Octopus Future

Generations VCT plc

Backing businesses

with the power to transform

the world for the better

2023

Annual report and

financial statements

Octopus Future Generations VCT plc

(‘Future Generations VCT’ or the ‘Company’)

is backing businesses that aim to address

society’s biggest challenges, providing

an opportunity for investors to share in

the growth of ambitious, purpose‑driven

companies.

The Company is managed by Octopus AIFM

Management Limited (the 'Manager'), who has

delegated investment management to Octopus

Investments Limited ('Octopus' or 'Portfolio Manager').

Octopus Ventures

Awards

Octopus Investments

Awards

Key dates

Annual General Meeting 12.00 noon on 11 December 2023

Shareholder event 4 December 2023

Interim results to 31 December 2023 March 2024

Strategic report Governance Financials

1 Octopus Future Generations VCT plc

Annual report and financial statements 2023

Contents

Strategic report

Chair’s statement 2

Investment themes 4

How Future Generations VCT works 5

Portfolio Manager’s review 13

Operating responsibly 21

Section 172(1) statement 28

Risks and risk management 32

Business review 35

Governance

Board of Directors 38

Corporate governance report 39

Leadership and purpose 41

Division of responsibilities 42

Composition, succession and evaluation 43

Audit, risk and internal control 44

Management Engagement Committee 47

Remuneration 48

Directors’ report 50

Financials

Directors’ responsibilities statement 55

Independent auditor’s report 56

Financial statements

Income statement 62

Balance sheet 63

Statement of changes in equity 64

Cash flow statement 66

Notes to the financial statements 67

Investment portfolio 81

Shareholder information and contact details 82

Glossary of terms 84

Notice of Annual General Meeting 85

Directors and advisers 89

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Annual report and financial statements 2023

Chair’s statement

Highlights

I would firstly like to welcome new shareholders to the

Company. Future Generations VCT invests in exciting

early-stage companies which we believe should also

have a positive impact on society. The NAV per share at

30 June 2023 was 94.3p, and in the year the Company

made 23 new investments. Each portfolio company has

the ambition to succeed as well as to address current

societal issues, ranging from improving healthcare to

positively impacting climate change. More information

on some of these businesses can be found on pages 13

to 20 in the Portfolio Manager‘s Review.

In the year to 30 June 2023, we utilised £24.4 million

of our cash resources, including £23.2 million which

was invested in new portfolio companies. The cash

and cash equivalents balance of £20.3 million as at

30 June 2023 represents 45% of net assets at that date.

The loss made in the year to 30 June 2023 was £0.8

million, which is to be anticipated at this early stage due

to the running costs of the Company exceeding returns

from investments.

We look forward to deploying further capital into

attractive new investment opportunities, and we

ultimately intend the profile of the Company to

comprise 80% to 90% in VCT qualifying investments

and 10% to 20% in permitted non-VCT qualifying

investments or cash.

Fundraise

On 19 January 2023, the Company launched an initial

offer to raise up to £30 million, with an over-allotment

facility of up to £10 million, and as of 30 June 2023, the

Company has successfully raised £15.2 million. The offer

will close for new applications on 31 October 2023.

As investors will be aware, the intention is to invest in

businesses which meet one of three key themes, which

we believe demonstrate excellent investment prospects

as well as having the potential to transform the world

we live in for the better. These three themes are

summarised on page 4.

£45.4m

in net assets

94.3p

net asset value (NAV)

per share

£15.2m

raised to date in current

fundraise

I am pleased to

present the annual

results for Future

Generations VCT

for the year ended

30 June 2023.

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3 Octopus Future Generations VCT plc

Annual report and financial statements 2023

Chair’s statement continued

Annual General Meeting (AGM)

The AGM will take place on 11 December 2023 from 12.00

noon and will be held at 33 Holborn, London EC1N 2HT.

Full details of the business to be conducted at the AGM

are given in the Notice of the AGM on pages 85 to 88.

Shareholders’ views are important, and the

Board encourages shareholders to vote on the

resolutions within the Notice of the AGM on pages 85

to 86 using the proxy form, or electronically at

www.investorcentre.co.uk/eproxy. The Board has

carefully considered the business to be approved at the

AGM and recommends shareholders to vote in favour

of all the resolutions being proposed, as the Board will

be doing.

In addition to the AGM, this year, we are also pleased to

offer shareholders the opportunity to attend an online

shareholder webinar on 4 December 2023 at 11.00 a.m.,

to make sure we can respond to any questions you may

have for either the Portfolio Manager or the Company’s

Board prior to the proxy forms needing to be completed.

At this event, Simon King (lead fund manager for Future

Generations VCT) and I will be presenting. For details

on how to sign up please see bit.ly/octopusfgwebinar.

Alternatively, shareholders are also invited to send any

questions they may have via email to

FGAGM@octopusinvestments.com.

Outlook

This is the Company’s first full 12-month report, and

my Board colleagues and I are pleased with the

progress the Company has made in the period. As of

30 June 2023, the Company comprised 25 portfolio

companies spanning all three of its investment themes.

Each of these portfolio companies is addressing

crucial societal and environmental issues ranging from

offering personalised psychological therapy to creating

smart nutrition or automating the measurement of

biodiversity. More can be read about some of the real

differences these companies are making in the world on

pages 14 to 17.

We have experienced challenges on many fronts

since the Company was launched, with an economic

climate that has made things more difficult for both

our portfolio companies and shareholders. However,

our hope is that we are starting to see some green

shoots of recovery with inflation in the UK slowing. We

are still seeing good momentum in the UK early-stage

market and are regularly impressed by the ingenuity,

energy and passion of the entrepreneurs behind our

portfolio companies. We are also heartened by the wider

European venture capital eco-system as it is now valued

at over $1.15 trillion, and the UK is at the very centre of

this. In 2010, there were only two European technology

companies, founded after 2000, valued at $1 billion

or more. In 2023, there are 311 companies with over a

billion-dollar valuation, and 61 of these are UK-based.

To remind shareholders, as the Company is at the

beginning of its investment journey, it will take time to

deploy the funds raised into portfolio companies that

the investment team consider to be good investment

opportunities. While we are in this early investment

phase, the portfolio will naturally be more concentrated

in fewer companies. This means that performance will

be more sensitive to the success and/or failure of these

investments than if the portfolio was larger.

As such, over the next couple of years, there may well

be a decline in overall value as the Company invests in

new businesses, some of which are at the start of their

growth journey and will need to build their technology,

prove their market, win new contracts, and grow their

teams. Their value will take time to grow, and inevitably

some of these will ultimately fail.

The long-term target is to pay an annual dividend of 5%

of the NAV. However, given the expected holding period

of target portfolio companies and restrictions imposed

on VCTs, it is very unlikely that the Company will be able

to pay dividends before 1 July 2025. During this time,

any growth in value will increase the net asset value

of the Company. Dividends are likely to be generated

from successful exits, so the Company is unlikely to pay

significant dividends until portfolio companies have time

to mature and be acquired.

I would like to conclude by thanking both my Board

colleagues and the Octopus team on behalf of all

shareholders for their hard work. I am excited to see

what the coming year brings for your Company.

Helen Sinclair

Chair

18 October 2023

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Annual report and financial statements 2023

Investment themes

Building a

sustainable

planet

Revitalising

healthcare

Empowering people

Building a sustainable planet

As society moves to a low carbon

economy, the way we produce and

consume information, materials

and energy is changing. Some of the

most exciting early-stage businesses

are helping to accelerate this transition.

Businesses under this theme might

be reducing carbon emissions,

protecting ecosystems, or creating a

circular economy that removes waste.

Empowering people

Future Generations VCT is investing in

businesses that are reimagining the

future of society. These companies

could democratise education or

financial services, disrupt the food

industry to stop people going hungry, or

increase connectivity between people

and protect their privacy online, driving

innovations that will make the world a

better and safer place.

Revitalising healthcare

Healthcare is essential. Future

Generations VCT is backing businesses

moving health and wellbeing

forward. That could mean investing in

entrepreneurs who are improving lives

through digital health solutions. Or

it might mean supporting businesses

helping people conquer addictions

or creating software that will make

healthcare services more efficient

and accessible.

Portfolio value by the three investment

themes as at 30 June 2023 (%)

Read more in the

Financials section on

pages 62 to 81

Top ten

The value of the top ten investments

as at 30 June 2023

Other investments

Value of the remaining portfolio

investments as at 30 June 2023

Cash

Value of cash in bank and money

market funds

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How Future Generations VCT works continued

Creating value for the long term

Cash deployment

The following graph shows Future Generations VCT's cash inflows and outflows during the year to demonstrate the movement from the opening to closing cash position:

•]

Cash inflows

Cash as at

30 June 2022

Management

fees

Other

costs

Fundraise New

investments

MMF

interest

Cash as at

30 June 2023

Cash outflows

£’000

29,826

(696)

(853)

14,904

(23,238)

350 20,292

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How Future Generations VCT works continued

Creating value for the long term continued

Valuations methodology

The pie charts below illustrate the split of valuation methodology (shown as a percentage of portfolio value and number of companies). The methodologies used for Future

Generations VCT include: ‘Calibration’ where a valuation is adjusted to reflect both market movements and performance of the investment since the initial funding round;

‘Last round’ which equates to the last fundraise price; and ‘Scenario analysis’: where there is uncertainty around the potential outcomes available to a company, a probability

weighted analysis is considered. For further information, please see Note 9.

Valuation

methodology

– by value

Valuation

methodology

– by number

of companies

Calibration Calibration

Scenario

analysis

Scenario

analysis

Last round Last round

5% 4%4% 4%91% 92%

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Annual report and financial statements 2023

Portfolio Manager’s review

At Octopus, our focus is on managing your investments and providing investors with clear and

transparent communication. Our annual and half-yearly updates are designed to keep you informed

about the progress of your investment.

Focus on Future Generations VCT’s performance

The NAV per share at 30 June 2023 was 94.3p, which represents a decrease in NAV of 1.8p per share versus a NAV of

96.1p per share as at 30 June 2022. The Company invests in three key areas that we believe demonstrate excellent

investment prospects and have potential to transform our world for the better.

Below is a breakdown of the 25 investments held as at 30 June 2023, showing the proportion and value of the

portfolio in each investment theme:

new investments completed in the

12 months to 30 June 2023

£24.9m

total value of the

portfolio as at 30 June 2023

Proportion by number of portfolio companies

in each theme

Value of the portfolio in each theme

Octopus was established

in 2000 and has a strong

commitment to both smaller

companies and to VCTs.

It currently manages five VCTs,

including Future Generations

VCT, with total net assets of

over £1.7 billion.

Building a

sustainable planet

Empowering

people

Revitalising

healthcare

£15.1m

£6.7m

32%

48%

20%

£3.1m

Building a

sustainable planet

Empowering

people

Revitalising

healthcare

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Annual report and financial statements 2023

Portfolio Manager’s review continued

Building a sustainable planet:

• Puraffinity is a smart materials

company which has developed a

design platform to create materials

which can capture the family

of ‘forever chemicals’ known as

PFAS (Per-and polyfluoroalkyl

substances).

• Neat is an embedded insurance

platform that gives merchants

the ability to provide insurance

bundles to their customers at a

competitive rate.

Empowering people:

• Cobee offers an employee benefits

platform.

• Correcto is an artificial intelligence

(AI) writing and grammar tool for

the Spanish language.

Revitalising healthcare:

• Little Journey is a digital eSupport

platform that prepares, informs and

provides support for families' healthcare

procedures and clinical trials.

• HelloSelf is a digital, personalised

psychological therapy and coaching

platform.

Overview of investments

Future Generations VCT completed 23 new investments in the reporting period, totalling £23.2 million. The total value of the portfolio as at 30 June 2023 is £24.9 million.

A further five investments completed after 30 June 2023.

Below are some examples of new investments made across our three investment themes during the year. For a full list, please see the Investment Portfolio on page 81.

A selection of Future Generations VCT's current portfolio

www.kita.earth

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Portfolio Manager’s review continued

Building a sustainable planet

To prevent the worst impacts of

climate change, alongside significantly

avoiding/reducing emissions, we must

remove gigatons of carbon dioxide

from the atmosphere annually for the

remainder of the 21st century.

Companies face multiple challenges in

executing net zero strategies: carbon removal

credits are in high demand and short supply,

carbon removal takes time, new technologies

need time to scale up and nature needs time

to grow. To meet future net zero targets,

carbon removal credits often need to be

purchased in advance. Carbon delivery risk can

act as a deterrent to companies that want

to build a net zero strategy and Kita offers a

solution that reduces this risk and gives a green

light to investment.

Kita’s flagship product is Carbon Purchase

Protection Cover. It protects buyers of

forward-purchased carbon removal credits

against under-delivery. If the carbon removal

credits underperform, Kita covers the loss (via

a reinsurance facility). With reduced risk in the

carbon transaction, carbon removal solutions

can access greater flows of consistent capital

to scale their impact faster: helping contribute

to a sustainable planet.

Kita bridges the insurance and carbon markets,

providing a bespoke portfolio of carbon

insurance products that offer security and

confidence to carbon projects and buyers of

carbon credits.

Kita is a Lloyd’s of London

Coverholder and regulated

bythe FCA

£4 million

total seed investment

secured in February2023

www.apheris.com

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Portfolio Manager’s review continued

Empowering people

Apheris enables governed, private and

secure computational access to data for

machine learning (ML) and analytics.

With a rise in standardised ML models, which

businesses can customise for specific use

cases, data becomes an organisation’s key

differentiator. However, businesses need to

safeguard their data assets and intellectual

property while leveraging it for ML.

The Apheris Compute Gateway ensures only

approved computations can be launched

on data, allowing ML-powered insights with

no need to share data. Compute Gateways

can communicate with each other, allowing

businesses to work collaboratively across

organisational or geographical boundaries,

while ensuring compliance with data privacy,

security and governance obligations.

7 to 3 years

– the reduction in time to

market for neuroscience

treatments using Apheris’

software

€8.7 million

raised in November 2022

www.percihealth.com

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Portfolio Manager’s review continued

Revitalising healthcare

The Perci team have built the first

comprehensive, digital clinic for cancer

patients. The service offers bespoke,

convenient healthcare with a focus on

holistic recovery, aimed at patients

living with cancer, as well as those

further along in their survivorship

journey.

The Perci platform offers access to a wealth of

experts across multi-disciplinary fields, offering

a physical, mental, social and emotional

evidence-based care, with the aim of delivering

better clinical outcomes for survivors.

Cancer survival starts on day one of a cancer

diagnosis, but while remission rates are

improving, advances in cancer treatment have

also introduced a wide range of long-term side

effects that require specialist help to manage.

Cancer doesn’t just impact health, it also has

a significant impact on psychological wellbeing,

sometimes making survivors feel isolated, as

well as carrying practical implications. Perci

Health believes that it’s time to let go of the

last historical taboos surrounding cancer, and

instead recognise it for the chronic condition

that it is, and address the high physical, mental,

emotional, social and financial costs associated

with it.

800

– the number of people living

with and beyond cancer who

have benefitted from Perci

Health's digital clinics.

£3.4 million

raised in April 2023

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Portfolio Manager’s review continued

Top ten investments

Portfolio company Cost

Valuation at

30 June 2023

Investment

theme

Tympa Health

£2.7m £2.7m

HelloSelf

£2.6m £2.6m

Cobee

£2.6m £2.5m

Pear Bio

£2.0m £2.0m

Infinitopes

£1.6m £1.6m

Skin + Me

£1.0m £1.3m

Apheris

£1.2m £1.2m

Elo Health

£1.3m £1.1m

Inflow

£1.0m £1.0m

Intrinsic

£0.9m £0.9m

Key:

Building a sustainable planet

Empowering people

Revitalising healthcare

Valuations

Future Generations VCT's portfolio companies are valued

in accordance with the International Private Equity and

Venture Capital valuation guidelines, as updated in

December 2022. This means we value the portfolio at

fair value, which is the price we expect people would be

willing to buy or sell an asset for, assuming they had all

the information we have available; are knowledgeable

parties with no pre-existing relationship; and that the

transaction is carried out under the normal course of

business. As a result, valuations have been re-appraised

in line with all these factors.

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Annual report and financial statements 2023

Portfolio Manager’s review continued

As part of our strategy, we require portfolio companies to put in place a Diversity

and Inclusion policy (D&I) and an Anti-Harassment policy. We also engage with

each company to help them understand their greenhouse gas (GHG) emissions and

support them to take action to minimise them. You can see how we are progressing

with these goals below, as at the date of this report:

Portfolio engagement

Engaged on monitoring GHG emissionsD&I policy status

Engagement status

of portfolio companies

with carbon

accounting tool

D&I policy status of

portfolio companies

Signed up | 16

Introduced | 8

In progress | 1

Policy in place | 100%

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Annual report and financial statements 2023

Portfolio Manager’s review continued

Outlook

Since Future Generations VCT was launched in January

2022, we have experienced a period of immense global

change and economic complexity. Whilst this has

brought greater challenges and hurdles for the Company

to overcome and work through, we are impressed with

how both the entrepreneurs we have invested in, and

the Octopus Ventures team, have navigated this in the

Company’s first full year of deployment.

The entrepreneurs we meet are intent on solving some of

the biggest challenges we have ever faced as a society

and planet by building successful companies which

could have a material and positive impact on people’s

lives. We believe that Octopus is very well placed

to source and secure some of the best investment

opportunities, generated by our extensive network and

reputation in the early-stage market. The portfolio as

at 30 June 2023 comprises of 25 companies spanning

all three of our investment themes which address these

challenges. We believe the entrepreneurs behind these

businesses have created some best-in-class solutions

that we are delighted to back.

The decline in NAV that we have seen in the year to

30 June 2023 is not unexpected in an early-stage fund,

and has been driven by the running costs.

The wide-ranging scope of Future Generations VCT’s

investment policy across its three investment themes,

some examples of which can be seen on pages 15 to 17,

allows us to build a diverse portfolio for the Company.

This diversity of stage, focus and offering gives us

greater confidence in the Company’s ability to succeed

in more turbulent economic times.

We are excited to have the opportunity to continue to

scale Future Generations VCT, support its ambition to

make the world a better place for future generations,

and hope to deliver attractive returns to shareholders.

Simon King

Partner and Lead Fund Manager

for Future Generations VCT

18 October 2023

Operating

responsibly

framework

of risks to

investments

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Annual report and financial statements 2023

Governance

Operating responsibly

The policy ensures Future Generations VCT

follows a three-step approach to responsible

investment which is aligned with Octopus Group’s

Responsible Investment policy.

Please view the Company’s policy here:

https://octopusinvestments.com/wp-content/

uploads/sites/3/2023/03/Future-Generations-VCT-

Responsible-Investment-Policy.pdf

Future Generations VCT has a policy in place, set by

the Board, to make sure Octopus Ventures considers

responsible investment within investment decisions in

relation to Future Generations VCT.

The Directors consider responsible investment

to be important and believe portfolio companies

should implement a framework to support

best practices, which in turn can help create

long-term value in the business.

This framework considers:

• materiality of risks to investments: the materiality of sustainability issues

in underlying portfolio;

• mission: the mission of an investment; and

• responsibility: a portfolio company’s values, culture and behaviour.

Future Generations VCT is responsible for implementing the policy. As the nature of

responsible investment, our investors and the wider business environment evolves,

the policy will be reviewed and, if necessary, updated.

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Operating responsibly continued

The Portfolio Manager's initiatives

Progress made:

• Between 1 June 2022 and 30 June 2023, 24% of

all the companies the Future Generations VCT's

investment team met with had at least one

founder who identified as female.

• Initiatives the investment team have launched

to help drive engagement with female

entrepreneurs include:

• offering 'office hours' to answer questions,

offering feedback to support entrepreneurs

who may not normally have access to this

type of forum;

• working more actively with earlier-stage angel

networks and incubators, as this earlier stage

of investment has typically a higher proportion

of female founders; and

• participating in industry-wide groups to

improve awareness and communicate our

commitment to supporting female founders.

• 33% of the portfolio companies have at least one

female founder.

Progress made:

• The ultimate goal is to reduce portfolio emissions

to minimise climate-related risks (see page 25)

and the immediate goal is to increase data

coverage to 100% within the next two years

(currently 60% of the Company’s portfolio

companies have been measured). Below is a

breakdown of GHG emissions reported on the

carbon monitoring tool provided by Octopus to

the portfolio companies. An explanation for the

different scopes can be read on page 26:

2022 GHG emissions in tonnes CO

e (based on

2021 full year data, three companies measured):

• Scope 1: 5.20

• Scope 2: 12.80

2023 GHG emissions in tonnes CO

e (based on

2022 full year data, seven companies measured):

• Scope 1: 22.26

• Scope 2: 24.36

The increase seen in the Scope 1 and 2 emissions

is due to a 133% increase in the number of

portfolio companies utilising the carbon

accounting tool.

Female diversity pledge:

By 2025, 30% of all new founder pitches to the

Future Generations VCT's investment team must be

businesses led or co-led by a woman and, by 2027,

this will increase to 50%.

