FORESIGHT ENTERPRISE VCT PLC

Cover_09_FE_AR22 Front_09_FE_AR22 Middle_09_FE_AR22 Back_09_FE_AR22 Cover_09_FE_AR22 Cover_09_FE_AR22 FORESIGHT ENTERPRISE VCT PLC Annual Report and Financial Statements 31 December 2022 FORESIGHT ENTERPRISE VCT PLC ANNUAL REPORT AND ACCOUNTS 31 DECEMBER 2022 OUR PURPOSE Foresight Enterprise VCT plc, formerly Foresight 4 VCT plc, is a Venture Capital Trust aiming to provide investors with regular dividends and capital growth from a portfolio of investments in fast‑growing, unquoted companies in the UK. KEY DATES Annual General Meeting 8 June 2023 Half‑Yearly results to 30 June 2023 September 2023 Annual results to 31 December 2023 April 2024 KEY OBJECTIVES Development of Net Asset Value Total Return above a 5% target Implementing a significant number of new and follow‑on investments, exceeding deployment requirements to maintain VCT status Payment of an annual dividend of at least 5% of the NAV at the start of the year Maintaining a programme of regular share buybacks at a discount of 7.5% with a view to reach 5% over the medium term, subject to market conditions FORESIGHT ENTERPRISE VCT PLC Annual Report and Accounts 31 December 2022 1 Strategic Report Financial Highlights 2 Chair’s Statement 4 Evolution of Foresight EnterpriseVCT plc 8 Company Objectives and KPIs 10 Manager’s Review 14 Top Ten Investments 26 Portfolio Overview 32 About the Manager 36 Co-Investments 39 Stakeholders and S172 40 Responsible Investment 42 Risks 45 Viability Statement 48 Governance Board of Directors 50 Directors’ Report 52 Corporate Governance 58 Audit Committee Report 62 Directors’ Remuneration Report 64 Statement of Directors’ Responsibilities 68 Financial Statements Independent Auditor’s Report 70 Income Statement 76 Reconciliation of Movements inShareholders’ Funds 77 Balance Sheet 78 Cash Flow Statement 79 Notes to the Accounts 80 Notice of Annual General Meeting 96 Glossary of Terms 100 Financial Conduct Authority 101 Corporate Information 102 Shareholder Information 103 Additional Information 104 WWW.FORESIGHTENTERPRISEVCT.COM CONTENTS GOVERNANCESTRATEGIC REPORT FINANCIAL STATEMENTS FINANCIAL HIGHLIGHTS "In the year, the valuation of investments increased by £8.7 million." • After adding back the payments of a 3.5p dividend made on 30June2022 and a 3.8p dividend made on 30December2022, NAV Total Return per share at 31December2022 was 72.2p, representing a positive total return of 4.5% in the year. • Four new investments costing £6.9million and three follow-on investments costing £2.1million were made during the year. • The Company fully exited its investments in TFC Europe Limited and Codeplay Software Limited, realising gains of £17.3 million in the year and returning proceeds of £19.7 million to the Company. • In the year, the valuation of investments increased by £8.7 million (2021: £22.3 million). • An interim dividend of 3.5p per share was paid on 30June2022, returning £6.9million to Shareholders. • A special interim dividend of 3.8p per share was paid on 30December2022 following successful realisations of TFC Europe and Codeplay Software, returning £8.1million to Shareholders. • The offer for subscription launched in October 2022 was closed on 26 April 2023 and raised a total of £21.7million after expenses. Key metrics 1 year 3 years 5 years Movement in NAV Total Return as at 31 December 2022 1 4.5% 21.8% 25.6% 1. Definitions of these Alternative Performance Measures (“APMs”) can be found in the Glossary on page 100. £138.5m Total Net Assets as at 31 December 2022 £8.7m Uplift in valuation of investments in the year to 31 December 2022 64.9p Net Asset Value per share as at 31 December 2022 7.3p Dividends paid 3.5p 30 June 2022 and 3.8p 30 December 2022 2 FORESIGHT ENTERPRISE VCT PLC Annual Report and Accounts 31 December 2022 Key metrics 31 December 31 December 2022 2021 Total net assets £138.5m £133.2m Net Asset Value per share 64.9p 69.1p Movement in NAV Total Return in the year 1 4.5% 18.0% Share price 58.5p 61.5p Share Price Total Return 1 125.3p 121.0p Dividends per share paid in the year 1 7.3p 4.2p Dividend yield 1 12.5% 6.8% Shares in issue 213,316,422 192,806,963 2022 2021 Discount to NAV at year end 1 9.9% 11.0% Average discount on buybacks 1 7.5% 7.5% Shares issued through fundraising 20,149,160 − Shares issued under the dividend reinvestment scheme 2,748,080 1,512,395 Shares bought back during the year under review 1 2,387,781 2,564,645 Ongoing charges ratio (based on net assets at 31 December) 1, 2 2.30% 2.25% 1. Definitions of these Alternative Performance Measures (“APMs”) can be found in the Glossary on page 100. 2. Special dividends paid during the year have been added back to year end net assets and the performance incentive accrual has been added back to total expenses in the year. PLACE OF BUSINESS OF PORTFOLIO COMPANIES Key:  Technology, Media & Telecommunications  Industrials & Manufacturing Healthcare Business Services Consumer & Leisure Other FORESIGHT ENTERPRISE VCT PLC Annual Report and Accounts 31 December 2022 3 GOVERNANCESTRATEGIC REPORT FINANCIAL STATEMENTS I am pleased to present the audited Annual Report and Accounts for the year ended 31 December 2022 and to report a Net Asset Value Total Return of 4.5% for the year including a dividend yield of 12.5%. Raymond Abbott Chair of Foresight Enterprise VCT plc CHAIR’S STATEMENT Overview of 2022 The business environment remains challenging after the substantial impact of the COVID-19 pandemic receded, with the war in Ukraine, supply chain issues, rapidly rising inflation and energy prices, and the threat of recession the new economic reality. I believe that the careful planning, help and advice the Manager provided the portfolio companies during the pandemic will continue to be relevant to the current and future economic situations. While there will be bumps in the road, the Board believes that the portfolio is in good shape to withstand what we currently see ahead. The Company’s portfolio in aggregate has remained resilient amid economic and political turmoil that has plagued 2022. Many of the portfolio companies have successfully adapted to the new economic landscape, with some performing extremely well and demonstrating the strength of their management teams. A minority struggled as a result of a fall in consumer demand, inflationary pressures and a surge in the cost of energy prices. However, these businesses are now beginning to show signs of recovery. In the year ended 31 December 2022, 23 companies in the portfolio recorded a combined increase in valuation of £20.0 million, offset by 14 companies recording an aggregate fall in valuation of £11.3 million. Strategy The Board believes that it is in the best interests of Shareholders to continue to pursue a strategy of: • Growth in Net Asset Value Total Return above a 5% target while continuing to grow the Company’s assets • Payment of annual dividends of at least 5% of the NAV per share per annum based on the opening NAV of that financial year • Implementation of a significant number of new and follow-on qualifying investments every year, exceeding deployment requirements to maintain VCT status • Maintaining a programme of regular share buybacks ata discount of 7.5% Central to the Company being able to achieve these objectives is the ability of the Manager to source and complete attractive new qualifying investment opportunities. Whilst this task has not been made easier by the changes to VCT legislation since 2015, which (amongst other requirements) place greater emphasis on growth or development capital investment into younger companies, the Company is fortunate in that it has pursued a policy of seeking growth capital investments for several years prior to the rule changes and the Manager has an established track record in this area. 4 FORESIGHT ENTERPRISE VCT PLC Annual Report and Accounts 31 December 2022 Performance and portfolio activity During the year Net Asset Value per share decreased by 6.1% from 69.1p at 31 December 2021 to 64.9p at 31December 2022. After adding back the payments of a3.5p dividend made on 30 June 2022 and a 3.8p dividend made on 30 December 2022, NAV Total Return per share at 31 December 2022 was 72.2p, representing apositive total return of 4.5%. This positive movement is a result of the strategy and business changes throughout the portfolio alluded to above. During the year the Manager completed four new investments and three follow-on investments costing £6.9million and £2.1 million respectively. The Manager also fully disposed of two investments, generating proceeds of £19.7 million with a further £0.4 million of deferred consideration included within debtors at the year end, representing a combined return multiple of13.0x. After the year end, the Company made four new investments totalling £5.0 million in Sprintroom Limited (£1.0 million), Firefish Software Limited (£1.5 million), Five Wealth Limited (£0.7 million) and Red Flag Alert Limited (£1.8 million). The Company also completed four follow-on investments with an aggregate cost of £2.7 million in IMMJ Systems Limited (£0.7 million), NorthWest EHealth Limited (£1.5 million), Ten