correspondence and

discussions with the engagement partner of BDO

LLP.

Corporate Governance Statement (continued)

Conflicts of interest

A conflict of interest may arise where assets are

transferred between Share pools, or from one

Foresight fund to another. The Board ensures that

any such transaction is at “arm’s length” and will

obtain independent valuations where necessary.

Board and Committee meetings

The following table sets out the Directors’

attendance at the Board and Committee meetings

held during the year.

Board

meetings

attended

Nomination

Committee

meetings

attended

Audit

Committee

meetings

attended

(4 held)

(1 held)

(2 held)

Sir Aubrey

Brocklebank

4 1 2

Andrew

Mackintosh

4 1 2

Steven Clarke 4 1 2

Chris Allner 4 1 2

Lord Flight* 1 - -

*Resigned 27 September 2022, after the first meeting of the year.

All meetings attended pre-resignation.

Remuneration Committee

The Committee meets as and when required to

review the levels of Directors’ remuneration. Details

of the specific levels of remuneration to each

Director, including the movement in Directors’

remuneration are set out in the Directors’

Remuneration Report on page 63.

Nomination Committee

The Nomination Committee’s primary function is to

make recommendations to the Board on all new

appointments and also to advise generally on issues

relating to Board composition and balance. The

Committee meets as and when appropriate.

Diversity Policy

The Board is committed to ensuring that the

Company is run in the most effective manner. It

seeks to have a Board with a diverse set of skills and

experience that

is well placed to oversee and

challenge the Investment Managers.

When considering a new appointment, the

Committee’s key responsibility is to ensure that

Shareholders are safeguarded by appointing the

most appropriate person for the position,

(irrespective of gender, race, age) giving due regard

to past and present experience in the sectors in

which the Company invests. The Company therefore

does not have a specific diversity policy in place.

The current directors are all male and of white

British ethnicity. For the reasons set out above, the

Board acknowledges that it does not yet meet the

Listing Rules target of having at least 40% of the

Board comprising female members; at least one

senior position on its board of directors held by a

woman; and having at least one member with an

ethnic minority background. The Board will be

mindful of this in any future recruitment plans.

Director tenure policy

Given the size of the Company and the complexity

of the VCT regulations, the Board does not impose a

limit in respect of the tenure of the Company’s non-

executive Directors.

Relations with Shareholders

Shareholders have the opportunity to meet the

Board at the AGM. The Board is also happy to

respond to any written queries made by

Shareholders during the course of the year, or to

meet with Shareholders if so requested.

In addition to the formal business of the AGM,

representatives of the Investment Manager and the

Board are available to answer any questions a

Shareholder may have.

Separate resolutions are proposed at the AGM on

each substantially separate issue. The Administration

Manager collates proxy votes and the results

(together with the proxy forms) are forwarded to the

Company Secretary immediately prior to the AGM.

In order to comply with the AIC Code, proxy votes

are announced at the AGM, following each vote on a

show of hands, except in the event of a poll being

called. The notice of the next AGM and proxy form

can be found at the end of these financial

statements.

The terms of reference of the Committees and the

conditions of appointment of non-executive

Directors are available to Shareholders on request.

Corporate Governance Statement (continued)

Financial reporting

The Directors’ responsibilities for preparing the

financial statements are set out in the Report of the

Directors on pages 60 to 61, and a statement by the

Auditor about their reporting responsibilities is set

out in the Independent Auditor’s report on page 77.

Risk management and internal control

The Board has adopted a Corporate Governance and

Internal Control Manual (“Manual”) for which it is

responsible, which has been compiled in order to

comply with the AIC Code of Corporate Governance

(“AIC Code”). The Manual is designed to provide

reasonable, but not absolute assurance against

material misstatement or loss, which it achieves by

detailing the perceived risks and controls to mitigate

them. The Board reviews the perceived risks in line

with relevant guidance, on an annual basis, and

implements additional controls as appropriate.

The Board reviews a Risk Register on an annual

basis. The main aspects of internal control in relation

to financial reporting by the Board were as follows:

 Review of quarterly reports from the Investment

Manager on the portfolio of investments held,

including additions and disposals;

 Quarterly reviews by the Board of the Company’s

investments, other assets and liabilities, revenue

and expenditure and detailed review of

unquoted investment valuations;

 Quarterly reviews by the Board of compliance

with the Venture Capital Trust regulations to

retain status, including a review of half-yearly

reports from Philip Hare & Associates LLP;

 A separate review of the Annual Report and Half-

Yearly report by the Audit Committee prior to

Board approval; and

 A review by the Board of all financial information

prior to publication.

The Board is responsible for ensuring that the

procedures to be followed by the advisers and

themselves are in place, and they review the

effectiveness of the Manual, based on the report

from the Audit Committee, on an annual basis to

ensure that the controls remain relevant and were in

operation throughout the year.

Although the Board is ultimately responsible for

safeguarding the assets of the Company, the Board

has delegated, through written agreements, the

day-to-day operation of the Company (including the

Financial Reporting Process) to Foresight Group LLP.

Anti-bribery policy

The Company operates an anti-bribery policy to

ensure that it meets its responsibilities arising from

the Bribery Act 2010. This policy can be found on

the website maintained by the Manager at

www.foresightgroup.eu.

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

Chairman’s Statement on page 4, the Investment

Manager’s Reports on pages 9, 21, 33, 36, and 41,

the Strategic Report on page 48 and the Report of

the Directors on page 56. The financial position of

the Company, its cash flows, liquidity position and

borrowing facilities are shown in the Balance Sheet

on page 84, Cash Flow Statement on page 89 and

the Strategic Report on page 48. A viability

statement is set out on page 52 considering the

longer term prospects of the company in light of

principle risks and facing the Company. In addition,

note 15 to the financial statements includes the

Company’s objectives, policies and processes for

managing its capital and financial risk management

objectives, details of its financial instruments, and its

exposures to credit risk and liquidity risk.

The continued conflict in Ukraine and the impact of

sanctions placed on Russian businesses and

individuals recently passed its one-year anniversary.

The Company has little direct exposure to the

conflict in Ukraine and impact of sanctions placed

on Russian business and individuals. The Investment

Manager works closely with all investee companies

to ensure that they are well placed to assess the

exposure of the business to the Ukraine conflict and

associated developments. As a result, direct impact

of the sanctions on the Company’s performance is

not expected to be significant.

Corporate Governance Statement (continued)

Going concern (continued)

High inflation, particularly on wages and other costs

has developed into an emerging risk. The

Investment Manager’s close relationship with the

investee companies allow it to ensure that the

businesses properly assess the potential impact of

increasing costs, particularly wages, and the extent

to which these may or may not be able to be passed

on to the end customer.

The Board considers the net impact to be at a

manageable level, with no impact on the going

concern of the Company.

The Company has considerable financial resources

and holds a diversified portfolio of investments. As a

consequence, the Directors believe that the

Company is well placed to manage its business risks

effectively.

The Directors confirm that they are satisfied that the

Company has adequate resources to continue in

business for a period of at least twelve months from

the date of approval of the financial statements.

For this reason, the Board believes that the

Company continues to be a going concern and that

it is appropriate to continue to apply the going

concern basis in preparing the financial statements.

Share capital

The company has five classes of share capital: DSO

D Shares, DP67 Shares, Ventures Shares, Healthcare

Shares and AIM Shares. The rights and obligations

attached to those shares, including the power of the

Company to buy back shares are set out in the

Report of the Directors on page 56 and details of

any significant shareholdings in the Directors’

Remuneration Report on page 64.

Compliance statement

The Listing Rules require the Board to report on

compliance with the provisions of the UK Corporate

Governance Code throughout the accounting

period. The Financial Reporting Council (FRC)

confirmed that member companies who report

against the AIC Code will be meeting their

obligations in relation to the UK Corporate

Governance Code and paragraph 9.8.6 of the Listing

Rules.

With the exception of the limited items outlined

below, the Company has complied, throughout the

accounting year ended 31 March 2023, with the

Provisions set out in the AIC Code of Corporate

Governance:

 The Company has no major Shareholders, so

Shareholders are not given the opportunity to

meet any new non-executive Directors at a

specific meeting other than the Annual General

Meeting. (5.2.3);

 The Board does not monitor the level of share

price discount or premium in respect of the DSO

D Shares or DP67 Shares, as Share buybacks are

not in operation in respect of these Share

classes. As noted on page 6, the Company has a

general policy of buying in Ventures, Healthcare

and AIM Shares which become available in the

market at a nil discount to NAV. The Board

continues to monitor the discount or premium in

respect of the Ventures, Healthcare and AIM

Shares and has delegated the day-to-day

management of this to Panmure Gordon.

(6.2.15);

 Due to the size of the Board and the nature of

the Company’s business, a formal and rigorous

performance evaluation of the Board, its

Committees, the individual Directors and the

Chairman has not been undertaken. Specific

performance issues are dealt with as they arise.

(7.2.22, 8.2.29, 9.2.37).

By order of the Board

Grant Whitehouse

Company Secretary

Floor, St. Magnus House

3 Lower Thames Street

London, EC3R 6HD 31 July 2023

Independent Auditor’s Report to the Members of

Thames Ventures 2 VCT Plc

Independent auditor’s report to the members of Thames Ventures VCT 2 plc

Opinion on the financial statements

In our opinion the financial statements:

• give a true and fair view of the state of the Company’s affairs as at 31 March 2023 and of its loss for the

year then ended;

• have been properly prepared in accordance with United Kingdom Generally Accepted Accounting

Practice;

• have been prepared in accordance with the requirements of the Companies Act 2006.

We have audited the financial statements of Thames Ventures VCT 2 plc (the ‘Company’) for the year ended 31

March 2023 which comprise the Income Statement; Statement of Changes in Equity; Balance Sheet; Cash Flow

Statement; and Notes to the accounts, including a summary of significant accounting policies. 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).

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 believe that the audit

evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Our audit opinion is

consistent with the additional report to the audit committee.

Independence

Following the recommendation of the audit committee, we were appointed by the Board of Directors for the audit

of the financial statements for the year ended 31 March 2010. The period of total uninterrupted engagement

including retenders and reappointments is 14 years, covering the years ended 31 March 2010 to 31 March 2023.

We remain 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 FRC’s Ethical Standard as applied to listed public interest

entities, and we have fulfilled our other ethical responsibilities in accordance with these requirements. The non-

audit services prohibited by that standard were not provided to the Company.

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:

• Obtaining the VCT compliance reports prepared by management’s expert during the year and as at year

end and reviewing their calculations to check that the Company was meeting its requirements to retain

VCT status;

• Consideration of the Company’s expected future compliance with VCT legislation, the absence of bank

debt, contingencies and commitments and any market or reputational risks;

• Reviewing the forecasted cash flows that support the Directors’ assessment of going concern,

challenging the Directors’ assumptions and judgements made in the forecasts, and assessing them for

reasonableness. In particular, we considered the available cash resources relative to the forecast

expenditure which was assessed against the prior year for reasonableness; and

• Evaluating the Directors’ method of assessing the going concern in light of market volatility.

Independent Auditor’s Report to the Members of

Thames Ventures 2 VCT Plc

(continued)

Conclusions relating to going concern (continued)

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 Company’s reporting on how it 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.

Overview

Key audit matters

2023 2022

Valuation of unquoted investments X X

Materiality

Company financial statements as a whole

£0.884m (2022: £1.065m) based on 1.75% (2022: 1.75%) of Net assets.

An overview of the scope of our audit

Our audit was scoped by obtaining an understanding of the Company and its environment, including the

Company’s system of internal control, and assessing the risks of material misstatement in the financial statements.

We also addressed the risk of management override of internal controls, including assessing whether there was

evidence of bias by the Directors that may have represented a risk of material misstatement.

