Annual report and financial statements for the period ended 31 December 2024

OCTOPUS FUTURE GENERATIONS VCT PLC

Annual report and financial statements for the period ended 31 December 2024

Octopus Future Generations VCT plc (‘Future Generations VCT’ or the ‘Company’) is backing businesses that aim to address some of 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’), which has delegated investment management to Octopus Investments Limited (‘Octopus’ or ‘Portfolio Manager’) via its investment team Octopus Ventures.

Chair’s statement

I am pleased to present the financial report and audited accounts for the Company for the 18 months to 31 December 2024.

I would like to welcome all of our new shareholders to the Company. Future Generations VCT invests in exciting early-stage companies which aspire to address current environmental and societal issues. In 2023, the Board reviewed and approved a proposal to move the Company’s year end from 30 June to 31 December. As a result, shareholders are receiving this annual report covering an extended 18-month period and will thereafter receive a half-year report as at June, and annual report and audited financial statements for the years ending December thereafter.

The NAV per share at 31 December 2024 was 88.8p, which represents a net decrease of 5.5p per share from 30 June 2023. In the 18 months to 31 December 2024, we utilised £10.1 million of our cash resources, including £8.2 million which was invested into 16 new and follow‑on opportunities. The cash balance of £20.1 million (excluding cash awaiting allotment) as at 31 December 2024 represents 42% of net assets at that date. The loss made in the period to 31 December 2024 was £2.9 million. This decline is reflective of some company specific performance challenges and the difficult funding conditions in the early-stage space which have led to downward movements in some valuations. Given the Company is still a relatively young VCT, many of its portfolio companies are at the beginning of their journey and will likely require further funding to succeed, so it is to be expected to see under performance or even failures before any growth in value of companies which are ultimately successful. The decline is also accentuated by the running costs of the Company exceeding returns from investments, which is to be anticipated at this stage.

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
We raised £3.6 million in the fundraise which closed on 31 October 2024. The 2023/2024 VCT fundraise market was highly competitive, ranking as the third highest on record with £882 million raised. In this environment, newer VCTs such as ours faced challenges in raising funds, as we compete with more established funds.

On 3 February 2025, to further support the Company’s growth, the Board launched an initial offer to raise up to £5 million. The offer closed for new applications on 1 April 2025 for the 2024/2025 tax year having successfully raised £5.0 million.

As investors will be aware, the intention is to invest in businesses which meet one of three key themes, which we hope will demonstrate excellent investment prospects as well as having the potential to transform the world we live in for the better.

VCT status
In November 2023, a ten-year extension was announced to the ‘sunset clause’ (a retirement date for the VCT scheme), meaning that VCT tax reliefs will be available until 5 April 2035. This extension passed through Parliament in February 2024 and on 3 September 2024 His Majesty’s Treasury brought the extension into effect through The Finance Act 2024.

Board of Directors
As announced in the half-yearly report to 31 December 2023, Emma Davies announced her retirement from the Board of Directors with effect from 31 March 2024 and Ajay Chowdhury was appointed with effect from 1 March 2024 and was elected by shareholders at the Annual General Meeting (AGM) held in December. We are already benefiting from his extensive experience in the early-stage venture ecosystem.

All the other Directors have indicated their willingness to remain on the Board and will be seeking re-election at the AGM.

Portfolio Manager
In September 2024, Octopus Titan VCT PLC, a fund which the Company has co-invested alongside to date, announced a review of strategy, due to the ongoing performance issues it has faced. This review (which benefits from independent external advice) is ongoing, and when concluded, the results will be shared with the Board of the Company and via any public announcements that the Board of Octopus Titan VCT PLC may make.

During this period, the investment team has prioritised much of its resource towards those portfolio companies which they believe have the potential to drive the greatest returns. This has affected your Company’s investment rate into new opportunities.

In the meantime, there have been a significant number of leavers from the broader Octopus Ventures team which invests capital from both the Company and other funds under management. Simon King, Octopus’ Lead Fund Manager for Future Generations, has unfortunately resigned to pursue a new opportunity after 13 years with Octopus. He will continue to take an active role as Lead Fund Manager of the Company until late summer. I would like to take this opportunity to thank Simon for his contribution and to wish him well for the future. We will provide you with updates in due course regarding his potential successor.

Erin Platts was appointed as new Chief Executive Officer (CEO) of Octopus Ventures in January 2025. Previously, she was CEO of HSBC Innovation Banking UK, formerly Silicon Valley Bank UK and worked at the heart of the UK and European tech ecosystem. Erin will be looking to scale the Octopus Ventures business, including ensuring there is appropriate investment and portfolio management resource to support the ongoing success of the Company.

