OCTOPUS FUTURE GENERATIONS VCT PLC Octopus Future Generations VCT plc
Backing businesses with the power to transform the world for the better
Unaudited half-yearly report for the six months ended 31 December 2023
Octopus Investments Awards
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 AIF Management Limited (the 'Manager'), who has delegated investment management to Octopus Investments Limited ('Octopus' or 'Portfolio Manager') via its investment team Octopus Ventures.
5 Star Winner
Contents
Interim management report
Financials
Directors' responsibilities statement 13
Income statement 14
Balance sheet 15
Statement of changes in equity 16
Cash flow statement 19
Condensed notes to the half-yearly report 20
Appendix 22
Shareholder information 23
Glossary 25
Directors and advisers 26
Chair's statement
Key financials:
£47.0 million
in total net assets
93.7p
Net asset value (NAV) per share
£8.6 million
raised to 31 October 2023 in last fundraise
I am pleased to present the unaudited half-yearly report and accounts for the Company for the six months to
31 December 2023.
I would like to welcome all new shareholders to the Company. Future Generations VCT invests in exciting early-stage companies which aspire to address current environmental and societal issues.
The NAV per share at 31 December 2023 was 93.7p, which represents a net decrease of 0.6p per share from 30 June 2023. In the period to 31 December 2023, we utilised £2.1 million of our cash resources. Of this amount, £2.0 million was invested into six new portfolio companies. The cash balance of £20.1 million as at
31 December 2023 represents 43% of net assets at that date. The loss made in the period to 31 December 2023 was £0.3 million, which is to be expected at this early stage due to the running costs of the Company exceeding returns from investments.
Fundraise
We were pleased to raise £8.6 million in our previous fundraise which closed on 31 October 2023. We have since launched a new offer to raise up to £15.0 million with an over-allotment facility of up to £5.0 million. The offer will close for new applications on 27 January 2025, or earlier if fully subscribed.
As investors will be aware, the intention is to invest in businesses which we believe demonstrate good investment prospects as well as having the potential to transform the world we live in for the better. The three themes are building a sustainable planet, empowering people and revitalising healthcare. We look to invest into companies that align with these three themes.
VCT qualification
I am pleased to report that the Company has met the 30% Investment Rule for the funds raised to June 2023 ahead of the deadline, which was 30 June 2024. Additionally, we have achieved ahead of deadline the requirement for 80% of the Company's funds to be invested in qualifying holdings by 1 July 2024 (for funds raised up to 30 June 2022).
Principal risks and uncertainties
The Board continues to review the risk environment in which the Company operates. We were pleased in the November Autumn Statement that the chancellor announced that the VCT sunset clause will be extended, meaning VCT relief will be available to subscribers for shares issued before April 2035, rather than April 2025. At this time, there have been no significant changes to the key risks which were described on pages 32 to 34 of the Annual Report for the year ended 30 June 2023. The Board does not anticipate significant changes to these risks in the year ahead.
Chair's statement continued
Change to year end
In 2023, the Board reviewed and approved a proposal to move the Company's year end from 30 June to
31 December. This change is mainly being driven by operational efficiency gains that can be achieved by aligning year-end periods with other funds with which the Company co-invests. As a result, shareholders will receive a half-yearly report for periods ending 31 December 2023 and 30 June 2024, followed by an annual report for 31 December 2024 covering an extended 18-month period. After this, the normal cadence of reporting will resume.
Board of Directors
Emma Davies has announced her retirement from the Board of Directors. It has been a pleasure to work with Emma, and I would like to take this opportunity to thank her on behalf of the Board and shareholders for her valuable contribution since the Company launched. Having completed a structured recruitment process,
I am pleased to announce the appointment of Ajay Chowdhury as an independent Non-Executive Director. Ajay is a serial entrepreneur, venture capitalist and author, and is currently a senior partner at the Boston Consulting Group. We look forward to benefitting from his wealth of experience in the early-stage venture ecosystem.
Outlook
The Company is at the beginning of its investment journey. The nature of investing into early-stage companies means that the value of our portfolio will take time to grow. We also expect that some of the investments made by the Company fail. Until the Company is fully invested, there is a greater concentration of value in fewer companies, so performance will be more sensitive to valuation movements in the underlying holdings than if the portfolio was larger. Higher interest rates also continue to dampen business and consumer confidence and these conditions are particularly challenging for early-stage companies to navigate and do not look set to ease in the short to mid-term.
However, despite these challenges there is reason to be optimistic as these conditions present opportunities to invest into, and build, new early-stage companies at attractive valuations. Our Manager continues to see interesting business opportunities, as passionate entrepreneurs seek new ways to solve fundamental environmental and societal issues. Our long-term view of early-stage venture capital remains positive.