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, including 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.

Key audit matter How the scope of our audit addressed the key audit matter

Valuation of

unquoted

investments

Refer to the

notes 2 and

10 within the

audited

Financial

Statements

The unquoted

investments consist of

both equity and loan

note investments. We

consider the valuation

of unquoted

investments to be the

most significant audit

area as there is a high

level of estimation

uncertainty involved

in determining the

unquoted investment

valuations.

Our sample for the testing of unquoted investments was stratified according to

risk considering, inter alia, the value of individual investments, the nature of the

investment, the extent of the fair value movement and the subjectivity of the

valuation technique.

For all Investments in our sample we:

Challenged whether the valuation methodology was the most appropriate in the

circumstances under the International Private Equity and Venture Capital

Valuation (“IPEV”) Guidelines and the applicable accounting standards. We have

recalculated the value attributable to the Company, having regard to the

application of enterprise value across the capital structures of the investee

companies.

Independent Auditor’s Report to the Members of

Thames Ventures 2 VCT Plc

(continued)

Key audit matters (continued)

Key audit matter How the scope of our audit addressed the key audit matter

Valuation of

unquoted

investments

(continued)

There is an inherent

risk of management

override arising

from the unquoted

investment

valuations being

prepared by the

Investment

Manager, who is

remunerated based

on the value of the

net assets of the

fund, as shown in

note 3.

For these reasons

we considered the

valuation of

unquoted

investments to be a

key audit matter.

For investments sampled that were valued using less subjective valuation

techniques (cost and price of recent investment reviewed for changes in fair value)

we:

• Verified the cost or price of recent investment to supporting documentation;

• Considered whether the investment was an arm’s length transaction through

reviewing the parties involved in the transaction and checking whether or not

they were already investors of the investee Company;

• Considered whether there were any indications that the cost or price of recent

investment was no longer representative of fair value considering, inter alia,

the current performance of the investee company and the milestones and

assumptions set out in the investment proposal; and

• Considered whether the price of recent investment is supported by alternative

valuation techniques.

For investments sampled that were valued using more subjective techniques

(earnings multiples and revenue multiples forecasts) we:

• Challenged and corroborated the inputs to the valuation with reference to

management information of investee companies, market data and our own

understanding and assessed the impact of the estimation uncertainty

concerning these assumptions and the disclosure of these uncertainties in the

financial statements;

• Reviewed the historical financial statements and any recent management

information available to support assumptions about maintainable revenues,

earnings or cash flows used in the valuations;

• Considered the revenue or earnings multiples applied and the discounts

applied by reference to observable listed company market data; and

• Challenged the consistency and appropriateness of adjustments made to such

market data in establishing the revenue, cash flow or earnings multiple applied

in arriving at the valuations adopted by considering the individual

performance of investee companies against plan and relative to the peer

group, the market and sector in which the investee company operates and

other factors as appropriate.

For a sample of loan note investments held at fair value included above, we:

• Vouched security held to loan agreement

• Considered the assumption that fair value is not significantly different to cost

by challenging the assumption that there is no significant movement in the

market interest rate since acquisition and considering the “unit of account”

concept

Where appropriate, we performed a sensitivity analysis by developing our own point

estimate where we considered that alternative input assumptions could reasonably

have been applied and we considered the overall impact of such sensitivities on the

portfolio of investments in determining whether the valuations as a whole are

reasonable and free from bias.

Key observations:

Based on the procedures performed we consider the investment valuations to be

appropriate considering the level of estimation uncertainty.

Independent Auditor’s Report to the Members of

Thames Ventures 2 VCT Plc

(continued)

Our application of materiality

We apply the concept of materiality both in planning and performing our audit, and in evaluating the effect of misstatements.

We consider materiality to be the magnitude by which misstatements, including omissions, could influence the economic

decisions of reasonable users that are taken on the basis of the financial statements.

In order to reduce to an appropriately low level the probability that any misstatements exceed materiality, we use a lower

materiality level, performance materiality, to determine the extent of testing needed. Importantly, misstatements below these

levels will not necessarily be evaluated as immaterial as we also take account of the nature of identified misstatements, and

the particular circumstances of their occurrence, when evaluating their effect on the financial statements as a whole.

Based on our professional judgement, we determined materiality for the financial statements as a whole and performance

materiality as follows:

Company financial statements

2023 2022

Materiality £0.884m £1.065m

Basis for determining

materiality

1.5% of Net assets 1.75% of Net assets

Rationale for the

benchmark applied

In setting materiality, we have had regard to

the nature and disposition of the investment

portfolio. Given that the VCT’s portfolio is

comprised of unquoted investments which

would typically have a wider spread of

reasonable alternative possible valuations, we

have applied a percentage of 1.5% of net

assets.

In setting materiality, we have had regard to

the nature and disposition of the investment

portfolio. Given that the VCT’s portfolio is

comprised of unquoted investments which

would typically have a wider spread of

reasonable alternative possible valuations,

we have applied a percentage of 1.75% of

net assets.

Performance

materiality

£0.664m £0.799m

Basis for determining

performance

materiality

75% of materiality 75% of materiality

Rationale for the

percentage applied

for performance

materiality

The level of performance materiality applied

was set after having considered a number of

factors including the expected total value of

known and likely misstatements and the level

of transactions in the year.

The level of performance materiality applied

was set after having considered a number of

factors including the expected total value of

known and likely misstatements and the level

of transactions in the year.

Lower testing threshold

We determined that for Revenue return before tax, a misstatement of less than materiality for the financial statements, could

influence users of the financial statements as it is a measure of the Company’s performance of income generated from its

investments after expenses. As a result, we determined a lower testing threshold for those items impacting revenue return of

£163,000 (2022: £146,000) based on 10% of expenditure (2022: 10% of expenditure).

Reporting threshold

We agreed with the Audit Committee that we would report to them all individual audit differences in excess of £18,000 (2022:

£53,000). We also agreed to report differences below this threshold that, in our view, warranted reporting on qualitative

grounds.

Other information

The directors are responsible for the other information. The other information comprises the information included in the Annual

Report and Accounts, other than the financial statements and our auditor’s report thereon. 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.

Independent Auditor’s Report to the Members of

Thames Ventures 2 VCT Plc (continued)

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 or our knowledge obtained during the audit.

Going concern and

longer-term

viability

• The Directors' statement with regards to the appropriateness of adopting the going concern

basis of accounting and any material uncertainties identified set out on page 45; and

• The Directors’ explanation as to their assessment of the Company’s prospects, the period this

assessment covers and why the period is appropriate set out on page 29.

Other Code

provisions

• Directors' statement on fair, balanced and understandable set out on page 37;

• Board’s confirmation that it has carried out a robust assessment of the emerging and principal

risks set out on page 26;

• The section of the annual report that describes the review of effectiveness of risk management

and internal control systems set out on page 45; and

• The section describing the work of the audit committee set out on page 42

Other Companies Act 2006 reporting

Based on the responsibilities described below and our work performed during the course of the audit, we are required by the

Companies Act 2006 and ISAs (UK) to report on certain opinions and matters as described below.

Strategic report

and Directors’

report

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; and

• 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 material misstatements in the strategic report or the

Directors’ report.

Directors’

remuneration

In our opinion, the part of the Directors’ remuneration report to be audited has been properly

prepared in accordance with the Companies Act 2006.

Matters on which

we are required to

report by

exception

We have nothing to report in respect of the following matters in relation to which the Companies

Act 2006 requires us to report to you if, in our opinion:

• adequate accounting records have not been kept, or returns adequate for our audit have not

been received from branches not visited by us; or

• the financial statements and the part of the Directors’ remuneration report to be audited are

not in agreement with the accounting records and returns; or

• certain disclosures of Directors’ remuneration specified by law are not made; or

• we have not received all the information and explanations we require for our audit.

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.

Independent Auditor’s Report to the Members of

Thames Ventures 2 VCT Plc

(continued)

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 to influence the economic decisions of users taken on the basis of

these financial statements.

Extent to which the audit was 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:

Non-compliance with laws and regulations

Based on:

• Our understanding of the Company and the industry in which it operates;

• Discussion with the Manager and those charged with governance; and

• Obtaining an understanding of the Company’s policies and procedures regarding compliance with laws and

regulations.

We considered the significant laws and regulations to be the Companies Act 2006, the FCA listing and DTR rules, the principles

of the UK Corporate Governance Code, industry practice represented by the Statement of Recommended Practice: Financial

Statements of Investment Trust Companies and Venture Capital Trusts (“the SORP”) and updated in 2022 with consequential

amendments and the applicable financial reporting framework. We also considered the Company’s qualification as a VCT under

UK tax legislation.

Our procedures in respect of the above included:

• Agreement of the financial statement disclosures to underlying supporting documentation;

• Enquiries of the Manager and those charged with governance relating to the existence of any non-compliance with laws

and regulations;

• Obtaining the VCT compliance reports prepared by management’s expert during the year and as at year end and

reviewing their calculations for the year end report to check that the Company was meeting its requirements to retain

VCT status; and

• Reviewing minutes of meeting of those charged with governance throughout the period for instances of non-

compliance with laws and regulations.

Fraud

We assessed the susceptibility of the financial statement to material misstatement including fraud.

Our risk assessment procedures included:

• Enquiry with the Manager and those charged with governance regarding any known or suspected instances of fraud;

• Obtaining an understanding of the Company’s policies and procedures relating to:

o Detecting and responding to the risks of fraud; and

o Internal controls established to mitigate risks related to fraud.

• Review of minutes of Board and other Committee meetings throughout the period for any known or suspected

instances of fraud;

• Discussion amongst the engagement team as to how and where fraud might occur in the financial statements.

Independent Auditor’s Report to the Members of

Thames Ventures 2 VCT Plc

(continued)

Extent to which the audit was capable of detecting irregularities, including fraud (continued)

Based on our risk assessment, we considered the areas most susceptible to fraud to be the valuation of unquoted investments,

recognition of the interest income and management override of controls.

Our procedures in respect of the above included:

• The procedures set out in the Key Audit Matters section above;

• Obtaining independent evidence to support the ownership of a sample of investments;

• Agreed the loan and interest rates to loan agreements and recalculated the loan interest;

• Vouched the interest income received to the bank statements;

• Obtained an understanding of the recoverability of the outstanding interest accrual and considered the

appropriateness of the accruals raised;

• Performed testing over the unquoted investments valuation to assess a recoverability of the interest accrual.

• Recalculating investment management fees and incentive fees in total;

• Obtaining independent confirmation of bank balances; and

• Reviewing journals that relate to the current year end that were posted into the accounting system post year end

against supporting documentation, to assess the reasonability of these journals and assess whether those journals

are not an indication of management override of controls or an indication of fraud.

We also communicated relevant identified laws and regulations and potential fraud risks to all engagement team members

who were all deemed to have appropriate competence and capabilities and remained alert to any indications of fraud or non-

compliance with laws and regulations throughout the audit.

Our audit procedures were designed to respond to risks of material misstatement in the financial statements, recognising that

the risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error,

as fraud may involve deliberate concealment by, for example, forgery, misrepresentations or through collusion. There are

inherent limitations in the audit procedures performed and the further removed non-compliance with laws and regulations is

from the events and transactions reflected in the financial statements, the less likely we are to become aware of it.

A further description of our responsibilities is available on the Financial Reporting Council’s website at:

www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report.

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.

Vanessa Bradley (Senior Statutory Auditor)

For and on behalf of BDO LLP, Statutory Auditor

London

United Kingdom

31 July 2023

BDO LLP is a limited liability partnership registered in England and Wales (with registered number OC305127).