AGM
The AGM will take place on 4 June 2025 from 10am 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. We will have a Portfolio Manager’s update at the AGM, supported by a filmed update from the Portfolio Manager which will be available on the website at www.octopusinvestments.com/futuregenvct/.

Shareholders’ views are important, and the Board encourages shareholders to vote on the resolutions within the Notice of the AGM 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.

Outlook
In the 18-month reporting period, the sharpest decline in NAV was seen in the first half of 2024 with a 7.1% drop. This was reflective of some of the portfolio companies struggling to scale, secure customer wins and successfully fundraise, meaning they were not achieving the milestones set at the time the Company invested. With companies not able to prove their business models, we will unfortunately see some fail. The Board is mindful that such performance is not an unusual outcome for a VCT at this stage of its investment life cycle, with any failures likely preceding valuation growth which is usually expected once the portfolio matures. The portfolio has been operating in a volatile macro environment since the Company launched and global geo-political and economic pressures continue to hamper some of their growth plans. However, we are satisfied to see a stabilisation in the NAV, with the portfolio showing a positive return in the six months from June to December 2024.

The Mergers and Acquisitions (M&A) environment has started to thaw with startups experiencing the highest annual M&A transaction levels since 2019¹. We are delighted to have been able to realise the Company’s first full and partial exits in the reporting period. These exits within just three years of launch we hope provide validation of Future Generations VCT’s investment strategy, demonstrating the ability of Octopus to identify and back high-potential companies while delivering early returns to the VCT and brings confidence that it is well positioned to generate long-term, sustainable value for shareholders.

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 2026. 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 more portfolio companies have time to mature and realisations are secured.

I would like to conclude by thanking both my Board colleagues and the Octopus team on behalf of all shareholders for their hard work. The Board’s long-term view of early-stage venture capital remains positive, and I am looking forward to seeing what 2025 brings for your Company.

Helen Sinclair
Chair

¹ https://carta.com/uk/en/data/state-of-private-markets-q4-2024/#key-trends

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 31 December 2024 was 88.8p, which represents a decrease in NAV of 5.5p per share versus a NAV of 94.3p per share as at 30 June 2023. 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 36 investments held as at 31 December 2024, showing the proportion and value of the portfolio in each investment theme:

Proportion by number of portfolio companies in each theme
Revitalising healthcare: 53%
Empowering people: 28%
Building a sustainable planet: 19%

Value of the portfolio in each theme
Revitalising healthcare: £13.3m
Empowering people: £8.0m
Building a sustainable planet: £5.5m

The decline in valuation over the 18-month period has been in large part driven by the downward valuation movements across 11 companies which saw a collective decrease in valuation of £7.9 million. The businesses which contributed most significantly to this were Tympa Health, Pear Bio and Elo Health. Tympa Health over‑invested in growth and had to make significant cost cuts and changes to senior management whilst running a fundraise process. It has successfully concluded a further investment round, but at a reduced valuation and the Company’s shareholding now sits behind a large preference stack, meaning that other investors get paid back first before the Company would see any returns. Pear Bio also had to significantly reduce its cash burn but has limited runway and needs to further fundraise, so the valuation has been reduced to reflect the risk to its future. Elo Health struggled to find a market fit and execute on the investment thesis, so to extend its cash runway it had to raise an investment round at a reduced valuation. These three valuation movements account for 86% of the total decline in the reporting period. The total investment cost of these three companies was £7 million.

Octopus Ventures believes that some of the companies which have seen decreased valuations in the 18 months have the potential to overcome the issues they face and get their growth plans back on track. We will continue to work with them to help them realise their ambitions. In some cases, if a company is achieving its performance milestones, the support offered could include further funding, to ensure a business has the capital it needs to execute on its strategy. At this early stage of the Company’s life cycle, it is to be anticipated that failures will likely precede valuation growth, which takes longer as the portfolio companies must achieve their agreed milestones and mature.

Conversely, 12 companies saw an increase in unrealised valuation in the period, delivering a collective increase in valuation of £4.4 million. These valuation increases reflect businesses which have successfully concluded further funding rounds, grown revenues or met certain important milestones. Notable strong performers in the portfolio include Apheris and Manual, both of which have shown impressive capital efficient growth. These strong performers demonstrate that there are opportunities available for companies to scale.