Health & Fitness Limited (£0.4 million) and Additive Manufacturing Technologies Ltd (£0.1 million). Furthermore, the Company realised its holdings in Innovation Consulting Group Limited and Datapath Group Limited. The two exits combined generated proceeds of £17.0 million at completion with a further £2.3 million of deferred consideration due over the next 24 months. Including cash returned to the date of this report, the exits have delivered an impressive aggregate return multiple of 8.4 times the original investment. Further details of these investments and realisations can be found in the Manager's Report. The Board and the Manager are confident that a number of new and follow-on investments can be achieved this year, particularly with the increased investment activity notedabove. Details of each of these new, existing and former portfolio companies can be found in the Manager’s Review. The Manager continues to see a strong pipeline of potential investments sourced through its regional networks and well-developed relationships with advisers and the SME community; however, it is also focused on supporting the existing portfolio through the current economic climate. Following the successful fundraise launched in October2022, the Company is in a position to fully support the portfolio, where appropriate, and exploit potential attractive investment opportunities. The offer was closed on 26 April 2023 having raised gross proceeds of £22.6 million, £21.7 million after expenses, as detailed in the post-balance sheet events in note 20. TheBoard would like to thank those existing Shareholders who have already supported this offer and welcome all new Shareholders to theCompany. Responsible investing The analysis of environmental, social and governance (“ESG”) issues is embedded in the Manager’s investment process and these factors are considered key in determining the quality of a business and its long-term success. Central to the Manager’s responsible investment approach are five ESG principles that are applied to evaluate investee companies, acquired since May 2018, throughout the lifecycle of their investment, from their initial review and acquisition to their final sale. Every year, these portfolio companies are assessed and progress measured against these principles. More detailed information about the process can be found on pages 42 to 44 of the Manager’s Review. Dividends An interim dividend of 3.5p per share was declared on 27May2022 based on an ex-dividend date of 16June2022 and a record date of 17 June 2022. Thedividend was paid on 30June2022, returning £6.9million to Shareholders. Following the successful realisations of TFC Europe and Codeplay Software, a special interim dividend of 3.8p per share was declared on 8 November 2022 based on an ex-dividend date of 15 December 2022 and a record date of 16 December 2022. Thedividend was paid on 30December 2022, returning £8.1million toShareholders. As noted in the prior Annual Report and Accounts and in light of the change in portfolio towards earlier-stage, higher-risk companies as required by the VCT rules, the Board felt it prudent to adjust the dividend policy towards a targeted annual dividend yield of 5% of NAV per annum. The Board and the Manager continue to hope that this may be enhanced by additional “special” dividends as and when particularly successful portfolio exits are made. Buybacks The Board is pleased to have achieved an average discount across all buybacks of 7.5% to the Net Asset Value per share in the year, but continues to have an objective of achieving and maintaining buybacks at a discount of 5% over the medium term, subject to market conditions. FORESIGHT ENTERPRISE VCT PLC Annual Report and Accounts 31 December 2022 5 GOVERNANCESTRATEGIC REPORT FINANCIAL STATEMENTS Management charges and performance incentive The annual management fee is an amount equal to 2.0% of net assets. This has resulted in ongoing charges for the period ended 31 December 2022 of 2.30% after adding back special dividends paid during the year to theyear end net assets and adding back the performance incentive accrual to total expenses for the year, which is at the lower end of the range when compared to competitor VCTs. As explained in note 13, the Directors have prepared a calculation incorporating estimated future dividends over the vesting period and expect a performance incentive fee to become payable during the vesting period. Therefore, a liability of £280,000 has been recognised asat 31 December 2022 (2021: £nil). Shareholder communication We were delighted to meet once again with some Shareholders in person at the AGM on 9 June 2022, having long been unable to do so as a result of the travel restrictions due to COVID-19. Following the disappointing remote attendance at the hybrid event, the Board will be reverting to an in-person event only in the future. Additionally, the Manager once again reintroduced in-person investor forum events in the year which have proven popular with our Shareholders in the past. Board composition The Board continues to review its own performance and undertakes succession planning to maintain an appropriate level of independence, experience, diversity and skills in order to be in a position to discharge all its responsibilities. We are in the process of adding new Board members in view of the retirement of Simon Jamieson at the AGM and we hope to be able to make anannouncement at that time. I thank Simon for his dedication to the Company and the Board over the last nine years, having overseen a transformation of the Company strategy through previously difficult times. I wish him all the best for thefuture. Annual General Meeting The Company’s Annual General Meeting will take place on 8 June 2023 at 1.00pm and we look forward to meeting as many of you as possible in person. Pleaserefer to the formal notice on pages 96 to 99 forfurther details in relation to the format of this year’s meeting. Wewould encourage you to submit your votes by proxyahead of thedeadline of 1.00pm on 6June 2023 andtoforwardany questions by email to[email protected] in advance ofthemeeting. Sunset clause The "Sunset Clause" for EIS and VCT reliefs has to be reviewed by the government by 6 April 2025. The clause provides that income tax relief will no longer be given to subscriptions made on or after 6 April 2025, unless the legislation is amended to make the scheme permanent, or the “sunset clause” is extended. The government has the power to extend or remove the sunset clause through secondary legislation, which would allow the VCT & EIS schemes to operate in their current form beyond the current expiry date of the scheme. The then Chancellor Kwasi Kwarteng announced during his mini-budget of 23 September 2022 that venture capital schemes will be safeguarded beyond 2025 but no further details were given as to how this will be implemented. To date, the now Chancellor Jeremy Hunt has yet to clarify. However, through correspondence with the Treasury Select Committee, the Chancellor has stated that it is the government's firm intention to extend the VCT and EIS schemes beyond the sunset on 6 April 2025 and that further details will be provided in due course. The Treasury Select Committee also notes that the UK should be able to extend the scheme without European Commission approval, clarified by the recently announced Northern Ireland Protocol, the Windsor Framework. Outlook As mentioned in my introduction, while the impact of the pandemic has lessened, other economic impacts are being seen after Russia invaded Ukraine, including, but not limited to, the significant rise in energy prices, rapid inflation, the cost of living crisis and the potential for a global recession. Supply chains remain under pressure post-Brexit and pandemic, and after the Russian invasion, such issues are unlikely to be resolved soon. While the Company’s portfolio has not been materially exposed to either Russia or Ukraine, it is very likely that the economic impacts we are currently experiencing will raise issues and concerns for the individual investee company management teams and the Manager. However, the portfolio is showing signs of resilience and the Manager has been working with management teams to assess business plans, consider funding requirements and help navigate through these difficult times. The portfolio is well diversified in terms of sector, size and number and the Manager’s approach through the pandemic will continue to be valuable to tackle the challenges ahead. The Company is well positioned to continue to support the portfolio and the fundraising that we are making will also provide the opportunity to seek new investments and take advantage of the opportunities that will emerge from the current economic situation. Raymond Abbott Chair 28 April 2023 CHAIR’S STATEMENT CONTINUED 6 FORESIGHT ENTERPRISE VCT PLC Annual Report and Accounts 31 December 2022 60 30 0 Actual NAV at 31 December 2021 Realised gains Funds raised (net of expenses) Interest and dividends Dividend paid (excluding DRIS) Management and secretarial fees BuybacksUnrealised losses Other income and expenses (0.4) Actual NAV at 31 December 2022 120 90 180 150 NAV bridge (£'000) 133.2 138.5 17.5 13.7 0.9 (13.2) (8.5) (3.2) (1.5) Dividend history (Since share consolidation in 2005) Ordinary Shares Dividend per Date share (p) 30 December 2022 3.8 30 June 2022 3.5 18 June 2021 4.2 28 August 2020 2.8 16 August 2019 4.0 19 October 2018 4.0 17 July 2017 4.0 18 December 2015 4.0 26 April 2013 4.0 24 February 2012 5.0 4 February 2011 5.0 18 December 2009 5.0 26 December 2008 5.0 28 December 2007 5.0 15 December 2006 2.5 30 December 2005 5.0 Cumulative 66.8 NAV per share 64.9 NAV Total Return 131.7 C Shares Dividend per Date share (p) 6 August 2015 25.0 NAV bridge and dividend history FORESIGHT ENTERPRISE VCT PLC Annual Report and Accounts 31 December 2022 7 GOVERNANCESTRATEGIC REPORT FINANCIAL STATEMENTS EVOLUTION OF FORESIGHT ENTERPRISE VCT PLC 2011 Foresight Group LLP’s private equity team was appointed manager of Acuity Growth VCT (formerly Acuity 2 VCT plc andpreviously Electra Kingsway VCT 2 plc) on 24February2011, which was renamed Foresight 5 VCT plc. Foresight Group was also appointed manager of Acuity VCT 3 plc (formerly Electra Kingsway VCT 3 plc) on 1 April 2011. 