Audited Income Statement

for the year ended 31 March 2023

Year ended 31 March 2023 Year ended 31 March 2022

Revenue Capital Total Revenue Capital Total

Note £’000 £’000 £’000 £’000 £’000 £’000

Income 2 284 - 284 1,296 - 1,296

(Loss)/gain on investments 9 - (6,307) (6,307) - 6,599 6,599

Total gain/(loss) from investments 284 (6,307) (6,023) 1,296 6,599 7,895

Investment management fees 3 (472) (472) (944) (531) (531) (1,062)

Other expenses 4 (689) - (689) (409) - (409)

(Loss)/return on ordinary activities

before tax

(877) (6,779) (7,656) 356 6,068 6,424

Tax on total comprehensive income

and ordinary activities

- - - - - -

(Loss)/return attributable to equity

Shareholders, being total comprehensive

income for the year

(877) (6,779) (7,656) 356 6,068 6,424

Basic and diluted return per share:

Ventures Share 8 (1.0p) (5.5p) (6.5p) (1.0p) 4.8p 3.8p

Healthcare Share 8 (1.4p) (20.0p) (21.4p) (1.6p) 19.9p 18.3p

AIM Share 8 (4.3p) 8.2p 3.9p (1.5p) (0.9p) (2.4p)

DSO D Share 8 0.3p (0.4p) (0.1p) (0.2p) 0.2p 0.0p

DP67 Share 8 (0.8p) (1.2p) (2.0p) 10.5p (2.2p) 8.3p

The total column within the Income Statement represents the Statement of Total Comprehensive Income of the

Company prepared in accordance with Financial Reporting Standard 102 (“FRS 102”). The supplementary

revenue return and capital return columns are prepared in accordance with the Statement of Recommended

Practice issued in July 2022 by the Association of Investment Companies (“AIC SORP”).

The accompanying notes form an integral part of these financial statements.

Income Statement

Analysed by Share pool – unaudited and non-statutory

for the year ended 31 March 2023

Split as:

Year ended 31 March 2023 Year ended 31 March 2022

Revenue Capital Total Revenue Capital Total

Ventures Share pool £’000 £’000 £’000 £’000 £’000 £’000

Income 64 64 58 - 58

Net (loss)/gain on investments - (2,401) (2,401) - 2,641 2,641

Total gain/(loss) from investments 64 (2,401) (2,337) 58 2,641 2,699

Investment management fees (278) (278) (556) (314) (314) (628)

Other expenses (280) - (280) (235) - (235)

(Loss)/return on ordinary activities before tax (494) (2,679) (3,173) (491) 2,327 1,836

Tax on total comprehensive income and

ordinary activities

- - - - - -

(Loss)/return attributable to equity

Shareholders, being total comprehensive

income for the year

(494) (2,679) (3,173) (491) 2,327 1,836

Year ended 31 March 2023 Year ended 31 March 2022

Revenue Capital Total Revenue Capital Total

Healthcare Share pool £’000 £’000 £’000 £’000 £’000 £’000

Income 4 - 4 21 - 21

Net (loss)/gain on investments - (3,857) (3,857) - 4,172 4,172

Total (loss)/gain from investments 4 (3,857) (3,853) 21 4,172 4,193

Investment management fees (161) (161) (322) (195) (195) (390)

Other expenses (115) - (115) (140) - (140)

(Loss)/return on ordinary activities before tax (272) (4,018) (4,290) (314) 3,977 3,663

Tax on total comprehensive income and

ordinary activities

- - - - - -

(Loss)/return attributable to equity

Shareholders, being total comprehensive

income for the year

(272) (4,018) (4,290) (314) 3,977 3,663

The accompanying notes form an integral part of these financial statements.

Income Statement (continued)

Analysed by Share pool – unaudited and non-statutory

for the year ended 31 March 2023

Year ended 31 March 2023 Year ended 31 March 2022

Revenue Capital Total Revenue Capital Total

AIM Share pool £’000 £’000 £’000 £’000 £’000 £’000

Income - - - -

- -

Net gain on investments - 93 93 - - -

Total gain from investments - 93 93 - - -

Investment management fees (18) (18) (36) (2) (2) (4)

Other expenses (21) - (21) (2) -

(2)

(Loss)/gain on ordinary activities before tax (39) 75 36 (4) (2) (6)

Tax on total comprehensive income and

ordinary activities

- - - -

- -

(Loss)/gain attributable to equity

Shareholders, being total comprehensive

income for the year

(39) 75 36 (4) (2) (6)

Year ended 31 March 2023 Year ended 31 March 2022

Revenue Capital Total Revenue Capital Total

DSO D Share pool £’000 £’000 £’000 £’000 £’000 £’000

Income 24 - 24 - - -

(Loss)/gain on investments - (27) (27) - 19 19

Total gain/(loss) from investments 24 (27) (3) - 19 19

Investment management fees (1) (1) (2) (6) (6) (12)

Other expenses (3) - (3) (10) - (10)

Return/(loss) on ordinary activities before tax 20 (28) (8) (16) 13 (3)

Tax on total comprehensive income and

ordinary activities

- - - - - -

Return/(loss) attributable to equity

Shareholders, being total comprehensive

income for the year

20 (28) (8) (16) 13 (3)

The accompanying notes form an integral part of these financial statements.

Income Statement (continued)

Analysed by Share pool – unaudited and non-statutory

for the year ended 31 March 2023

Year ended 31 March 2023 Year ended 31 March 2022

Revenue Capital Total Revenue Capital Total

DP67 Share pool £’000 £’000 £’000 £’000 £’000 £’000

Income 192 - 192 1,217 - 1,217

Net loss on investments - (115) (115) - (233) (233)

Total gain/(loss) from investments 192 (115) 77 1,217 (233) 984

Investment management fees (14) (14) (28) (14) (14) (28)

Other expenses (270) - (270) (22) - (22)

(Loss)/return on ordinary activities before tax (92) (129) (221) 1,181 (247) 934

Tax on total comprehensive income and

ordinary activities

- - - - - -

(Loss)/return attributable to equity

Shareholders, being total comprehensive

income for the year

(92) (129) (221) 1,181 (247) 934

The accompanying notes form an integral part of these financial statements.

Audited Balance Sheet

as at 31 March 2023

2023 2022

Note £’000 £’000

Fixed assets

Investments 9 43,157 49,141

Current assets

Debtors 10 2,510 4,317

Cash at bank and in hand 6,082 8,384

8,592 12,701

Creditors: amounts falling due within one year 11 (1,214) (965)

Net current assets 7,378 11,736

Net assets 50,535 60,877

Capital and reserves

Called up Share capital 12 117 113

Capital redemption reserve 13 4 58

Special reserve 13 50,483 24,063

Share premium account 13 - 29,284

Funds held in respect of shares not yet allotted 13 - 7

Revaluation reserve 13 93 6,995

Capital reserve – realised 13 4,127 3,769

Revenue reserve 13 (4,289) (3,412)

Total equity Shareholders’ funds 14 50,535 60,877

Basic and diluted Net Asset Value per share:

Ventures Share 14 59.4p 68.2p

Healthcare Share 14 61.6p 84.4p

AIM Share 14 101.1p 99.9p

DSO D Share 14 2.6p 2.6p

DP67 Share 14 24.8p 26.8p

The financial statements on pages 80 to 112 were approved and authorised for issue by the Board of Directors on

31 July 2023 and were signed on its behalf by:

Sir Aubrey Brocklebank Bt.

Chairman

Company number: 06789187

The accompanying notes form an integral part of these financial statements.

Balance Sheet

Analysed by Share pool – unaudited and non-statutory

as at 31 March 2023

Split as:

2023 2022

Ventures Share pool Note £’000 £’000

Fixed assets

Investments 27,758 31,259

Current assets

Debtors 925 1,801

Cash at bank and in hand 3,430 4,321

4,355 6,122

Creditors: amounts falling due within one year (730) (490)

Net current assets 3,625 5,632

Net assets 31,383 36,891

Capital and reserves

Called up share capital 12 67 65

Capital redemption reserve 3 58

Special reserve 32,039 16,290

Share premium account - 18,657

Funds held in respect of shares not yet allotted - 2

Revaluation reserve 1,170 3,458

Capital reserve – realised 1,665 1,428

Revenue reserve (3,561) (3,067)

Total equity Shareholders’ funds 31,383 36,891

2023 2022

Healthcare Share pool Note £’000 £’000

Fixed assets

Investments 12,355 15,945

Current assets

Debtors 455 633

Cash at bank and in hand 860 2,483

1,315 3,116

Creditors: amounts falling due within one year (221) (310)

Net current assets 1,094 2,806

Net assets 13,449 18,751

Capital and reserves

Called up share capital 12 28 27

Capital redemption reserve 1 -

Special reserve 15,395 7,752

Share premium account - 8,594

Funds held in respect of shares not yet allotted - 5

Revaluation reserve (295) 4,031

Capital reserve – realised 177 (73)

Revenue reserve (1,857) (1,585)

Total equity Shareholders’ funds 13,449 18,751

The accompanying notes form an integral part of these financial statements.

Balance Sheet (continued)

Analysed by Share pool – unaudited and non-statutory

as at 31 March 2023

2023 2022

AIM Share pool Note £’000 £’000

Fixed assets

Investments 1,893 -

Current assets

Debtors 2 604

Cash at bank and in hand 850 1,446

852 2,050

Creditors: amounts falling due within one year (19) (21)

Net current assets 833 2,029

Net assets 2,726 2,029

Capital and reserves

Called up share capital 12 3 2

Special reserve 2,673 (2)

Share premium account - 2,033

Funds held in respect of shares not yet allotted - -

Revaluation reserve 93 -

Capital reserve – realised - -

Revenue reserve (43) (4)

Total equity Shareholders’ funds 2,726 2,029

The accompanying notes form an integral part of these financial statements.

2023 2022

DSO D Share pool Note £’000 £’000

Fixed assets

Investments 16 43

Current assets

Debtors 21 61

Cash at bank and in hand 176 124

197 185

Creditors: amounts falling due within one year (13) (20)

Net current assets 184 165

Net assets 200 208

Capital and reserves

Called up share capital 12 8 8

Special reserve 422 423

Revaluation reserve (258) (231)

Capital reserve – realised 22 22

Revenue reserve 6 (14)

Total equity Shareholders’ funds 200 208

Balance Sheet (continued)

Analysed by Share pool – unaudited and non-statutory

as at 31 March 2023

2023 2022

DP67 Share pool Note £’000 £’000

Fixed assets

Investments 1,135 1,894

Current assets

Debtors 1,107 1,218

Cash at bank and in hand 766 10

1,873 1,228

Creditors: amounts falling due within one year (231) (124)

Net current assets 1,642 1,104

Net assets 2,777 2,998

Capital and reserves

Called up share capital 12 11 11

Special reserve (46) (400)

Revaluation reserve (617) (263)

Capital reserve – realised 2,263 2,392

Revenue reserve 1,166 1,258

Total equity Shareholders’ funds 2,777 2,998

The accompanying notes form an integral part of these financial statements.

Statement of Changes in Equity

for the year ended 31 March 2023

A transfer of £454,000 (2022: £1,803,000) representing previously recognised realised gains and losses on

disposal of investments during the period has been made between the Revaluation Reserve and the Capital reserve

- realised. A transfer of £2,540,000 (2022: £5,159,000) representing the total of: realised losses on the disposal of

investments, cumulative realised losses on permanent fair value change, capital expenses and capital dividends in

the period, has been made between the Capital Reserve - realised and the Special reserve.

The accompanying notes form an integral part of these financial statements.