The interest on Future Generation’s uninvested cash reserves was £1.4 million in the 18 months to 31 December 2024 (30 June 2023: gain of £0.4 million), driven by returns on money market funds. The Board’s objective for these investments is to generate sufficient returns through the cycle to cover costs, at limited risk to capital.

Disposals
In September 2024, as part of a Series A funding round, Octopus sold a portion of the Company’s shares in Neat. Then in November, Pluxee (a global leader in employee benefits) acquired Cobee. The two exits combined offer the Company a return of 1.5x, including contingent deferred proceeds.

Overview of investments
The Company completed 16 investments in the 18 months to 31 December 2024 (comprising a total of £8.2 million) and 4 further investments after the reporting date totalling £2.4 million. More information on some of these businesses can be found below:

A selection of our completed investments

Revitalising Healthcare

Pencil Biosciences is a gene editing technology platform.

Awell Health automates routine clinical tasks, synchronising data between systems and driving seamless coordination between care teams and patients.

Cellvoyant is an artificial intelligence (AI) first biotechnology company creating novel stem cell-based therapies for chronic diseases.

Manual provides easy access to advice and medical support for diagnosis, custom treatment plans and holistic care to induce long-term behaviour change.

Nanosyrinx has developed a targeted biologic therapeutic delivery platform (a nano-syringe).

Empowering people

Correcto is an AI writing and grammar tool for the Spanish language.

Remofirst is an Employer of Record (EOR) and compliance platform that allows companies to hire and pay employees globally.

Swiipr has developed a digital payments platform specifically for the airline industry.

Building a sustainable planet

Metris Energy has created a platform that allows landlords of multi-unit buildings to monetise modular renewable energy projects through a single billing platform to charge tenants.

Drift is designing sailing vessels and routing algorithms required to capture deep water wind energy and convert it into onboard hydrogen gas for transportation back to shore using a fully integrated desalination, electrolysis and storage system.

Q&A

Q. How do you value a portfolio company?
A. Future Generations VCT’s unquoted portfolio companies are valued in accordance with UK Generally Accepted Accounting Practice (UK GAAP) accounting standards and the International Private Equity and Venture Capital (IPEV) valuation guidelines.

This means we value the portfolio at fair value, with all companies being valued at least twice yearly, for our half-year (June) and annual accounts (December).

Q. What do you mean by ‘fair value’?
A. When we say fair value, we mean the price we expect people would be willing to buy or sell an asset for, assuming they understand the asset and market conditions, are knowledgeable parties, act independently, and that the transaction is carried out under the normal course of business (i.e. is not rushed and proper marketing has taken place).

Q. Who values the portfolio, what is the process and what oversight is there to make sure this is right?
A. The Octopus Investment Managers involved with the portfolio companies, either in the capacity of a Director or observer on the board, or the primary contact, will provide commentary including, but not limited to, recent developments with the portfolio and the wider market in which they operate, progress towards milestones, management team changes, board dynamics and technical progress. This is combined with the latest available financial accounts and budget provided by the portfolio company which will be summarised into Key Performance Indicators (KPIs).

From this information, a member of the separate Valuations team drafts the initial proposal. This will highlight any material changes, key asset level assumptions used and KPIs, and discuss portfolio company performance as well as the rationale underpinning the selected valuation methodology. A peer review exercise then takes place, where the proposals are challenged and reviewed. The peer reviewer is an investment professional from the Fund Manager (typically the Lead Fund Manager) who has not been involved in preparing the valuations.

This will then be reviewed and approved by the Octopus Valuations Committee which comprises individuals with appropriate expertise and experience in valuations. Those individuals are not involved in the investment decisions and as such can independently review and challenge. The Future Generations VCT Board will then meet to discuss them in detail, revise as necessary and ultimately approve them.

There are also more valuation checkpoints throughout the year in advance of allotments and other share-related transactions, which means that the portfolio’s valuation is reviewed to ensure NAV is fairly represented prior to these corporate actions.

As part of our continuous improvement processes, we periodically review the actual realised value of our investments compared to their last holding value and refine our valuation methodologies accordingly. This, combined with the high proportion of valuations that are based on the terms of further funding rounds led by new external investors, firmly underpins the robustness of the valuation process.

Valuations
The table illustrates the split of valuation methodology (shown as a percentage of portfolio value and number of companies). ‘External price’ includes valuations based on funding rounds that typically completed in the last 18 months to the period end or shortly after the period end, and exits of companies where terms have been agreed with an acquirer. ‘Multiples’ is predominantly used for valuations that are based on a multiple of revenues for portfolio companies. Where there is uncertainty around the potential outcomes available to a company, a probability weighted ‘scenario analysis’ is considered.