2012 Foresight 4 VCT plc acquired the assets and liabilities of both Foresight 5 VCT plc and Acuity VCT 3 plc. On 6 February 2012, Foresight 5 VCT plc and Acuity 3 VCT plc were merged into Foresight 4 VCT plc as a separate C Share class. 2004 In August 2004, Foresight Group LLP’s private equity team was appointed to manage Advent2VCT plc, whichwassubsequently renamedForesight 4 VCT plc. ITA 2012 At the same time, Foresight Clearwater VCT plc was merged into the Ordinary Share class of Foresight 4 VCT plc. "Foresight Group is one of the longest serving VCT managers in the industry, launching the fi rst Foresight VCT in 1997. A combination of organic growth and strategic acquisitions now makes Foresight one of the largest and most diverse VCT managers in the industry." VCT 8 FORESIGHT ENTERPRISE VCT PLC Annual Report and Accounts 31 December 20228 FORESIGHT ENTERPRISE VCT PLC Annual Report and Accounts 31 December 2022 2021 With eff ect from 8 July 2021, the Company's name was changed from Foresight 4 VCT plc to Foresight Enterprise VCT plc. 2015 The C Shares were converted into Ordinary Shares on 10August2015. FORESIGHT ENTERPRISE VCT PLC Annual Report and Accounts 31 December 2022 9 2017 On 22 June 2017, Foresight3 VCT plc was merged into Foresight4VCT plc. The enlarged Foresight 4 VCT plc had combined net assets of £77.0million. 2023 On 26 April 2023, theCompany closed its latest off er for subscription after raising £21.7million after expenses. GOVERNANCE FINANCIAL STATEMENTSSTRATEGIC REPORT FORESIGHT ENTERPRISE VCT PLC Annual Report and Accounts 31 December 2022 9 GOVERNANCE FINANCIAL STATEMENTSSTRATEGIC REPORT FORESIGHT ENTERPRISE VCT PLC Annual Report and Accounts 31 December 2022 9 GOVERNANCESTRATEGIC REPORT FINANCIAL STATEMENTS COMPANY OBJECTIVES AND KPIS Objective Growth in Net Asset Value Total Return above a 5% target while continuing to grow the Company’s assets Progress against objective • During the year Net Asset Value per share decreased by 6.1% from 69.1p at 31December2021 to 64.9p at 31December2022. • Including the payments of a 3.5p dividend made on 30June2022 and a 3.8p dividend made on 30December2022, NAV Total Return per share at 31 December 2022 was 72.2p, representing a positive total return of 4.5%. • This positive movement is a result of the strategy and business changes throughout the portfolio alluded to in this report. KPIs 4.5% Movement in NAV Total Return in year to 31December2022 (2021: 18.0%) 18.0% FY21 4.5% FY22 £138.5m Total net assets as at 31 December 2022 (2021: £133.2m) £133.2m FY21 £138.5m FY22 Objective Payment of annual dividends of at least 5% of the NAV per share per annum based on the opening NAV of that financial year Progress against objective • An interim dividend of 3.5p per share was declared on 27May2022 based on an ex-dividend date of 16June2022 and a record date of 17June2022. Thedividend was paid on 30June2022. • A special interim dividend of 3.8p per share was declared on 8November2022 based on an ex-dividend date of 15December2022 and a record date of 16December2022. The dividend was paid on 30December2022. • This total payout exceeded the minimum target dividend per share of 5% of the NAV per share of 69.1p as at 31 December 2021. KPIs 3.5p Interim dividendpaid 30 June 2022 (18 June 2021: 4.2p) 4.2p FY21 3.5p FY22 3.8p Special dividendpaid 30 December 2022 0.0p FY21 3.8p FY22 10 FORESIGHT ENTERPRISE VCT PLC Annual Report and Accounts 31 December 2022 Objective Implementation of a significant number of new and follow-on qualifying investments every year, exceeding deployment requirements to maintain VCT status Progress against objective • During the year the Manager completed four new investments and three follow-on investments costing £6.9million and £2.1million respectively. • The Board and the Manager are confident that a number of new and follow-on investments can be achieved in 2023 as the ongoing economic difficulties and political turmoil are already presenting unique investment opportunities. Detailsof each of these new portfolio companies can be found in the Manager’sReview. KPIs £6.9m New investment deployment in year to 31December2022 (2021: £10.0m) £10.0m FY21 £6.9m FY22 £2.1m Follow-on deployment in year to 31December2022 (2021: £3.2m) £3.2m FY21 £2.1m FY22 Objective Maintaining a programme of regular share buybacks at a discount of 7.5% to NAV Progress against objective • The Board is pleased to have achieved an average discount across all buybacks of 7.5% to the Net Asset Value per share in the year but continues to have an objective of achieving and maintaining buybacks at a discount of 5% over the medium term, subject to market conditions. KPIs 2,387,781 Number of shares bought back in year to 31December2022 (2021: 2,564,645) 2,564,645 FY21 2,387,781 FY22 7.5% Average discount onbuybacks in year to 31December2022 (2021: 7. 5%) 7.5% FY21 7.5% FY22 FORESIGHT ENTERPRISE VCT PLC Annual Report and Accounts 31 December 2022 11 GOVERNANCESTRATEGIC REPORT FINANCIAL STATEMENTS Performance and Key Performance Indicators (“KPIs”) The Board expects the Manager to deliver a performance which meets the objectives of the Company. The KPIs covering these objectives are growth in Net Asset Value per share and dividend payments, which, whencombined, give a positive overall NAV Total Return. Additional KPIs and Alternative Performance Measures (“APMs”) reviewed by the Board include the discount of the share price relative to the Net Asset Value, which shows the percentage by which the mid-market share price of the Company is lower than the Net Asset Value per share, and total expenses as a proportion of Shareholders’ funds. KPIs and APMs allow performance comparisons to be made between VCTs. A record of some of these indicators is contained in the Key Metrics section on page 3 and the Company Objectives and KPIs section on page 10. The ongoing charges ratio for the year was 2.30% of net assets after adding back special dividends paid during the year to the year end net assets and adding back the performance incentive accrual to total expenses for the year. The Directors note that regular share buybacks at a competitive discount to NAV is an essential KPI and also accretive forexisting Shareholders. Share buybacks were completed at an average discount of 7.5%. Further details of the Company’s KPIs can be found in the Glossary of Terms onpage 100. A review of the Company’s performance during the financial year, the position of the Company at the year end and the outlook for the coming year is contained within the Manager’s Review. The Board assesses the performance of the Manager in meeting the Company’s objective against the primary KPIs and APMshighlightedabove. Investments in unquoted companies at an early stage oftheir development will involve some disappointments. However, investing the Company’s funds in companies with high growth characteristics with the potential to become strong performers within their respective fields creates an opportunity to provide investors with regular dividends and capital growth. COMPANY OBJECTIVES AND KPIS CONTINUED INVESTMENT OBJECTIVE To provide private investors with regular dividends and capital growth from a portfolio of investments in fast‑growing unquoted companies in the UK. It is the intention to maximise tax‑free income available to investors from a combination of dividends and interest received on investments and the distribution of capital gains arising from trade sales or flotations. Investment policy The Company will target UK unquoted companies which it believes will achieve the objective of producing attractive returns for Shareholders. Investment securities The Company invests in a range of securities including ordinary and preference shares, loan stock, convertible securities, fixed-interest securities and cash. Unquoted investments are usually structured as a combination of ordinary shares and loan stock. Cash is primarily held in interest-bearing accounts