Greenhouse gases (GHG):

Octopus engages with all portfolio companies on

their GHG and gives them access to appropriate

complimentary tools to support their understanding

of their carbon footprint.

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Annual report and financial statements 2023

Operating responsibly continued

Materiality of risks

to investments

Mission Responsibility

Future Generations VCT has a Responsible

Investment policy to make sure environmental,

social and governance risks of the Company's

underlying portfolio will be considered during the

investment process and any sustainability issues,

that could impact the financial performance of an

investment, are identified. To do this, a Responsible

Investment Tool is used which utilises guidance

from the Sustainability Accounting Standards

Board (SASB) to help identify and manage

any issues.

Once identified, the investment team consider

the exposure to these risks and engage directly

with the portfolio companies to understand how

appropriately they are managing the risks. Given

the nature of these tech-enabled businesses, the

most material risks identified include data security,

data privacy, and recruiting and managing a

global, diverse and skilled workforce.

Future Generations VCT's mission is to back

businesses with the power to transform the world

for the better. Whilst the Company doesn’t target

specific sustainability goals or objectives, Octopus

Investments tracks the number, amount invested

and value of companies in Future Generations

VCT's portfolio that are aligned with Octopus

Group’s three Investment themes: building a

sustainable planet, revitalising healthcare and

empowering people.

The Company will not invest in any business whose

activities or practices appear on the Octopus

Ventures Exclusion List, which includes sectors

such as tobacco, arms, fossil fuels, gambling and

deforestation.

The team endeavours to ensure that all portfolio

companies:

• provide safe and healthy working conditions;

• treat people fairly, irrespective of race, gender,

nationality, disability, political or religious

beliefs;

• do not accept bribes; and

• uphold high standards of business integrity at

all times.

Octopus Investments has created an Engagement

Tool which is sent to all portfolio companies to

help the Octopus Ventures investment team

understand whether a portfolio company

considers its wider stakeholders (community,

customers, people, planet and shareholders) within

decision-making, and provides tools and guidance

to help them adopt responsible practices.

The Octopus Ventures team also collect data

on diversity within the portfolio and actively

work with portfolio companies to support talent

management, recruitment and diversity.

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Annual report and financial statements 2023

FinancialsGovernance

Operating responsibly continued

February 2019

Becomes a

signatory to the

UNPRI

July 2022

Launched the annual

engagement survey to

the portfolio to collect

key metrics

November 2021

Signed up to

B Corp Climate

Collective, committing

to a 2030 net zero

target

September 2022

Launched Octopus Giving

(the Octopus charitable

foundation) to the portfolio

companies, offering to matched

funding for charity fundraising,

charity volunteer sessions and

dedicated support and advice

January 2021

Becomes B Corp

certified

March 2022

Launched carbon

management tool to

portfolio companies

June 2023

Launched the

in-house tool to assess

all new investment

opportunities to align with

responsible investment

goals

October 2022

Participated in the

British Business Bank

'Alison Rose Review of

Female Entrepreneurship'

June 2022

Announcement of

the Female diversity

pledge – see page 22

2019 2021 2022 2023

Key:

Octopus Investments actions

Octopus Ventures actions

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Annual report and financial statements 2023

Operating responsibly continued

Climate-related risks and opportunities

Whilst not a requirement, Future Generations VCT has chosen to continue evolving its disclosures in line with the

recommendations of the Task Force on Climate-related Financial Disclosures (TCFD) and has given some initial

disclosures under the main headings below, which will continue to evolve over future periods.

Octopus Investments

Day-to-day management

of Future Generations VCT’s

portfolio companies and

oversight of investment

decisions is undertaken by

Octopus Ventures and works

within Octopus Investments’

governance structures.

Impact and

Sustainability team

Sits within Octopus Investments

and works with Octopus

Ventures to implement

responsible investment

processes, and provide training,

tools and support around

disclosures and reporting.

Responsible Investment

(RI) Committee

Comprised of an Octopus

Founder, Chief Executive Officer,

Chief Investment Officer,

Head of Institutional, Head of

Impact and Sustainability and

Chief of Staff.

Provides RI oversight and

makes sure that appropriate

action has been taken to

address any concerns within the

Octopus Ventures Investment

Committee.

Octopus Ventures team

Accountable for the delivery

of the RI policies which form

part of the funds they manage.

Responsible investment

therefore forms part of the

investment process.

Future Generations

VCT Board

Considers RI as an integrated

element of investment strategy,

and oversight of climate-related

risks and opportunities forms

part of the existing risk

management process.

Governance

Strategic report Governance Financials

26 Octopus Future Generations VCT plc

Annual report and financial statements 2023

Operating responsibly continued

Strategy

With the transition to a lower carbon economy, the

Impact and Sustainability team are taking ‘transition

climate risks’ and ‘physical climate risks’ into

consideration to understand what could potentially be

material to portfolio company financial performance

in the short, medium and long term, and in both

best (1.5ºC temperature change) and worst case

(4ºC temperature change) climate scenarios. Where

these risks are identified as being relevant to portfolio

companies they will be addressed, for example:

• energy management: future increases in energy prices

relating to carbon taxes, carbon pricing or supply could

impact costs and therefore profitability. Recognising

that every company can reduce their energy usage,

the Octopus Ventures team are working with the

portfolio companies to understand and reduce

carbon emissions.

Future Generations VCT

Future Generations VCT recognises the need to conduct

its business, including investment decisions, in a

manner that is responsible to the environment wherever

possible. The Company does not produce any reportable

emissions as the fund management is outsourced

to Octopus, with no physical assets or property held

by Future Generations VCT. As the Company has no

employees or operations, it is not responsible for any

direct emissions.

Risk management

The investment team use guidance from the

Sustainability Accounting Standards Board (SASB)

to identify climate-related risks. Where potential

material climate-related risks have been identified, the

investment team assess how well the risk is managed by

the portfolio company. Where appropriate, this is raised

to the Investment Committee as part of the investment

process and is continually monitored.

Metrics and targets

Future Generations VCT invests in unquoted, early-stage

businesses. In contrast to later-stage, quoted businesses,

there is limited readily available data on climate-related

risks and opportunities that impact the portfolio

companies.

To understand the carbon emissions of the Future

Generations VCT portfolio, the Octopus Ventures team

have taken steps to measure the portfolio companies’

Scope 1 and 2 (GHG) emissions by providing them

with access to a carbon measurement tool that will

provide the companies with details of their carbon

footprint. Scope 1 emissions are those directly from

company-owned and controlled resources. Scope 2

emissions are indirect emissions from the generation

of purchased energy from a utility provider. Scope 3

emissions are the result of activities from assets not

owned or controlled by the reporting organisation,

but that the organisation indirectly affects in its value

chain. Whilst Octopus supports portfolio companies in

measuring some Scope 3 emissions, such as purchased

goods and services and business travel, this is an area

where it is looking to grow its capability to support the

portfolio companies that are looking to measure their

full scope.

Strategic report Governance Financials

27 Octopus Future Generations VCT plc

Annual report and financial statements 2023

Operating responsibly continued

Gender and diversity

The Board of Directors is comprised of three female

Non-Executive Directors with considerable experience of

the VCT industry and investment in early-stage growth

companies. The gender and diversity of the constitution

of the Board is reviewed on an annual basis.

Human rights issues

The Board seeks to conduct Future Generations VCT's

affairs responsibly. The Company is required by company

law to provide details of employee, human rights, social

and community issues, including information about

any policies it has in relation to these matters and the

effectiveness of such policies. As an externally managed

investment company with no employees, Future

Generations VCT does not maintain specific policies

in relation to these matters.

Whistleblowing

The Board considers, on an annual basis, the

arrangements implemented by Octopus to encourage

employees of the Portfolio Manager or the Company

Secretary to raise concerns in confidence, within their

organisation, about possible improprieties in matters of

financial reporting or other matters. The Whistleblowing

policy allows for any concerns to be raised via email or

telephone hotline. The Board is satisfied that adequate

arrangements are in place to allow an independent

investigation, and follow-on action where necessary,

to take place within the organisation.

Bribery Act

Octopus has introduced robust procedures, set out

in the Anti-Bribery policy, to ensure full compliance

with the Bribery Act 2010 and to make sure that the

highest standards of professional ethical conduct are

maintained. All employees and those working for, or on

behalf of, the firm are aware of their legal obligations

when conducting company business. This is done via

an online learning platform with annual declarations.

Section 172 of the Companies Act 2006 requires the

Directors of Future Generations VCT to act in a way that

they consider, in good faith, will most likely promote the

success of the Company for the benefit of the members

as a whole. In doing so, the Directors should have regard

(amongst other matters) to:

• the likely consequence of any decision in the

long term;

• the interests 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 community and the environment;

• the desirability of the Company maintaining a

reputation for high standards of business conduct;

and

• the need to act fairly as between members of the

Company.

As Future Generations VCT has no employees and no

customers in the traditional sense, there is nothing to

report in relation to these matters.

The Board considers its significant stakeholders to

be its shareholders, its third-party advisers and its

portfolio companies, all of which are considered in

decision-making.

The Board works closely with the Portfolio Manager in

reviewing how stakeholder issues are handled, ensuring

good governance and responsibility in managing the

affairs of Future Generations VCT. Key stakeholders from

the Portfolio Manager attend Board meetings, therefore

the Portfolio Manager has therefore been well informed

of any decisions the Board has made during the period

and, as a result, has had the opportunity to discuss the

impact these decisions may have.

Business strategy

The success of Future Generations VCT is driven by

its investment policy, which is set out in the Strategic

Report on page 35.

When considering business strategy, the Board considers

matters such as the interests of its stakeholders and the

long-term impact of its actions on Future Generations

VCT’s future and reputation.

The Board

The Board adopts the 2019 AIC Code of Corporate

Governance which provides a framework for the

governance of Venture Capital Trusts such as Future

Generations VCT. It is normal practice for Venture Capital

Trusts to delegate authority for day-to-day management

of the Company to a Portfolio Manager, and to outsource

administration, accounting and company secretarial

services. The Board then engages with the Portfolio

Manager in setting, approving and overseeing the

execution of the business strategy and related policies.

The Board has set KPIs relating to portfolio performance.

The Board also review areas over the course of the

financial year including Future Generations VCT’s

business strategy; key risks; stakeholder-related matters;

diversity and inclusivity; environmental matters;

corporate responsibility and governance; compliance

and legal matters.

The Board formally reviews the performance of the

Portfolio Manager on an annual basis.

Matters reserved for the Board include, but are not

limited to, all shareholder communication, the setting

of investment policy, investment of cash reserves,

the raising of capital and the allotment and issue

of shares, the buyback of shares, dividend policy,

Director appraisal and succession, financial reporting,

RIS announcements, compliance with UK Listing

Authority rules and FCA regulations.

Culture

The Directors seek to apply the ESG principles adopted

by the Portfolio Manager and these values help to

define the culture and relationship with the investment

team. There is a general principle of openness and

transparency in dealings between the Portfolio Manager

and the Directors, and clear policies covering, for

instance, investment process and conflicts, provide

a clear operating framework. Generally, the culture

should contribute to the purpose of producing

consistent returns over the long term and achieving the

agreed KPIs, which will deliver, most importantly, good

returns to shareholders.

Section 172(1) statement

Strategic report Governance Financials

28 Octopus Future Generations VCT plc

Annual report and financial statements 2023

Section 172(1) statement continued

Business ethics and governance

The Board is responsible for ensuring that the activities

of Future Generations VCT and its various investments

are conducted in compliance with the law and

applicable governance and regulatory regimes, and in

adherence with prevailing best practice for the relevant

industry. This includes reviewing internal controls,

ensuring that there is an appropriate balance of skills

and experience represented on the Board, and ensuring

that the financial statements give a true and fair view

of the state of affairs of Future Generations VCT. Further

detail can be found in the Directors’ Responsibilities

Statement on page 55. In the year to 30 June 2023 no

areas of concern have been flagged in this regard.

Relations with key stakeholders

The Board considers Octopus to be its key business

partner as it has responsibility for the provision of

investment management, administration, custody

and company secretarial services.

As Future Generations VCT is classified as a full-scope

Alternative Investment Fund under the Alternative

Investment Fund Management Directive (the ‘AIFM

Directive’), it has in place an agreement with

Octopus AIF Management Limited to act as Manager

(an authorised alternative investment fund manager

responsible for ensuring compliance with the AIFM

Directive). Octopus AIF Management Limited has

in turn appointed Octopus Investments Limited

to act as Portfolio Manager to Future Generations

VCT (responsible for portfolio management and

the day-to-day running of Future Generations VCT).

The AIF Manager’s main focus is risk management

and the review of the valuation of Future Generations

VCT’s portfolio.

The Board works with Octopus in the selection of

third-party providers such as the registrar, corporate

broker and VCT status adviser. Its selection is made on

the basis of quality of service, accuracy and price. Any

errors or delays reflect badly on Future Generations VCT,

but more importantly can cause inconvenience, and

potential loss, for shareholders. The performance of

third-party providers is reviewed annually.

Key decisions

Some of the key decisions made during the year that

required the Board to take into consideration Section

172(1) factors include:

Fundraising launch in 2023

In line with the Company’s objectives, the Board issued

an offer for subscription of shares on 19 January 2023

to raise up to £30 million, with an over-allotment facility

of £10 million. This was discussed with the Investment

Manager, and allowed new and existing shareholders

to invest in the Company.

Investment decisions

The Board monitors investment decisions and the

Company’s ability to meet the requirements of HMRC’s

VCT investment rules.

Communications with shareholders

The Board has decided to introduce a shareholder event,

to take place prior to the AGM in December 2023. This

will give shareholders an opportunity to ask questions of

the Portfolio Manager and Chair. Further details can be

found on page 53.

Strategic report Governance Financials

29 Octopus Future Generations VCT plc

Annual report and financial statements 2023

Section 172(1) statement continued

Our key stakeholders

Shareholders

Why we engage

The Board recognises the critical importance of

communication with shareholders. Their support

is fundamental to raising further capital which is

dependent on Future Generations VCT’s performance

and clear reporting on portfolio progress. Shareholders

are encouraged to attend and vote at shareholder

meetings and to raise questions in relation to Future

Generations VCT’s progress.

Portfolio companies

Why we engage

Future Generations VCT’s performance and the

performance of its underlying portfolio companies

are directly and intrinsically linked. The Portfolio

Manager monitors the portfolio companies through

a programme of regular company meetings as part

of its investment process.

Octopus and suppliers

Why we engage

Future Generations VCT is reliant on Octopus as

the key provider of investment management and

non-investment services. In addition, third parties

such as Computershare, as registrar, and Panmure

Gordon, as corporate broker, as well as lawyers and tax

advisers, provide key services for Future Generations

VCT and shareholders. Future Generations VCT

works with our suppliers to make sure that it can

provide an appropriate level of service and regulatory

compliance function. Future Generations VCT is

focused on ensuring that we have the right suppliers

and relationships that can effectively deliver the right

services for the business in line with applicable laws,

regulations and best practice.

How we engage

Company reports and other information are

published on the Octopus Investments website

www.octopusinvestments.com/futuregenvct/.

Any shareholder enquiries will be handled promptly

by Octopus Investments. The Chair responds to

communications addressed to the Board. The Directors

aim to make sure that the annual report and financial

statements are fair, balanced and understandable,

and that sufficient information is provided to

shareholders to assess Future Generations VCT’s

performance, business approach and strategy.

How we engage

The Board has given Octopus discretionary authority

to vote on portfolio company resolutions on its behalf

as part of its approach to corporate governance,

and encourages it to do so. As part of the portfolio

valuation review, the Board is provided with sufficient

information and support to scrutinise the performance

of the portfolio companies.

How we engage

Future Generations VCT engages with Octopus

and its third-party suppliers on the basis of proven

track record with observance of minimum levels of

performance, ethics and governance in order to create

value and mitigate risk. The Board has a positive and

open relationship with Octopus. Octopus attends all

Board meetings.

Various independent professional advisers are utilised

by Future Generations VCT to help with certain

activities, including regulatory and legal compliance,

for example lawyers, tax advisers, corporate brokers

and auditors.

Strategic report Governance Financials

30 Octopus Future Generations VCT plc

Annual report and financial statements 2023

Section 172(1) statement continued

Our key stakeholders continued

Community and environment

Why we engage

Future Generations VCT invests in businesses that are

helping to build a sustainable planet, empower people

or revitalise healthcare.

Government and regulators

Why we engage

Good governance and compliance with applicable

regulations is vital in ensuring the success of Future

Generations VCT and the regimes within which it

operates. In addition, the ‘sunset clause’, which was

introduced in 2015 for VCTs, stated that income tax

relief would no longer be given to subscriptions made

on or after 6 April 2025, but it is looking likely that the

VCT legislation will be renewed as the government

have stated they are supportive of extending VCTs

in the future.

How we engage

In addition to the Board’s recognition that the ESG

policy should help to mitigate the impacts of climate

change, the Board has adopted a paperless operation

since launch, and uses conferencing platforms at times

to reduce travel.

The Board requires that Octopus collects data on

diversity within the portfolio and actively works with

our portfolio companies on an ongoing basis to

support their talent management and recruitment,

staff wellbeing and diversity policies and initiatives.

A condition of our investment is that the company

must have in place a Diversity and Inclusion policy, as

well as an Anti-Harassment and Discrimination policy.

How we engage

The Board encourages openness and transparency

and promotes proactive compliance with all relevant

regulation.

Future Generations VCT, through its Portfolio Manager,

engages with government and regulatory bodies at

regular intervals as well as participating in focus groups

and research with industry bodies.

Government and regulatory policy informs strategic

decision-making at Board level with consideration

given to the impact Future Generations VCT has on

the sector.

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31 Octopus Future Generations VCT plc

Annual report and financial statements 2023

Risks and risk management

The Board assesses the

risks faced by Future

Generations VCT,

reviews the mitigating

controls and monitors

the effectiveness of

these controls.

Principal risks, emerging risks

and risk management

Detailed on the following pages are the

principal risks of Future Generations VCT,

and the mitigating actions in relation to

those risks.

In addition to the principal risks,

emerging risks including adverse changes

in the global macroeconomic environment,

climate change, high market valuations

and geopolitical protectionism are

monitored by the Board.

The Board seeks to mitigate risks by setting

policy, regularly reviewing performance and

monitoring progress and compliance. In the

mitigation and management of these risks,

the Board applies the principles detailed in

the Financial Reporting Council’s Guidance

on Risk Management, Internal Control and

Related Financial and Business Reporting.

Mitigation

Octopus has significant experience and a strong track

record of investing in early-stage unquoted companies,

and appropriate due diligence is undertaken on every

new investment. A member of the Octopus Ventures

team is typically appointed to the board of a portfolio

company, and regular board reports are prepared by

the portfolio company’s management and examined

by the Portfolio Manager. This arrangement, in

conjunction with its portfolio talent team’s active

involvement, allows Future Generations VCT to play

a prominent role in a portfolio company’s ongoing

development and strategy.

Mitigation

Octopus tracks Future Generations VCT’s qualifying

status throughout the period, and reviews this at

key points, including at the point of investment and

realisation. This status is reported to the Board at each

Board meeting. The Future Generations VCT Board

has also engaged external independent advisers to

undertake an independent VCT status monitoring role.

Change

Given the level of independent verification, a systemic

issue which would result in loss of VCT status is

considered less likely and therefore a decreased risk.

Change

Increased due to the difficult macro environment and

challenging trading conditions for some companies.

Investment performance VCT qualifying status

The focus of Future Generations VCT investments is

into early-stage, unquoted, small and medium-sized

VCT qualifying companies which, by their nature, entail

a higher level of risk and shorter cash runway than

investments in larger quoted companies.

Future Generations VCT is required at all times to

observe the conditions for the maintenance of

approved VCT status. The loss of such approval could

lead to Future Generations VCT and its investors losing

access to the various tax benefits associated with VCT

status and investment.

Strategic report Governance Financials

32 Octopus Future Generations VCT plc

Annual report and financial statements 2023

Risks and risk management continued

Mitigation

The Portfolio Manager has a broad team experienced

in and focused on early-stage investing. This mitigates

the risk of any one individual with the required skill set

and knowledge of venture capital investing, and the

portfolio specifically, leaving. Key investment staff are

also incentivised via the performance incentive fee.

Mitigation

The Future Generations VCT Board reviews the system

of internal controls, both financial and non-financial,

operated by Octopus (to the extent the latter are

relevant to Future Generations VCT internal controls).

These include controls designed to make sure that

Future Generations VCT assets are safeguarded and

that proper accounting records are maintained.

Mitigation

Annual due diligence is conducted on third parties

which includes a review of their controls for information

security. Octopus has a dedicated information security

team and a third party is engaged to provide continual

protection in this area. A security framework is in place

to help prevent malicious events.

Change

No overall change in risk exposure on balance.

Change

No overall change in risk exposure on balance.

Change

No overall change on balance, although cyber threat

remains a significant risk area faced by all providers.

Loss of key people Information securityOperational

The loss of key investment staff by the Portfolio

Manager could lead to poor fund management

and/or performance due to lack of continuity or

understanding of Future Generations VCT.