Called

capital

Capital

Redemption

reserve

Special

reserve

premium

account

Funds

held in

respect

of shares

not yet

allotted

Revaluation

Reserve

(note 9)

Capital

reserve

-realised

Revenue

reserve Total

£’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000

At 31 March 2021 102 58 29,417 20,010 241 (1,143) 3,132 (3,768) 48,049

Total comprehensive

income

- - - - - 6,335 (267) 356 6,424

Transfer between

reserves*

- - (5,159) - - 1,803 3,356 - -

Unallotted shares - - - - (234) - - - (234)

Transactions with owners

Dividend paid - - - - - - (2,452) - (2,452)

Purchase of own

- - (195) - - - - - (195)

Issue of shares 11 - - 9,501 - - - - 9,512

Share issue costs - - - (227) - - - - (227)

At 31 March 2022 113 58 24,063 29,284 7 6,995 3,769 (3,412) 60,877

Total comprehensive

income

- - - - - (6,448) (331) (877) (7,656)

Transfer between

reserves*

- - (2,540) - - (454) 2,994 - -

Unallotted shares - - - - (7) - - - (7)

Transactions with owners

Dividend paid - - - - - - (2,305) - (2,305)

Cancellation of

share premium

- (58) 31,785 (31,727) - - - - -

Purchase of own

(4) 4 (2,825) - - - - - (2,825)

Issue of shares 8 - - 2,500 - - - - 2,508

Share issue costs - - - (57) - - - - (57)

At 31 March 2023 117 4 50,483 - - 93 4,127 (4,289) 50,535

Cash Flow Statement

for the year ended 31 March 2023

Unaudited non-statutory analysis Audited

Ventures

pool

Healthcare

pool

AIM

Pool

DSO D

pool

DP67

pool Company

£’000 £’000 £’000 £’000 £’000 £’000

Cash flows from operating activities

(Loss)/return on ordinary activities before taxation

(3,173) (4,290) 36 (8) (221) (7,656)

Losses/(gains) on investments (note 9)

2,401 3,857 (93) 27 115 6,307

(Decrease)/increase in creditors

240 (89) (2) (7) 107 249

Decrease in debtors

876 178 602 40 111 1,807

Net cash inflow/(outflow) from operating activities

344 (344) 543 52 112 707

Cash flow from investing activities

Purchase of investments (note 9)

(5,088) (1,554) (1,800) - - (8,442)

Proceeds from disposal of investments (note 9)

6,188 1,287 - - 644 8,119

Net cash inflow/(outflow) from investing activities

1,100 (267) (1,800) - 644 (323)

Net cash inflow/(outflow) before financing

1,444 (611) (1,257) 52 756 384

Cash flows from financing activities

Repurchase of shares

(2,066) (759) - - - (2,825)

Issue of share capital

1,277 553 678 - - 2,508

Cost of issue of share capital

(28) (12) (17) (57)

Funds held in respect of shares not yet allotted

(2) (5) - - - (7)

Equity dividends paid (note 7)

(1,516) (789) - - - (2,305)

Net cash (outflow)/inflow from financing activities

(2,335) (1,012) 661 - - (2,686)

Net change in cash

(891) (1,623) (596) 52 756 (2,302)

Cash and cash equivalents at start of the year

4,321 2,483 1,446 124 10 8,384

Cash and cash equivalents at end of the year

3,430 860 850 176 766 6,082

Cash and cash equivalents comprise

Cash at bank and in hand

3,430 860 850 176 766 6,082

Total cash and cash equivalents

3,430 860 850 176 766 6,082

The accompanying notes form an integral part of these financial statements.

Cash Flow Statement

for the year ended 31 March 2022

Unaudited non-statutory analysis Audited

Ventures

pool

Healthcare

pool

AIM

Pool

DSO D

pool

DP67

pool

Company

£’000 £’000 £’000 £’000 £’000 £’000

Cash flows from operating activities

(Loss)/return on ordinary activities before taxation

1,836 3,663 (6) (3) 934 6,424

(Gains)/losses on investments

(2,641) (4,172) - (19) 233 (6,599)

Increase in creditors

253 211 21 3 50 538

Increase in debtors

(1,337) (379) (604) (32) (1,217) (3,569)

Net cash outflow from operating activities

(1,889) (677) (589) (51) - (3,206)

Cash flow from investing activities

Purchase of investments (note 9)

(2,070) (4,764) - - - (6,834)

Proceeds from disposal of investments (note 9)

2,085 2,529 - 421 - 5,035

Net cash inflow/(outflow) from investing activities

15 (2,235) - 421 - (1,799)

Net cash inflow/(outflow) before financing

(1,874) (2,912) (589) 370 - (5,005)

Cash flows from financing activities

Repurchase of shares

(58) (137) - - - (195)

Issue of share capital

4,775 2,658 2,079 - - 9,512

Cost of issue of share capital

(122) (61) (44) - - (227)

Funds held in respect of shares not yet allotted

(220) (14) - - - (234)

Equity dividends paid (note 7)

(1,321) (542) - (590) - (2,453)

Net cash (outflow)/inflow from financing activities

3,054 1,904 2,035 (590) - 6,403

Net change in cash

1,180 (1,008) 1,446 (220) - 1,398

Cash and cash equivalents at start of the year

3,141 3,491 - 344 10 6,986

Cash and cash equivalents at end of the year

4,321 2,483 1,446 124 10 8,384

Cash and cash equivalents comprise

Cash at bank and in hand

4,321 2,483 1,446 124 10 8,384

Total cash and cash equivalents

4,321 2,483 1,446 124 10 8,384

The accompanying notes form an integral part of these financial statements.

Notes to the Accounts

for the year ended 31 March 2023

1. Accounting policies

Basis of accounting

The Company has prepared its financial statements in accordance with the Financial Reporting Standard

102 (“FRS 102”) and in accordance with the Statement of Recommended Practice “Financial Statements of

Investment Trust Companies and Venture Capital Trusts” revised July 2022 (“SORP”).

The financial statements are presented in pounds sterling and rounded to thousands. The Company’s

functional and presentational currency is pounds sterling.

Going concern

The Directors have made an assessment of the company’s ability to continue as a going concern and are

satisfied that the company has the resources to continue in business for the foreseeable future, being a

period of 12 months from the date these Financial Statements were approved. Furthermore, the Directors

are not aware of any material uncertainties that may cast significant doubt upon the Company’s ability to

continue as a going concern, having taken into account the liquidity of the Company’s investment portfolio

and the Company’s financial position in respect of its cash flows and investment commitments. Therefore,

the Financial Statements have been prepared on the going concern basis.

Presentation of Income Statement

In order to better reflect the activities of a Venture Capital Trust, and in accordance with the SORP,

supplementary information which analyses the Income Statement between items of a revenue and capital

nature has been presented alongside the Income Statement. The revenue return is the measure the

Directors believe appropriate in assessing the Company’s compliance with certain requirements set out in

Part 6 of the Income Tax Act 2007.

Reportable segments

The Company has one reportable segment as the sole activity of the Company is to operate as a VCT and

all of the Company’s resources are allocated to this activity.

Investments

All investments are designated as “fair value through profit or loss” assets due to investments being

managed and performance evaluated on a fair value basis. A financial asset is designated within this

category if it is both acquired and managed on a fair value basis, with a view to selling after a period of

time, in accordance with the Company’s documented investment policy.

It is possible to determine the fair values within a reasonable range of estimates. The fair value of an

investment upon acquisition is deemed to be cost. Thereafter investments are measured at fair value in

accordance with FRS 102 sections 11 and 12, together with the International Private Equity and Venture

Capital Valuation Guidelines (“IPEV”).

Liquidity investments are measured using bid prices.

Notes to the Accounts (continued)

for the year ended 31 March 2023

1. Accounting policies (continued)

Investments (continued)

For unquoted investments, fair value is established by using the IPEV guidelines. The valuation

methodologies for unquoted entities used by the IPEV to ascertain the fair value of an investment are as

follows:

 Calibration to price of recent investment;

 Multiples;

 Net assets;

 Discounted cash flows or earnings (of underlying business);

 Discounted cash flows (from the investment); and

 Industry valuation benchmarks.

The methodology applied takes account of the nature, facts and circumstances of the individual investment

and uses reasonable data, market inputs, assumptions and estimates in order to ascertain fair value. The

valuation of investments is detailed in Note 9.

Gains and losses arising from changes in fair value are included in the Income Statement for the year as a

capital item and transaction costs on acquisition or disposal of the investment are expensed. Where an

investee company has gone into receivership, liquidation or administration (where there is little likelihood

of recovery), the loss on the investment, although not physically disposed of, is treated as being realised.

It is not the Company’s policy to exercise significant influence or joint control over investee companies.

Therefore, the results of these companies are not incorporated into the Income Statement except to the

extent of any income accrued. This is in accordance with FRS 102 sections 14 and 15 and the SORP, which

do not require portfolio investments to be accounted for using the equity method of accounting.

Calibration to price of recent investment requires a level of judgment to be applied in assessing and

reviewing any additional information available since the last investment date. The manager considers a

range of factors in order to determine if there is any indication of decline in value or evidence of increase

in value since the recent investment date. If no such indications are noted, the price of the recent

investment will be used as the fair value for the investment.

Examples of signals which could indicate a movement in value are: -

 Changes in results against budget or in expectations of achievement of technical milestones

(patents/testing/regulatory approvals);

 Significant changes in the market of the products or in the economic environment in which it

operates;

 Significant changes in the performance of comparable companies;

 Internal matters such as fraud, litigation or management structure.

In respect of disclosures required by the SORP for the ten largest investments held by the Company, the

most recent publicly available accounts information, either as filed at Companies House, or announced to

the London Stock Exchange, is disclosed. In the case of unlisted investments, this may be abbreviated

information only.

Notes to the Accounts (continued)

for the year ended 31 March 2023

1. Accounting policies (continued)

Judgements in applying accounting policies and key sources of estimation uncertainty

The key estimate in the financial statements is the determination of the fair value of the unquoted

investments by the Directors as it impacts the valuation of the unquoted investments at the balance sheet

date.

Of the Company’s assets measured at fair value, it is possible to determine their fair values within a

reasonable range of estimates.

A price sensitivity analysis of the unquoted investments is provided in note 15, under Investment price risk.

Income

Dividend income from investments is recognised when the Shareholders’ rights to receive payment have

been established, normally the ex-dividend date.

Interest income is accrued on a time apportioned basis, by reference to the principal sum outstanding and

at the effective rate applicable, and only where there is reasonable certainty of collection in the foreseeable

future.

Distributions from investments in limited liability partnerships (“LLPs”) are recognised as they are paid to

the Company. Where such items are considered capital in nature they are recognised as capital income.

Arrangement fee rebates received from the Investment Manager are treated as capital income following the

date of investment.

Where previously accrued income is considered unrecoverable, a corresponding bad debt expense is

recognised.

Expenses

All expenses are accounted for on an accruals basis, and are stated inclusive of any VAT charged. In respect

of the analysis between revenue and capital items presented within the Income Statement, all expenses

have been presented as revenue items except as follows:

 Expenses which are incidental to the acquisition of an investment are deducted from the Capital

Account;

 Expenses which are incidental to the disposal of an investment are deducted from the disposal

proceeds of the investment;

 Expenses are split and presented partly as capital items where a connection with the maintenance or

enhancement of the value of the investments held can be demonstrated. Investment management

fees are allocated 50% to revenue and 50% to capital, in order to reflect the Directors’ expected

long-term view of the nature of the investment returns of the Company.

Expenses and liabilities not specific to a share class are generally allocated pro rata to the Net Asset Values

of each share class.

Notes to the Accounts (continued)

for the year ended 31 March 2023

1. Accounting policies (continued)

Taxation

The tax effects on different items in the Income Statement are allocated between capital and revenue on

the same basis as the particular item to which they relate, using the Company’s effective rate of tax for the

accounting period.