as well as in a range of permitted liquidity investments. UK companies Investments are primarily made in companies which are substantially based in the UK, although many will trade overseas. The companies in which investments are made must satisfy a number of tests set out in Part 6 of the Income Tax Act 2007 tobe classed as VCT qualifying holdings. Asset mix The Company aims to be significantly invested in growth businesses, subject always to the quality of investment opportunities and the timing of realisations. Any uninvested funds are held in cash and a range of permitted liquidity investments. Risk diversification and maximum exposures Risk is spread by investing in a range of different businesses within different industry sectors at different stages of development, using a mixture of securities. The maximum amount invested in any one company, including any guarantees to banks or third parties providing loans or other investment to such a company, is limited by VCT legislation to 15% of the Company’s investments (which includes cash) by VCT value at the time of investment. Strategies for achieving objectives 12 FORESIGHT ENTERPRISE VCT PLC Annual Report and Accounts 31 December 2022 Investment style Investments are selected in the expectation that value will be enhanced by the application of private equity disciplines, including an active management style for unquoted companies through the placement of an investor director on investee company boards. Borrowing powers The Company has a borrowing limit of an amount not exceeding an amount equal to 50% of the adjusted capital and reserves (being the aggregate of the amount paid up on the issued share capital of the Company and the amount standing to the credit of its reserves). Whilst the Company does not currently borrow, and has no plans to do so, itsArticles allow it to do so. VCT regulation The investment policy is designed to ensure that the Company continues to qualify and is approved as a VCT by HMRC. Amongst other conditions, the Company may not invest more than 15% of its total investments and cash by VCT value, at the time of making the investment, in a single company, must have at least 80% by VCT value of its investments and cash throughout the year in shares or securities in qualifying holdings and must invest 30% of funds raised in qualifying holdings within 12 months of the end of the year in which those funds were raised. In addition, in aggregate, 70% of a VCT’s qualifying investments (30% for investments made before 6 April 2018 from funds raised before 6 April 2011) by VCT value must be in ordinary shares which carry no preferential rights to assets on a winding up or to dividends (apart from certain non-cumulative fixed preferential rights). For each individual investment, a minimum of 10% of the investment must be in ordinary shares of that company. Dividend policy The Board will endeavour to pay annual dividends of at least 5% of the NAV per share based on the opening NAV of that financial year. The aim of the Board and the Manager is for future investment performance to support this level of distribution, whilst also enhancing the NAV per share at around its current level. This level of dividend may be exceeded by the payment of additional “special” dividends as and when particularly successful portfolio disposals are made. Share buyback policy It is the Company’s policy, subject to adequate cash availability and distributable reserves, to consider repurchasing shares when they become available in order to help provide liquidity to the market in the Company’sshares at a discount of 7.5% to the prevailing NAV per share. Other funds managed by Foresight Group The Company may invest alongside other funds managed or advised by the Manager. Where more than one fund is able to participate in an investment opportunity, allocations will generally be made based on the Manager’s allocation policy, other than where a fund has a pre-existing investment where the incumbent fund will have priority. Implementation of this policy will be subject to the availability of monies to make the investment and other portfolio considerations, such as the portfolio diversity and the need to maintain VCT status. The Manager provides investment management services or advice to Foresight VCT plc, Foresight Solar & Technology VCT plc, Foresight Nottingham Fund LP, Foresight Solar Fund Limited, Foresight Inheritance Tax Solutions, Foresight Energy Infrastructure EIS, Foresight Regional Investment LP, Foresight WAE Technology EIS Fund, Foresight Italian Green Bond Fund, MEIF ESEM Equity LP, Scottish Growth Scheme – Foresight Group Equity Partners LP, NI Opportunities LP, JLEN Environmental Assets Group Limited, Foresight Regional Investment II LP, Foresight Energy Infrastructure Partners S.C.Sp, Foresight Regional Investment III LP, NI Opportunities II LP, Foresight Sustainable Forestry Company plc, Foresight Regional Investment IV LP, Foresight Regional Investment V LP, AIB Foresight SME Impact LP, Foresight WestYorkshire Business Accelerator LP, FP Foresight Sustainable Future Themes Fund, FP Foresight Global Real Infrastructure Fund, FP Foresight Sustainable Real Estate Securities Fund, FP Foresight UK Infrastructure Income Fund, Thames Ventures VCT 1 plc, Thames Ventures VCT 2 plc and Thames Ventures EIS. FORESIGHT ENTERPRISE VCT PLC Annual Report and Accounts 31 December 2022 13 GOVERNANCESTRATEGIC REPORT FINANCIAL STATEMENTS Portfolio summary The portfolio is diversified by sector, transaction type and maturity profile. Details of the ten largest investments by valuation, including an update on their performance, are provided on pages 26 to 30. In the year, the valuation of investments increased by £8.7 million. Overall, the portfolio has performed well despite uncertainty in the markets following the impact of COVID-19 and subsequent geopolitical uncertainty and price inflation. In line with the Board’s strategic objectives, the Investment Manager remains focused on growing the Company through further development of NAV whilst paying an annual dividend to Shareholders of at least 5% of the NAV per share. In the year, net assets increased 3.9% to £138.5 million and an annual dividend of at least 5% of the NAV per share as at 31 December 2021 was paid, meaning that the Company successfully met these objectives. New investments 2022 was a mixed year in the markets, with the technology sector in particular performing strongly early in 2022 but then seeing a significant softening. Many investee management teams have successfully steered their businesses through the uncertainty of 2022, whilst developing clearer medium and longer-term growth plans. The Manager has invested further in its origination capabilities and identified a large number of potentially attractive investment opportunities during the year. Over the course of 2022, four new investments were completed; a total investment of £6.9 million. New investments were across compliance technology, health services, advanced materials and insure-tech. Behind these, there continues to be a strong pipeline of opportunities that the Manager expects to convert during the next 12 months. Follow-on investments totalling £2.1million were also made in three existing investee companies. As at 31 December 2022 the Company’s portfolio comprised 41 investments with a total cost of £69.9million and a valuation of £112.0 million. MANAGER’S REVIEW Portfolio diversification Sector by cost Sector by valuation Key: Technology, Media & Telecommunications Healthcare Consumer & Leisure Industrials & Manufacturing Business Services Other 36% 22% 15% 13% 12% 2% 27% 20% 13% 22% 12% 6% 14 FORESIGHT ENTERPRISE VCT PLC Annual Report and Accounts 31 December 2022 Homelink Healthcare Limited In March 2022, the Company invested £1.1 million in Homelink Healthcare, a specialist provider of hospital-at-home and virtual ward services. The business employs highly qualifi ed and experienced nurses and rehabilitation teams to provide services to patients in their own homes through contracts with the NHS. These services deliver a range of clinical interventions, including wound care, intravenous therapies, physiotherapy and rehabilitation. The nurses are paid in-line with NHS remuneration and the clinical services off ered alleviate pressure on the NHS by freeing up vital bed space, savingtime and reducingcosts. So‑Sure Limited In May 2022, the Company invested £1.6 million in So-Sure, a digital tech platform that operates across the entire insurance supply chain, automating much of the process from distribution and policy administration to fraud detection and claim management. The investment will be used to scale up the business by investing into marketing, technology and to improve platform automation. Strategic Software Applications Ltd In August 2022, the Company invested £1.7 million in Strategic Software Applications, which trades under the name Ruleguard, a London-based SaaS technology provider supporting fi nancial institutions in meeting their regulatory compliance obligations. The platform enables customers to navigate the ever-growing challenges