Portfolio case studies

CoMind
CoMind is building revolutionary brain sensing technologies.

Their mission is to redefine the way the brain is measured and treated at every stage of care. One of the first applications of CoMind’s core technology is in measuring intracranial brain pressure using an adhesive sensor and advanced signal processing. This will be a step change from the current standard of having to drill through the skull to measure intracranial pressure in patients impacted by traumatic brain injury, stroke, and/or other neurocritical conditions.

While other companies are trying to create noninvasive technology in this sector, we believe CoMind has a distinct competitive advantage. CoMind has developed an advanced optical sensing technique that has opened up new possibilities in monitoring brain health. Unlike existing methods, CoMind’s technology is more similar to the “LiDAR” (Light Detection and Ranging) systems used in self-driving cars. This allows CoMind’s devices to give a unique, detailed view of brain health, helping doctors deliver more personalised and targeted treatments to patients at every stage of care.

>250 subjects were measured in 2024.
Several devices are currently being used in hospitals for clinical trials.

Swiipr
Passengers get quick, easy-to-use compensation, airlines save on processing costs while improving service.

When flights are disrupted, compensating passengers is a hassle for both airlines and travellers. Swiipr’s platform simplifies this by automating payment verification and processing through a system designed specifically for airlines. The company provides passengers with virtual and physical prepaid cards, offering instant, flexible spending compared to outdated paper vouchers or slow payments. Swiipr also supports airlines with solutions for crew, operational, and crisis payments, enabling fast, direct payouts to staff. Passengers get quick, easy-to-use compensation, airlines save on processing costs while improving service, and retailers benefit from instant payment settlement. Swiipr also integrates with airline Customer Relationship Management systems, making it an essential partner for the industry.

Octopus Ventures is excited about Swiipr’s travel-focused digital payments solution and its potential to revolutionise how airlines handle pay-outs. Swiipr’s innovative product aims to transform compensation payments and speed up management processes for airlines and beyond. By enabling digital payments, Swiipr seeks to boost efficiency, enhance customer experiences, and provide automated processes that are transparent and compliant with regulations.

With over 500 million passengers affected by travel disruptions each year, simplifying the path to compensation has the potential to significantly improve customer satisfaction, build trust, and foster loyalty in the industry.

Only 1–2% of disrupted passengers currently receive compensation.
Billions of dollars lost by passengers in outdated, inefficient pay-out processes every year.
Pay360 Payment Award winner: Best B2B Programme and Best Customer Facing Experience at the 2024 awards.

DRIFT
DRIFT aims to drive the clean energy transition worldwide with high-performance sailing vessels that harness deep ocean wind to produce green hydrogen at sea and deliver it globally.

It does this using a unique, AI-enabled vessel routing system that enables the vessels to find and stay in optimum weather conditions. The growing demand for clean hydrogen to accelerate the decarbonisation of sectors such as heavy industry, transportation and manufacturing is sparking innovation in the sector. DRIFT’s solution is mobile, resilient and works outside of existing infrastructure. The company is developing renewable energy partnerships that will benefit coastal and island communities around the world.

DRIFT is leading the way in developing a truly innovative new class of mobile renewable energy, building the world’s first net-positive ships and unlocking a new era of clean fuel generation capable of covering 70% of the globe. The company’s technology uniquely unlocks the planet’s greatest resource, overcoming supply challenges and enabling a fair and equitable clean energy transition.

€10 trillion: Goldman Sachs estimates that the green hydrogen market could reach €10 trillion by 2050.

24%: Bank of America predicts that clean hydrogen could provide 24% of global energy needs by 2050.

COP 28 winner: DRIFT is a COP 28 award-winning DeepTech company and winner of the Monaco Prize for Innovation in Renewable Hydrogen and Transportation 2024.

Top 10 investments
Here, we set out the cost and valuation of the top 10 holdings, which account for over 58% of the value of the portfolio.