Due to the Company’s status as a Venture Capital Trust, and the continued intention to meet the conditions

required to comply with Part 6 of the Income Tax Act 2007, no provision for taxation is required in respect of

any realised or unrealised appreciation of the Company’s investments which arises.

Deferred taxation, which is not discounted, is provided in full on timing differences that result in an

obligation at the balance sheet date to pay more tax, or a right to pay less tax, at a future date, at rates

expected to apply when they crystallise, based on current tax rates and law. Timing differences arise from

the inclusion of items of income and expenditure in taxation computations in periods different from those

in which they are included in the accounts.

Other debtors and other creditors

Other debtors (including accrued income) and other creditors are included within the accounts at amortised

cost.

Issue costs

Issue costs in relation to the shares issued for each share class have been deducted from the share

premium account, special reserve or revenue reserve, as applicable, for the relevant share class.

Performance Incentive

Amounts payable in respect of Performance Incentive arrangements are recorded at such time that an

obligation has been established. An explanation of each of the Performance Incentive arrangements is

given in Note 12. In respect of the DSO D Share, pool, should a Performance Incentive become payable it

will be recorded as an expense item through the Income Statement. Performance Incentives in respect of all

other Share classes are paid by way of dividends and will therefore be recognised in accordance with the

dividend accounting policy. There is no Performance Incentive in place for the AIM Share class.

Dividends

Dividends payable are recognised as distributions in the financial statements when the Company’s liability

to make payment has been established, typically once declared by the Board or approved by Shareholders

at the AGM.

Funds held in respect of shares not yet allotted

Cash received in respect of applications for new shares that have not yet been allotted is shown as “Funds

held in respect of shares not yet allotted” and recorded on the Balance Sheet.

Notes to the Accounts (continued)

for the year ended 31 March 2023

2. Income

2023 2022

£’000 £’000

Income from investments

Loan interest 269 1,255

Dividend income 15 41

284 1,296

3. Investment management fees

The management fee, which is charged to the Company, is based on an annual amount of 1.50% of the

DSO D Share pool net assets, 1.35% of the DP67 Share pool net assets, 2.00% of the Ventures Share pool

net assets, 2.50% of the Healthcare Share pool net assets and 1.75% of the AIM Share pool net assets. The

Manager also provides administration services for a fee calculated as follows: (i) a basic fee of £47,550; (ii) A

fee of 0.1% of net assets per annum on funds in excess of £10 million; (iii) £5,000 per additional share pool,

excluding the DSO D share pool. Fees in relation to these services are shown within note 4.

2023 2022

£’000 £’000

Investment management fees 944 1,062

4. Other expenses

2023 2022

£’000 £’000

Administration services 125 98

Trail fee 21 24

Directors’ remuneration 96 75

Auditor’s remuneration for audit 60 48

Registrars 22 48

London Stock Exchange 11 10

FCA 8 8

Printing and Postage 19 19

Bad debt expense 258 2

Insurance 15 22

Recruitment - 24

Other 54 31

689 409

The annual running costs of the Company are subject to a cap of 3.0% of net assets of the Company for all

Share pools, with the exception of the DP67 and Healthcare Share pools, which are subject to caps of 2.9%

and 3.5% respectively. For the year ended 31 March 2023 the expenses for the D Share pool were 2.4% of

net assets, for the DP67 pool 2.0% of net assets, for the Ventures pool 2.2% of net assets, for the Healthcare

pool 2.5% of net assets and for the AIM pool 2.1% of net assets.

Notes to the Accounts (continued)

for the year ended 31 March 2023

5. Directors’ remuneration

Details of remuneration are given in the audited part of the Directors’ Remuneration Report on page 62.

Key management is comprised of the Directors of the Company.

The Company had no employees (other than Directors) during the year. Costs in respect of the Directors are

shown in note 4 above. No other emoluments or pension contributions were paid by the Company to, or

on behalf of, any Director. There were no amounts outstanding at the year end.

6. Taxation

2023 2022

£’000 £’000

(a) Tax charge for the year

UK corporation tax at 19% (2022: 19%) - -

Deferred tax movement - -

Charge for the year - -

(b) Factors affecting tax charge for the year

(Loss)/return on ordinary activities before taxation (7,656) 6,424

Tax charge calculated on return on ordinary activities before taxation at the

applicable rate of 19% (2022: 19%)

(1,454) 1,221

Effects of:

Expenses disallowed for tax purposes

3 -

Losses/(gains) on investments

1,198 (1,254)

UK dividend income

(3) (8)

LLP profits receivable during the year

(4) (4)

Losses carried forward

260 45

Tax on total comprehensive income and ordinary activities

- -

Excess management expenses, which are available to be carried forward and offset against future taxable

income, amounted to £6.0 million (2022: £4.6 million). The associated deferred tax asset of £1.5 million has

not been recognised due to the fact that it is unlikely that the excess management fees will be offset

against future taxable profits in the foreseeable future.

7. Dividends

2023 2022 2023 2022

Pence per share

Revenue

£’000

Capital

£’000

Total

£’000

Revenue

£’000

Capital

£’000

Total

£’000

Dividends paid

Ventures Shares

2021 Final - 2.75 - - - - 1,322 1,322

2022 Final 2.75 - - 1,516 1,516 -- -

2.75 2.75 - 1,516 1,516 - 1,322 1,322

Notes to the Accounts (continued)

for the year ended 31 March 2023

7. Dividends (continued)

2023 2022 2023 2022

Pence per share

Revenue

£’000

Capital

£’000

Total

£’000

Revenue

£’000

Capital

£’000

Total

£’000

Healthcare Shares

2021 Final - 2.75 - - - - 541 541

2022 Final 3.50 - - 789 789 - - -

3.50 2.75 - 789 789 - 541 541

DSO D Shares

2021 Special - 7.50

- - -

590 590

- 7.50

- - -

590 590

Total 2,305 2,305 2,453 2,453

Dividends proposed

Ventures Shares

2023 Final 1.25 - - 661 661 - - -

Healthcare Shares

2023 Final 1.25 - - 273 273 - - -

8. Basic and diluted return per share

Weighted

Average

number

of shares in

issue*

Revenue

return/

(loss)

Capital

(loss)/

gain

Total

Comprehensive

(loss)/

income

Basic and

diluted

(loss)/

return

per share

£’000 £’000 £’000 Pence

Return per share is calculated on the following:

Year ended 31 March 2023

Ventures Shares 48,923,338

(494) (2,679)

(3,173) (6.5p)

Healthcare Shares 20,046,893

(272) (4,018)

(4,290) (21.4p)

AIM Shares 916,744

(39) 75

36 3.9p

DSO D Shares 7,867,247

20 (28)

(8) (0.1p)

DP67 Shares 11,192,136

(92) (129)

(221) (2.0p)

Year ended 31 March 2022

Ventures Shares 48,629,971

(491) 2,327

1,836 3.8p

Healthcare Shares 20,007,047

(314) 3,977

3,663 18.3p

AIM Shares 283,425

(4) (2)

(6) (2.3p)

DSO D Shares 7,867,247

(16) 13

(3) 0.0p

DP67 Shares 11,192,136

1,181 (247)

934 8.3p

*Excluding 13,976,149 (2022: 11,216,391) Ventures Management Shares and 5,712,064 (2022:

4,605,472)

Healthcare Management Shares as there is an agreement in place with the Company that the right to

distributions on the Management Shares is waived until certain the performance hurdles are met, as described

on pages 8 and 20. At no point will voting rights attaching to the Management Shares be exercised.

As the Company has not issued any convertible securities or share options, there is no dilutive effect on the

return per DSO D Share, DP67 Share, Ventures Share, Healthcare Share or AIM Share. The return per share

disclosed therefore represents both the basic and diluted return per share for all classes of share.

Notes to the Accounts (continued)

for the year ended 31 March 2023

9. Fixed assets – investments

Liquidity

investments

Quoted VC

investments

Unquoted VC

investments

Total

£’000 £’000 £’000 £’000

Opening cost at 1 April 2022

5,161 4,403 40,146 49,710

Unrealised valuation (losses)/gains at 1 April 2022

(1,642) 2,930 5,802 7,090

Unrealised foreign exchange losses at 1 April 2022 - - (95) (95)

Realised losses arising on permanent fair value change at

1 April 2022 - - (7,564) (7,564)

Opening fair value at 1 April 2022

3,519 7,333 38,289 49,141

Movements in the year:

Purchased at cost 1,800

6,642 8,442

Disposals - proceeds (183)

(7,936) (8,119)

- realised gains on disposals 30

111 141

Unrealised foreign exchange gains -

321 321

Unrealised valuation losses in the Income Statement (111) (2,226) (4,432) (6,769)

Closing value at 31 March 2023

5,055 5,107 32,995 43,157

Closing cost at 31 March 2023

6,798 4,403 40,774 51,975

Unrealised valuation (losses)/gains at 31 March 2023 (1,743) 704 906 (133)

Unrealised foreign exchange gains at 31 March 2023 - - 226 226

Realised losses arising on permanent fair value change at

31 March 2023 - - (8,911) (8,911)

Closing value at 31 March 2023

5,055 5,107 32,995 43,157

No costs incidental to the acquisitions of investments were incurred during the year.

The Company has categorised its financial instruments using the fair value hierarchy as follows:

Level 1 Reflects financial instruments quoted in an active market;

Level 2 Reflects financial instruments that have prices that are observable either directly or indirectly; and

Level 3 Reflects financial instruments that use valuation techniques which are not based on observable

market data (unquoted equity investments and loan note investments).

Level

2023 Level 1 Level 2 Level 3 2022

£’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000

Liquidity investments 5,055 - - 5,055 3,519 - - 3,519

Quoted equity 5,107 - - 5,107 7,333 - - 7,333

Unquoted loan notes - - 2,013 2,013 - - 3,250 3,250

Unquoted equity - - 30,982 30,982 - - 35,039 35,039

10,162 - 32,995 43,157 10,852 - 38,289 49,141

Notes to the Accounts (continued)

for the year ended 31 March 2023

9. Fixed assets investments (continued)

Reconciliation of fair value for Level 3 financial instruments held at the year-end:

Unquoted

equity

Unquoted

loan notes

Total

£’000 £’000 £’000

Balance at 1 April 2022 35,039 3,250 38,289

Movements in the Income Statement:

Unrealised valuation (losses)/gains in the income statement (4,473) 41 (4,432)

Unrealised foreign exchange gains 321 - 321

Realised gains/(losses) in the income statement 219 (108) 111

Purchases at cost 5,643 999 6,642

Sales proceeds (5,767) (2,169) (7,936)

Balance at 31 March 2023 30,982 2,013 32,995

Changing one or more of the inputs to reasonable possible alternative valuation assumptions could result

in a significant change in the fair value of the Level 3 investments. There is an element of judgment in the

choice of assumptions for unquoted investments and it is possible that, if different assumptions were used,

different valuations could have been attributed to some of the Company’s investments.

The Board and the Investment Manager believe that the valuations as at 31 March 2023 reflect the most

appropriate assumptions at that date, giving due regard to all information available from each investee

company. Valuations are subject to fluctuations in market conditions and the sensitivity of the Company to

such changes is shown within note 15.

Significant interests

Details of shareholdings in portfolio companies where the Company’s holding, as at 31 March 2023,

represents greater than 20% of the nominal value of any share class. The figures shown below represent the

financial position and performance as of the latest available financial statements. The Company does not

have significant influence over any of its portfolio companies.