of increasing regulatory compliance requirements with effi ciency, reduced risk and lower audit compliance costs. The investment will help the company to develop additional platform capabilities while scaling up sales and marketing functions to capitalise on a large and growing market opportunity. Copptech UK Limited In August 2022, the Company made a £2.5 million investment in Copptech, a developer of environmentally friendly antimicrobial technologies that kill bacteria, fungi and viruses. Applications for the technology are wide ranging and include diminishing the transmission of viruses in medical facilities, extending the shelf life of perishable goods, reducing discolouration and odour in clothing and providing mould, fungi and termite-resistant properties to building materials. The business has proven itself to be highly scalable across Latin America and is already seeing meaningful traction in the large North American and European markets, where it is expanding its sales teams and operations. The investment will enable Copptech toscale the business and operate globally. FORESIGHT ENTERPRISE VCT PLC Annual Report and Accounts 31 December 2022 15 GOVERNANCESTRATEGIC REPORT FINANCIAL STATEMENTS Follow-on investments The Manager had expected that more portfolio companies would need additional capital to support them through continued diffi cult trading conditions resulting from macroeconomic challenges and political uncertainty aff ecting energy and supply prices. However, the portfolio has remained relatively resilient. The Company made follow-on investments in three companies during 2022, totalling £2.1 million. Further details of each of these are provided below. The additional equity injections in the year were mainly used to support each company’s further growth plans, such as launching new products or to expand into new markets. In view of the diffi cult economic outlook, the Manager remains vigilant about the health of the rest of the portfolio and the need for follow-on funding over the coming months. Rovco Ltd In March 2022, Rovco, a leading provider of autonomous and cloud-managed robotics for subsea surveys in off shore wind and oil fi eld decommissioning, received a £0.5 million follow-on investment from the Company as part of a larger round with various new institutional investors. The investment will be used to further develop Rovco’s technical capabilities and alleviate pressure on working capital requirements. Hexarad Group Limited In August 2022, a £0.7 million follow-on investment was made in Hexarad Group, an early-stage, high-growth healthcare technology company, providing teleradiology services to NHS Trusts and UK private healthcare customers. The investment will be used to accelerate the company’s growth plans in response to signifi cant marketdemand. Spektrix Limited In November 2022, a follow-on investment of £0.9 million was made in Spektrix, alongside a US institutional investor. Spektrix is an enterprise software company providing ticketing, CRM, marketing and fundraising software to companies in the performing arts sector. The investment will be used to support growth plans forthebusiness. Realisations The M&A climate was robust, particularly in the fi rst half of 2022 and the Manager was pleased to report some particularly strong realisations. The Manager continues to engage with a range of potential acquirers of several portfolio companies, with demand for these high-growth businesses demonstrated by both private equity and tradebuyers. TFC Europe Limited In June 2022, the Company sold its holding in TFC, a market-leading manufacturing operations services provider, to AFC, an Ohio-based distributor of fasteners backed by Bertram Capital, a California-based mid-market private equity house. This resulted in proceeds of £15.4 million at completion, representing a particularly strong return of 12.4x the original investment made by the Company and Foresight 3 VCT plc, which merged in June2017. With offi ces in the UK and Germany, TFC is predominantly a supplier of technical fasteners across Europe. Since the original investment, the Manager had taken a proactive approach to supporting TFC, helping to extend its network in the UK and Germany. TFC rapidly expanded its vendor managed inventory service, grew its customer base, and became a market-leading service provider to SMEs and international global brands operating across a range of industries. The Manager supported three acquisitions as well as considerable investment in new and existing facilities, opening new sites in England, Northern Ireland and Czechia. Codeplay Software Limited In June 2022, the Company completed the sale of Codeplay, one of the UK’s leading providers of solutions for the semiconductor industry, to a leading US chip manufacturer. Since the Manager's investment in 2018, Codeplay continued to develop a suite of high-performance software assets and is positioned at the centre of an increasingly important ecosystem that improves the performance of chips, used in high-performance and low-power environments, from supercomputers to self-driving cars. It has also developed new routes to market, selling its solutions to chip companies and downstream users, such as manufacturers of diagnostic healthcare equipment. This transaction generated proceeds of £4.3 million, representing an exceptional return of 15.9x and an IRR of nearly 100%. MANAGER’S REVIEW CONTINUED 16 FORESIGHT ENTERPRISE VCT PLC Annual Report and Accounts 31 December 2022 Realisations in the year ended 31 December 2022 Accounting Valuation at cost at date Realised 31 December of disposal Proceeds gain 2021 Company Detail (£) (£) (£) (£) TFC Europe Limited Full disposal 2,149,307 15,407,883 13,258,576 10,330,550 Codeplay Software Limited 1 Full disposal 300,000 4,300,599 4,000,599 1,697,425 Spektrix Limited Loan repayment 618,000 618,000 — 618,000 Specac International Limited Loan repayment 500,000 500,000 — 500,000 Positive Response Corporation Ltd Loan repayment 125,000 125,000 — 125,000 Total disposals 3,692,307 20,951,482 17,259,175 13,270,975 1. A further £418,000 of deferred consideration has been reflected in the accounts. Pipeline At 31 December 2022, the Company had cash reserves of £24.8 million, which will be used to fund new and follow-on investments, buybacks and running expenses. The Manager is seeing its pipeline of potential investments grow and has a number of opportunities under exclusivity or in due diligence, which continue toprogress. The volatility caused by political uncertainty, rising energy costs and broader price inflation resulted in a challenging period for many companies, with staff retention and exaggerated wage expectations causing concern for many. This does, however, create opportunities, and the Manager is well placed to consider these as they arise, whilst supporting existing portfolio companies with follow-on investments as needed. In the medium term and long term, the Manager expects that current unpredictability will present attractive investment opportunities. It is able to access these opportunities through its wide and proprietary network of contacts around the country, and considers the Company’s strategy to be well-suited to market volatility, due to its balanced mix of companies across sectors and stages, experienced investment team and network of high-qualitychairs. Post-year end activity Sprintroom Limited In January 2023, £1.0 million of growth capital was invested in Sprintroom, which trades as Sprint Electric. Thebusiness designs and manufactures drives for controlling electric motors in light and heavy industrial applications, as well as recovering and reusing otherwise lost energy. The investment will be used to further develop and commercialise novel alternating current variable speed drive technology. IMMJ Systems Limited In February 2023, £0.7 million was invested in IMMJ, a clinical electronic document management solution supplier to the NHS. The investment will be used to grow the leadership team and bolster the business’ abilities to support the digitisation of records, providing easy and efficient access to patient records for clinical care across the NHS. Firefish Software Limited In March 2023, the Company invested £1.5million in Firefish Software Limited, a Glasgow based customer relationship management and marketing software platform targeting the recruitment sector. The funding will be used to further develop the platform in order to attract a larger enterprise level customer base and expand its outbound sales team. FORESIGHT ENTERPRISE VCT PLC Annual Report and Accounts 31 December 2022 17 GOVERNANCESTRATEGIC REPORT FINANCIAL STATEMENTS Post-year end activity continued NorthWest EHealth Limited In March 2023, the Company invested £1.5 million in NorthWest EHealth, which provides software and services to the clinical trials market, allowing pharmaceutical companies and contract research organisations to conduct feasibility studies, recruit patients and run trials. The investment will be used to support the delivery of a 100% growth in real world trial delivery in FY23, while completing building the