A loss of key data could result in a data breach and

fines. The Future Generations VCT Board is reliant

on Octopus and third parties to take appropriate

measures to prevent a loss of confidential

customer information.

The Future Generations VCT Board is reliant on the

Portfolio Manager to manage investments effectively,

and manage the services of a number of third parties,

in particular the registrar, depositary and tax advisers.

A failure of the systems or controls at Octopus or

third-party providers could lead to an inability to

provide accurate reporting and accounting and to

ensure adherence to VCT rules.

Strategic report Governance Financials

33 Octopus Future Generations VCT plc

Annual report and financial statements 2023

Risks and risk management continued

Mitigation

Future Generations VCT aims to invest in a diverse

portfolio of companies, across a range of sectors,

which helps to mitigate against the impact on any

one sector. Future Generations VCT also maintains

adequate liquidity to make sure that it can continue

to provide follow-on investment to those portfolio

companies which require it and which is supported by

the individual investment case.

Mitigation

The Portfolio Manager engages with HM Treasury and

industry bodies to demonstrate the positive benefits

of VCTs in terms of growing early-stage companies,

creating jobs and increasing tax revenue, and to help

shape any change to VCT legislation. The ‘sunset

clause’ meant that in 2025 the government would need

to renew the legislation to allow VCTs to continue to

operate under the current legislation. However, recent

government announcements have been supportive of

legislation renewal in support of VCT's.

Mitigation

Future Generations VCT’s liquidity risk is managed

on a continuing basis by Octopus in accordance with

policies and procedures agreed by the Board. Future

Generations VCT’s overall liquidity risks are monitored

on a quarterly basis by the Board, with frequent

budgeting and close monitoring of available cash

resources. Future Generations VCT maintains sufficient

investments in cash and readily realisable securities to

meet its financial obligations. At 30 June 2023, these

resources were valued at £20,292,000.

Change

No overall change, although there remains some

uncertainty around removal of the sunset clause.

Change

Increased due to continued uncertainty in an

environment that includes high interest rates, high

inflation and other economic factors.

Change

Increased to reflect the potential knock-on effects

of economic uncertainty, impacting fundraising and

increasing the risk of disposal failure.

LiquidityEconomic Legislative

The risk that Future Generations VCT’s available cash

will not be sufficient to meet its financial obligations.

Future Generations VCT invests into smaller unquoted

companies, which are inherently illiquid as there is no

readily available market for these shares. Therefore,

these may be difficult to realise for their fair market

value at short notice.

Events such as an economic recession, movement in

interest rates, inflation and rising living costs could

adversely affect some smaller companies’ valuations,

as they may be more vulnerable to changes in trading

conditions or the sectors in which they operate.

This could result in a reduction in the value of Future

Generations VCT assets.

A change to the VCT regulations could adversely

impact Future Generations VCT by restricting the

companies Future Generations VCT can invest in under

its current strategy. Similarly, changes to VCT tax

reliefs for investors could make VCTs less attractive

and impact Future Generations VCT’s ability to

raise further funds.

Strategic report Governance Financials

34 Octopus Future Generations VCT plc

Annual report and financial statements 2023

Business review

Investment policy

Future Generations VCT’s focus is on providing

early-stage, development and expansion funding to

unquoted companies which it believes will generate a

financial return and with business activities which are

aligned with certain investment themes. Investments

will be made in unquoted companies which fall

within the following sustainability themes: building a

sustainable planet, empowering people, and revitalising

healthcare. Future Generations VCT will typically

make an initial investment of £0.1 million to £10 million

and may make further follow-on investments into

existing portfolio companies. Due to constraints of VCT

regulations, the upper limit of £10 million will become

relevant as the Company grows.

No material changes may be made to Future

Generations VCT’s investment policy without the prior

approval of shareholders by the passing of an Ordinary

Resolution. The Directors will continually monitor the

investment process and ensure compliance with the

investment policy.

The Directors will control the overall risk of the portfolio

by ensuring that Future Generations VCT has exposure

to a diversified range of portfolio companies from

a number of different sectors. Concentration risk is

mitigated by ensuring that at the point of investment no

one investment will represent more than 15% (by value

as calculated pursuant to the VCT legislation) of Future

Generations VCT’s total investments.

Any borrowing by Future Generations VCT for the

purposes of making investments will be in accordance

with its Articles of Association. The investment profile is

expected to be:

• 80-90% in VCT qualifying investments, primarily in

unquoted companies; and

• 10-20% in non-VCT qualifying investments or cash.

Non-VCT qualifying investments

An active approach will be taken to manage any cash

held, prior to investing in VCT qualifying companies.

After the Company has ensured it satisfies all VCT

investment qualification targets required by HMRC,

the majority of the remaining cash will be invested

in accordance with HMRC rules for non-qualifying

investments. It is intended that this will include

Undertakings for Collective Investments in Transferable

Securities (UCITS), corporate bonds or other money

market funds, including those managed by Octopus.

VCT qualifying investments

Investment decisions made must adhere to HMRC’s VCT

qualification rules. In addition to adhering to the VCT

rules, when contemplating a prospective investment in a

company, particular regard is made to:

• the strength of the management team;

• large, typically global, addressable markets;

• the portfolio company’s ability to sustain a

competitive advantage;

• the existence of proprietary technology;

• alignment with Future Generations VCT's investment

themes;

• visibility over future revenues and recurring income;

and

• the portfolio company’s prospects of being sold or

floated in the future, at a significant multiple on the

initial cost of investment.

A review of the investment portfolio and of market

conditions during the period is included in the Chair’s

Statement and Portfolio Manager’s Review which

form part of the Strategic Report on pages 2 and 13

respectively.

Liquidity strategy

The Board’s strategy is to maintain an appropriate level

of liquidity on the balance sheet to continue to achieve

the following three targets:

• to support further investment in existing portfolio

companies if required;

• to take advantage of new investment opportunities

as they arise; and

• to cover the running costs of Future Generations VCT

as they fall due.

Liquidity in Future Generations VCT is primarily driven by

fundraising activities and in future, profitable exits.

VCT regulation

Compliance with the required VCT rules and regulations

is considered when all investment decisions are made.

Octopus monitors this on a continuous basis and reports

on it to the Board on a quarterly basis. Shoosmiths

LLP performs an independent review, which includes a

comprehensive validation exercise. One of the primary

purposes of the investment policy is to make sure Future

Generations VCT continues to adhere to the VCT rules

and maintains approval as a VCT by HMRC. The main

criteria to which Future Generations VCT must adhere

are detailed on page 82. Future Generations VCT will

continue to ensure its compliance with the qualification

requirements. For rules that don’t yet apply to Future

Generations VCT, Octopus prepares forecasts to ensure

that qualification will be met when they are applicable.

Strategic report Governance Financials

35 Octopus Future Generations VCT plc

Annual report and financial statements 2023

Business review continued

Key Performance Indicators (KPIs)

As a VCT, the long-term objective is to provide

shareholders with attractive dividends and capital return

by investing its funds in a broad spread of unquoted

UK companies which meet the relevant criteria for

VCTs. Future Generations VCT does not expect to pay

dividends before 1 July 2025, whereby funds will be fully

invested and portfolio companies may start to mature.

The Board has identified four key performance measures

to assess the Company’s success in meeting these

objectives. Some of these are classified as alternative

performance measures (APMs) in line with Financial

Reporting Council (FRC) guidance. The Glossary of

Terms on page 84 has further details.

1. NAV per share

The Company’s target is for the NAV to stay flat or

increase as it expects to pay out any capital growth

as dividends. The NAV per share as at 30 June 2023

was 94.3p.

2. Total return per share (APM)

Total return is calculated as movement in NAV per share

in the period plus dividends paid in the period, divided by

the NAV per share at the beginning of the period. Total

return on the NAV per share enables shareholders to

evaluate more clearly the performance of the Company,

as it reflects the underlying value of the portfolio at

the reporting date. The total return per share will be

applicable in future periods.

3. Total ongoing charges (APM)

The ongoing charges ratio has been calculated

using the AIC recommended methodology and

excludes irrecoverable VAT, exceptional costs and trail

commission. The Company aims for this to be lower

than 3.0%. The total ongoing charges were 3.0% as

at 30 June 2023.

4. VCT qualification %

Future Generations VCT must comply with VCT

legislation set out by HMRC. A key requirement is to

achieve and then maintain at least an 80% qualifying

investment level by 1 July 2024. The target is for this to

be 80-90%. In addition, at least 30% of all new funds

raised will need to be invested in qualifying holdings

within 12 months of the end of the accounting period

in which the VCT issued the shares. The Company is on

target to comply with these requirements.

Performance

The Board is responsible for Future Generations VCT’s

investment strategy and performance, although the

management of the investment portfolio is delegated

to Octopus through the Investment Management

Agreement, as referred to in the Directors’ Report on

page 50. The Board will look to expand on performance

in subsequent reports as the Future Generations VCT

portfolio grows.

The graph below compares the NAV total return

of Future Generations VCT over the period from

November 2021 to June 2023 with the total return from

a notional investment in the FTSE Small cap index over

the same period (all rebased to 100p). This index is

considered to be the most appropriate broad equity

market index for comparative purposes, given the

nature of the underlying investments. The Board wishes

to point out that VCTs are not able to make qualifying

investments in companies quoted on the Main Market

in their observance of the HMRC rules.

The Strategic Report was approved on behalf of the

Board by:

Helen Sinclair

Chair

18 October 2023

100

120

Incorporation:

17 November 2021

Feb 22Dec 21

Apr 22

Feb 23

Apr 23

Jun 23

Jun 22

Aug 22

Oct 22

Dec 22

140

Value of £100 investment (£)

FTSE Small cap ex investment trusts total return, based on £100 notional investment on 17 November 2021 and the

reinvestment of all income.

NAV total return (gross dividend reinvested), based on a notional investment of £100 on 17 November 2021 .

NAV total return (gross dividend reinvested) + 30% upfront income tax relief, based on a notional investment of £100

on 17 November 2021.

Strategic report Governance Financials

36 Octopus Future Generations VCT plc

Annual report and financial statements 2023

Strategic report Governance Financials

37 Octopus Future Generations VCT plc

Annual report and financial statements 2023

Governance

What’s in this section

Board of Directors 38

Corporate governance report 39

Leadership and purpose 41

Division of responsibilities 42

Composition, succession and evaluation 43

Audit, risk and internal control 44

Management Engagement Committee 47

Remuneration 48

Directors’ report 50

Strategic report Governance Financials

38 Octopus Future Generations VCT plc

Annual report and financial statements 2023

Audit Committee Remuneration and Nomination Committee

Management Engagement Committee Chair Independent

Board of Directors

Helen Sinclair

Independent Non-Executive Chair

Helen has extensive experience of investing in a wide

range of small and medium-sized businesses. She

has an MA from the University of Cambridge and

an MBA from INSEAD Business School. She worked

for 3i (1991 to 1998) and subsequently co-founded

Matrix Private Equity in 2000 (which became

Mobeus Equity Partners), raising two funds, Mobeus

Income & Growth 2 VCT and Matrix Enterprise Fund.

Helen is a non-executive director of North East

Finance (Holdco) Ltd, North East Finance (Subco)

Ltd, Sherborne Investors (Guernsey) C Limited, WH

Ireland plc, Shires Income plc and BlackRock Smaller

Companies Trust plc.

Joanna Santinon

Independent Non-Executive Director

Joanna is a chartered accountant and chartered

tax adviser. She specialised in tax, transactions and

private equity, and has wider experience including

mergers and acquisitions, strategic investments,

capital raisings and listings from a career spanning

24 years at Ernst & Young (EY), where she was a

member of the London Markets Board and led the

Private Tax team in London through a transformation

and growth period. During her time with EY, Joanna

played key roles in transactions in the UK and Europe.

She co-founded the EY Women’s Network, which

she led for over ten years. Joanna also led the EY

UK Entrepreneur of the Year Programme. She is

currently a Trustee of The Centre for Entrepreneurs

and a member of the School Governing Board at

Sutton High School for Girls GDST. Joanna is also a

non-executive director of Guinness VCT plc and Ecofin

Global Utilities and Infrastructure Trust plc.

Emma Davies

Non-Executive Director

Emma has a wealth of experience, expertise and

networks from a range of world-class investment

houses including J.P. Morgan, Perry Capital,

Big Society Capital (where she was the Chief

Investment Officer) and The Wellcome Trust.

She spent five years as a partner at Marylebone

Partners, building and leading their direct investing

capability, and was co-CEO of Octopus Ventures

from 2021 to 2023. She has a particular interest in

ESG/impact considerations and has an MA from

Oxford University and an MSc from LSE. Emma

is currently Chief Investment Officer of Guy’s

& St Thomas’ Foundation, a non-executive director

and audit committee chair for Riverstone Credit

Opportunities Income Trust plc, and a non-executive

director of Baillie Gifford European Growth Trust Plc.

Strategic report Governance Financials

39 Octopus Future Generations VCT plc

Annual report and financial statements 2023

Corporate governance report

Leadership and purpose

The Board is responsible for leading the business in

the way which it believes is most likely to lead to

long-term sustainable success. This includes

effective engagement with our stakeholders.

Read more on pages 48 to 49

Corporate governance report continued

Viability statement

In accordance with the FRC UK Corporate Governance

Code published in 2018 and provision 36 of the AIC

Code of Corporate Governance, the Directors have

assessed the prospects of Future Generations VCT over

a period of five years, consistent with the expected

investment holding period of an investor. A fundraising

was launched on 19 January 2023 and is due to close

for new applications on 31 October 2023, proposing

to raise £30 million with an over-allotment of up to

£10 million. Under VCT rules, subscribing investors are

required to hold their investment for a five-year period

in order to benefit from the associated tax reliefs.

The Board regularly considers strategy, including investor

demand for Future Generations VCT’s shares, and a

five-year period is considered to be a reasonable time

horizon for this.

The Board carried out a robust assessment of the

emerging and principal risks facing Future Generations

VCT and its current position. This included the cost of

living crisis, rising interest rates, the war in Ukraine and

any other risks which may adversely impact its business

model, future performance, solvency or liquidity,

and focused on the major factors which affect the

economic, regulatory and political environment.

Particular consideration was given to Future Generations

VCT’s reliance on, and close working relationship with,

the Portfolio Manager. The principal risks faced by Future

Generations VCT and the procedures in place to monitor

and mitigate them are set out on pages 32 to 34.

The Board has carried out robust stress testing of cash

flows, which included assessing the resilience of portfolio

companies, including the requirement for any future

financial support.

The Board has additionally considered the ability of

Future Generations VCT to comply with the ongoing

conditions to make sure it maintains its VCT qualifying

status under its current investment policy.

Based on this assessment, the Board confirms that it

has a reasonable expectation that Future Generations

VCT will be able to continue in operation and meet

its liabilities as they fall due over the five-year period

to 30 June 2028. The Board is mindful of the ongoing

risks and will continue to make sure that appropriate

safeguards are in place, in addition to monitoring the

cash flow forecasts to make sure Future Generations

VCT has sufficient liquidity.

Going concern

Future Generations VCT’s business activities, together

with the factors likely to affect its future development,

performance and position, are set out in the Strategic

Report. Further details on the management of financial

risk can be found in Note 15 of the Financial Statements.

The Board receives reports from Octopus and the

Directors believe that Future Generations VCT has

adequate financial resources to continue in operational

existence for a period of at least 12 months from the

date of the signing of these financial statements.

In reaching this conclusion the Directors have

considered the liquid assets of Future Generations VCT

and its ability to meet its obligations as they fall due.

As no material uncertainties leading to significant

doubt about going concern have been identified,

and taking into account all available information

about Future Generations VCT, the Directors believe

that it is appropriate to continue to adopt the going

concern basis of accounting in preparing the financial

statements.

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Annual report and financial statements 2023

Leadership and purpose

Board of Directors

Future Generations VCT currently has a Board of three

Non-Executive Directors, two of whom are considered

to be independent. Emma Davies is not considered to

be independent due to her previous role as co-CEO of

Octopus Ventures.

The Board meets on a quarterly basis, and will meet on

other occasions as necessary, to review the investment

performance and monitor compliance with the

investment policy laid down by the Board as set out

in the Strategic Report on page 35.

The Board has a formal schedule of matters specifically

reserved for its decision which include:

• the consideration and approval of future

developments or changes to the investment policy,

including risk and asset allocation;

• consideration of corporate strategy;

• approval of the appropriate dividend to be paid to the

shareholders;

• approval of the annual report and the unaudited

half-yearly report;

• the appointments to and resignations from the

Board, including planning for succession;

• the appointment, evaluation, removal and

remuneration of Octopus;

• the performance of Future Generations VCT, including

monitoring the discount of the NAV to the share

price; and

• monitoring shareholder profiles and considering

shareholder communications.

During the year there were four formal Board meetings, attended by all of the Directors, together with meetings of

the Audit Committee, Remuneration and Nomination Committee and Management Engagement Committee as

detailed below. In addition, a number of ad hoc meetings were held remotely to deal with matters such as the formal

approval of the annual and half-year results, approval of fundraising documentation, the annual report process and

audit planning.

Board meeting

attendance

Audit Committee

meeting attendance

Remuneration

and Nomination

Committee meeting

attendance

Management

Engagement

Committee meeting

attendance

Helen Sinclair 4 2 2 2

Joanna Santinon 4 2 2 2

Emma Davies 4 n/a n/a n/a

The Chair leads the Board in the determination of its strategy and in the achievement of its objectives. The Chair

is responsible for organising the business of the Board, ensuring its effectiveness and setting its agenda, and has

no involvement in the day-to-day business of Future Generations VCT. She facilitates the effective contribution of

the Directors and makes sure that they receive accurate, timely and clear information and that they communicate

effectively with shareholders.

The company secretarial function is discharged by Octopus Company Secretarial Services Limited, which is

responsible for advising the Board, through the Chair, on all governance matters. All Directors have access to the

advice and services of the Company Secretary, who has administrative responsibility for the meetings of the Board

and its committees. Directors may also take independent professional advice at Future Generations VCT’s expense

where necessary in the performance of their duties. The Board does not consider it necessary for the size of the Board

or Future Generations VCT to identify a member of the Board as the senior Non-Executive Director.

Future Generations VCT’s Articles of Association and the schedule of matters reserved to the Board for decision

provide that the appointment and removal of the Company Secretary is a matter for the full Board.

Strategic report Governance Financials

42 Octopus Future Generations VCT plc

Annual report and financial statements 2023

Division of responsibilities

Board committees

The Board has appointed three committees, with

delegated powers, to make recommendations to the

Board in specific areas.

The Audit Committee consists of two Directors, both of

whom are independent. The Audit Committee is chaired

by Joanna Santinon, whom the Committee believes

possesses appropriate and relevant financial experience

as a chartered accountant. The Board consider it

appropriate for Helen Sinclair, as Chair of the Board, to

be a member of the Audit Committee due to the limited

size of the Board. The Audit Committee monitors the

integrity of the financial statements of the Company,

and any other formal announcements relating to its

financial performance. Details of the work undertaken

by the Audit Committee are set out on pages 44 to 46.

The Remuneration and Nomination Committee consists

of two independent Directors. The Committee advises

the Board on the composition of the Board and its

committees, in making appointments to the Board

taking account of diversity, and ensuring suitable

succession plans are in place for Directors. It also has

responsibility for setting the Remuneration policy for the

Non-Executive Directors. Details of the work undertaken

by the Remuneration and Nomination Committee

are set out on page 48. Helen Sinclair chairs the

Remuneration and Nomination Committee.

The Management Engagement Committee consists

of two independent Directors. The Committee is

responsible for evaluating the performance of the

Portfolio Manager and other third-party service

providers engaged by the Company. Details of the

work undertaken by the Management Engagement

Committee are set out on page 47. Joanna Santinon

chairs the Management Engagement Committee.

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43 Octopus Future Generations VCT plc

Annual report and financial statements 2023

Composition, succession and evaluation

Future Generations VCT’s Articles of Association require that one-third of Directors

should retire by rotation each year and seek re-election at the AGM, and that Directors

appointed by the Board should seek re-appointment at the next AGM. All Directors are

required to submit themselves for re-election at least every three years; however, it was

agreed that all Directors will stand for re-election annually going forward.

Date of original

appointment

Date

for re-election

Helen Sinclair (Chair) 21 January 2022 11 December 2023

Joanna Santinon 21 January 2022 11 December 2023

Emma Davies 21 January 2022 11 December 2023

Appointment and replacement of Directors

A person may be appointed as a Director of Future Generations VCT by the

shareholders in a general meeting by Ordinary Resolution (requiring a simple majority

of the persons voting on the relevant resolution) or by the Directors. No person, other

than a Director retiring by rotation or otherwise, shall be appointed or re-appointed

a Director at any general meeting unless they are recommended by the Directors or,

not less than seven nor more than 42 clear days before the date appointed for the

meeting, notice is given to Future Generations VCT of the intention to propose that

person for appointment or re-appointment in the form and manner set out in Future

Generations VCT’s Articles of Association. Each Director who is appointed by the

Directors (and who has not been elected as a Director by the members at a general

meeting held in the interval since their appointment as a Director) is to be subject

to election as a Director of Future Generations VCT by the members at the first AGM

following his or her appointment.