Compan

Registered office

Share class

Number

Proportion

of class held

Capital

and

reserves

(Loss)/

profit for

the year

Cadbury House Holdings Limited EC3R 6HD Ordinary 678,522 28% £3.6m (£1.1m)

Channel Mum Limited RG1 1PL D1 Ordinary 57,022 26.3% £0.2m *

Cornelis Networks Inc EC4M 8AL Series A-3

Preferred

1,800,000 28.1% * *

Empiribox Holdings Limited BL1 4QR C Ordinary 2,515,592 40.9% £1.7m *

D Ordinary 1,377,144 41.5%

E Ordinary 9,032,082 24.9%

Rated People Limited EC2A 4HJ C Ordinary 30,171 21.4% (£4.1m) (£2.3m)

Virtual Class Limited E1 8EW B Ordinary 3,282 50.0% £1.4m *

C2 Ordinary 3,428 22.1%

* Information not publicly available.

100

Notes to the Accounts (continued)

for the year ended 31 March 2023

9. Fixed assets investments (continued)

The following summary shows the valuation of investments made by other funds managed or advised by the

Investment Manager, alongside the aggregated valuations for all Share pools within Thames Ventures 2 VCT

plc. All amounts shown are stated as at 31 March 2023.

Total investment across

all Thames Ventures 2

VCT plc Share pools

£’000

Total investment

across other

Foresight/

Downing funds*

£’000

Arecor Therapeutics plc^ 3,837 498

Downing Strategic Micro-Cap Investment Trust plc 3,162 3,740

Cornelis Networks, Inc. 2,874 9,647

Virtual Class Limited (Third Space Learning) 2,199 3,158

FVRVS Limited (t/a Fundamental VR) 1,846 2,158

Ayar Labs, Inc. 1,840 5,519

Rated People Limited 1,821 3,287

CommerceIQ, Inc. 1,731 2,371

Imagen Limited 1,703 3,406

Hackajob Limited 1,665 5,915

Congenica Limited 1,470 -

Open Bionics Limited 1,428 479

BlackRock Cash D Acc 1,172 -

GENinCode plc^ 1,051 -

Ecstase Limited (t/a ADAY) 1,000 2,878

Invizius Limited 998 223

Trinny London Limited 934 11,800

Upp Technologies Group Limited (previously Volo Commerce) 923 923

Masters of Pie Limited 876 3,876

Cambridge Respiratory Innovations Limited 800 1,024

Cadbury House Holdings Limited 791 2,162

Parsable, Inc. 753 2,876

Vanguard FTSE U.K. Equity Income Index Fund GBP Acc 721 -

Limitless Technology Limited 703 1,545

Closed Loop Medicine Limited 650 516

Cambridge Touch Technologies Limited 605 2,670

MIP Discovery Limited 600 881

DiA Imaging Analysis Limited 564 937

The Electrospinning Company Limited 544 200

Vivacity Labs Limited 490 5,911

Maverick Pubs (Holdings) Limited 444 -

Bulbshare Limited 427 3,739

Maestro Media Limited 419 7,414

Carbice Corporation 406 2,519

Qkine Limited 379 371

Gatewales Limited 344 -

FundingXchange Limited 276 1,644

Distributed Limited 275 2,225

Destiny Pharma plc^ 219 -

Audioscenic Limited 200 5,000

Pearce and Saunders DevCo Limited 16 70

Adaptix Limited - -

Channel Mum Limited - -

Empiribox Holdings Limited - -

Glisser Limited - -

Hummingbird Technologies Limited - -

Lignia Wood Company Limited - -

Lineten Limited - -

Live Better With Limited - -

London City Shopping Centre Limited - -

Ormsborough Limited - -

43,156 101,582

* Includes the value of investments made by all other self-managed and discretionary managed funds to which Foresight Group LLP

and Downing LLP acted as Investment Manager or Adviser as at 31 March 2023.

101

Notes to the Accounts (continued)

for the year ended 31 March 2023

10. Debtors

2023 2022

£’000 £’000

Prepayments and accrued income 1,140 1,275

Other debtors 1,370 3,042

2,510 4,317

11. Creditors: amounts falling due within one year

2023 2022

£’000 £’000

Taxation and social security 6 5

Other creditors 1,066 808

Accruals and deferred income 142 152

1,214 965

12. Called up share capital

2023 2022

£’000 £’000

Allotted, called up and fully paid:

66,852,564 (2022: 65,328,545) Ventures Shares of 0.1p each 67 65

27,544,877 (2022: 26,811,908) Healthcare Shares of 0.1p each 28 27

2,695,803 (2022: 2,034,990) AIM Shares of 0.1p each 3 2

7,867,247 (2022: 7,867,247) DSO D Shares of 0.1p each 8 8

11,192,136 (2022: 11,192,136) DP67 Shares of 0.1p each 11 11

117 113

The Company’s capital is managed in accordance with its investment policy, as shown in the Strategic

Report, in pursuit of its principal investment objective, as stated on page 48. There have been no significant

changes in the objectives, policies or processes for managing capital from the previous period.

The Company has the authority to buy back shares, as described in the Directors’ Report.

During the year ended 31 March 2023, the Company issued 1,851,706 Ventures Shares of 0.1p each at an

average price of 69.22p per Ordinary Share, 656,708 Healthcare Shares of 0.1p each at an average price of

85.06p per Ordinary Share and 660,813 AIM Shares of 0.1p each at an average price of 102.31p per

Ordinary Share. 2,759,758 Ventures Management Shares and 1,106,592 Healthcare Management Shares

were issued during the year.

During the year ended 31 March 2023, the Company repurchased 3,014,102 Ventures Shares at an average

price of 66.75p per Share and 1,007,037 Healthcare Shares at an average price of 72.75p per Share.

102

Notes to the Accounts (continued)

for the year ended 31 March 2023

12. Called up share capital (continued)

Ventures and Healthcare Share pools

A Performance Incentive scheme is in place in respect of the Ventures and Healthcare Management Shares,

which will represent 20% of the total number of Ventures and Healthcare Shares in issue. As part of the

arrangement, in order to prevent dilution to the Shareholders of the Ventures and Healthcare Shares, the

management team will waive their voting rights granted by these Management Shares at any

general meeting of the Company and income or capital distributions otherwise payable on these

Management Shares will be waived unless the relevant share class has achieved the relevant Total Return

hurdle (based on audited results) at each year end date.

The Performance Incentive arrangements are structured such that the Ventures and Healthcare

Management Shares will receive 20% of dividends paid in respect of the Company’s Ventures and

Healthcare Share pools, only when the Total Return hurdle is met. For the hurdle to be met, the Total

Return to Ventures or Healthcare Shareholders must exceed £1.09 per share for the year ended 31 March

2023. For subsequent years, the Total Return hurdle increases by 3.0p per annum such that for the year

ended 31 March 2024 the hurdle is £1.12, and for the year ended 31 March 2025 the hurdle is £1.15. The

performance incentive arrangements in respect of the Ventures and Healthcare Share pools are assessed on

each of the two Share pools individually.

DSO D Share pool

The Performance Incentive in respect of the DSO D Shares is structured as a simple fee when the hurdle is

met. A fee is payable when:

(i) Shareholders receive total proceeds of at least 100.0p per DSO D Share (excluding income tax relief);

and

(ii) Shareholders achieve a tax-free compound return of at least 7% per annum (after allowing for income

tax relief on investment).

If the hurdle is met, the fee will be 3.0p per DSO D Share plus 20% of Shareholder proceeds above 100.0p

per D Share. The maximum performance fee is limited to 7.0p per D Share.

As at 31 March 2023, there is not expected to be a performance incentive payable per DSO D Share as the

compound return hurdle is not likely to be met.

The Company does not have any externally imposed capital requirements.

103

Notes to the Accounts (continued)

for the year ended 31 March 2023

13. Reserves

2023 2022

£’000 £’000

Capital redemption reserve 4 58

Special reserve 50,483 24,063

Share premium account - 29,284

Revaluation reserve 93 6,995

Capital reserve – realised 4,127 3,769

Revenue reserve (4,289) (3,412)

Funds held in respect of shares not yet allotted - 7

50,418 60,764

Note: called up share capital not included above

The Special reserve, Capital reserve – realised and Revenue reserve are all distributable reserves. The

distributable reserves are reduced by unrealised holding losses of £18.1 million (2022: £12.0 million), which

are included in the Revaluation reserve.

Capital redemption reserve

This reserve accounts for amounts by which the issued share capital is diminished through the repurchase

and cancellation of the Company’s own shares.

Special reserve

The Special reserve is available to the Company to enable the purchase of its own shares in the market

without affecting its ability to pay capital distributions.

Share premium account

This reserve accounts for the difference between the prices at which shares are issued and the nominal

value of the shares, less issue costs and transfers to the other distributable reserves.

Revaluation reserve

This reserve represents the cumulative increases and decreases in the valuations of investments held at

each year end, against cost.

Capital reserve - realised

The following are disclosed in this reserve:

 gains and losses on the disposal of investments;

 foreign exchange differences of a capital nature;

 expenses, together with the related taxation effect, charged in accordance with the above accounting

policies; and

 capital dividends paid to Shareholders.

Revenue reserve

This reserve accounts for movements within the revenue column of the Income Statement, the payment of

revenue dividends and other non-capital realised movements.

Funds held in respect of shares not yet allotted

This reserve represents the fundraising proceeds which were awaiting allotment as at the Balance Sheet

date.

104

Notes to the Accounts (continued)

for the year ended 31 March 2023

14. Basic and diluted Net Asset Value per share

Shares in issue

2023 Net Asset

Value

2022 Net Asset

Value

2023 2022

Pence

per

£’000

Pence

per

£’000

Ventures Shares 66,852,564* 65,328,545* 59.4 31,383 68.2 36,889

Healthcare Shares 27,544,877* 26,811,908* 61.6 13,449 84.4 18,746

AIM Shares 2,695,803 2,034,990 101.1 2,726 99.9 2,029

DSO D Shares 7,867,247 7,867,247 2.6 200 2.6 208

DP67 Shares 11,192,136 11,192,136 24.8 2,777 26.8 2,998

Funds held in respect of shares not yet allotted - 6

Net assets per Balance Sheet 50,535 60,876

* includes 13,976,149 (2022: 11,216,391) Management Shares and 5,712,064 (2022: 4,605,472) Healthcare

Management Shares, which have not been included in the calculation of Net Asset Value per share as the

right to distributions on the Management Shares is waived until certain performance hurdles have been met,

as described on pages 8 and 20.

The Directors allocate the assets and liabilities of the Company between the DSO D Shares, DP67 Shares,

Ventures Shares, Healthcare Shares and AIM Shares such that each share class has sufficient net assets to

represent its dividend and return of capital rights, as described in note 12.

As the Company has not issued any convertible shares or share options, there is no dilutive effect on the

Net Asset Value per DSO D Share, per DP67 Share, per Ventures Share, per Healthcare Share or per AIM

Share. The Net Asset Value per share disclosed therefore represents both the basic and diluted Net Asset

Value per DSO D Share, per DP67 Share, per Ventures Share, per Healthcare Share and per AIM Share.

15. Financial instruments

The Company’s financial instruments comprise investments held at fair value through profit or loss, being

equity and loan investments in unquoted companies, Liquidity investments, loans and receivables, being

cash deposits and short-term debtors, and financial liabilities, being creditors arising from its operations.

The main purpose of these financial instruments is to generate cashflows, revenues and capital appreciation

for the Company’s operations. The Company has no gearing or other financial liabilities apart from short-

term creditors.

The fair value of investments is determined using the detailed accounting policy as shown in Note 1. The

composition of the investments is set out in Note 9.

The fair values of cash deposits and short-term debtors and creditors equate to their carrying values.