company's Connexon platform; to be compatible with all UK healthcare data sources by year end. Ten Health & Fitness Limited In March 2023, Ten Health, a multi-site operator in the boutique health, wellbeing and fi tness market, received an additional investment of £0.4 million. The funding will enable the company to complete its new fl agship Kings Cross site and support the company’s transition toprofi tability from Q1 2023. Five Wealth Limited In March 2023, the Company invested £0.7 million in Five Wealth, an established boutique fi nancial planning business operating across the North West of England, headquartered in Manchester. This growth capital investment will be used to support increased marketing and advertising to drive top line growth and greater regulatory and compliance costs which are forecast to increase commensurately with AUM. Red Flag Alert Limited In March 2023, the Company invested £1.8 million in Reg Flag Alert, a Manchester based proprietary SaaS intelligence platform with modular capabilities spanning compliance, prospecting, risk management and fi nancial health assessments. The growth capital will be used to expand the sales team and alongside an increased marketing budget is expected to accelerate new client acquisition. Additive Manufacturing Technologies Ltd ("AMT") In April 2023, the Company invested £0.1 million in AMT, which manufactures systems that automate the post-processing of 3D printed parts. The investment will be used to cover short-term working capital requirements, as the business continues to grow sales and pushes towards sustainable profi tability. Innovation Consulting Group Limited ("GovGrant") In March 2023, the Company announced the impressive exit of GovGrant to Source Advisors, a US corporate buyer backed by BV Investment Partners. GovGrant is one of the UK’s leading providers of R&D tax relief, patent box relief and other innovation services. The transaction generated proceeds of £6.8 million at completion. When added to £0.7 million of cash returned to date, this implies a total cash-on-cash return of 4.5 times the capital of £1.65 million invested in October 2015, equivalent to an IRR of 25%. Since the original investment in 2015, the Manager had helped GovGrant through a period of material growth during which it supported the R&D activities of a growing number of customers. GovGrant’s high levels of service and innovative products, such as the growing patent box off ering, have contributed to driving innovation in the UK economy. The Manager had taken a proactive approach to supporting the exceptional senior management team, all of whom were introduced to the business during the investment period. Datapath Group Limited In March 2023, the Company announced the notable exit of Datapath, a global leader in the provision of visual solutions. The transaction generated proceeds of £10.2million at completion with an additional £2.3million payable over the next 24 months. When added to £10.8million of cash returned to date, this implies a total cash-on-cash return of 11.7 times the original investment, equivalent to an IRR of 38% since the initial investment in2007. Since the original investment, the Manager had supported Datapath through a period of material growth with revenues growing from approximately £7 million to £25 million. Datapath has developed a market leading hardware and software product suite for the delivery of multi-screen displays and video walls which are sold globally to a diverse customer base across a range ofsectors. MANAGER’S REVIEW CONTINUED 18 FORESIGHT ENTERPRISE VCT PLC Annual Report and Accounts 31 December 2022 GOVERNANCESTRATEGIC REPORT FINANCIAL STATEMENTS FORESIGHT ENTERPRISE VCT PLC Annual Report and Accounts 31 December 2022 19 MANAGER’S REVIEW CONTINUED Key portfolio developments In the year, the valuation of investments increased by £8.7 million. Material changes in valuation, defined as increasing or decreasing by £1.0 million or more since 31December2021, are detailed below. Updates on these companies are included below, or in the Top TenInvestments section on pages 26 to 30. 20 FORESIGHT ENTERPRISE VCT PLC Annual Report and Accounts 31 December 2022 Biotherapy Services Limited Biotherapy Services is an early-stage biopharma company that has developed a platform treatment for use in wound healing, initially for the treatment of diabetic foot ulcers but with additional use in cardiac issues and lung treatments. The company had been progressing aclinicaltrial. 31 December 2022 update Recruitment into the RAPID gel trial has now been stopped as a result of continued slow progress. The trial will be formally closed to allow the publication of positive interim data. The company is still attempting to raise funds; however, despite several positive meetings, no heads of terms have been received and there is a substantial risk that no additional funding can be secured. If no funding isreceived, the company will pursue a sale. Key valuation changes in the year Valuation change Company Valuation methodology (£) Callen-Lenz Associates Limited Discounted revenue multiple 2,865,819 Hospital Services Group Limited Discounted earnings multiple 1,174,683 Spektrix Limited Price of last funding round 1,047,483 Innovation Consulting Group Limited 1 Discounted offer received (1,702,886) Biofortuna Ltd Discounted revenue multiple (1,845,281) Biotherapy Services Limited Nil value (2,378,376) Datapath Group Limited 2 Discounted offer received (3,672,136) 1. £904,000 of this valuation decrease was recovered upon final exit in March 2023. 2. £1,941,000 of this valuation decrease was recovered upon final exit in March 2023. Outlook 2022 has been a year of volatility for most asset classes, as rising inflation, increased energy costs and higher interest rates impacted business performance, particularly in the second half of the year. In global equity markets, the MSCI World Index fell by 10% over the 12months, while the tech-heavy NASDAQ fell by more than30%. In the UK, business and consumer confidence was dented by political uncertainty and broader price inflation. Russia’s invasion of Ukraine had a particularly acute effect on the UK economy as the price of electricity rose sharply due to the country’s reliance on natural gas for power generation. In many markets, businesses began to invest in growth after an uncertain COVID-19 period at the same time that global supply chain issues resulted in long lead times for products, weighing on sales and increasing working capital requirements. Many businesses in the Company’s portfolio faced challenges with both staff retention and hiring, as the number of vacancies and wage inflation drove staff churn. This required careful attention from management teams and the Manager's board members, but often presented an opportunity to focus on efficiency by retaining the besttalent. Despite this backdrop, the Company’s portfolio performed strongly in the year, achieving a 4.5% NAV Total Return for its Shareholders, with exceptional exits from the likes of TFC and Codeplay contributing in the Company's dividend of 7.3p per share for the year, representing an attractive 12.5% dividend yield. TheCompany’s strategy is well-suited to market volatility, given its diverse sector allocation and the mix of later and earlier-stage growth companies in the portfolio, many of which are profitable and so typically more resilient in a downturn. Looking forward to 2023, the UK market is likely to remain unpredictable. While some forecasters are expecting interest rates to peak in the summer, the labour market remains stubbornly tight and inflation persistent, meaning that rates may remain elevated for a longer period. While a recession has been avoided to date, balancing rate increases with current low growth and productivity rates is a difficult task for politicians andrate-setters. The range of outcomes for SMEs is likely to be wide, and so a balanced approach to portfolio construction is prudent, alongside providing hands-on support for management teams as they navigate this environment. This is not a reason to be pessimistic. The UK remains a dynamic economy, attracting some of the best global talent in technology, life sciences, engineering and financial services among many others, while its cities remain a destination for workers and tourists alike. The Manager believes that the UK has great potential in the medium and long term with many competitive advantages over its neighbours and more distant trading partners, and this temporary pullback is already presenting unique investment opportunities, which we are able to access through our wide and proprietary network of contacts around the country. Aweaker sterling also attracts overseas acquirers to the UK, such as the US trade buyers for Codeplay, TFC and other exits. The Manager is pleased with the overall performance of the portfolio over the past 12 months, especially in these challenging times, and looks forward to a further improvement as labour markets loosen, inflation reduces and interest rates peak and reverse. While the market remains uncertain, the Manager expects to see a