The long-term target of the Company is to pay an annual dividend of 5% of the NAV generated by exits from investments. 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 the end of 2025. During this time, any growth in the portfolio value should be reflected in the Company's share price.
I would like to conclude by thanking my Board colleagues and the Octopus team on behalf of all shareholders for their hard work. I am looking forward to seeing what the coming year brings for the Company.
Helen Sinclair Chair
28 March 2024
Investment themes
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 wishes to empower people to create a fairer and more equitable society so invests 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. This could drive 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.
Please view the Responsible Investment policy here octopusinvestments.com/fg-responsible-investment-policy/
Operating responsibly
Future Generations VCT has a policy in place, which is set by the Board, to ensure Octopus Ventures considers responsible investment within investment decisions.
Octopus Ventures is responsible for implementing the Company's Responsible Investment policy. As the nature of responsible investment, and the wider business environment evolves, the policy will be reviewed and, if necessary, updated. The policy ensures Octopus Ventures follows a three-step approach to responsible investment.
Octopus is an accredited B Corp and signatory to the internationally recognised Principles for Responsible Investment, demonstrating their commitment to responsible investment and to creating a more sustainable financial system.
Octopus Ventures initiatives:
Female diversity pledge
By 2025, 30% of all new founder pitches to the Octopus Ventures investment team must be businesses led or co-led by a woman and by 2027, this will increase to 50%.
Greenhouse gas emissions
Octopus Ventures will engage with all portfolio companies on their greenhouse gas emissions and give them access to appropriate complimentary tools to support their understanding of their carbon footprint and how to reduce it.
2023
Operating responsibly continued
The Directors believe responsible investment can help create long-term value so companies should implement a framework to support best practices.
This framework considers:
1. Mission: the impact of an investment
2. Materiality: the materiality of sustainability issues
3. Responsibility: a portfolio company's values, culture and behaviour
Mission
Future Generations VCT is helping to solve some of the world's biggest problems. The team look for investments that have the capability to enable the transition to a greener planet, address inequality and rebalance access to healthcare. To see how the portfolio is split by each theme, please refer topage 7.
Materiality
As part of the investment process, the team incorporate a material risk review of sustainability issues. This process includes identification and consideration of material issues which could impact the sector within which the Company operates. These risks and their relevance to sectors is based on guidance from the Sustainability Accounting Standards Board (SASB). Given the nature of the tech-enabled businesses targeted for investment, the most material risks identified include data security, data privacy, and recruiting and managing a diverse and skilled workforce.
Responsibility
Octopus has created an engagement tool to help the investment team understand whether a company considers their wider stakeholders (community, customers, people, planet and shareholders) within decision making and provide tools and guidance to help companies adopt responsible practices. The team will also collect data on diversity within the portfolio and actively work with portfolio companies to support talent management, recruitment and diversity.
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.
6
investments completed in six months to 31 December 2023
Focus on Future Generations VCT's investments
Below is a breakdown of the 30 investments held as at 31 December 2023, showing the proportion and value of the portfolio in each investment theme:
Proportion by number of portfolio companies in each theme
Value of the portfolio in each theme
£26.7 million
total value of the portfolio as at 31 December 2023
Portfolio Manager's review continued
Overview of investments
The Company completed six new investments in the reporting period (comprising a total of £2.0 million) and three further investments after 31 December 2023 totalling £2.8 million of investment. More information on three of these businesses can be found below. For a full list, please see the Appendix on page 22.
A selection of our completed investments
Revitalising healthcare
An artificial intelligence (AI) first biotechnology company creating novel stem cell-based therapies for chronic diseases. Its technology uses AI-first live cell imaging to predict and optimise stem cell differentiation, to controllably manufacture any cell and tissue in the body at scale. It is working at the exciting intersection of cell biology, computer vision, engineering, and machine learning to industrialise next-generation science from research into the real world.
Building a sustainable planet
A platform that allows landlords of multi-unit buildings to monetise modular renewable energy projects through a single billing platform to charge tenants. Its innovative technology and guidance makes navigating the path to solar energy quick and easy allowing commercial property owners to play a part in securing a greener, more prosperous future for their portfolio and the planet.
Revitalising healthcare
Automates routine clinical tasks, synchronising data between systems and driving seamless coordination between care teams and patients. Despite significant technological advances, healthcare delivery remains sub-optimal and Awell wants to change this to give care teams more time for the human aspects of care.
| Attention: This is an excerpt of the original content. To continue reading it, access the original document here. |
Attachments
- Original Link
- Original Document
- Permalink
Disclaimer
Octopus Future Generations Vct plc published this content on 28 March 2024 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 28 March 2024 12:37:19 UTC.