Top 10 investments in detail¹

1

HelloSelf Limited
A digital, personalised psychological therapy and coaching platform.
www.helloself.com

2
Remofirst, Inc.
Global payroll and compliance system for remote teams.
www.remofirst.com

3
Infinitopes Ltd
Has built an antigen discovery platform to develop cancer vaccines that provide better treatment outcomes.
www.infinitopes.com

4
Neat SAS
An embedded insurance platform that gives merchants the ability to provide insurance bundles to their customers at a competitive rate.
mobility.neat.eu

5

TYTN Ltd (t/a TitanML)
An artificial intelligence company which is developing a one-stop-shop for Natural Language Processing AI Optimisation, allowing enterprises to generate value from their data.
www.titanml.co

6

Apheris AI GmbH
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.
www.apheris.com

7

Menwell Limited (t/a Manual)
Making high-quality healthcare more accessible and stigma-free
www.manual.co

8
Mr & Mrs Oliver Ltd (t/a Skin + Me)
A direct to consumer, personalised skin care company.
www.skinandme.com

9
Intrinsic Semiconductor Technologies Ltd
Solid state memory technology that is simple to integrate and faster than current alternatives like Flash.
www.intrinsicsemi.com

10

CoMind Technologies Ltd
Development of non-invasive brain sensing technology for monitoring of medical conditions.
comind.io

1. These are numbers per latest public filings. More recent figures have not yet been disclosed.
2. Information not publicly available.

Portfolio engagement
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:

D&I policy status
Policy in place: 100%

Engaged in monitoring 2023 greenhouse gas emissions¹
Signed up: 16
Introduced: 19
In progress: 1

¹ As of 31 December 2024, only 2023 carbon emissions data was available.

Outlook
Despite the declining NAV in the reporting period, we are reassured to see an increase in the NAV per share of the fund in the last six months. This, combined with the two profitable realisations in the period, is offering us early proof points of the Company’s investment strategy to deliver sustainable growth as it moves into its third year of deployment. With a more diversified portfolio, in terms of both stage and sector, this also offers a clearer path for the Company to enter a growth phase.

As is to be expected at this stage in the Company’s lifecycle, it has started to make its first follow-on investments into portfolio companies which are achieving their agreed milestones and successfully gaining new external lead funders. The Company made two follow-on investments in the reporting period and three after.

This strategy of reinvesting into existing portfolio companies aims to increase the Company’s stake in portfolio companies that have achieved market fit and are scaling successfully, supporting its overall growth plan. Along with further financial support, Octopus’ resources are directed in the most impactful way, both through Octopus-appointed non-executive Directors or monitors on the boards and our in-house People and Talent team. This team works directly with the portfolio company management teams, offering training and recruitment support to ensure the best talent pool is being explored to help drive success.

We are excited to have the opportunity to continue to scale the Company, 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

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.

Emerging and principal risks, and risk management
The Board is mindful of the ongoing risks and will continue to make sure that appropriate safeguards are in place. The Board carries out a regular review of the risk environment in which the Company operates.

Emerging risks

The Board has considered emerging risks. 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.

The following are some of the potential emerging risks management and the Board are currently monitoring:

• adverse changes in global macroeconomic environment;
• challenging market conditions for private company fundraising and exits;
• geo‑political instability; and
• climate change.

Detailed below are the principal risks of Future Generations VCT, and the mitigating actions in relation to those risks.

Principal risks

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 fundraise with an initial offer to raise up to £5 million was launched on 3 February 2025. The offer closed for new applications on 1 April 2025 for the 2024/2025 tax year having successfully raised £5 million. Under VCT rules, subscribing investors are required to hold their investment for a five‑year period in order to benefit from the associated tax reliefs. The Board regularly considers strategy, including investor demand for Future Generations VCT’s shares, and a five-year period is considered to be a reasonable time horizon for this.

The Board carried out a robust assessment of the emerging and principal risks facing Future Generations VCT and its current position. This includes 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 the Company’s reliance on, and close working relationship with, the Investment Manager. The principal risks faced by the Company and the procedures in place to monitor and mitigate them are set out above.

The Board has carried out robust stress testing of cash flows, which included assessing the resilience of portfolio companies, including the requirement for any future financial support.

The Board has additionally considered the ability of Future Generations VCT to comply with the ongoing conditions to make sure it maintains its VCT qualifying status under its current Investment policy.

Based on this assessment, the Board confirms that it has a reasonable expectation that Future Generations VCT will be able to continue in operation and meet its liabilities as they fall due over the five-year period to 31 December 2029. The Board is mindful of the ongoing risks and will continue to make sure that appropriate safeguards are in place, in addition to monitoring the cash flow forecasts to make sure Future Generations VCT has sufficient liquidity.

Directors’ responsibilities statement

The Directors are responsible for preparing the Strategic Report, the Directors’ Report, the Directors’ Remuneration Report and the Financial Statements in accordance with applicable law and regulations. They are also responsible for ensuring that the annual report and financial statements include information required by the UK 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

Income statement

• 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.