sustained high level of activity from UK companies seeking growth capital and expects VCTs to remain an attractive source of capital for entrepreneurs. This is driven by good relative performance of the Company, supported by its diverse portfolio and high-touch approach to supporting management teams and SMEs inachieving their full potential. James Livingston on behalf of Foresight Group LLP Co-Head of Private Equity 28 April 2023 FORESIGHT ENTERPRISE VCT PLC Annual Report and Accounts 31 December 2022 21 GOVERNANCESTRATEGIC REPORT FINANCIAL STATEMENTS Name Roxy Leisure Holdings Limited Location Manchester Website www.roxyleisure.co.uk Industry Consumer & Leisure Foresight Enterprise VCT plc commitment £2.5 million Foresight Enterprise VCT plc ownership % 5.6% Stage Scale up stage Investment date December 2019 Total Foresight Group LLP commitment £9.5 million (includes £2.5 million of co-investment from Foresight VCT plc and £4.5 million of co-investment from Foresight Regional InvestmentLP) ROXY LEISURE HOLDINGS LIMITED CASE STUDY In December 2019, the Company invested £1.5 million in Roxy Leisure, a competitive socialising bar group which now operates 14 venues across nine cities throughout theUK. The Company provided a further £1.0 million offunding in December 2020. Roxy Leisure is aligned to Sustainable Development Goal8 (Decent Work and Economic Growth). Awareness As a small family-run business still in its development stage, Roxy had limited awareness of ESG principles at investment. Since investment, ESG awareness has markedly increased, with key initiatives regularly discussed at board level and now embedded within thecompany’s processes. Environment Roxy has dramatically reduced single-use plastics across the business. No plastic straws or drinks cups are used and only canned and bottled drinks are sold, with all related waste recycled. Energy effi ciency has been a key focus since investment. The business now employs a full-time maintenance and site improvement team that has energy effi ciency improvements as one of its key targets. All new sites are built with LED lighting as standard whilst legacy sites are being retrofi tted with LEDs. Roxy has recently trialled a heat recapturing system at its Sheffi eld site, which is intended to become a standard feature in all new site builds if successful. 22 FORESIGHT ENTERPRISE VCT PLC Annual Report and Accounts 31 December 2022 Social Since investment Roxy has created 319 jobs. Engagement with both staff and customers is very strong and embedded across the organisation, which is even more important as the business grows. Weekly customer feedback surveys are conducted, with results analysed and presented to the board each month to support continuous improvement. Internally, several staff systems from staff -only social medial accounts to internal communications tools, are utilised to ensure constant staff engagement across all teams, supporting the company’s strong culture. Staff incentives are now also partially aligned with engagement feedback scores to promote continuous improvement. Governance Since investment, to strengthen the senior management team, the Manager introduced Mark McQuater as chair. Mark is a former chief executive of Revolution Bar Group, founder chief executive of Barracuda Group, and managing director of JD Wetherspoon. His signifi cant industry expertise and senior leadership experience within a main list plc has signifi cantly enhanced Roxy’s governance practices. A managing director, fi nance director, fi nancial controller, operations director and food & beverage manager are amongst several senior management roles created since investment that support improved compliance, policy adoption and governance throughout the business. Third-party interactions The company, supported by its scale, now works closely with key suppliers to plan ahead for future site builds and refurbishment projects by ordering increased quantities of key equipment and materials in advance, which dramatically reduces the level of shipping costs and carbon emissions associated with material transport. All key equipment, such as bowling lanes, shuﬄ eboards and arcade machines, comes from overseas suppliers. Ordering in bulk and forward planning makes a signifi cant diff erence to the logistical and environmental burden. This is further supported by Roxy’s investment in a warehousing facility for its projects team, which looks after all new site development and maintenance. This storage and development facility is key to enabling the shift to bulk advanced ordering. GOVERNANCESTRATEGIC REPORT FINANCIAL STATEMENTS FORESIGHT ENTERPRISE VCT PLC Annual Report and Accounts 31 December 2022 23 Name NorthWest EHealth Limited Location Manchester Website www.nweh.co.uk Industry Healthcare Foresight Enterprise VCT plc commitment £3.0 million (£1.5 million invested post year end in March 2023) Foresight Enterprise VCT plc ownership % 13.9% Stage Growth stage Investment date June 2021 Total Foresight Group LLP commitment £6.0 million (£3.0 million invested post year end in March 2023; includes co-investment of £3.0 million from Foresight VCT plc) In May 2021, the Company invested £1.5 million growth capital in NWEH, a Manchester-based technology-enabled provider of software and services to the real world clinical trials market. The Company provided a further £1.5 million of funding in March 2023. Awareness The company’s products signifi cantly improve outcomes for both pharmaceutical researchers and patients alike, since NWEH allows better trial design and faster recruitment of the most appropriate subjects, ultimately resulting in faster and safer drug development. Since investment, ESG awareness has improved, with topics now regularly discussed at board level. Third-party interactions NWEH was originally established as a partnership between two NHS organisations and Manchester University. These parties remain closely involved in the business as shareholders. NWEH leverages its ability to build trusting relationships with data “nodes”, such as NHS trusts, to improve outcomes for trial subjects and customers. NWEH’s products are focused on accessing healthcare records in a compliant way. It is the only company to have achieved regulatory approval for this in a stage 3 trial. NWEH is therefore contributing to new governance and regulatory standards in the sector. NORTHWEST EHEALTH LIMITED (“NWEH”) CASE STUDY 24 FORESIGHT ENTERPRISE VCT PLC Annual Report and Accounts 31 December 2022 Social NWEH’s aim is to introduce new ways of running clinical trials to the global pharma market. The goal of this is to reduce the cost of running clinical trials, increase the chances of their success, and allow the effi cacy of drugs to be tested in a real-world setting. All of these should lead to an increase in the number of successful trials run, which in turn should lead to more treatments coming to market. NWEH’s core activity therefore has a societal benefi t, contributing to a healthier population. Governance Due to operating in a highly regulated environment and being backed by public sector bodies, NWEH already had strong governance processes in place at investment. This included a formal board and several sub-committees, as well as monthly management reports and an annual audit. However, management information and controls have markedly improved in the past year with the Manager’s support. Environment NWEH has a formalised environmental policy that includes recycling and remote working. Whilst the company itself has a minimal carbon footprint, the move to real world trials should reduce in-clinic visits, which will likely have a positive impact on the amount of travel required bypatients. GOVERNANCESTRATEGIC REPORT FINANCIAL STATEMENTS FORESIGHT ENTERPRISE VCT PLC Annual Report and Accounts 31 December 2022 25 BY VALUE AS AT 31 DECEMBER 2022 SPECAC INTERNATIONAL LIMITED DATAPATH GROUP LIMITED HOSPITAL SERVICES GROUP LIMITED ROXY LEISURE HOLDINGS LIMITED KENT www.specac.com DERBYSHIRE www.datapath.co.uk BELFAST www.hsl.ie LEEDS www.roxyleisure.co.uk SECTOR: INDUSTRIALS & MANUFACTURING SECTOR: TECHNOLOGY, MEDIA &TELECOMMUNICATIONS SECTOR: HEALTHCARE SECTOR: CONSUMER & LEISURE Specac International is a leading manufacturer of high specifi cation sample analysis and preparation equipment used in testing and research laboratories worldwide, primarily supporting infrared spectroscopy. Datapath Group is a UK manufacturer of multi-screen computer graphics cards and video capture hardware and software, specialising in video wall and data wall technology. Hospital Services Group (“HSL”) distributes, installs and maintains high-quality healthcare equipment and consumables from global partners such as Hologic, Fujifi lm and Shimadzu. HSL has strengths in the radiology, ophthalmic, endoscopy and surgical sectors, as well as a building presence in telehealth and broader healthcare IT. Roxy Leisure (“Roxy”) operates competitive socialising bars throughout the UK. The venues contain a range of games and activities from tenpin bowling, table tennis, shuﬄ eboard and pool to more innovative activities such as ice free curling and batting cages. As at December 2022 the business operated 13 bars across eight cities. 