105

Notes to the Accounts (continued)

for the year ended 31 March 2023

15. Financial instruments (continued)

The Company’s investment activities expose the Company to a number of risks associated with financial

instruments and the sectors in which the Company invests. The principal financial risks arising from the

Company’s operations are:

 Market risks;

 Credit risk; and

 Liquidity risk.

The Board regularly reviews these risks and the policies in place for managing them. There have been no

significant changes to the nature of the risks that the Company is exposed to over the year and there have

also been no significant changes to the policies for managing those risks during the year.

The risk management policies used by the Company in respect of the principal financial risks and a review

of the financial instruments held at the year-end are provided below:

Market risks

As a VCT, the Company is exposed to investment risks in the form of potential losses and gains that may

arise on the investments it holds, in accordance with its investment policy. The management of these

market risks is a fundamental part of investment activities undertaken by the Investment Manager and is

overseen by the Board. The Manager monitors investments through regular contact with the management

of investee companies, regular review of management accounts and other financial information and

attendance at investee company board meetings. This enables the Manager to manage the investment risk

in respect of individual investments. Investment risk is also mitigated by holding a diversified portfolio

spread across various business sectors and asset classes.

The key market risks to which the Company is exposed are:

 Investment price risk;

 Foreign exchange risk; and

 Interest rate risk.

The Company has undertaken sensitivity analysis on its financial instruments, split into the relevant

component parts, taking into consideration the economic climate at the time of review in order to ascertain

the appropriate risk allocation.

106

Notes to the Accounts (continued)

for the year ended 31 March 2023

15. Financial instruments (continued)

Investment price risk

Investment price risk arises from uncertainty about the future prices and valuations of financial instruments

held in accordance with the Company’s investment objectives. It represents the potential loss that the

Company might suffer through market price movements in respect of quoted investments, and also

changes in the fair value of unquoted investments that it holds.

Quoted investments

The Company’s sensitivity to fluctuations in the prices of its quoted investments is summarised below. A

20% movement in the quoted prices of these assets, which is considered to be a reasonable annual

movement given the fluctuations in the FTSE indices, would have the following impact on the company:

Risk exposure at

31 March 2023

Risk exposure at

31 March 2022

Liquidity investments (£’000) 5,055 3,519

Quoted Ventures and Healthcare investments (£’000) 5,107 7,333

FTSE 100 Index at the reporting date 7,632 7,516

Movement in FTSE 100 Index

Estimated

impact on

NAV/Total

Return

Estimated

impact on

NAV

Estimated

impact on

NAV/Total

Return

Estimated

impact on

NAV

£’000 Pence £’000 Pence

Ventures Shares

20% increase to 4,332 (2022: 5,142) 722 1.4p 857 1.6p

20% decrease to 2,888 (2022: 3,428) (722) (1.4p) (857) (1.6p)

Healthcare Shares

20% increase to 5,590 (2022: 7,880) 932 4.3p 1,313 5.9p

20% decrease to 3,726 (2022: 5,254) (932) (4.3p) (1,313) (5.9p)

At 31 March 2023, the unquoted portfolio was valued at £34,377,000 (2022: £38,289,000). A breakdown of

the unquoted portfolio by valuation method used is as follows:

2023

£’000

Calibration to price of recent investment 21,408

Multiples 4,605

Discounted cash flows or earnings (of underlying business) 3,566

Discounted cash flows (from the investment) 2,265

Net assets 1,151

32,995

107

Notes to the Accounts (continued)

for the year ended 31 March 2023

15. Financial instruments (continued)

Market risks (continued)

Investment price risk (continued)

As the majority of the Company’s unquoted investments are valued using calibration to price of recent

investment, a change in market conditions could impact on the valuation of the equity investments held in

the unquoted portfolio. As the unquoted investments are across a broad range of sectors and valued using

different valuation techniques, it is not possible to create a meaningful analysis by changing one input or

discount factor. As unquoted investments are typically structured as partly equity and partly loan notes,

investment price risk of the unquoted investments is considered as a whole. The Board has considered the

volatility of current market conditions in determining the reasonably possible market movements that

should be illustrated with sensitivity analysis. Positive and negative movements of 20% in the carrying

value of the unquoted portfolio as a whole are considered to be a reasonable maximum level in a given

year and would have the following impact:

Movement in unquoted investment valuations

31 March 2023

+20% movement -20% movement

Impact on

net assets

Impact on

NAV per

Impact on

net assets

Impact on

NAV per

Share pool £’000 Pence £’000 Pence

Ventures Shares 5,644 10.7p (5,644) (10.7p)

Healthcare Shares 1,529 7.0p (1,529) (7.0p)

DSO D Shares 3 0.0p (3) (0.0p)

DP67 Shares 227 2.0p (227) (2.0p)

31 March 2022

+20% movement -50% movement

Impact on

net assets

Impact on

NAV per

Impact on

net assets

Impact on

NAV per

Share pool £’000 Pence £’000 Pence

Ventures Shares 5,395 10.0p (13,487) (24.9p)

Healthcare Shares 1,876 8.4p (4,689) (21.1p)

DSO D Shares 9 0.1p (22) (0.3p)

DP67 Shares 379 3.4p (947) (8.5p)

The sensitivity analysis for unquoted valuations above assumes that each of the subcategories of financial

instruments (ordinary shares and loans) held by the Company produces an overall movement of plus 20%

or minus 50%. Shareholders should note that equal correlation between these subcategories is unlikely to

be the case in reality, particularly in the case of loan instruments. Where share prices are falling, the equity

instrument could fall in value before the loan instrument. It is not considered practical to assess the

sensitivity of the loan instruments to market price risk in isolation.

108

Notes to the Accounts (continued)

for the year ended 31 March 2023

15. Financial instruments (continued)

Market risks (continued)

Foreign exchange risk

The Company has exposure to fluctuations in the prevailing market rates of exchange between the US

Dollar ("USD") and the British Pound ("GBP"), as a result of holding investments in companies which use

USD as their functional and reporting currency. The valuations of such investments are first performed in

USD and subsequently converted to the equivalent GBP values at each reporting date. As at 31 March 2023,

cumulative unrealised foreign exchange gains of £321,000 (2022: cumulative loss £171,000) had been

recognised in the Income Statement, representing the movements in the USD:GBP exchange rates between

the date of each relevant investment and the reporting date. The Board continues to review the exposure to

fluctuations in foreign currencies but has not sought to mitigate the exposure at this time. The Company

does however have relationships with foreign exchange service providers and will seek to reduce the impact

of foreign exchange fluctuations on future cash flows as they arise.

Interest rate risk

The Company accepts exposure to interest rate risk on floating-rate financial assets through the effect of

changes in prevailing interest rates. The Company receives interest on its cash deposits at a rate agreed

with its bankers. Investments in loan notes attract interest, predominately at fixed rates. A summary of the

interest rate profile of the Company’s investments is shown below.

There are three categories in respect of interest, which are attributable to the financial instruments held by

the Company as follows:

 “Fixed rate” assets represent investments with predetermined yield targets and comprise certain loan

note investments and preference shares;

 “Floating rate” assets predominantly bear interest at rates linked to Bank of England base rate or

LIBOR and comprise cash at bank; and

 “No interest rate” assets do not attract interest and comprise equity investments, certain loan note

investments, Liquidity investments, loans and receivables (excluding cash at bank) and other financial

liabilities.

Average Average period 2023 2022

interest rate until maturity £’000 £’000

Fixed rate 2.6% 55 days 2,013 3,250

Floating rate nil - 8,384

No interest rate 49,904 49,242

51,917 60,876

The Company monitors the level of income received from fixed and floating rate assets and, if appropriate,

may make adjustments to the allocation between the categories, in particular, if this should be required to

ensure compliance with the VCT regulations.

During the period the Bank of England base rate has increased from 0.75% per annum to 4.25% per annum

at the period end (from 0.10% to 0.75% in the prior year). Following the period end, in May 2023, the rate

increased further, to 5.00% per annum. Any potential change in the base rate, at the current level, would

have an immaterial impact on the net assets and Total Return of the Company.

109

Notes to the Accounts (continued)

for the year ended 31 March 2023

15. Financial instruments (continued)

Credit risk

Credit risk is the risk that a counterparty to a financial instrument is unable to discharge a commitment to

the Company made under that instrument. The Company is exposed to credit risk through its holdings of

loan notes in investee companies, cash deposits and debtors. Credit risk relating to holdings of loan notes

in investee companies is considered to be part of market risk.

The Company’s financial assets that are exposed to credit risk are summarised as follows:

2023 2022

£’000 £’000

Investments in loan notes

2,013 3,250

Cash and cash equivalents

6,082 8,384

Interest and other receivables

2,510 4,316

10,605 15,950

The Manager manages credit risk in respect of loan notes with a similar approach as described under

investment price risk. The management of credit risk, associated interest, dividends and other receivables is

covered within the investment management procedures.

Cash is mainly held with Royal Bank of Scotland plc, an A-rated financial institution. Consequently, the

Directors consider that the credit risk associated with cash deposits is low.

There have been limited changes in fair value during the year that are directly attributable to changes in

credit risk.

Liquidity risk

Liquidity risk is the risk that the Company encounters difficulties in meeting obligations associated with its

financial liabilities. Liquidity risk may also arise from either the inability to sell financial instruments at their

fair values when required, or from the inability to generate cash inflows as required.

The Company has a relatively low level of creditors, being £1.2 million (2022: £965,000), all of which are

payable within one year. The Company has no borrowings, and accordingly the Board believes that the

Company’s exposure to liquidity risk is low. Also, the quoted investments held by the Company are

considered to be readily realisable. The Company always holds sufficient levels of funds as cash and readily

realisable investments in order to meet expenses and other cash outflows as they arise. For these reasons,

the Board believes that the Company’s exposure to liquidity risk is minimal. The Company’s liquidity risk is

managed by the Investment Manager in line with guidance agreed with the Board and is reviewed by the

Board at regular intervals.

Although the Company’s investments are not held to meet the Company’s liquidity requirements, the table

below shows an analysis of the assets, highlighting the length of time that it could take the Company to

realise its assets if it were required to do so.

110

Notes to the Accounts (continued)

for the year ended 31 March 2023

15. Financial instruments (continued)

The carrying values of loan note investments held and at fair value through profit or loss as at 31 March

2023, analysed by expected maturity date, are as follows:

As at 31 March 2023 Passed Not later Between Between Between

maturity than 1 1 and 2 2 and 3 3 and 5

date year years years years Total

£’000 £’000 £’000 £’000 £’000 £’000

Fully performing loans - - - - 878 878

Past due loans 1,135 - - - - 1,135

1,135 - - - 878 2,013

As at 31 March 2022 Passed Not later Between Between Between

maturity than 1 1 and 2 2 and 3 3 and 5

date year years years years Total

£’000 £’000 £’000 £’000 £’000 £’000

Fully performing loans - 417 - - 258 675

Past due loans 1,411 1,164 - - - 2,575

1,411 1,581 - - 258 3,250

As at 31 March 2023, of the loans classified as “past due”, £1,135,000 (2022: £1,411,000) relates to the

principal of loans where the principal had passed its maturity date. The total of £1,135,000 relates to

principal which is between 3 and 5 years past due (2022: £1,411,000 between 1 and 3 years past due).

Notwithstanding that the principal remained outstanding passed its maturity date, the Directors did not

consider that the loan principal amounts had been impaired.

16. Deferred taxation

2023 2022

£’000 £’000

At the beginning of the year - -

Charged to the income statement - -

At the end of the year - -

111

Notes to the Accounts (continued)

for the year ended 31 March 2023

17. Capital management

The Company’s objectives when managing capital are to safeguard the Company’s ability to continue as a

going concern, in line with its planned exit and evergreen strategies, so that it can continue to provide

returns for Shareholders, and to provide an adequate return to the Shareholders by allocating its capital to

assets, commensurately with the level of risk.