At each AGM, one-third of the Directors for the time being, or if their number is

not three or an integral multiple of three the number nearest to but not exceeding

one-third, are to be subject to re-election. The Companies Act 2006 allows

shareholders in a general meeting by Ordinary Resolution (requiring a simple majority

of the persons voting on the relevant resolution) to remove any Director before the

expiration of his or her period of office, but without prejudice to any claim for damages

which the Director may have for breach of any contract of service between him or her

and Future Generations VCT. A person also ceases to be a Director if he or she resigns

in writing, ceases to be a Director by virtue of any provision of the Companies Act,

becomes prohibited by law from being a Director, becomes bankrupt or is the subject

of a relevant insolvency procedure, or becomes of unsound mind, or if the Board so

decides following at least six months’ absence without leave or if he or she becomes

subject to relevant procedures under the mental health laws, as set out in Future

Generations VCT’s Articles of Association.

Independence

We believe that, in line with the AIC Code, all members of the Board marked as

independent are so in character and judgement with respect to their duties to the

shareholders. The Board considers the experience, range of skills, knowledge of Future

Generations VCT and its operating environment and diversity of the Directors.

Performance evaluation

Each year the Remuneration and Nomination Committee will conduct a formal

performance evaluation of the Board as a whole, its committees and the Directors.

The first performance evaluation took place during the year ended 30 June 2023 in the

form of a questionnaire completed by each Director. The Chair of the Remuneration

and Nomination Committee provides a summary of the findings to the Board, which

is discussed and an action plan agreed. Following the evaluation it was agreed that

recruitment for a fourth Non-Executive Director be initiated. There were no further

issues requiring action in the year. The performance of the Chair was evaluated by the

other Directors. As a result of the evaluation, the Board considers that all Directors

continue to make an effective contribution and have the requisite skills and experience

to continue to provide able leadership and direction for Future Generations VCT.

The Management Engagement Committee conducted an evaluation of Octopus, as

the Portfolio Manager, with feedback of the results being provided to Octopus. The

Management Engagement Committee also considered the oversight and performance

of other third-party providers in the year under review.

Strategic report Governance Financials

44 Octopus Future Generations VCT plc

Annual report and financial statements 2023

Audit, risk and internal control

Audit Committee report

This report is submitted in accordance with the AIC

Code in respect of the year ended 30 June 2023 and

describes the duties and work of the Audit Committee.

The Committee’s key objective is the provision of

effective governance of the appropriateness of Future

Generations VCT’s financial reporting, the performance

of the auditor and the management of the internal

control and business risks systems. The Directors forming

the Audit Committee can be found on page 38.

The Audit Committee’s terms of reference include the

following responsibilities:

• reviewing and making recommendations to the

Board in relation to Future Generations VCT’s

published financial statements and other formal

announcements relating to Future Generations

VCT’s financial performance;

• advising the Board on whether the annual report

and financial statements, taken as a whole, is fair,

balanced and understandable;

• advising the Board on whether the annual report and

financial statements provides necessary information

for shareholders to assess performance, business

model and strategy;

• reviewing and making recommendations to the

Board in relation to Future Generations VCT’s internal

control (including internal financial control) and risk

management systems;

• annually considering the need for an internal audit

function;

• making recommendations to the Board in relation

to the appointment, re-appointment and removal of

the external auditor and approving the remuneration

and terms of engagement of the external auditor;

• reviewing and monitoring the external auditor’s

independence and objectivity and the effectiveness

of the audit process, taking into consideration

relevant UK professional regulatory requirements;

• monitoring the extent to which the external auditor

is engaged to supply non-audit services; and

• ensuring that Octopus has arrangements in place for

the investigation and follow-up of any concerns raised

confidentially by staff in relation to the propriety of

financial reporting or other matters.

As part of the process of working with the Board to

maximise effectiveness, meetings of the Committee

usually take place immediately prior to a Board meeting

and a report is provided on relevant matters to enable

the Board to carry out its duties.

The Committee reviews its terms of reference and

its effectiveness annually and recommends to the

Board any changes required as a result of the review.

The terms of reference are available on request from

Future Generations VCT’s Company Secretary. The

Committee meets twice per year and on an ad hoc basis

as necessary and has direct access to BDO LLP, Future

Generations VCT’s external auditor.

When considering whether to recommend the

appointment or re-appointment of the external auditor

the Committee takes into account the tenure of the

current auditor in addition to comparing the fees

charged by similar-sized audit firms.

Auditor appointment

BDO LLP were appointed on 25 July 2022 as Future

Generations VCT’s external auditor. The effectiveness

of the external audit will be assessed as part of the

Board and committee evaluation process which is

conducted annually, and by the quality and content of

the audit plan and report provided to the Committee

by the auditor and the resultant discussions on topics

raised. The Committee also challenges the auditor

when present at a Committee meeting, if appropriate.

Auditor independence and objectivity

When considering the effectiveness of the external

audit, the Committee considered the quality and

content of the audit plan and report provided by the

auditor and the resultant reporting and discussions

on topics raised.

The Committee challenged the auditor on its

independence and objectivity prior to their

engagement. The Committee also reviews the

information and assurances provided by the auditor

on its compliance with the relevant ethical standards.

No non-audit services were provided by the auditor

in the year under review.

Strategic report Governance Financials

45 Octopus Future Generations VCT plc

Annual report and financial statements 2023

Audit, risk and internal control continued

Audit Committee report

continued

Internal audit

Future Generations VCT does not have an internal audit

function as it is not deemed appropriate given the

size of Future Generations VCT and the nature of its

business. However, the Committee considers annually

whether there is a need for such a function and makes

the appropriate recommendation to the Board. Octopus

has an internal audit function which reports to the

Board annually on the outcome of the internal audits

that have taken place. Any significant issues arising

from the Octopus internal audit that affect Future

Generations VCT would be raised to the Committee as

soon as reasonably practical. The Octopus Compliance

Department also reports regularly to the Board.

The Committee monitors the significant risks facing

Future Generations VCT and Octopus engages

closely with the auditor to mitigate the risks and the

resultant impact.

The Committee has considered the whole annual

report and financial statements for the year ended

30 June 2023 and has reported to the Board that it

considers them to be fair, balanced and understandable,

providing the information necessary for shareholders to

assess Future Generations VCT’s performance, business

model and strategy.

Significant risks

The Audit Committee is responsible for considering and

reporting on any significant risks that arise in relation to

the audit of the financial statements. The Committee

and the auditor have identified the most significant risks

for Future Generations VCT as:

• Valuation of investment portfolio

The Committee gives special audit consideration to

the valuation of investments and supporting data

provided by Octopus. The impact of this risk would

be a large gain or loss in Future Generations VCT’s

results. The valuations are supported by the portfolio

companies’ accounts and third-party evidence which

gives comfort to the Audit Committee.

• Management override of financial controls

The Committee reviews all significant accounting

estimates that form part of the financial statements

and considers any material judgements applied by

management during the completion of the financial

statements.

These issues were discussed with Octopus and the

auditor at the conclusion of the audit of the financial

statements.

Other audit risks considered include financial reporting

and corporate governance disclosures, the existence of

investments and the calculation of management fees.

Internal controls

The Directors have overall responsibility for keeping

under review the effectiveness of Future Generations

VCT’s systems of risk management and internal controls.

The purpose of these controls is to make sure that

proper accounting records are maintained, assets are

safeguarded and the financial information used within

the business and for publication is accurate and reliable;

such a system can only provide reasonable and not

absolute assurance against material misstatement

or loss. The systems of risk management and internal

control, which have been in place throughout the year

under review and up to the date of this report, are

designed to manage rather than eliminate the risk of

failure to achieve the business objectives. The Board

regularly reviews financial results and investment

performance with Octopus.

Octopus identifies the investment opportunities,

monitors the portfolio of investments and manages

the assets of Future Generations VCT on a

discretionary basis.

Octopus is engaged to carry out the accounting

function and retain physical custody of the documents

of title relating to unquoted investments. Octopus

regularly reconciles the client asset register with the

physical documents.

Strategic report Governance Financials

46 Octopus Future Generations VCT plc

Annual report and financial statements 2023

Audit, risk and internal control continued

Audit Committee report

continued

Internal controls continued

The Directors confirm that they have established a

process throughout the year and up to the date of this

report for identifying, evaluating and managing the

significant potential risks faced by Future Generations

VCT and have reviewed the effectiveness of the risk

management and internal control systems. As part

of this process, a review of the risk management and

internal control systems is carried out in accordance

with the Financial Reporting Council’s Guidance on Risk

Management, Internal Control and Related Financial

and Business Reporting. The Board does not consider it

necessary to have an internal audit function due to all

operational activities being outsourced. The need for an

internal audit function will be reviewed at least annually.

The risk management and internal control systems

include the production and review of monthly bank

reconciliations and management accounts. All outflows

made from Future Generations VCT’s accounts require

the authority of two approved signatories from Octopus.

Octopus is subject to regular review by the Octopus

Compliance Department.

Financial risk management

Future Generations VCT is exposed to the risks arising

from its operational and investment activities. Further

details can be found in Note 15 of the Financial

Statements.

The Audit Committee is also responsible for considering

and reporting on any significant issues that arise

in relation to the audit of the financial statements.

The Audit Committee can confirm that there were no

significant issues to report to the shareholders in respect

of the audit of the financial statements to 30 June 2023.

Joanna Santinon

Audit Committee Chair

18 October 2023

Strategic report Governance Financials

47 Octopus Future Generations VCT plc

Annual report and financial statements 2023

Management Engagement Committee

Management Engagement Committee report

The Board has appointed a Management Engagement

Committee to help in evaluating the performance of

the Manager and other third-party service providers

engaged by Future Generations VCT. The Directors

forming the Management Engagement Committee

can be found on page 38.

The Committee’s responsibilities are:

• to review, at least annually, the contractual

relationships with the Manager and terms of the

management agreement, to make sure they are

competitive and in the interests of shareholders as a

whole, making recommendations to the Board on any

variation to the terms which it considers necessary or

appropriate;

• to review, at least annually, the performance of the

Manager and describe its decisions and rationale in

the annual report;

• to consider whether the appointment of the Manager

continues to be in the interests of shareholders;

• if it considers it necessary or appropriate, to

negotiate/re-negotiate terms with the Manager;

• to review the standard of any administrative,

company secretarial or sales and marketing support

provided by the Manager, whether under the terms of

the management agreement or simply as part of a

non-contractual obligation of understanding;

• to review, monitor and evaluate, at least annually,

the performance of the Company’s third-party

service providers in meeting their obligations under

their respective agreements and to ensure their

continued competitiveness and effectiveness, making

recommendations on any variation to the terms

which it considers necessary or appropriate;

• to assess the Company’s third-party service providers

in their role as stakeholders and whether there is an

appropriate level of engagement with them; and

• to consider any points of conflict which may arise for

the providers of services to the Company.

The Committee met twice during the course of the year

and, prior to the year end, confirmed the continued

appointment of Octopus, on the agreed terms, was in

the interests of shareholders.

Joanna Santinon

Management Engagement Committee Chair

18 October 2023

Strategic report Governance Financials

48 Octopus Future Generations VCT plc

Annual report and financial statements 2023

Remuneration

Directors’ remuneration report

Introduction

This report has been prepared in accordance with

Schedule 8 to the Large and Medium-sized Companies

and Groups (Accounts and Reports) (Amendment)

Regulations 2013, in respect of the year ended

30 June 2023. The reporting requirements entail two

sections be included, a policy report and an annual

remuneration report, which are presented below.

Future Generations VCT’s auditor, BDO LLP, is required

to give its opinion on certain information included in this

report; this comprises the Directors’ emoluments section

and share information below. Their report on these and

other matters is set out on pages 56 to 61.

The Remuneration and Nomination Committee is

responsible for determining the remuneration of

Non-Executive Directors and the composition of the

Board and its Committees, taking account of diversity

and ensuring succession plans are in place. Board

composition was reviewed in 2023. The Directors’

remuneration paid during the year is set out on page 49.

Future Generations VCT does not have a Chief Executive

Officer, senior management or any employees.

Directors’ Remuneration policy report

The Board consists entirely of Non-Executive Directors,

who meet at least four times a year and on other

occasions as necessary, to deal with the important

aspects of Future Generations VCT’s affairs. Directors

are appointed with the expectation that they will serve

for at least a period of three years. All Non-Executive

Directors retire at the first general meeting after

election and thereafter one-third of all Directors are

subject to retirement by rotation at subsequent AGMs.

Re-election will be recommended by the Board but is

dependent upon a shareholder vote.

Each Director received a letter of appointment which

is subject to termination by the Director or Future

Generations VCT on three months’ notice in writing.

None of the Directors are entitled to compensation

payable upon early termination of their contract other

than in respect of any unexpired notice period. These

appointment letters are available for inspection at the

registered office, details of which are on page 89.

Future Generations VCT’s policy is that the fees payable

to the Directors should reflect the time spent by the

Board on Future Generations VCT’s affairs and the

responsibilities borne by the Directors. They should be

sufficient to attract candidates of high calibre to be

recruited. The policy is for the Chair of the Board and

the Chair of the Audit Committee to be paid higher fees

than the other Directors in recognition of their more

onerous roles. The policy is to review these rates from

time to time. Due to the nature of Future Generations

VCT, there are no employees other than the Directors

and so no such issues to consider when determining the

Directors’ remuneration.

The maximum level of Directors’ remuneration is

currently fixed by Future Generations VCT’s Articles

of Association not to exceed £125,000 in aggregate.

The Board has considered that it is appropriate to obtain

shareholder approval for an update to the Company’s

aggregate remuneration limit, increasing it to £175,000

per annum in light of a new Director joining during

2024. As such, a special resolution to amend the limit

in the Articles of Association is being proposed at the

AGM to be held on 11 December 2023. The increase is

not being proposed in the expectation of significant

increases in remuneration but rather to provide added

flexibility and ensure the Articles are fit for purpose on

an ongoing basis.

Future Generations VCT’s policy is for the Directors to

be remunerated in the form of fees, payable quarterly

in arrears. The fees are not related to the Directors’

performance, either individually or collectively. There

are no long-term incentive schemes, share option

schemes or pension schemes in place. The Articles of

Association also entitle the Directors to be repaid all

reasonable travelling, subsistence and other expenses

incurred by them respectively whilst conducting their

duties as Directors; however, no other remuneration

or compensation was paid or payable by Future

Generations VCT during the year to any of the

current Directors.

The Remuneration policy will be put to shareholders for

approval at the AGM to be held in December 2023.

Annual remuneration report

This remuneration report is subject to approval by

a simple majority of shareholders at the AGM in

December 2023.

Statement of voting at the Annual General

Meeting

The most significant portion of the votes cast against

a resolution at the 2022 AGM were for the resolutions

relating to the approval of the Directors’ Remuneration

Policy (3.50% of votes cast) and the Directors’

Remuneration Report (3.50% of votes cast). No

communication was received from shareholders giving

reasons for the votes against the resolutions.

Shareholders’ views are always welcome and considered

by the Board. The methods of contacting the Board are

set out in the Directors’ Report on page 53.

Strategic report Governance Financials

49 Octopus Future Generations VCT plc

Annual report and financial statements 2023

Remuneration continued

Directors’ remuneration report

continued

Company performance

The Board is responsible for Future Generations VCT’s investment strategy and

performance, although the management of Future Generations VCT’s investment

portfolio is delegated to the Portfolio Manager through the agreements as referred

to in the Directors’ Report.

Details of Future Generations VCT’s performance are contained in the Portfolio

Manager’s Review on pages 13 to 20 and the Business Review on pages 35 and 36.

A performance graph showing the NAV total return from incorporation date to

30 June 2023 is included on page 36.

Directors’ emoluments (audited)

The amount of each Director’s fees for the period were:

Year ended

30 June 2023

Year ended

30 June 2023

Change

Period ended

30 June 2022

Helen Sinclair 35,000 116% 16,171

Joanna Santinon 28,000 122% 12,623

Emma Davies

6,731 100% —

Total 69,731 28,794

1. Octopus paid the remuneration of Emma Davies up until 24 March 2023, the date on which she ceased to

be an employee.

The Directors do not receive any other form of emoluments in addition to the Directors’

fees. Their total remuneration is fixed and not linked to the performance of Future

Generations VCT and no bonuses were or will be paid to the Directors.

The Chair of the Board and Chair of the Audit Committee receive additional

remuneration over the basic Directors’ fee in recognition of the additional

responsibilities and time commitment required for their roles.

For the year under review, Directors’ fees have been paid at the following rates:

Chair of the Board £35,000; Chair of the Audit Committee £28,000; and other

Directors £25,000.

Following a review in June 2023, the following rates are effective from 1 July 2023:

Chair of the Board £37,100; Chair of the Audit Committee £29,700; and other Directors

£26,500. Directors’ remuneration will be reviewed annually by the Remuneration and

Nomination Committee.

Relative importance of spend on pay

The actual expenditure in the current period is as follows:

Year ended

30 June 2023

Period ended

30 June 2022

Total dividends paid — —

Total buybacks — —

Total Directors’ fees 69,731 28,794

Total expenses 673,584 204,414

There were no other significant payments during the period relevant to understanding

the relative importance of spend on pay.

Statement of Directors’ shareholdings (audited)

There are no guidelines or requirements for Directors to own shares in Future

Generations VCT. The interests of the Directors of Future Generations VCT during the

year (in respect of which transactions are notifiable under Disclosure and Transparency

Rule 3.1.2R) in the issued Ordinary shares of 0.1p each are shown in the table below:

30 June 2023 30 June 2022

Helen Sinclair 14,548 14,548

Joanna Santinon 72,744 72,744

Emma Davies 14,548 14,548

There have been no changes in the Directors’ share interests between 30 June 2023

and the date of this report.

Any information required by legislation in relation to executive directors (including a

Chief Executive Officer) or employees has been omitted because Future Generations

VCT has neither and so it is not relevant.

By order of the Board

Helen Sinclair

Remuneration and Nomination Committee Chair

18 October 2023

Strategic report Governance Financials

50 Octopus Future Generations VCT plc

Annual report and financial statements 2023

Directors’ report

The Directors present their report and the audited

financial statements for the year ended 30 June 2023.

The Corporate Governance Report on pages 39 and 40

and the reports of the Audit Committee, Remuneration

and Nomination Committee and Management

Engagement Committee on pages 44 to 49 form part

of this Directors’ Report.

The Directors consider that the annual report and

financial statements, taken as a whole, is fair,

balanced and understandable and provides the

information necessary for shareholders to assess

Future Generations VCT’s position, performance,

business model and strategy.

Directors

Brief biographical notes on the Directors are given on

page 38.

All Directors will stand for re-election by shareholders at

the forthcoming AGM.

Directors’ and Officers’ liability insurance

Future Generations VCT has, as permitted by the

Companies Act 2006, maintained insurance cover

on behalf of the Directors and Company Secretary

indemnifying them against certain liabilities which

may be incurred by them in relation to Future

Generations VCT.

Dividend

The Directors will not be proposing a dividend for the

year under review.

Management

Future Generations VCT has in place an agreement with

Octopus AIF Management Limited to act as Manager.

Octopus AIF Management Limited has in turn appointed

Octopus Investments Limited to act as Portfolio

Manager to Future Generations VCT (responsible for

portfolio management and the day-to-day running

of Future Generations VCT). These agreements are

central to Future Generations VCT’s ability to continue

in business. The principal terms of the management

agreement with Octopus are set out in Notes 3 and 18

of the Financial Statements.

Octopus also provides secretarial and administrative

services to Future Generations VCT. Thompson

Taraz Depositary Limited has been appointed as

depositary to Future Generations VCT. Thompson

Taraz Depositary Limited provides cash monitoring,

safekeeping of financial instruments and other assets

and oversight duties.

The Directors confirm that, in their opinion, the

continuing appointment of Octopus as Portfolio

Manager is in the best interests of the shareholders as

a whole. In reaching this conclusion the Directors have

taken into account the performance of the investment

portfolio and the ability of Octopus to produce

satisfactory investment performance in the future.

The Directors also considered the length of the notice

period of the management agreement and fees payable

to Octopus, together with the standard of other services

provided, as set out above. Details of the fees paid to

Octopus in respect of services provided are in Notes 3

and 18 of the Financial Statements.

Future Generations VCT has established a performance

incentive scheme whereby Octopus is entitled to an

annual performance-related incentive fee if certain

performance criteria are met. Further details of this

scheme are disclosed within Note 18 of the Financial

Statements.

Through the agreements described above, the

investment decisions and routine management decisions

such as the payment of standard running costs are

delegated to Octopus.

Financial risk management

Future Generations VCT is exposed to the risks arising

from its operational and investment activities. Further

details can be found in Note 15 of the Financial

Statements.

Whistleblowing

Please refer to page 27 for our statement on

whistleblowing.

Bribery Act

Please refer to page 27 for our statement on the

Bribery Act.