Balance sheet

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 28 April 2025 and are signed on their behalf by:

Helen Sinclair
Chair
Company No: 13750143

Statement of changes in equity

1. Reserves are available for distribution, subject to the restrictions.

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

Cash flow statement

1. Loss before tax includes cashflows from dividends of £1.4 million (2023: £0.4 million).

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

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 (£). Some accounting policies have been disclosed in the respective notes to the financial statements.

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)’.

2. Investment income
Accounting policy

Investment income comprises interest earned on money market funds. Dividend income is shown net of any related tax credit. Dividends receivable are brought into account when Future Generation’s right to receive payment is established and there is no reasonable doubt that payment will be received. Fixed returns on debt and money market funds are recognised so as to reflect the effective interest rate, provided there is no reasonable doubt that payment will be received in due course.

Disclosure

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.

Disclosure

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.

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.

1. Includes employers’ NI.
2. Includes VAT.

Total ongoing charges are capped at 3.0% of net assets. For the period to 31 December 2024, the ongoing charges exceeded this cap and a rebate was paid from the Portfolio Manager for the amount of £39,000. For the 18 months to 31 December 2024 the ongoing charges were 3.0% (2023: 3.0%) 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.

5. Tax on ordinary activities
Accounting policy

Corporation tax payable is applied to profits chargeable to corporation tax, if any, at the current rate. The tax effect of different items of income/gain and expenditure/loss is allocated between capital and revenue return on the ‘marginal’ basis as recommended in the SORP.

Deferred tax is recognised in respect of all timing differences at the reporting date. Timing differences are differences between taxable profits and total income as stated in the financial statements that arise from the inclusion of income and expenses in tax assessments in periods different from those in which they are recognised in financial statements.

Disclosure
The corporation tax charge for the period was £nil.

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 £3,231,000 (2023: £1,094,000) are estimated to be carried forward at 31 December 2024 (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 £808,000 (2023: £273,000) in respect of these tax losses because there is insufficient forecast taxable income in excess of deductible expenses to utilise these losses carried forward.

Approved VCTs are exempt from tax on capital gains. As the Directors intend for Future Generations VCT to continue to maintain its approval as a VCT through its affairs, no current deferred tax has been recognised in respect of any capital gains or losses arising on the revaluation or disposal of investment.

6. (Loss)/earnings per share

The Earnings/(loss) per share is based on 51,727,417 (2023: 40,987,788) Ordinary shares, being the weighted average number of Ordinary shares in issue during the period.

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

7. Net asset value per share

8. 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 £1,380,000 (2023: £696,000) in the period as a management fee, after applying a rebate to maintain the total ongoing charges below the 3% cap. 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 £213,000 (2023: £122,000) was paid to Octopus for Non‑Investment Services. 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 31 December 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/.

9. 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 retired as a Non-Executive Director of Future Generations VCT on 31 March 2024. No dividends have been paid to the Directors of Future Generations VCT in the period (2023: £nil).

10. 2024 financial information

The figures and financial information for the period ended 31 December 2024 are extracted from the Company’s annual financial statements for the period and do not constitute statutory accounts. The Company’s annual financial statements for the period to 31 December 2024 have been audited but have not yet been delivered to the Registrar of Companies. The Auditors’ report on the 2024 annual financial statements was unqualified, did not include a reference to any matter to which the auditors drew attention without qualifying the report, and did not contain any statements under Sections 498(2) or 498(3) of the Companies Act 2006.

11. 2023 financial information

The figures and financial information for the year ended 30 June 2023 are compiled from an extract of the published financial statements for the period and do not constitute statutory accounts. Those financial statements have been delivered to the Registrar of Companies and included the Auditors’ report which was unqualified, did not include a reference to any matter to which the auditors drew attention without qualifying the report, and did not contain any statements under Sections 498(2) or 498(3) of the Companies Act 2006.

12. Annual Report and financial statements
The Annual Report and financial statements will be posted to shareholders in early May and will be available on the Company’s website, https://octopusinvestments.com/our-products/venture-capital-trusts/octopus-future-generations-vct/.
The Notice of Annual General Meeting is contained within the Annual Report.

13. General information

Registered in England & Wales. Company No. 13750143
LEI: 213800AL71Z7N2O58N66

14. Directors

Helen Sinclair (Chair), Joanna Santinon and Ajay Chowdhury

15. Secretary and registered office   

Octopus Company Secretarial Services Limited
6^th Floor, 33 Holborn, London EC1N 2HT