By its nature, the Company has an amount of capital, at least 80% (as measured under the tax legislation) of

which is, and must remain, invested in the relatively high-risk asset class of small UK companies, within

three years of that capital being subscribed. The Company accordingly has limited scope to manage its

capital structure in the 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, return capital to Shareholders, issue new shares or sell assets, if

so required, to maintain a sufficient level of liquidity in order for the Company to remain a going concern.

As the Investment Policy implies, the Board would consider levels of gearing, although there are no current

plans to do so. It regards 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 in this approach from the previous period.

18. Contingencies, guarantees and financial commitments

There were no contingencies, guarantees or financial commitments of the Company at the year-end (2022:

£84,000).

112

Notes to the Accounts (continued)

for the year ended 31 March 2023

19. Controlling party and related party transactions

In the opinion of the Directors, there is no immediate or ultimate controlling party.

Fees payable during the year to the Directors and their interest in shares of the Company are disclosed within

the Directors’ Remuneration Report on page 63 and 64. There were no amounts outstanding and due to the

Directors as at 31 March 2023 (2022: nil).

Further related party transactions include Investment Management and Administration fees payable to

Foresight Group LLP and Downing LLP, as disclosed in notes 3 and 4.

In addition, Downing LLP was also paid promoter fees in connection with the offers for subscription which

were open during the year. The total paid to Downing LLP during the year ended 31 March 2023 was £39,000

(2022: £149,000).

The Company also has an agreement to pay an ongoing trail fee annually to the Investment Manager, in

connection with applicable proceeds raised under previous offers for subscription, out of which there is an

obligation to pay trail commission to intermediaries. The total trail fee payable in respect of the year ended

31 March 2023 was £21,000, all of which was unpaid as at 31 March 2023 (2022; £24,000).

20. Events after the end of the reporting period

In the period between 31 March 2023 and the date of this report, the Company issued the following shares:

 360,443 Ventures Shares, at an average price of 66.00p per share; and

 1,722,102 Healthcare Shares, at an average price of 68.27p per share; and

At the date of this report, there were 67,213,007 Ventures Shares, 29,266,979 Healthcare Shares and 2,695,803

AIM Shares in issue, including Management Shares.

113

Notice of the Annual General Meeting of

Thames Ventures 2 VCT plc

NOTICE IS HEREBY GIVEN that the Annual General Meeting of Thames Ventures 2 VCT plc will be held at the

offices of Foresight Group LLP, The Shard, 32 London Bridge Street, London, SE1 9SG at 3:30 p.m. on 12

September 2023 for the transaction of the following business:

As Ordinary Business, to consider and, if thought fit, pass the following resolutions which will be proposed as

Ordinary Resolutions:

1. To receive and adopt the Report of the Directors and Accounts of the Company for the year ended 31

March 2023, together with the report of the Auditor thereon.

2. To approve the Directors’ Remuneration Report.

3. To approve the Directors' Remuneration Policy.

4. To approve the payment of final dividends of 1.25p per Ventures Share and 1.25p per Healthcare Share.

5. To re-appoint BDO LLP as Auditor of the Company to hold office until the conclusion of the next Annual

General Meeting at which the accounts of the Company are presented and to authorise the Directors to

determine their remuneration.

6. To re-elect as Director, Sir Aubrey Brocklebank, who retires and, being eligible, offers himself for re-

election.

7. To re-elect as Director, Chris Allner, who retires and, being eligible, offers himself for re-election

8. To re-elect as Director, Steven Clarke, who retires and, being eligible, offers himself for re-election.

9. To re-elect as Director, Andrew Mackintosh, who retires and, being eligible, offers himself for re-election.

As Special Business, to consider and, if thought fit, pass the following:

Ordinary Resolution

10. That, in addition to any existing authority (to the extent unused), the Directors be and are hereby generally

and unconditionally authorised in accordance with Section 551 of the Companies Act 2006 (the “Act”) to

exercise all the powers of the Company to allot shares or to grant rights to subscribe for or to convert any

security into shares in the Company up to an aggregate nominal amount of £140,000, being up to £51,000

Ventures Shares (plus Ventures Management Shares of up to £12,750) (representing approximately 120% of

the Ventures Share capital in issue at today’s date), up to £49,000 Healthcare Shares (plus Healthcare

Management Shares of up to £12,250) (representing approximately 260% of the Healthcare Share capital in

issue at today’s date) and up to £15,000 AIM Shares (representing approximately 556% of the AIM Share

capital in issue at today’s date), during the period commencing on the passing of this resolution and

expiring at the conclusion of the Company's next annual general meeting, or on the expiry of 15 months

following the passing of the resolution, whichever is the later (unless previously revoked, varied or extended

by the Company in a general meeting), but so that this authority shall allow the Company to make before

the expiry of this authority offers or agreements which would or might require shares to be allotted or

rights to be granted to subscribe for or to convert any security into shares in the Company after such expiry

and all previous authorities given by the Directors in accordance with section 551 of the Act be and are

hereby revoked, provided that such revocation shall not have retrospective effect;

Special Resolutions

11. That, in addition to any existing authority (to the extent unused), the Directors be and are hereby

empowered, during the period commencing on the passing of this resolution and expiring at the

conclusion of the Company's next annual general meeting, or on the expiry of 15 months following the

passing of this resolution, whichever is the later (unless previously revoked, varied or extended by the

Company in a general meeting), pursuant to section 570 of the Act, to allot equity securities (as defined in

Section 560(1) of the Act) for cash pursuant to the authority given in accordance with Section 551 of the

Act, pursuant to Resolution 10 above, as if section 561(1) of the Act did not apply to any such allotment but

so that this authority shall allow the Company to make offers or agreements before the expiry and the

Directors may allot equity securities in pursuance of such offers or agreements as if the powers conferred

hereby had not so expired;

114

Notice of the Annual General Meeting of

Thames Ventures 2 VCT plc

(continued)

12. That, the Company be and is hereby generally and unconditionally authorised to make market purchases

(within the meaning of Section 693(4) of the Companies Act 2006) of DSO D Shares of 0.1p each (“DSO D

Shares”), DP67 Shares of 0.1p each (“DP67 Shares"), Ventures Shares of 0.1p each (“Ventures Shares”),

Healthcare Shares of 0.1p each (“Healthcare Shares”) and AIM Shares of 0.1p each (“AIM Shares”) in the

capital of the Company provided that:

(i) the maximum number of 1,172,219 DSO D Shares representing approximately 14.9% of the issued DSO

D Share capital, 1,667,628 DP67 Shares representing approximately 14.9% of the issued DP67 Share

capital, 7,932,291 Ventures Shares representing approximately 14.9% of the issued Ventures Share

capital, 3,509,682 Healthcare Shares representing approximately 14.9% of the issued Healthcare Share

capital of the Company and 401,674 AIM Shares representing approximately 14.9% of the issued AIM

Share capital of the Company;

(ii) the minimum price which may be paid for a DSO D Share, DP67 Share, Ventures Share, Healthcare

Share or AIM Share is 0.1p, exclusive of all expenses;

(iii) the maximum price which may be paid for a DSO D Share, DP67 Share, Ventures Share, Healthcare

Share or AIM Share is an amount, exclusive of all expenses, equal to 105% of the average of the middle

market quotations of the relevant share, as derived from the Daily Official List of the London Stock

Exchange, for each of the five business days immediately preceding the day on which the share is

contracted to be purchased; and

(iv) the Company may validly make a contract to purchase its own DSO D Shares, DP67 Shares, Ventures

Shares, Healthcare Shares or AIM Shares under the authority hereby conferred prior to the expiry of

such authority which will or may be executed wholly or partly after the expiry of such authority, and

may validly make a purchase of DSO D Shares, DP67 Shares, Ventures Shares, Healthcare Shares or AIM

Shares in pursuance of any such contract;

and this power, unless previously varied, revoked or renewed, shall come to an end at the conclusion of the

Annual General Meeting of the Company next following the passing of this resolution or on the expiry of 15

months from the passing of the resolution, whichever is the earlier.

Shareholders wishing to attend the AGM are requested to please notify us via email, to

tv2agm@downing.co.uk, in case there are changes to arrangements which need to be communicated at

short notice.

By order of the Board

Grant Whitehouse

Company Secretary

Registered office:

6th Floor, St. Magnus House

3 Lower Thames Street

London EC3R 6HD

31 July 2023

115

Notice of the Annual General Meeting of

Thames Ventures 2 VCT plc

(continued)

Notes

(a) To be valid, a Form of Proxy and the power of attorney or other written authority, if any, under which it is

signed or an office or notarially certified copy or a copy certified in accordance with the Powers of Attorney

Act 1971 of such power and written authority, must be deposited at the offices of the Company’s Registrar,

The City Partnership (UK) Limited, The Mending Rooms, Park Valley House, Park Valley Mills, Meltham Road,

Huddersfield HD4 7BH or submitted electronically at proxy-thamesventures2.cpip.io, in each case not less

than 48 hours (excluding weekends and public holidays) before the time appointed for holding the Annual

General Meeting or adjourned meeting at which the person named in the Form of Proxy proposes to vote.

(b) In order to revoke a proxy instruction a member will need to inform the Company using one of the following

methods:

 by sending a signed hard copy notice clearly stating the intention to revoke the proxy appointment

to The City Partnership (UK) Limited, The Mending Rooms, Park Valley House, Park Valley Mills,

Meltham Road, Huddersfield HD4 7BH. In the case of a member which is a company, the revocation

notice must be executed under its common seal or signed on its behalf by an officer of the company

or an attorney for the company. Any power of attorney or any other authority under which the

revocation notice is signed (or a duly certified copy of such power or authority) must be included with

the revocation notice; or

 by sending an e-mail to tv2agm@downing.co.uk.

In either case, the revocation notice must be received by The City Partnership before the Annual General

Meeting or the holding of a poll subsequent thereto. If a member attempts to revoke his or her proxy

appointment but the revocation is received after the time specified then, subject to Note (c) directly below,

the proxy appointment will remain valid.

only those holders of the Company’s shares registered on the Register of Members of the Company as at

3:30 p.m. on 8 September 2023 or, in the event that the Annual General Meeting is adjourned, on the Register

of Members 48 hours (excluding weekends and public holidays) before the time of any adjourned meeting,

shall be entitled to vote at the said Annual General Meeting in respect of such shares registered in their name

at the relevant time. Changes to entries on the Register of Members after 3:30 p.m. on 8 September 2023 or,

in the event that the Annual General Meeting is adjourned, on the Register of Members less than 48 hours

(excluding weekends and public holidays) before the time of any adjourned meeting, shall be disregarded in

determining the right of any person to attend and vote at the Annual General Meeting.

(d) As at 9:00 a.m. on 31 July 2023, the Company’s issued share capital comprised 7,867,247 DSO D Shares,

11,192,136 DP67 Shares, 67,213,007 Ventures Shares, 29,266,979 Healthcare Shares and 2,695,803 AIM Shares

the total number of voting rights in the Company, excluding management shares, was 75,152,567,322.

Information on the number of shares and voting rights is included at www.foresightgroup.eu.

(e) 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 no voting indication is given, the proxy will vote or abstain from voting at his

or her discretion. The proxy will vote (or abstain from voting) as he or she thinks fit in relation to any other

matter which is put before the Annual General Meeting.

(f) Except as provided above, members who have general queries about the Annual General Meeting should

write to the Chairman at the registered office set out on the previous page.

(g) Members may not use any email address provided either in this notice of Annual General Meeting, or any

related documents (including the Chairman’s letter and Form of Proxy), to communicate with the Company

for any purposes other than those expressly stated.