Strategic report Governance Financials

51 Octopus Future Generations VCT plc

Annual report and financial statements 2023

Directors’ report continued

VCT regulation

Compliance with required rules and regulations is

considered when all investment decisions are made.

Future Generations VCT is further monitored on a

continual basis to ensure compliance. The main criteria

to which it must adhere are detailed on page 82.

Future Generations VCT will continue to ensure its

compliance with the qualification requirements.

Environment policy and greenhouse

gas emissions

Refer to page 22 in the Strategic Report for our ESG

policy and greenhouse gas emissions.

Share capital

Future Generations VCT’s Ordinary share capital as at

30 June 2023 comprised 48,138,337 (2022: 32,569,178)

Ordinary shares of 0.1p each. No shares were held

in Treasury.

Share issues and open offers

During the year 15,569,159 shares were issued.

On 19 January 2023, an offer for subscription

to raise up to £30 million in aggregate with an

over-allotment facility of £10 million was launched.

As at 18 October 2023, 7,011,227 shares had been issued

for a total consideration of £6.9 million. The offer will

close for new applications on 31 October 2023.

41,127,110 Ordinary shares were allotted under the offer

launched on 31 January 2022 to raise up to £20 million in

aggregate with an over-allotment facility of £80 million.

The offer closed for new applications on 31 October 2022.

Post balance sheet events

A full list of post balance sheet events since

30 June 2023 can be found in Note 16 of the

Financial Statements on page 77.

Rights attaching to the shares and restrictions

on voting and transfer

Subject to any suspension or abrogation of rights

pursuant to relevant law or Future Generations VCT’s

Articles of Association, the shares confer on their holders

the following principal rights:

a) the right to receive out of profits available for

distribution such dividends as may be agreed to be

paid (in the case of a final dividend in an amount not

exceeding the amount recommended by the Board

as approved by shareholders in a general meeting

or in the case of an interim dividend in an amount

determined by the Board). All dividends unclaimed

for a period of 12 years after having become due for

payment are forfeited automatically and cease to

remain owing by Future Generations VCT;

b) the right, on a return of assets on a liquidation,

reduction of capital or otherwise, to share in the

surplus assets of Future Generations VCT remaining

after payment of its liabilities pari passu with the

other holders of Ordinary shares; and

c) the right to receive notice of and to attend and speak

and vote in person or by proxy at any general meeting

of Future Generations VCT. On a show of hands,

every member present or represented and voting has

one vote, and on a poll, every member present or

represented and voting has one vote for every share

of which that member is the holder.

The appointment of a proxy must be received not less

than 48 hours before the time of the holding of the

relevant meeting or adjourned meeting or, in the case

of a poll taken otherwise than at or on the same day

as the relevant meeting or adjourned meeting, be

received after the poll has been demanded and not

less than 24 hours before the time appointed for the

taking of the poll.

These rights can be suspended. If a member, or any

other person appearing to be interested in shares held

by that member, has failed to comply within the time

limits specified in Future Generations VCT’s Articles

of Association with a notice pursuant to s793 of the

Companies Act 2006 (notice by Future Generations

VCT requiring information about interests in its shares),

Future Generations VCT can, until the default ceases,

suspend the right to attend and speak and vote at a

general meeting. If the shares represent at least 0.25%

of their class Future Generations VCT can also withhold

any dividend or other money payable in respect of the

shares (without any obligation to pay interest) and

refuse to accept certain transfers of the relevant shares.

Shareholders, either alone or with other shareholders,

have other rights as set out in Future Generations VCT’s

Articles of Association and in company law (principally

the Companies Act 2006).

A member may choose whether his shares are evidenced

by share certificates (certificated shares) or held in

electronic (uncertificated) form in CREST (the UK

electronic settlement system).

Strategic report Governance Financials

52 Octopus Future Generations VCT plc

Annual report and financial statements 2023

Directors’ report continued

Rights attaching to the shares and restrictions

on voting and transfer continued

Any member may transfer all or any of his shares,

subject in the case of certificated shares to the rules set

out in Future Generations VCT’s Articles of Association

or in the case of uncertificated shares to the regulations

governing the operation of CREST (which allow the

Directors to refuse to register a transfer as therein set

out); the transferor remains the holder of the shares

until the name of the transferee is entered in the register

of members. The Directors may refuse to register a

transfer of certificated shares in favour of more than

four persons jointly or where there is no adequate

evidence of ownership or the transfer is not duly

stamped (if so required).

The Directors may also refuse to register a share transfer

if it is in respect of a certificated share which is not fully

paid up or on which Future Generations VCT has a lien

provided that, where the share transfer is in respect of

any share admitted to the Official List maintained by

the UK Listing Authority, any such discretion may not

be exercised so as to prevent dealings taking place on

an open and proper basis, or if in the opinion of the

Directors (and with the concurrence of the UK Listing

Authority) exceptional circumstances so warrant,

provided that the exercise of such power will not

disturb the market in those shares. Whilst there are no

squeeze-out and sell-out rules relating to the shares

in Future Generations VCT’s Articles of Association,

shareholders are subject to the compulsory acquisition

provisions in s974 to s991 of the Companies Act 2006.

Directors’ authority to allot shares, to disapply

pre-emption rights

The authority proposed under Resolution 8 is required

so that the Directors may offer existing shareholders

the opportunity to add to their investment or to offer

potential shareholders an opportunity to invest in Future

Generations VCT in a tax-efficient manner without

it having to incur substantial costs. Any consequent

modest increase in the size of Future Generations VCT

will, in the opinion of the Directors, be in the interests

of shareholders generally. Any issue proceeds will be

available for investment in line with Future Generations

VCT’s investment policy and may be used, in part,

to purchase Ordinary shares in the market.

Resolution 8 seeks Directors’ authority to allot Ordinary

shares. Such authority would expire at the later of the

conclusion of the next AGM following the passing of

this Resolution and the expiry of 15 months from the

passing of the Resolution, giving the Directors authority

to allot up to 120% of Future Generations VCT’s issued

share capital as at the date of the Notice of AGM.

This authority is in addition to existing authorities.

The Board intends to utilise this authority in respect of

the fundraising activities of Future Generations VCT.

Resolution 9 seeks Directors’ authority to allot equity

securities for cash without pre-emption rights applying

in certain circumstances. These Resolutions would

authorise the Directors, until the conclusion of the next

AGM of Future Generations VCT following the passing of

these Resolutions or, if later, on the expiry of 15 months

from the passing of these Resolutions, to issue Ordinary

shares for cash without pre-emption rights applying by

way of an offer to existing shareholders. These powers

will be exercised only if, in the opinion of the Directors,

it would be in the best interests of shareholders,

as a whole. This authority is in addition to existing

authorities.

Directors’ authority to make market purchase

of its own shares

The authority proposed under Resolution 10 is required

so that the Directors may make purchases of up to

7,215,936 Ordinary shares, representing approximately

14.99% of Future Generations VCT’s issued share capital

as at the date of the Notice of AGM. Any shares bought

back under this authority will be at a price determined

by the Board (subject to a minimum price of 0.1p (being

the nominal value of such shares) and a maximum

price of 5% above the average mid-market quotation

for such shares on the London Stock Exchange and

the applicable regulations thereunder) and may be

cancelled or held in Treasury as may be determined by

the Board. The authority conferred by Resolution 10

will expire on the earlier of the conclusion of the next

AGM of Future Generations VCT following the passing

of this Resolution and 15 months from the date of

the passing of the Resolution unless renewed, varied

or revoked by Future Generations VCT in a general

meeting and will be in addition to existing authorities.

This power will be exercised only if, in the opinion of the

Directors, a repurchase would be in the best interests of

shareholders as a whole.

Amendment to Future Generations VCT’s

maximum aggregate remuneration

The Board considers it appropriate to obtain

shareholders’ approval for an update to the Company’s

maximum aggregate remuneration limit. A special

resolution to this effect is being proposed at Resolution

11, seeking to increase the maximum aggregate

remuneration from £125,000 to £175,000 per annum. The

amendment is being proposed to allow future flexibility

for future additions to the Board of Directors and ensure

the Articles are fit for purpose on an ongoing basis.

Strategic report Governance Financials

53 Octopus Future Generations VCT plc

Annual report and financial statements 2023

Directors’ report continued

Substantial shareholdings

As at the date of this report, no disclosures of major

shareholdings had been made to Future Generations

VCT under Disclosure and Transparency Rule 5 (Vote

Holder and Issuer Notification Rules).

Independent auditor

BDO LLP were originally appointed by the Board

as auditor on 25 July 2022 and offer themselves for

re-appointment as auditor of Future Generations VCT.

A resolution to re-appoint BDO LLP will be proposed at

the forthcoming AGM.

As far as the Directors are aware, there is no relevant

audit information of which the auditor is unaware and

the Directors have taken all the steps they ought to have

taken as a Director in order to make them aware of any

relevant audit information and to establish that Future

Generations VCT’s auditor is aware of that information.

Relations with shareholders

Shareholders will have the opportunity to attend

the Annual General Meeting which will be held on

11 December 2023 at 12.00 noon.

Future Generations VCT will also be holding a

virtual shareholder event on 4 December 2023 at

11.00 a.m. where there will be a presentation by

the Board and Portfolio Manager as well as an

opportunity to ask questions. To register, please see

bit. ly/ octopusfgwebinar. The Board is also happy to

respond to any written queries made by shareholders

during the course of the year and can be contacted at

33 Holborn, London EC1N 2HT. Alternatively, the team

at Octopus will be pleased to answer any questions you

may have and can be contacted on 0800 316 2295.

Information given in the Strategic Report

The likely future development of Future Generations VCT

has not been given in the Directors’ Report as equivalent

disclosure has been given in the Strategic Report.

The Directors’ Report was approved on behalf of the

Board on 18 October 2023.

Helen Sinclair

Chair

18 October 2023

What’s in this section

Directors’ responsibilities statement 55

Independent auditor’s report 56

Financial statements

Income statement 62

Balance sheet 63

Statement of changes in equity 64

Cash flow statement 66

Notes to the financial statements 67

Investment portfolio 81

Shareholder information and contact details 82

Glossary of terms 84

Notice of Annual General Meeting 85

Directors and advisers 89

54 Octopus Future Generations VCT plc

Annual report and financial statements 2023

Strategic report Governance Financials

Financials

Strategic report Governance Financials

55 Octopus Future Generations VCT plc

Annual report and financial statements 2023

The Directors are responsible for preparing the Strategic Report, the Directors’ Report,

the Directors’ Remuneration Report and the Financial Statements in accordance with

applicable law and regulations. They are also responsible for ensuring that the annual

report and financial statements include information required by the Listing Rules of the

Financial Conduct Authority.

Company law requires the Directors to prepare financial statements for each financial

year. Under that law the Directors have elected to prepare the financial statements

in accordance with United Kingdom Generally Accepted Accounting Practice (GAAP),

including Financial Reporting Standard 102 – The Financial Reporting Standard

Applicable in the United Kingdom and Republic of Ireland (FRS 102), United Kingdom

accounting standards and applicable law. Under company law the Directors must not

approve the financial statements unless they are satisfied that they give a true and

fair view of the state of affairs and profit or loss of the Company for that period. In

preparing these financial statements, the Directors are required to:

• select suitable accounting policies and then apply them consistently;

• make judgements and accounting estimates that are reasonable and prudent;

• state whether applicable UK accounting standards have been followed, subject to

any material departures disclosed and explained in the financial statements;

• prepare the financial statements on the going concern basis unless it is

inappropriate to presume that the Company will continue in business; and

• prepare a Strategic Report, Directors’ Report and Directors’ Remuneration Report

which comply with the requirements of the Companies Act 2006.

The Directors are responsible for keeping adequate accounting records that are

sufficient to show and explain the Company’s transactions and disclose with

reasonable accuracy at any time the financial position of the Company and enable

them to ensure that the financial statements comply with the Companies Act 2006.

They are also responsible for safeguarding the assets of the Company and hence

for taking reasonable steps for the prevention and detection of fraud and other

irregularities.

In so far as each of the Directors is aware:

• there is no relevant audit information of which the Company’s auditor is unaware;

and

• the Directors have taken all steps that they ought to have taken to make themselves

aware of any relevant audit information and to establish that the auditor is aware

of that information.

The Directors are responsible for preparing the annual report and financial statements

in accordance with applicable law and regulations. Having taken advice from the Audit

Committee, the Directors are of the opinion that this report as a whole provides the

necessary information to assess the Company’s performance, business model and

strategy and is fair, balanced and understandable.

The Directors are responsible for the maintenance and integrity of the corporate and

financial information included on the Company’s website. Legislation in the United

Kingdom governing the preparation and dissemination of financial statements may

differ from legislation in other jurisdictions.

The Directors confirm that, to the best of their knowledge:

• the financial statements, prepared in accordance with United Kingdom Generally

Accepted Accounting Practice, including FRS 102, give a true and fair view of the

assets, liabilities, financial position and profit or loss of the Company; and

• the annual report and financial statements (including the Strategic Report), give a

fair review of the development and performance of the business and the position

of the Company, together with a description of the principal risks and uncertainties

that it faces.

On behalf of the Board

Helen Sinclair

Chair

18 October 2023

Directors’ responsibilities statement

Strategic report Governance Financials

56 Octopus Future Generations VCT plc

Annual report and financial statements 2023

Independent auditor’s report

to the members of Octopus Future Generations VCT plc

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 the calculations therein 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 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 caused by the current macroeconomic uncertainties.

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.

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 30 June 2023

and of its loss for the year then ended;

• have been properly prepared in accordance with United Kingdom Generally

Accepted Accounting Practice; and

• have been prepared in accordance with the requirements of the Companies

Act 2006.

We have audited the financial statements of Octopus Future Generations VCT

plc (the ‘Company’) for the year ended 30 June 2023 which comprise the Income

Statement, the Balance Sheet, the Statement of Changes in Equity, the Cash Flow

Statement and notes to the financial statements, 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 on 25 July 2022 to audit the financial statements for the period

ended 30 July 2022 and subsequent financial periods. The period of total uninterrupted

engagement including retenders and reappointments is two years, covering the period

ended 30 June 2022 to year ended 30 June 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.

Strategic report Governance Financials

57 Octopus Future Generations VCT plc

Annual report and financial statements 2023

Independent auditor’s report continued

to the members of Octopus Future Generations VCT plc

How the scope of our audit addressed the key audit matter

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 portfolio companies.

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 portfolio Company; and

• 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 portfolio company and the milestones and

assumptions set out in the investment proposal.

Overview

2023 2022

Key audit matters

Valuation of unquoted

investments  

Materiality

Company financial statements as a whole

£900,000 (2022: £300,000) based on 2% (2022: 1%) 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

Valuation of unquoted investments (Note 9 of the Financial Statements)

We consider the valuation of investments to be the most significant audit area as

there is a high level of estimation uncertainty involved in determining the unquoted

investment valuations.

There is also an inherent risk of management override arising from the unquoted

investment valuations being prepared by the Portfolio 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.

Strategic report Governance Financials

58 Octopus Future Generations VCT plc

Annual report and financial statements 2023

Independent auditor’s report continued

to the members of Octopus Future Generations VCT plc

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 £900,000 £300,000

Basis for determining

materiality

2% of net assets 1% 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 2%

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, and that

the entity is in its first year

of incorporation, we have

applied a percentage of 1%

of net assets.

Performance

materiality £675,000 £225,000

Basis for determining

performance

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.

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

For investments sampled that were valued using more subjective techniques (Price of

recent investment calibration to revenue multiple) we:

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

management information of portfolio 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

portfolio companies against budget and relative to the peer group, the market and

sector in which the portfolio company operates and other factors as appropriate.

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.

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.

Strategic report Governance Financials

59 Octopus Future Generations VCT plc

Annual report and financial statements 2023

Independent auditor’s report continued

to the members of Octopus Future Generations VCT plc

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 40; 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 40.

Other Code

provisions

• Directors’ statement on fair, balanced and

understandable set out on page 50;

• Board’s confirmation that it has carried out a robust

assessment of the emerging and principal risks set out on

page 32 to 34;

• the section of the annual report that describes the review

of effectiveness of risk management and internal control

systems set out on page 45 to 46; and

• the section describing the work of the Audit Committee

set out on page 44 to 46.

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.

Our application of materiality continued

Lower testing threshold

While the majority of long-term returns are expected to arise from capital, we note

that ongoing costs and revenue returns are still important to users of the financial

statements, despite being considerably smaller in magnitude. As a result, we

determined a lower testing threshold for those items impacting revenue return of

£119,000 (2022: £32,000) 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 £35,000 (2022: £6,000) 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 financial statements 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.

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.

Strategic report Governance Financials

60 Octopus Future Generations VCT plc

Annual report and financial statements 2023

Independent auditor’s report continued

to the members of Octopus Future Generations VCT plc

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

We gained an understanding of the Company and the industry in which it operates

and held discussions with the Portfolio Manager and those charged with governance in

order to obtain an understanding of the Company’s policies and procedures regarding

compliance with laws and regulations. We have therefore 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 (2022) (the SORP) 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:

• obtaining an understanding of the control environment in monitoring compliance with

laws and regulations;

• agreement of the financial statement disclosures to underlying supporting

documentation;

• enquiries of management 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 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.

Other Companies Act 2006 reporting continued

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.

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.

FinancialsGovernanceStrategic report

61 Octopus Future Generations VCT plc

Annual report and financial statements 2023

Independent auditor’s report continued

to the members of Octopus Future Generations VCT plc

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-Jayne Bradley (Senior Statutory Auditor)

For and on behalf of BDO LLP, Statutory Auditor

London, United Kingdom

18 October 2023

BDO LLP is a limited liability partnership registered in England and Wales

(with registered number OC305127)

Auditor’s responsibilities for the audit of the financial statements continued

Fraud

We assessed the susceptibility of the financial statement to material misstatement

including fraud.

Our risk assessment procedures included:

• enquiry with the Portfolio Manager and those charged with governance regarding

any known or suspected instances of fraud;

• review of minutes of meeting of those charged with governance 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; and

• considering management fees and performance targets and the related financial

statement areas impacted by these.

Based on our risk assessment, we considered the areas most susceptible to fraud to be

the valuation of unquoted investments 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;

• recalculating investment management fees in total;

• obtaining independent confirmation of bank balances; and

• testing journals posted in preparation of the financial statements and evaluating

whether there was evidence of bias by the Portfolio Manager and Directors that

represented a risk of material misstatement due to 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.

Strategic report

62 Octopus Future Generations VCT plc

Annual report and financial statements 2023

FinancialsGovernance

Income statement

Year to 30 June 2023 Period to 30 June 2022

Notes

Revenue

£’000

Capital

£’000

Total

£’000

Revenue

£’000

Capital

£’000

Total

£’000

Net (loss)/gain on valuation of fixed asset investments 9 — (6) (6) — 9 9

Investment management fee 3 (174) (522) (696) (39) (118) (157)

Investment income 2 424 — 424 — — —

Other expenses 4 (500) — (500) (165) — (165)

Loss before tax (250) (528) (778) (204) (109) (313)

Tax 6 — — — — — —

Loss after tax (250) (528) (778) (204) (109) (313)

Loss per share – basic and diluted 7 (0.6)p (1.3)p (1.9)p (1.6)p (0.8)p (2.4)p

• The ‘Total’ column of this statement is the profit and loss account of Future Generations VCT; the supplementary revenue return and capital return columns have been prepared

under guidance published by the Association of Investment Companies.

• All revenue and capital items in the above statement derive from continuing operations.

• Future Generations VCT has only one class of business and derives its income from investments made in shares and securities and from bank and money market funds.

Future Generations VCT has no other comprehensive income for the period.

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

63 Octopus Future Generations VCT plc

Annual report and financial statements 2023

Strategic report Governance Financials

Balance sheet

As at 30 June 2023 As at 30 June 2022

Notes £’000 £’000 £’000 £’000

Fixed asset investments 9 24,895 1,663

Current assets:

Debtors 10 379 54

Applications cash

370 1,915

Cash at bank 152 29,826

Money market funds 11 20,140 —

21,041 31,795

Creditors: amounts falling due within one year 12 (518) (2,166)

Net current assets 20,523 29,629

Net assets 45,418 31,292

Share capital 13 48 33

Share premium 46,461 31,572

Capital reserve realised (640) (118)

Capital reserve unrealised 3 9

Revenue reserve (454) (204)

Total equity shareholders’ funds 45,418 31,292

NAV per share 8 94.3p 96.1p

1. Cash received from investors but not yet allotted.

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

The statements were approved by the Directors and authorised for issue on 18 October 2023 and are signed on their behalf by:

Helen Sinclair

Chair

Company No: 13750143

64 Octopus Future Generations VCT plc

Annual report and financial statements 2023

Strategic report Governance Financials

Statement of changes in equity

Share capital

£’000

Share premium

£’000

Capital reserve

realised

£’000

Capital reserve

unrealised

£’000

Revenue

reserve

£’000

Total

£’000

As at 30 June 2022 33 31,572 (118) 9 (204) 31,292

Comprehensive income for the period:

Management fees allocated as capital expenditure — — (522) — — (522)

Net loss on fair value of fixed asset investments — — — (6) — (6)

Loss after tax — — — — (250) (250)

Total comprehensive loss for the period — — (522) (6) (250) (778)

Contributions by and distributions to owners:

Shares issued 15 15,164 — — — 15,179

Share issue costs — (275) — — — (275)

Total contributions by and distributions to owners 15 14,889 — — — 14,904

Balance as at 30 June 2023 48 46,461 (640) 3 (454) 45,418

1. Reserves are available for distribution, subject to the restrictions tabled in Note 14 of the Financial Statements.

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

65 Octopus Future Generations VCT plc

Annual report and financial statements 2023

Strategic report Governance Financials

Statement of changes in equity continued

Share capital

£’000

Share premium

£’000

Capital reserve

realised

£’000

Capital reserve

unrealised

£’000

Revenue

reserve

£’000

Total

£’000

As at 17 November 2021 — — — — — —

Comprehensive income for the period:

Management fees allocated as capital expenditure — — (118) — — (118)

Net gain on fair value of fixed asset investments — — — 9 — 9

Loss after tax — — — — (204) (204)

Total comprehensive loss for the period — — (118) 9 (204) (313)

Contributions by and distributions to owners:

Shares issued 33 32,111 — — — 32,144

Share issue costs — (539) — — — (539)

Total contributions by and distributions to owners 33 31,572 — — — 31,605

Balance as at 30 June 2022 33 31,572 (118) 9 (204) 31,292

1. Reserves are available for distribution, subject to the restrictions tabled in Note 14 of the Financial Statements.

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

66 Octopus Future Generations VCT plc

Annual report and financial statements 2023

Strategic report Governance Financials

Cash flow statement

Notes

Year to

30 June

2023

£’000

Period to

30 June

2022

£’000

Cash flows from operating activities

Loss before tax (778) (313)

Increase in debtors (325) (54)

(Decrease)/increase in creditors (103) 251

Loss/(gain) on valuation of fixed asset investments 6 (9)

Outflow from operating activities (1,200) (125)

Cash flows from investing activities

Purchase of fixed asset investments 9 (23,238) (1,654)

Outflow from investing activities (23,238) (1,654)

Cash flows from financing activities

Applications account inflow 12 13,634 34,059

Applications account outflow 12 (15,179) (32,144)

Proceed from share issues 15,179 32,144

Share issue costs (275) (539)

Inflow from financing activities 13,360 33,520

(Decrease)/increase in cash and cash equivalents (11,079) 31,741

Opening cash and cash equivalents 31,741 —

Closing cash and cash equivalents 20,662 31,741

Cash and cash equivalents comprise

Cash at bank 152 29,826

Money market funds 20,140 —

Applications cash 370 1,915

Closing cash and cash equivalents 20,662 31,741

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

Strategic report Governance Financials

67 Octopus Future Generations VCT plc

Annual report and financial statements 2023

Notes to the financial statements

1. Principal accounting policies

Octopus Future Generations VCT plc (‘Future Generations VCT’) is a Public Limited

Company (plc) incorporated in England and Wales and its registered office is at

6th Floor, 33 Holborn, London EC1N 2HT.

Future Generations VCT has been approved as a Venture Capital Trust by HMRC under

Section 259 of the Income Taxes Act 2007. The shares of Future Generations VCT were

first admitted to the Official List of the UK Listing Authority and trading on the London

Stock Exchange on 5 April 2022 and can be found under the TIDM code OFG. Future

Generations VCT is premium listed.

The principal activity of Future Generations VCT is to invest in a diversified portfolio of

UK smaller companies in order to generate capital growth over the long term as well as

an attractive tax-free dividend stream.

The financial statements are presented in GBP (£) to the nearest £’000. The functional

currency is also GBP (£).

Basis of preparation

The financial statements have been prepared on a going concern basis under the

historical cost convention, except for the measurement at fair value of certain financial

instruments, and in accordance with UK Generally Accepted Accounting Practice

(GAAP), including Financial Reporting Standard 102 – ‘The Financial Reporting Standard

applicable in the United Kingdom and Republic of Ireland’ (FRS 102), the Companies

Act 2006 and the Statement of Recommended Practice (SORP) ‘Financial Statements

of Investment Trust Companies and Venture Capital Trusts (July 2022)’. Further details

can be found on page 40. The financial statements cover the year ended 30 June 2023.

Comparatives relate to the period from 17 November 2021 to 30 June 2022 and are

audited. A summary of the principal accounting policies is set out in the notes.

Future Generations VCT presents its Income Statement in a three-column format to

give shareholders additional detail of the performance of Future Generations VCT, split

between items of a revenue or capital nature as required by the SORP.

The preparation of the financial statements requires management to make

judgements and estimates that affect the application of policies and reported

amounts of assets, liabilities, income and expenses. Estimates and assumptions mainly

relate to the fair valuation of the fixed asset investments, which encompasses entirely

of unquoted investments. Estimates are based on historical experience and other

assumptions that are considered reasonable under the circumstances. The estimates

and the assumptions are under continuous review with particular attention paid to the

carrying value of the investments.

Capital valuation policies are those that are most important to the manifestation

of Future Generations VCT’s financial position and that require the application of

subjective and complex judgements, often due to the need to make estimates about

the effects of matters that are inherently uncertain and may change in subsequent

periods. The critical accounting policies that are declared will not necessarily result in

material changes to the financial statements in any given period but rather contain

a potential for material change. The main accounting and valuation policies used by

Future Generations VCT are disclosed in the notes below. Whilst not all the significant

accounting policies require subjective or complex judgements, Future Generations VCT

considers that the following accounting policies should be considered critical.

Future Generations VCT has designated all fixed asset investments as being held at

fair value through profit or loss; therefore all gains and losses arising from investments

held are taken to the Income Statement in the period in which they occur. Accordingly,

all expenses and investment gains and losses are attributable to assets designated as

being at fair value through profit or loss.

Investments are regularly reviewed to make sure that the fair values are appropriately

stated. Unquoted investments are valued in accordance with current IPEV valuation

guidelines, although this does rely on subjective estimates such as appropriate sector

earnings or revenue-based multiples, forecast results of portfolio companies, and

liquidity or marketability of the investments held.

Although Future Generations VCT believes that the assumptions concerning the

business environment and estimates of future cash flows are appropriate, changes in

estimates and assumptions could require changes in the stated values. This could lead

to additional changes in fair value in the future.

Revenue and capital

The revenue column of the Income Statement comprises of revenue expenses.

The capital column includes changes in fair value of investments and capital expenses.

Gains and losses arising from changes in fair value of investments are recognised as

part of the capital return within the Income Statement. Investment management fees

are split between revenue (25%) and capital (75%) in line with the Board’s expected

long-term return in the form of income and capital gains respectively from Future

Generations VCT’s investment portfolio.

Strategic report Governance Financials

68 Octopus Future Generations VCT plc

Annual report and financial statements 2023

Notes to the financial statements continued

1. Principal accounting policies continued

Cash and cash equivalents

Cash and cash equivalents comprises of cash at bank and other highly liquid

short-term investments with a maturity of three months or less at the date of

acquisition. The carrying amount approximates fair value.

Financing strategy and capital structure

Capital management is monitored and controlled by forecasting income and

expenditure over both the short and medium term to enable investments to be made

whilst maintaining short-term liquidity. The investments being managed include

equity, and short-term liquidity comprises cash and cash equivalents including debtors

and creditors.

We define capital as shareholders’ funds and our financial strategy in the medium term

is to manage a level of cash that balances the risks of the business with optimising

the return on equity. Future Generations VCT currently has no borrowings nor does it

anticipate that it will have any borrowing facilities in the future to fund the acquisition

of investments.

Future Generations VCT does not have any externally imposed capital requirements.

The value of the managed capital is indicated in Note 14. The Board considers the

distributable reserves and the total return for the period when recommending a dividend.

In addition, the Board is authorised to make market purchases up to a maximum of

14.99% of the issued Ordinary share capital of Future Generations VCT in accordance

with Special Resolution 10 in order to maintain sufficient liquidity in the VCT.

Financial instruments

Future Generations VCT’s principal financial assets are its investments and the

policies in relation to those assets are set out in Note 9. Financial liabilities and equity

instruments are classified according to the substance of the contractual arrangements

entered into. An equity instrument is any contract that evidences a residual interest

in the assets of the entity after deducting all of its financial liabilities. Where the

contractual terms of share capital do not have any terms meeting the definition

of a financial liability then this is classed as an equity instrument. Dividends and

distributions relating to equity instruments are debited directly to equity.

Judgements in applying accounting policies and key sources of estimation

uncertainty

This is addressed in Note 9.

Reserves

Share capital – represents the nominal value of shares that have been issued.

Share premium – includes any premium received on issue of share capital. Any

transaction costs directly associated with the issuing of shares are deducted from

share premium.

Capital reserve realised – arises when an investment is sold. Any balance held on the

capital reserve unrealised is transferred to the capital reserve realised, as a movement

in reserves.

Capital reserve unrealised – arises when Future Generations VCT revalues

the investments held at the end of the period. Any gains or losses arising are

credited/charged to the capital reserve unrealised.

Revenue reserve – revenue profits and losses are credited and charged to this account.

2. Investment income

Accounting policy

Investment income comprises interest earned on money market funds.

30 June 2023

£’000

30 June 2022

£’000

Money market funds 424 —

Total 424 —

3. Investment management fees

Accounting policy

For the purposes of the revenue and capital columns in the Income Statement, the

management fee has been allocated 25% to revenue and 75% to capital, in line

with the Board’s expected long-term return in the form of income and capital gains

respectively from Future Generations VCT’s investment portfolio.

69 Octopus Future Generations VCT plc

Annual report and financial statements 2023

Strategic report Governance Financials

Notes to the financial statements continued

3. Investment management fees continued

Disclosure

Year to 30 June 2023 Period to 30 June 2022

Revenue

£’000

Capital

£’000

Total

£’000

Revenue

£’000

Capital

£’000

Total

£’000

Investment management fee 174 522 696 39 118 157

Total 174 522 696 39 118 157

The Portfolio Manager provides investment management services through agreements with Octopus AIF Management Limited and Future Generations VCT. It also provides

accounting and administration services to Future Generations VCT under a Non-Investment Services Agreement (NISA). No compensation is payable if the agreement is

terminated by either party, if the required notice period is given. The fee payable, should insufficient notice be given, will be equal to the fee that would have been paid

should continuous service be provided, or the required notice period was given. The basis upon which the management fee is calculated is disclosed within Note 18 of the

Financial Statements.

4. Other expenses

Accounting policy

Other expenses are accounted for on an accruals basis and are charged wholly to revenue.

The transaction costs incurred when purchasing or selling assets are written off to the Income Statement in the period that they occur.

Year to

30 June 2023

£’000

Period to

30 June 2022

£’000

NISA fees 122 24

Directors’ remuneration

77 29

Audit fees

63 38

Listing fees 58 17

Depositary fees 57 13

Report and account fees 38 17

Registrar fees 21 12

Other fees 64 15

Total 500 165

1. Includes employers’ NI.

2. Includes VAT.

Total ongoing charges are capped at 3.0% of net assets. For the year to 30 June 2023 the ongoing charges were 3.0% (2022: 2.2%) of net assets. This is calculated by summing the

annualised expenses incurred in the period (excluding non-recurring expenses) divided by the average NAV throughout the period.

Strategic report Governance Financials

70 Octopus Future Generations VCT plc

Annual report and financial statements 2023

Notes to the financial statements continued

Disclosure

The corporation tax charge for the period was £nil.

Year to

30 June 2023

£’000

Period to

30 June 2022

£’000

Loss on ordinary activities before tax (778) (313)

Current tax at 20.5% (159) (60)

Effects of:

Non-taxable income — —

Non-taxable capital gains 1 (2)

Non-deductible expenses — —

Excess management expenses on which deferred

tax not recognised 193 81

Tax rate differences

(35) (19)

Total current tax charge — —

1. Tax rate difference due to tax charge for the period being calculated at 20.5% and excess management

expenses on which deferred tax is not recognised being calculated at 25%.

Unrelieved tax losses of £1,094,000 (2022: £313,000) are estimated to be carried

forward at 30 June 2023 (subject to completion of Future Generations VCT’s tax return)

and are available for offset against future taxable income, subject to agreement with

HMRC. Future Generations VCT has not recognised the deferred tax asset of £273,000

(2022: £81,000) in respect of these tax losses because there is insufficient forecast

taxable income in excess of deductible expenses to utilise these losses carried forward.

The deferred tax asset is based on the future tax rate that has been substantially

enacted as at the balance sheet date.

Approved VCTs are exempt from tax on capital gains. As the Directors intend for Future

Generations VCT to continue to maintain its approval as a VCT through its affairs,

no current deferred tax has been recognised in respect of any capital gains or losses

arising on the revaluation or disposal of investment.

5. Directors’ remuneration

Total Directors’ fees paid during the period were £70,000 (2022: £28,000). Employers’

National Insurance contributions paid during the period were £7,000 (2022: £1,000). The

highest paid Director received £35,000 (2022: £16,000). None of the Directors received

any other remuneration or benefit from Future Generations VCT during the period.

Future Generations VCT has no employees other than Non-Executive Directors. The

average number of Non-Executive Directors in the period was three.

6. Tax on ordinary activities

Accounting policy

Corporation tax payable is applied to profits chargeable to corporation tax, if any,

at the current rate. The tax effect of different items of income/gain and

expenditure/loss is allocated between capital and revenue return on the ‘marginal’

basis as recommended in the SORP.

Deferred tax is recognised in respect of all timing differences at the reporting date.

Timing differences are differences between taxable profits and total income as stated

in the financial statements that arise from the inclusion of income and expenses in tax

assessments in periods different from those in which they are recognised in financial

statements.

71 Octopus Future Generations VCT plc

Annual report and financial statements 2023

Strategic report Governance Financials

Notes to the financial statements continued

7. Loss per share

Year to 30 June 2023 Period to 30 June 2022

Revenue

£’000

Capital

£’000

Total

£’000

Revenue

£’000

Capital

£’000

Total

£’000

Loss attributable to Ordinary shareholders (£’000) (250) (528) (778) (204) (109) (313)

Loss per Ordinary share (p) (0.6) (1.3) (1.9) (1.6) (0.8) (2.4)

The loss per share is based on 40,987,788 (2022: 13,205,218) Ordinary shares, being the weighted average number of Ordinary shares in issue during the period.

There are no potentially dilutive capital instruments in issue and so no diluted return per share figures are relevant. The basic and diluted earnings per share are therefore identical.

8. Net asset value per share

30 June 2023 30 June 2022

Net assets (£’000) 45,418 31,292

Shares in issue 48,138,337 32,569,178

NAV per share (p) 94.3 96.1

9. Fixed asset investments

Accounting policy

Future Generations VCT’s principal financial assets are its investments and the policies in relation to those assets are set out below. Financial liabilities and equity instruments are

classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the

entity after deducting all of its financial liabilities. Where the contractual terms of share capital do not have any terms meeting the definition of a financial liability then this is

classed as an equity instrument. Dividends and distributions relating to equity instruments are debited directly to equity.

Purchases are recognised in the financial statements at the date of the transaction (trade date).

These investments are actively managed and their value is evaluated on a fair value basis in accordance with a documented valuation policy. The rationale for the selected

valuation methodologies, as well as the observable inputs underpinning the valuations, are provided to the Board. As permitted under FRS 102, the investments are measured at

subsequent reporting dates at fair value through profit or loss (FVTPL).

In the case of unquoted investments, fair value is estimated by using recognised valuation techniques such as price of recent transaction (PRI), earnings or revenue-based

multiples, discounted cash flows or net asset value, in line with the International Private Equity and Venture Capital’s valuation guidelines as updated in December 2022.

Gains or losses arising from changes in fair value of investments are recognised as part of the capital return within the Income Statement and allocated to the capital reserve

unrealised. In determining the valuation of assets, the Directors are required to make judgements and estimates that are within a reasonable range and a reflection of their

understanding of the trading performance of the portfolio companies.

Strategic report Governance Financials

72 Octopus Future Generations VCT plc

Annual report and financial statements 2023

Notes to the financial statements continued

(ii) Where a recent transaction is not deemed to be representative of fair value, a

Market Approach may be considered. This technique involves the application of an

appropriate multiple to a performance measure (typically revenue, but potentially

also EBITDA) in order to derive the value of the business:

• appropriate multiples will usually be derived by reference to a current

market-based multiple, as reflected in market valuations of comparable

quoted companies or the price at which comparable companies have changed

ownership, to the extent this information is publicly available; or

• calibration to the PRI validates that the valuation techniques using

contemporaneous market inputs generate fair value at the investment date and

therefore that the same valuation techniques using updated market inputs as of

each subsequent reporting date will generate fair value at each such date. This

approach will notably help capture any risks associated with a lack of liquidity in

the minority holding of an unquoted investment and may be further adjusted to

reflect the trading performance of the portfolio company versus expectations as

at the investment.

(iii) For investments in early or development stages, where there are no current or

short-term future revenues expected, the most appropriate valuation approach

to measure fair value may be based on calibrating the latest pricing round using

qualitative milestones. These milestones provide a directional indication of the

movement in fair value.

(iv) Where a number of discreet outcomes can be expected for an investment, a

simplified probability-weighted expected return model may be used to determine

fair value.

(v) Where appropriate an Income Approach may be used.

9. Fixed asset investments continued

Fair value hierarchy

Paragraph 34.22 of FRS 102 recognises a hierarchy of fair value measurements, for

financial instruments measured at fair value in the balance sheet, which gives the

highest priority to unadjusted quoted prices in active markets for identical assets

or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). This

methodology is adopted by Future Generations VCT and requires disclosure of

financial instruments to be dependent on the lowest significant applicable input,

as laid out below:

• Level 1: The unadjusted, fully accessible and current quoted price in an active market

for identical assets or liabilities that an entity can access at the measurement date.

Future Generations VCT holds no quoted investments.

• Level 2: Inputs for similar assets or liabilities other than the quoted prices included in

Level 1 that are directly or indirectly observable, which exist for the duration of the

period of investment. Future Generations VCT holds no such investments.

• Level 3: This is where inputs are unobservable, where no active market is available

and recent transactions for identical instruments do not provide a good estimate of

fair value for the asset or liability. Future Generations VCT’s unquoted investments

are included in Level 3.

All items held at fair value through profit or loss were designated as such upon initial

recognition. Movements in investments at fair value through profit or loss during the

period to 30 June 2023 are summarised below and in Note 14.

The most critical estimates, assumptions and judgements relate to the determination

of the carrying value of investments at FVTPL. All investments held by Future

Generations VCT are classified as FVTPL and measured in accordance with the Future

Generations VCT valuation policy.

Unquoted investments are stated at fair value by the Directors at each measurement

date in accordance with appropriate valuation techniques, which are consistent with

the IPEV guidelines:

(i) The price of a recent investment, if resulting from an orderly transaction, is

assumed to represent fair value as of the transaction date. At subsequent reporting

dates, the PRI may remain an appropriate indicator of fair value, however as its

validity is eroded over time, adequate consideration will be given to the current

facts and circumstances, including, but not limited to, changes in the market or

changes in the performance of the portfolio company.

Strategic report Governance Financials

73 Octopus Future Generations VCT plc

Annual report and financial statements 2023

Notes to the financial statements continued

10. Debtors

30 June 2023

£’000

30 June 2022

£’000

Prepayments 292 41

Accrued income 74 —

Other debtors

13 13

Total 379 54

1. Other debtors consists of 50,000 redeemable preference shares which were allotted and issued to Octopus

Investments Limited on 17 December 2021.

11. Current asset investments

30 June 2023

£’000

30 June 2022

£’000

Money market funds 20,140 —

Total 20,140 —

The current asset investments are readily convertible into cash at the option of Future

Generations VCT. The current asset investments are held for trading, are actively

managed and the performance is evaluated in accordance with a documented

investment strategy. Information about them is provided internally on that basis

to the Board.

9. Fixed asset investments continued

Disclosure

Level 3: Unquoted

investments

£’000

Book cost at 30 June 2022 1,654

Cumulative revaluation at 30 June 2022 9

Valuation at 30 June 2023 1,663

Movement in the period:

Purchases at cost 23,238

Change in fair value in period (6)

Valuation at 30 June 2023 24,895

Book cost at 30 June 2023 24,892

Cumulative revaluation at 30 June 2023 3

Valuation at 30 June 2023 24,895

The investment portfolio is managed with capital growth as the primary focus.

Further details in respect of the methods and assumptions applied in determining

the fair value of the investments are disclosed in the Portfolio Manager’s Review. The

sensitivity of these valuations to a reasonable possible change in such assumptions is

given in Note 15.

Strategic report Governance Financials

74 Octopus Future Generations VCT plc

Annual report and financial statements 2023

Notes to the financial statements continued

Capital management is monitored and controlled using the internal control procedures

set out on page 45 of this report. The capital being managed includes equity, cash

balances and liquid resources including debtors and creditors.

0.1p Ordinary shares 30 June 2023 30 June 2022

Brought forward 32,569,178 —

Shares issued – subscriber — 2

Shares issued – fundraise 15,569,159 32,569,176

Carried forward 48,138,337 32,569,178

Each share has full voting, dividend and capital distribution rights.

During the period 15,569,159 shares were issued at an average price of 99.0p per share:

8,557,932 Ordinary shares under the offer launched on 31 January 2022 and 7,011,227

Ordinary shares under the offer launched on 19 January 2023. The gross consideration

received for these shares was £15.2 million (£14.9 million net of fees).

14. Reserves

When Future Generations VCT revalues its investments during the period and at

the period end, any gains or losses arising are credited or charged to the Income

Statement. Unrealised gains/losses are then transferred to the ‘capital reserve

unrealised’. When an investment is sold, any balance held on the ‘capital reserve

unrealised’ is transferred to the ‘capital reserve realised’ as a movement in reserves.

Reserves available for potential distribution by way of a dividend are:

30 June 2023

£’000

30 June 2022

£’000

Opening balance (321) —

Movement in period (773) (321)

Carried forward (1,094) (321)

There are no reserves available for distribution as the balance is below zero, which is

not unexpected at this point in Future Generations VCT’s development.

12. Current liabilities

30 June 2023

£’000

30 June 2022

£’000

Applications cash

370 1,915

Trade creditors 5 84

Other creditors

13 13

Accruals 130 154

Total 518 2,166

1. Applications cash is cash received from investors to Future Generations VCT but not yet allotted. The

movement in the applications cash creditor is reflected in the cash flow statement as application inflows

not yet allotted.

2. Other creditors consists of 50,000 redeemable preference shares which were allotted and issued to

Octopus Investments Limited on 17 December 2021.

13. Share capital

30 June 2023

£’000

30 June 2022

£’000

Allotted and fully paid up: 48,138,337

(2022: 32,569,178) Ordinary shares of 0.1p 48 33

The capital of Future Generations VCT is managed in accordance with its investment

policy with a view to the achievement of its investment objective as set out on

page 35. Future Generations VCT is not subject to any externally imposed capital

requirements.

Capital is defined as shareholders’ funds and Future Generations VCT’s financial

strategy in the medium term is to manage a level of cash that balances the risks of the

business with optimising the return on equity. Future Generations VCT currently has no

borrowings nor does it anticipate that it will enter into any borrowing facilities in the

future to fund the acquisition of investments.

The Board considers the distributable reserves and the total return for the period

when recommending a dividend. In addition, the Board is authorised to make market

purchases up to a maximum of 14.99% of the issued Ordinary share capital of

Future Generations VCT as at the date of the AGM for the period to the next AGM in

accordance with Special Resolution 10 in order to maintain sufficient liquidity in Future

Generations VCT’s shares.

Strategic report Governance Financials

75 Octopus Future Generations VCT plc

Annual report and financial statements 2023

Notes to the financial statements continued

In carrying on its investment activities, Future Generations VCT is exposed to various

types of risk associated with the financial instruments and markets in which it invests.

The most significant types of financial risk facing Future Generations VCT are market

risk, credit risk and liquidity risk. Future Generations VCT’s approach to managing these

risks is set out below together with a description of the nature and amount of the

financial instruments held at the balance sheet date.

Market risk

Future Generations VCT’s strategy for managing investment risk is determined with

regard to Future Generations VCT’s long-term objective, as outlined on page 36. The

management of market risk is part of the investment management process and is

a central feature of venture capital investment. Future Generations VCT’s portfolio is

managed in accordance with the policies and procedures described in the Corporate

Governance Statement on pages 39 and 40, having regard to the possible effects

of adverse price movements, with the objective of maximising overall returns to

shareholders. Investments in unquoted companies, by their nature, usually involve a

higher degree of risk than investments in companies quoted on a recognised stock

exchange, though the risk can be mitigated to a certain extent by diversifying the

portfolio across business sectors and asset classes. The overall disposition of Future

Generations VCT’s assets is regularly monitored by the Board.

Details of Future Generations VCT’s investment portfolio at the balance sheet date are

set out on page 81.

55% by value of Future Generations VCT’s net assets (100% of invested portfolio)

comprises investments in unquoted companies held at fair value. Whilst a variety of

valuation methodologies were considered for the valuation of the Future Generations

VCT, the portfolio has predominantly been valued using PRI, with only two investments

valued using either a scenario analysis or calibration of PRI. Consequently, portfolio

valuations are less sensitive to market movements. However, market sensitivities

will become more relevant in future periods as the portfolio matures and alternative

valuation methodologies are adopted.

A 25% overall decrease in the valuation of the unquoted investments at 30 June 2023

would have decreased net assets by £6.2 million (14% of net assets) and an equivalent

change in the opposite direction would have increased net assets by the same amount.

15. Financial instruments and risk management

Future Generations VCT’s financial instruments comprise equity, cash balances and

liquid resources including debtors and creditors. Future Generations VCT holds financial

assets in accordance with its investment policy of investing mainly in a portfolio of

VCT qualifying unquoted securities whilst holding a proportion of its assets in cash or

near-cash investments in order to provide a reserve of liquidity.

Classification of financial instruments

Future Generations VCT held the following categories of financial instruments, all of

which are included in the balance sheet at fair value, at 30 June 2023:

30 June 2023 30 June 2022

£’000 £’000

Financial assets held at fair value through

profit or loss

Fixed asset investments 24,895 1,663

Money market funds 20,140 —

Total 45,035 1,663

Financial assets at fair value

Applications cash

370 1,915

Cash at bank 152 29,826

Debtors 379 54

Total 901 31,795

Financial liabilities at fair value

Creditors 148 251

Unallotted cash

370 1,915

Total 518 2,166

1. Applications cash and unallotted cash is cash received from investors by Future Generations VCT but not

yet allotted.

Fixed asset investments (see Note 9) are valued at fair value. Unquoted investments

are carried at fair value as determined by the Directors in accordance with IPEV

guidelines. The fair value of all other financial assets and liabilities is represented by

their carrying value in the balance sheet. The Directors believe that the fair value of

these assets held at the period end is equal to their book value.

Strategic report Governance Financials

76 Octopus Future Generations VCT plc

Annual report and financial statements 2023

Notes to the financial statements continued

At 30 June 2023, Future Generations VCT’s financial assets exposed to credit risk

comprised the following:

30 June 2023

£’000

30 June 2022

£’000

Cash at bank 152 29,826

Money market funds 20,140 —

Applications cash 370 1,915

Total 20,662 31,741

Credit risk relating to listed money market funds is mitigated by investing in a portfolio

of investment instruments of high credit quality, comprising securities issued by major

UK companies and institutions. Credit risk relating to loans to and preference shares in

unquoted companies is considered to be part of market risk.

Credit risk arising on the sale of investments is considered to be small due to the short

settlement and the contracted agreements in place with the settlement lawyers.

Future Generations VCT’s deposit and current accounts are maintained with HSBC

Bank plc. The Portfolio Manager has in place a monitoring procedure in respect of

counterparty risk which is reviewed on an ongoing basis. Should the credit quality or

the financial position of HSBC deteriorate significantly, the Portfolio Manager will move

the cash holdings to another bank.

Liquidity risk

Future Generations VCT’s financial assets include investments in unquoted equity

securities which are not traded on a recognised stock exchange and which generally

may be illiquid. As a result, Future Generations VCT may not be able to realise some

of its investments in these instruments quickly at an amount close to their fair value

in order to meet its liquidity requirements, or to respond to specific events such as

deterioration in the creditworthiness of any particular issuer. Listed money market

funds are considered to be readily realisable as they are of high credit quality as

outlined above.

Future Generations VCT’s liquidity risk is managed on a continuing basis by the

Portfolio Manager in accordance with policies and procedures laid down by the Board.

Future Generations VCT’s overall liquidity risks are monitored on a quarterly basis by

the Board.

Future Generations VCT maintains sufficient resources in cash to pay accounts payable

and accrued expenses. At 30 June 2023 these resources were valued at £20,292,000

(2022: £29,826,000).

15. Financial instruments and risk management continued

Market risk continued

18% of the invested portfolio’s assets are exposed to USD (10% of net assets), along

with 20% exposed to EUR (11% of net assets), with the remaining amount denominated

in GBP. Overall, this results in £9.5 million of the portfolio exposed to foreign currencies,

or 21% of net assets. An increase in the rate of 5% would decrease the net assets by

£475,000 (1% of net assets) with the equivalent change in the opposite direction. The 5%

sensitivity used provides the most meaningful impact of average foreign exchange rate

changes across the portfolio.

Floating risk

Future Generations VCT’s floating rate investments comprise interest-bearing money

market funds as at 30 June 2023. Cash held at bank earns no interest due to the HMRC

VCT rule which prohibits a VCT from earning more than 30% of its income in non-VCT

qualifying income. The benchmark rate which determines the rate of interest receivable

on Future Generations VCT’s money market investment is the Bank of England base rate,

which was 5.0% at 30 June 2023. The amounts held in floating rate investments at the

balance sheet date were as follows:

30 June 2023

£’000

30 June 2022

£’000

Money market funds 20,140 —

Total 20,140 —

A 1% increase in the base rate would increase income receivable from these investments

and the net assets for the year by £201,000 (2022: £nil).

Credit risk

There were no significant concentrations of credit risk to counterparties at 30 June 2023.

Credit risk is the risk that a counterparty to a financial instrument will fail to discharge

an obligation or commitment that it has entered into with Future Generations VCT.

The Portfolio Manager and the Board carry out a regular review of counterparty risk.

The carrying values of financial assets represent the maximum credit risk exposure at

the balance sheet date.

Strategic report Governance Financials

77 Octopus Future Generations VCT plc

Annual report and financial statements 2023

Notes to the financial statements continued

In addition, Octopus is entitled to performance-related incentive fees, subject to Future

Generations VCT’s total return at year end exceeding the total return at the previous

year end when an incentive fee was paid, or 97p if the first incentive fee has not yet been

paid (the ‘Excess’), equal to 20% of the Excess. No performance fee will be paid prior to

the financial year ending on 30 June 2025, dividends (paid or declared) being equal to or

greater than 10p per Ordinary share and the total return exceeding 120p.

The cap relating to Future Generations VCT’s total expense ratio, that is the regular,

recurring costs of Future Generations VCT expressed as a percentage of its NAV,

above which Octopus has agreed to pay, is 3.0%, and is calculated in accordance with

the AIC Guidelines.

Octopus AIF Management Limited remuneration disclosures (unaudited)

Quantitative remuneration disclosures required to be made in this annual report in

accordance with the FCA Handbook FUND 3.3.5 are available on the website:

https://www.octopusinvestments.com/remuneration-disclosures/.

19. Related party transactions

Several members of the Octopus investment team hold non-executive directorships as

part of their monitoring roles in Future Generations VCT’s portfolio companies, but they

have no controlling interests in those companies.

Emma Davies, a Non-Executive Director of Future Generations VCT, previously held the

role of co-CEO of Octopus Ventures and she also holds shares in Octopus Capital Ltd.

On 24 March 2023, Emma Davies ceased to be employed by Octopus Capital Limited

and therefore she is no longer considered a related party. Emma continues her role as a

Non-Executive Director of Future Generations VCT. No dividends have been paid to the

Directors of Future Generations VCT in the year (2022: £nil).

16. Post balance sheet events

The following events occurred between the balance sheet date and the signing of these

financial statements:

• five new investments completed totalling £0.9 million, two of which were the second

tranche of funding agreed previously.

17. Contingencies, guarantees and financial commitments

There were no contingencies, guarantees or financial commitments as at 30 June 2023

(2022: £nil).

18. Transactions with the Manager and Portfolio Manager

Future Generations VCT is classified as a full-scope Alternative Investment Fund under

the Alternative Investment Fund Management Directive (the ‘AIFM Directive’). Future

Generations VCT has appointed Octopus AIF Management Limited to provide the

services of an AIFM of a full-scope AIF. In accordance with its power to do so under

AIFMD, Octopus AIF Management Limited has delegated investment management to

Octopus Investments Limited, whilst retaining the obligations of a risk manager.

Future Generations VCT paid Octopus AIF Management Limited £696,000 (2022:

£157,000) in the period as a management fee. The annual management charge (AMC)

is based on 2% of Future Generations VCT’s NAV. The AMC is payable quarterly in

advance and calculated using the latest published NAV of Future Generations VCT

and the number of shares in issue at each quarter end. Once the quarter has ended,

an adjustment will be made if the NAV at the end of the current quarter is calculated

and which differs from the NAV as at the end of the previous quarter. The Manager

will donate 10% of the management fee to the Octopus Giving Charitable Foundation,

which was set up in 2014 to help charities make the world a better place and which,

since inception, has donated more than £1 million to such worthy causes.

Octopus also provides Non-Investment Services to Future Generations VCT, payable

quarterly in advance. The fee is 0.3% of Future Generations VCT’s NAV, calculated at

quarterly intervals. The NISA fee is calculated using the latest published NAV of Future

Generations VCT and the number of shares in issue at each quarter end. As with the

AMC, an adjustment will be made once the quarter has ended if the NAV at the end of

the current quarter is calculated and which differs from the NAV as at the end of the

previous quarter. During the period £122,000 (2022: £24,000) was paid to Octopus for

Non-Investment Services.

Strategic report Governance Financials

78 Octopus Future Generations VCT plc

Annual report and financial statements 2023

Notes to the financial statements continued

20. Top ten voting rights and equity management

Tympa Health HelloSelf Cobee Pear Bio

Has developed a novel device and

software platform to improve ear

and hearing health screening and

diagnostics.

A digital, personalised psychological

therapy and coaching platform.

An employee benefits platform. A precision medicine diagnostics

and therapeutics discovery company

which can recreate a tumour's

microenvironment and assess and

monitor the effects of different

therapies.

Initial investment

date

February 2023

Initial investment

date

January 2023

Initial investment

date

November 2022

Initial investment

date

April 2023

% equity held by

Future Generations

VCT

3.5%

% equity held by

Future Generations

VCT

4.1%

% equity held by

Future Generations

VCT

2.7%

% equity held by

Future Generations

VCT

5.3%

Investment cost £2.7m

(2022: —)

Investment cost

£2.6m

(2022: —)

Investment cost £2.6m

(2022: —)

Investment cost £2.0m

(2022: —)

Valuation £2.7m

(2022: —)

Valuation £2.6m

(2022: —)

Valuation £2.5m

(2022: —)

Valuation £2.0m

(2022: —)

Valuation

movement

—

(2022: —)

Valuation

movement

—

(2022: —)

Valuation

movement

£0m

(2022: —)

Valuation

movement

—

(2022: —)

Last submitted

accounts

31 December 2021 Last submitted

accounts

31 March 2022 Last submitted

accounts

NA Last submitted

accounts

31 December 2022

Turnover NA

(2022: NA)

Turnover NA

(2022: NA)

Turnover NA

(2022: NA)

Turnover NA

(2022: NA)

Profit/(loss) before

tax

(2022: NA)

Profit/(loss) before

tax

(2022: NA)

Profit/(loss) before

tax

(2022: NA)

Profit/(loss) before

tax

(2022: NA)

Net assets £6.2m

(2022: £2.4m)

Net assets £9.3m

(2022: £9.1m)

Net assets NA

(2022: NA)

Net assets £(2.8)m

(2022: £(2.2)m)

Valuation

methodology

Last round

(2022: —)

Valuation

methodology

Last round

(2022: —)

Valuation

methodology

Last round

(2022: —)

Valuation

methodology

Last round

(2022: —)

Key:

NA: Not Available. These are numbers per latest public filings. Latest figures have not been disclosed.

—: Not Applicable as this was not a holding in 2022.

Strategic report Governance Financials

79 Octopus Future Generations VCT plc

Annual report and financial statements 2023

20. Top ten voting rights and equity management continued

Infinitopes Skin + Me Apheris Elo Health

Has built an antigen discovery

platform to develop cancer vaccines

that provide better treatment

outcomes.

A direct to consumer, personalised

skin care company.

An end-to-end federated learning

platform enabling data scientists to

conduct analysis over sensitive data

without compromising the privacy or

security of the data subjects.

A smart nutrition company turning

food from the cause of disease to

medicine using data.

Initial investment

date

December 2022

Initial investment

date

December 2022

Initial investment

date

November 2022

Initial investment

date

January 2023

% equity held by

Future Generations

VCT

5.2%

% equity held by

Future Generations

VCT

0.6%

% equity held by

Future Generations

VCT

3.2%

% equity held by

Future Generations

VCT

3.2%

Investment cost £1.6m

(2022: —)

Investment cost £1.0m

(2022: —)

Investment cost £1.2m

(2022: —)

Investment cost £1.3m

(2022: —)

Valuation £1.6m

(2022: —)

Valuation £1.3m

(2022: —)

Valuation £1.2m

(2022: —)

Valuation £1.1m

(2022: —)

Valuation

movement

—

(2022: —)

Valuation

movement

£0.3m

(2022: —)

Valuation

movement

£0m

(2022: —)

Valuation

movement

£0.2m

(2022: —)

Last submitted

accounts

31 December 2022

(2022: —)

Last submitted

accounts

31 August 2022

(2022: —)

Last submitted

accounts

(2022: —)

Last submitted

accounts

(2022: —)

Turnover NA

(2022: NA)

Turnover NA

(2022: NA)

Turnover NA

(2022: NA)

Turnover NA

(2022: NA)

Profit/(loss) before

tax

(2022: NA)

Profit/(loss) before

tax

£(10.6)m

(2022: NA)

Profit/(loss) before

tax

(2022: NA)

Profit/(loss) before

tax

(2022: NA)

Net assets £8.1m

(2022: £2.4m)

Net assets £(9.1)m

(2022: £9.1m)

Net assets NA

(2022: NA)

Net assets NA

(2022: NA)

Valuation

methodology

Last round

(2022: —)

Valuation

methodology

Calibration

(2022: —)

Valuation

methodology

Last round

(2022: —)

Valuation

methodology

Last round

(2022: —)

Notes to the financial statements continued

Key:

NA: Not Available. These are numbers per latest public filings. Latest figures have not been disclosed.

—: Not Applicable as this was not a holding in 2022.

Strategic report Governance Financials

80 Octopus Future Generations VCT plc

Annual report and financial statements 2023

20. Top ten voting rights and equity management continued

Inflow Intrinsic

A digital therapeutic company

addressing the needs of those with

ADHD.

Embedded memory technology that

is simple to integrate and much faster

than Flash.

Initial investment

date

June 2022

Initial investment

date

December 2022

% equity held by

Future Generations

VCT

1.9%

(2022: 1.9%)

% equity held by

Future Generations

VCT

5.1%

Investment cost £1.0m

(2022: £1.0%)

Investment cost £0.9m

(2022: —)

Valuation £1.0m

(2022: £1.0m)

Valuation £0.9m

(2022: —)

Valuation

movement

—

(2022: £0m)

Valuation

movement

—

(2022: —)

Last submitted

accounts

(2022: —)

Last submitted

accounts

31 December 2022

(2022: —)

Turnover NA

(2022: NA)

Turnover NA

(2022: NA)

Profit/(loss) before

tax

(2022: NA)

Profit/(loss) before

tax

(2022: NA)

Net assets NA

(2022: NA)

Net assets £5.5m

(2022: £0.2m)

Valuation

methodology

Last round

(2022: —)

Valuation

methodology

Last round

(2022: —)

Notes to the financial statements continued

Key:

NA: Not Available. These are numbers per latest public filings. Latest figures have not been disclosed.

—: Not Applicable as this was not a holding in 2022.

Strategic report Governance Financials

81 Octopus Future Generations VCT plc

Annual report and financial statements 2023

Investment portfolio

Fixed asset investments Theme

Investment cost as at

30 June 2023

(£'000)

Amount invested in the year ended

30 June 2023

(£'000)

Apheris Revitalising healthcare 1,246 1,246

Bloom App Limited Empowering people 642 —

Perk Finance (trading as Cobee) Revitalising healthcare 2,568 2,568

Correcto Inc. Empowering people 387 387

Elo Health Inc. Revitalising healthcare 1,257 1,257

HelloSelf Limited Empowering people 2,551 2,551

Infinitopes Revitalising healthcare 1,611 1,611

Inflow Holdings Inc. Revitalising healthcare 1,012 —

Intrinsic Empowering people 880 880

Kita Earth Building a sustainable planet 691 691

Little Journey Limited Revitalising healthcare 377 377

Living Optics Empowering people 858 858

Neat Building a sustainable planet 765 765

Oto Health Inc Revitalising healthcare 289 289

Ourotech Limited (trading as Pear Bio) Revitalising healthcare 2,014 2,014

Perci Health Revitalising healthcare 578 578

Phlux Technology Ltd Empowering people 503 503

Pivotal Future Ltd Building a sustainable planet 767 767

Puraffinity Ltd Building a sustainable planet 474 474

Secfix Empowering people 543 543

Mr & Mrs Oliver Ltd (trading as Skin+Me) Revitalising healthcare 991 991

TYTN (trading as TitanML) Empowering people 451 451

Tympa Health Revitalising healthcare 2,685 2,685

Ufonia Limited Revitalising healthcare 374 374

Vypercore Limited Empowering people 377 377

24,891 23,237

Strategic report Governance Financials

82 Octopus Future Generations VCT plc

Annual report and financial statements 2023

Shareholder information and contact details

Unaudited

Share price

Future Generations VCT’s share price can be found on various financial websites

including www.londonstockexchange.com, with the following TIDM/EPIC code:

Ordinary shares

TIDM/EPIC code OFG

Latest share price 17 October 2023 93.0p

Buying and selling shares

Future Generations VCT’s Ordinary shares can be bought and sold via a stockbroker

in the same way as any other company quoted on the London Stock Exchange. There

may be tax implications in respect of selling all or part of your holdings, so shareholders

should contact their independent financial adviser if they have any queries.

Buyback of shares

Future Generations VCT operates a policy of buying its own shares for cancellation as

they become available, and envisages that purchases will be made at no greater than

a 5% discount to the prevailing NAV. Future Generations VCT is, however, unable to

buy back shares directly from shareholders. If you are considering selling your shares,

please contact Octopus Investments who can talk to you about the options available.

They will also be able to provide details of closed periods (when Future Generations VCT

is prohibited from buying shares) and details of the price at which it has been bought,

and can be contacted as follows:

Octopus Client Relations Team 0800 316 2295

investorsupport@octopusinvestments.com

If you are considering trading on the secondary market or would like to talk directly to

Future Generations VCT’s corporate broker, Panmure Gordon (UK) Limited (‘Panmure’),

they can be contacted as follows:

Chris Lloyd 020 7886 2716 chris.lloyd@panmure.com

Paul Nolan 020 7886 2717 paul.nolan@panmure.com

Future Generations VCT was incorporated on 17 November 2021, with over £32.1 million

in aggregate (£31.6 million net of expenses) raised through an offer for subscription

during the period to 30 June 2022. A further £15.2 million (£14.9 million net of expenses)

was raised through an offer for subscription during the period to 30 June 2023.

Further details of Future Generations VCT’s progress are discussed in the Chair’s Statement

and Portfolio Manager’s Review on pages 2 and 3 and 13 to 20 respectively.

Venture Capital Trusts (VCTs)

VCTs were introduced in the Finance Act 1995 to provide a means for private individuals

to invest in unquoted companies in the UK. Subsequent Finance Acts have introduced

changes to VCT legislation. The tax benefits currently available to eligible new investors

in VCTs include:

• up to 30% upfront income tax relief;

• exemption from income tax on dividends paid; and

• exemption from capital gains tax on disposals of shares in VCTs.

The principal activity of Future Generations VCT is to invest in a diversified portfolio of

UK smaller companies in order to generate capital growth over the long term as well as

an attractive tax-free dividend stream. Future Generations VCT has been granted full

approval as a VCT by HM Revenue and Customs HMRC.

In order to maintain its approval, Future Generations VCT must comply with certain

requirements on a continuing basis, including the provisions of Chapter 3 of the Income

Tax Act 2007, in particular s280A:

• no single investment made can exceed 15% of Future Generations VCT’s total value;

and

• a minimum of 10% of each qualifying investment must be in Ordinary shares with

no preferential rights.

The below requirements will apply once Future Generations VCT has passed through

three accounting periods:

• at least 80% of its investments must comprise ‘qualifying holdings’

(as defined in

the legislation); and

• at least 70% of the 80% of qualifying holdings must be invested in Ordinary shares

with no preferential rights.

1. A ‘qualifying holding’ consists of up to £5 million (£10 million for knowledge-intensive companies) invested

in any one year in new shares or securities in an unquoted company (or companies quoted on AIM) which

is carrying on a qualifying trade and whose gross assets do not exceed a prescribed limit at the time of

investment. The definition of a ‘qualifying trade’ excludes certain activities such as property investment

and development, financial services and asset leasing.

Strategic report Governance Financials

83 Octopus Future Generations VCT plc

Annual report and financial statements 2023

Shareholder information and contact details continued

Unaudited

Electronic communications

All Future Generations VCT’s reports, accounts and other correspondence are published

electronically. If you opt into receiving paper copies, we would encourage you to

consider switching to e-communications as this cuts the cost of printing and reduces

the impact on the environment. To do so, please contact Octopus on

0800 316 2295 or Computershare on 0370 707 1003. Alternatively, you can sign up to

receive e-communications via the Computershare Investor Centre at:

www-uk.computershare.com/investor/.

Warning to shareholders

Many companies are aware that their shareholders have received unsolicited phone

calls or correspondence concerning investment matters. These are typically from

overseas-based ‘brokers’ who target UK shareholders offering to sell them what

often turn out to be worthless or high risk shares in US or UK investments. They can

be very persistent and extremely persuasive. Shareholders are therefore advised to

be wary of any unsolicited advice, offer to buy shares at a discount, or offer for free

company reports.

Please note that it is very unlikely that either Octopus or Future Generations VCT’s

registrar would make unsolicited telephone calls to shareholders and that any such

calls would relate only to official documentation already circulated to shareholders and

never in respect of investment advice.

If you are in any doubt about the authenticity of an unsolicited phone call, please call

Octopus on 0800 316 2295.

The Financial Conduct Authority has also issued guidelines on how to avoid

share fraud and further information can be found on their website:

www.fca.org.uk/scamsmart/share-bond-boiler-room-scams.

You can report any share fraud to them by calling 0800 111 6768.

Secondary market

UK income tax payers, aged 18 or over, can purchase shares in the secondary market

and benefit from:

• tax-free dividends;

• realised gains not being subject to capital gains tax (although any realised losses are

not allowable);

• no minimum holding period; and

• no need to include VCT dividends in annual tax returns.

The UK tax treatment of VCTs is on a first in and first out basis and so tax advice

should be obtained before shareholders dispose of their shares.

Whilst there is no specific limit on the amount of an individual’s acquisition of shares

in a VCT, tax reliefs will only be given to the extent that the total of an individual’s

subscriptions or other acquisitions of shares in VCTs in any tax year do not exceed

£200,000. Qualifying investors who intend to invest more than £200,000 in VCTs in any

one tax year should consult their professional advisers.

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 amendment, this

should be notified to Future Generations VCT’s registrar, Computershare, under the

signature of the registered holder or via the Computershare Investor Centre at:

www-uk.computershare.com/investor/. Computershare’s contact details are

provided on the inside back cover.

Other information for shareholders

Shareholders can obtain a full copy of Future Generations VCT’s annual report on

the Octopus website at www.octopusinvestments.com/our-products/venture-

capital-trusts/octopus-future-generations-vct/.

All other statutory information can also be found here.

Strategic report Governance Financials

84 Octopus Future Generations VCT plc

Annual report and financial statements 2023

Glossary of terms

Ongoing charges ratio (APM)

The ongoing charges ratio has been calculated using the AIC recommended

methodology and excludes irrecoverable VAT, exceptional costs and trail commission.

The figure shows the annual percentage reduction in shareholder returns as a result of

recurring operational expenses. It informs shareholders of the likely costs that will be

incurred in managing Future Generations VCT in the future.

This is calculated by dividing the ongoing expenses, which includes the annualised

amount of the expenses listed out in Note 4 on page 69 but excludes irrecoverable VAT,

exceptional costs and trail commission, by the average net assets in the period.

Total return (APM)

Total return is calculated as movement in NAV per share in the period plus dividends

paid in the period. Total return on the NAV per share enables shareholders to evaluate

more clearly the performance of Future Generations VCT, as it reflects the underlying

value of the portfolio at the reporting date.

Total return % (APM)

Total return % is calculated as movement in NAV per share in the period plus dividends

paid in the period, divided by the NAV per share at the beginning of the period. Total

return % on the NAV per share enables shareholders to evaluate more clearly the

performance of Future Generations VCT, as it reflects the underlying value of the

portfolio at the reporting date.

Alternative performance measure (APM)

A financial measure of historical or future financial performance, financial position

or cash flows, other than a financial measure defined or specified in the applicable

financial reporting framework. These APMs will help shareholders to understand and

assess Future Generations VCT’s progress. A number of terms within this glossary have

been identified as APMs.

Money Market Fund (MMF):

A mutual fund that invests in highly liquid, short term investments. These instruments

include cash, cash equivalent securities, and high credit rating debt based securities

with a short term maturity. They are intended to offer investors high liquidity with a

low level of risk.

Net asset value or NAV

The value of Future Generations VCT’s total assets less liabilities. It is equal to the total

shareholders’ funds.

Net asset value per share or NAV per share

The NAV per share of Future Generations VCT is the sum of the underlying assets less

the liabilities of Future Generations VCT divided by the total number of shares in issue.

Strategic report Governance Financials

85 Octopus Future Generations VCT plc

Annual report and financial statements 2023

Notice is hereby given that the AGM of Octopus Future Generations VCT plc will

be held at the offices of Octopus Investments, 33 Holborn, London EC1N 2HT on

11 December 2023 at 12.00 noon for the purposes of considering and, if thought

fit, passing the following resolutions of which Resolutions 1 to 8 will be proposed as

Ordinary Resolutions and Resolutions 9 to 11 will be proposed as Special Resolutions:

Ordinary business

1. To receive and adopt the annual report and the audited financial statements for

the year to 30 June 2023.

2. To approve the Directors’ Remuneration Policy.

3. To approve the Directors’ Remuneration Report.

4. To re-elect Helen Sinclair as a Director.

5. To re-elect Joanna Santinon as a Director.

6. To re-elect Emma Davies as a Director.

7. To re-appoint BDO LLP as auditor of the Company and to authorise the Audit

Committee to determine its remuneration.

Special business

To consider and, if thought fit, pass Resolution 8 as an Ordinary Resolution and

Resolutions 9 to 11 as Special Resolutions:

8. Authority to allot relevant securities

THAT the Directors of the Company be and hereby are 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 up to a

maximum of 57,766,004 Ordinary shares in the Company (‘Shares’) (representing

approximately 120% of the Shares in issue as at 17 October 2023), provided that

the authority conferred by this Resolution shall expire on the date falling 15 months

from the date of the passing of this Resolution or, if earlier, at the conclusion of the

Annual General Meeting of the Company to be held in 2024 save that this authority

shall allow the Company to make, before the expiry of this authority, any offers

or agreements which would or might require Shares to be allotted or rights to be

granted after such expiry and the Directors may allot Shares in pursuance of any

such offer or agreement notwithstanding the expiry of such authority.

9. Empowerment to make allotments of equity securities

THAT conditional upon the passing of Resolution 8 above the Directors of the

Company be and hereby are empowered pursuant to Section 571 of the Act to allot

or make offers or agreements to allot equity securities (which expression shall have

the meaning ascribed to it in Section 560(1) of the Act) for cash pursuant to the

authority granted by Resolution 8 above, as if Section 561 of the Act did not apply

to any such allotment and so that: (a) reference to allotment of equity securities

in this Resolution shall be construed in accordance with Section 560(2) of the Act;

and (b) the power conferred by this Resolution shall enable the Company to make

any offer or agreement before the expiry of the said power which would or might

require equity securities to be allotted after the expiry of the said power and the

Directors may allot equity securities in pursuance of any such offer or agreement

notwithstanding the expiry of such power. The power provided by this Resolution

shall expire on the date falling 15 months from the date of the passing of this

Resolution or, if earlier, at the conclusion of the Annual General Meeting of the

Company to be held in 2024.

Notice of Annual General Meeting

Strategic report Governance Financials

86 Octopus Future Generations VCT plc

Annual report and financial statements 2023

11. Articles of Association

THAT the Articles of Association of the Company be amended to increase the limit

on the maximum aggregate remuneration permitted to be paid to Directors from

£125,000 to £175,000 per annum by replacing the figure “£125,000” appearing in Article

102 with “£175,000”.

By order of the Board

Helen Sinclair

Chair

18 October 2023

Special business continued

10. Authority to make market purchases

THAT the Company be and is hereby generally and unconditionally authorised to

make one or more market purchases (within the meaning of s693(4) of the Act)

of Shares provided that:

(a) the maximum number of Shares so authorised to be purchased shall not exceed

7,215,936 Shares, representing approximately 14.99% of the present issued

Shares as at the date of this notice;

(b) the minimum price which may be paid for a Share shall be its nominal value;

amount equal to the higher of: (i) 105% of the average of the middle market

quotation for a Share taken from the London Stock Exchange Daily Official List

for the five business days immediately preceding the day on which the Share

is contracted to be purchased; and (ii) the amount stipulated by Article 5(6)

of the Market Abuse Regulation;

(d) the authority conferred by this Resolution shall (unless previously renewed,

varied or revoked in general meeting) expire on the date falling 15 months after

the passing of this Resolution or, if earlier, at the conclusion of the Annual

General Meeting of the Company to be held in 2024; and

(e) the Company may enter into a contract to purchase its Shares under this

authority prior to the expiry of this authority which will or may be executed

wholly or partly after the expiry of this authority and the Company may make

a purchase of its Shares in pursuance of any such contract.

Notice of Annual General Meeting continued

Strategic report Governance Financials

87 Octopus Future Generations VCT plc

Annual report and financial statements 2023

Notes:

(a) A member entitled to attend and vote at the AGM

may appoint one or more proxies to attend and vote

on his or her behalf. A proxy need not be a member.

(b) Pursuant to Regulation 41 of the Uncertificated

Securities Regulations 2001, entitlement to attend

and vote at the meeting and the number of votes

which may be cast thereat will be determined

by reference to the Register of Members of the

Company at close of business on the day which is

two days before the day of the meeting. Changes

to entries on the Register of Members after that time

shall be disregarded in determining the rights of any

person to attend and vote at the meeting.

must be completed and delivered to the registrar

of the Company, Computershare Investor Services

PLC, The Pavilions, Bridgwater Road, Bristol BS99 6ZY

or alternatively, you may register your proxy

electronically at www.investorcentre.co.uk/eproxy,

in each case, so as to be received by no later than 48

hours (excluding non-working days) before the time

the AGM is scheduled to begin. To vote electronically,

you will be asked to provide your Control Number,

Shareholder Reference Number and PIN which are

detailed on your proxy form.

Appointment of a proxy, or any CREST proxy

instruction (as described in paragraph (d) below) will

not preclude a member from subsequently attending

and voting at the meeting should he or she choose

to do so. This is the only acceptable means by which

proxy instructions may be submitted electronically.

(d) To appoint one or more proxies or to give an

instruction to a proxy (whether previously appointed

or otherwise) via the CREST system, CREST

messages must be received by the issuer’s agent (ID

number 3RA50) not later than 48 hours (excluding

non-working days) before the time appointed for

holding the meeting. For this purpose, the time of

receipt will be taken to be the time (as determined

by the time stamp generated by the CREST system)

from which the issuer’s agent is able to retrieve the

message. After this time any change of instructions

to a proxy appointed through CREST should be

communicated to the proxy by other means. CREST

personal members or other CREST sponsored

members, and those CREST members who have

appointed voting service provider(s), should contact

their CREST sponsor or voting service provider(s) for

assistance with appointing proxies via CREST. For

further information on CREST procedures, limitations

and system timings please refer to the CREST

manual. The Company may treat as invalid a proxy

appointment sent by CREST in the circumstances

set out in Regulation 35(5)(a) of the Uncertificated

Securities Regulations 2001.

(e) Any person receiving a copy of the Notice as a

person nominated by a member to enjoy information

rights under Section 146 of the Companies Act 2006

(a ‘Nominated Person’) should be aware that the

provisions in Notes (a) and (b) above concerning

the appointment of a proxy or proxies to attend

the meeting in place of a member, do not apply to

a Nominated Person as only shareholders have the

right to appoint a proxy. However, a Nominated

Person may have a right under an agreement

between the Nominated Person and the member

by whom he or she was nominated to be appointed,

or to have someone else appointed, as a proxy for

the meeting. If a Nominated Person has no such

proxy appointment right or does not wish to exercise

it, he/she may have a right under such an agreement

to give instructions to the member as to the exercise

of voting rights at the meeting.

(f) Section 319A of the Companies Act 2006 requires

the Directors to answer any question raised at the

AGM which relates to the business of the meeting,

although no answer need be given: (a) if to do

so would interfere unduly with the preparation of

the meeting or involve disclosure of confidential

information; (b) if the answer has already been given

on the Company’s website; or (c) if it is undesirable in

the best interests of the Company or the good order

of the meeting.

Questions from our shareholders in relation to

the AGM can be sent via email to

FGAGM@octopusinvestments.com. The Company

may, however, elect to provide answers to questions

raised within a reasonable period of days after

the conclusion of the AGM.

Notice of Annual General Meeting continued

Strategic report Governance Financials

88 Octopus Future Generations VCT plc

Annual report and financial statements 2023

Notes: continued

(g) Members satisfying the thresholds in Section 527 of

the Companies Act 2006 can require the Company

to publish a statement on its website setting out any

matter relating to: (a) the audit of the Company’s

accounts (including the auditor’s report and the

conduct of the audit) that are to be laid before

the AGM; or (b) any circumstances connected with

an auditor of the Company ceasing to hold office

since the last AGM, that the members propose to

raise at the meeting. The Company cannot require

the members requesting the publication to pay its

expenses. Any statement required to be placed on

the website must also be sent to the Company’s

auditor no later than the time it makes its statement

available on the website. The business which may be

dealt with at the meeting includes any statement

that the Company has been required to publish on

its website.

(h) Under Sections 338 and 338A of the Companies Act

2006, members meeting the threshold requirements

in those sections have the right to require the

Company:

(i) to give, to members of the Company entitled to

receive notice of the meeting, notice of a

resolution which may properly be moved and is

intended to be moved at the meeting; and/or

(ii) to include in the business to be dealt with at

the meeting any matters (other than a proposed

resolution) which may be properly included in the

business.

A resolution may properly be moved or a matter may

properly be included in the business unless:

(i) (in the case of a resolution only) it would, if

passed, be ineffective (whether by reason

of inconsistency with any enactment or the

Company’s constitution or otherwise);

(ii) it is defamatory of any person; or

(iii) it is frivolous or vexatious.

Such a request may be in hard copy form or in

electronic form, and must identify the resolution

of which notice is to be given or the matter to be

included in the business, must be authorised by the

person or persons making it, must be received by

the Company not later than six weeks before the

meeting, and (in the case of a matter to be included

in the business only) must be accompanied by a

statement setting out the grounds for the request.

(i) A copy of the Notice of AGM and the information

required by Section 311A of the Companies Act

2006 is included on the Company’s website,

www.octopusinvestments.com/our-products/

venture-capital-trusts/octopus-future-

generations-vct/. Copies of the Directors’

letters of appointment, the Register of Directors’

Interests in the Ordinary shares of the Company

kept in accordance with the Listing Rules and

a copy of the Memorandum and Articles of

Association of the Company will be available

for inspection at the registered office of the

Company during usual business hours on any

weekday from the date of this Notice until the

AGM, and at the place of that meeting for at

least 15 minutes prior to the commencement of

the meeting until its conclusion.

(j) As at 17 October 2023 (being the last practicable

date prior to the publication of this Notice)

the Company’s issued share capital consists of

48,138,337 Ordinary shares, carrying one vote

each. Therefore, the total voting rights in the

Company as at 17 October 2023 are 48,138,337.

Notice of Annual General Meeting continued

Board of Directors

Helen Sinclair

Joanna Santinon

Emma Davies

Company number

Registered in England and Wales

No. 13750143

Secretary and registered office

Octopus Company Secretarial Services Limited

33 Holborn

London

EC1N 2HT

Portfolio Manager

Octopus Investments Limited

33 Holborn

London

EC1N 2HT

Tel: 0800 316 2295

www.octopusinvestments.com

Legal Entity Identifier (LEI)

213800AL71Z7N2O58N66

Manager

Octopus AIF Management Limited

33 Holborn

London

EC1N 2HT

Tel: 0800 316 2295

www.octopusinvestments.com

Corporate broker

Panmure Gordon (UK) Limited

40 Gracechurch Street

London

EC3V 0BT

Tel: 020 7886 2500

Independent auditor

BDO LLP

55 Baker Street

London

W1U 7EU

Tax adviser

James Cowper Kreston

Reading Bridge House

George Street

Reading

Berkshire

RG1 8LS

VCT status adviser

Shoosmiths LLP

Apex Plaza, Forbury Road

Reading

RG1 1SH

Bankers

HSBC Bank plc

31 Holborn

London

EC1N 2HR

Depositary

Thompson Taraz Depositary Limited

47 Park Lane

London

W1K 1PR

Registrar

Computershare Investor Services PLC

The Pavilions

Bridgwater Road

Bristol

BS99 6ZZ

Tel: 0370 703 6324

(Calls are charged at the standard geographic rate

and will vary by provider. Calls from outside the

United Kingdom will be charged at the applicable

international rate.)

www.computershare.com/uk

www‑uk.computershare.com/investor/

Octopus Future Generations VCT plc

Annual report and financial statements 2023

Directors and advisers

Perivan 263848

www.lyonsbennett.com

Octopus Investments

33 Holborn

London EC1N 2HT

0800 316 2295

investorsupport@octopusinvestments.com

octopusinvestments.com