31 December 2022 update Specac International had a very strong year, bedding in a much-improved team, including new engineering and production managers, while focusing on improved sales processes and best-in-class production. The business also invested in its product development team to accelerate the output from its R&D pipeline. Sales and EBITDA were both ahead of budget and a good year of growth is forecast. 31 December 2022 update The company’s new product, Aetria, is being rolled out, with showrooms opening at strategically located sites globally. Thepipeline continues to build, although at a slower pace than forecast, partly due to temporarily subdued markets. Supply chain shortages have had an impact on revenues and stock management, which are likely to be temporary. The company’s approach to managing these post pandemic issues refl ect the strong cash position and long-term outlook. The board continues to support the business as it navigates the steady growth in this new product suite. 31 December 2022 update HSL had an excellent year of trading, refl ecting resilience in healthcare spending, with steady growth in maintainable earnings. Although profi tability is below FY2020 levels, the performance is now more sustainable as PPE sales now make up a small fraction of the previous year. There was a particularly strong performance from the MDI division which experienced strong demand for ultrasound systems. International supply chains have been volatile with longer lead times and price infl ation, however trading continues tobestrong. 31 December 2022 update Roxy had a strong year delivering robust revenues from existing sites whilst signifi cantly expanding the site footprint, opening four new venues in Leeds, Edinburgh, Sheffi eld and Bristol. The company has a strong pipeline of new openings in 2023 with a second site in Birmingham having opened early in the new year. Initial investment April 2015 Amount invested (£) 1,300,000 Accounting cost (£) 2,054,761 Valuation (£) 10,788,670 Basis of valuation Discounted earnings multiple Equity held (%) 42.6% Income received in the year (£) 96,315 Cash returned up to 31December 2022 (£) 1,383,016 Initial investment September 2007 Amount invested (£) 2,000,000 Accounting cost (£) 11,081,243 Valuation (£) 10,491,390 Basis of valuation Discounted off er received Equity held (%) 26.7% Income received in the year (£) — Cash returned up to 31December 2022 (£) 10,770,283 Initial investment April 2015 Amount invested (£) 1,200,000 Accounting cost (£) 1,200,000 Valuation (£) 6,850,996 Basis of valuation Discounted earnings multiple Equity held (%) 16.3% Income received in the year (£) 98,257 Cash returned up to 31December 2022 (£) 221,280 Initial investment December 2019 Amount invested (£) 2,500,000 Accounting cost (£) 2,500,000 Valuation (£) 5,937,355 Basis of valuation Discounted earnings multiple Equity held (%) 5.6% Income received in the year (£) 29,490 Cash returned up to 31December 2022 (£) 29,490 £’000 Year ended 31 March 2022 Year ended 31 March 2021 Sales 13,727 11,093 Profi t before tax 1,785 733 Retained profi t 1,522 547 Net assets 5,776 4,673 £’000 Year ended 31 March 2022 Year ended 31 March 2021 Sales 25,878 21,845 Profi t before tax 3,816 2,265 Retained profi t 3,498 2,573 Net assets 29,609 26,111 £’000 Year ended 30 September 2021 Year ended 30 September 2020 Sales 30,789 44,965 Profi t before tax 1,755 6,113 Retained profi t 970 5,028 Net assets 4,687 3,663 £’000 Year ended 31 December 2021 Year ended 31 December 2020 Sales 12,136 1,712 Profi t/(loss) before tax 1,749 (2,269) Retained profi t/(loss) 1,410 (2,269) Net assets/(liabilities) 867 (394) TOP TEN INVESTMENTS Portfolio For the investments below held by Foresight 3 VCT plc (“F3”) pre-merger on 22 June 2017, the amount invested refers to the initial amount invested by F3 and the Company. The accounting cost includes both the initial investment by both funds andalso the valuation of the F3 investment at the point it was transferred to the Company. 26 FORESIGHT ENTERPRISE VCT PLC Annual Report and Accounts 31 December 2022 SPECAC INTERNATIONAL LIMITED DATAPATH GROUP LIMITED HOSPITAL SERVICES GROUP LIMITED ROXY LEISURE HOLDINGS LIMITED KENT www.specac.com DERBYSHIRE www.datapath.co.uk BELFAST www.hsl.ie LEEDS www.roxyleisure.co.uk SECTOR: INDUSTRIALS & MANUFACTURING SECTOR: TECHNOLOGY, MEDIA &TELECOMMUNICATIONS SECTOR: HEALTHCARE SECTOR: CONSUMER & LEISURE Specac International is a leading manufacturer of high specifi cation sample analysis and preparation equipment used in testing and research laboratories worldwide, primarily supporting infrared spectroscopy. Datapath Group is a UK manufacturer of multi-screen computer graphics cards and video capture hardware and software, specialising in video wall and data wall technology. Hospital Services Group (“HSL”) distributes, installs and maintains high-quality healthcare equipment and consumables from global partners such as Hologic, Fujifi lm and Shimadzu. HSL has strengths in the radiology, ophthalmic, endoscopy and surgical sectors, as well as a building presence in telehealth and broader healthcare IT. Roxy Leisure (“Roxy”) operates competitive socialising bars throughout the UK. The venues contain a range of games and activities from tenpin bowling, table tennis, shuﬄ eboard and pool to more innovative activities such as ice free curling and batting cages. As at December 2022 the business operated 13 bars across eight cities. 31 December 2022 update Specac International had a very strong year, bedding in a much-improved team, including new engineering and production managers, while focusing on improved sales processes and best-in-class production. The business also invested in its product development team to accelerate the output from its R&D pipeline. Sales and EBITDA were both ahead of budget and a good year of growth is forecast. 31 December 2022 update The company’s new product, Aetria, is being rolled out, with showrooms opening at strategically located sites globally. Thepipeline continues to build, although at a slower pace than forecast, partly due to temporarily subdued markets. Supply chain shortages have had an impact on revenues and stock management, which are likely to be temporary. The company’s approach to managing these post pandemic issues refl ect the strong cash position and long-term outlook. The board continues to support the business as it navigates the steady growth in this new product suite. 31 December 2022 update HSL had an excellent year of trading, refl ecting resilience in healthcare spending, with steady growth in maintainable earnings. Although profi tability is below FY2020 levels, the performance is now more sustainable as PPE sales now make up a small fraction of the previous year. There was a particularly strong performance from the MDI division which experienced strong demand for ultrasound systems. International supply chains have been volatile with longer lead times and price infl ation, however trading continues tobestrong. 31 December 2022 update Roxy had a strong year delivering robust revenues from existing sites whilst signifi cantly expanding the site footprint, opening four new venues in Leeds, Edinburgh, Sheffi eld and Bristol. The company has a strong pipeline of new openings in 2023 with a second site in Birmingham having opened early in the new year. Initial investment April 2015 Amount invested (£) 1,300,000 Accounting cost (£) 2,054,761 Valuation (£) 10,788,670 Basis of valuation Discounted earnings multiple Equity held (%) 42.6% Income received in the year (£) 96,315 Cash returned up to 31December 2022 (£) 1,383,016 Initial investment September 2007 Amount invested (£) 2,000,000 Accounting cost (£) 11,081,243 Valuation (£) 10,491,390 Basis of valuation Discounted off er received Equity held (%) 26.7% Income received in the year (£) — Cash returned up to 31December 2022 (£) 10,770,283 Initial investment April 2015 Amount invested (£) 1,200,000 Accounting cost (£) 1,200,000 Valuation (£) 6,850,996 Basis of valuation Discounted earnings multiple Equity held (%) 16.3% Income received in the year (£) 98,257 Cash returned up to 31December 2022 (£) 221,280 Initial investment December 2019 Amount invested (£) 2,500,000 Accounting cost (£) 2,500,000 Valuation (£) 5,937,355 Basis of valuation Discounted earnings multiple Equity held (%) 5.6% Income received in the year (£) 29,490 Cash returned up to 31December 2022 (£) 29,490 £’000 Year ended 31 March 2022 Year ended 31 March 2021 Sales 13,727 11,093 Profi t before tax 1,785 733 Retained profi t 1,522 547 Net assets 5,776 4,673 £’000 Year ended 31 March 2022 Year ended 31 March 2021 Sales 25,878 21,845 Profi t before tax 3,816 2,265 Retained profi t 3,498 2,573 Net assets 29,609 26,111 £’000 Year ended 30 September 2021 Year ended 30 September 2020 Sales 30,789 44,965 Profi t before tax 1,755 6,113 Retained profi t 970 5,028 Net assets 4,687 3,663 £’000 Year ended 31 December 2021 Year ended 31 December 2020 Sales 12,136 1,712 Profi t/(loss) before tax 1,749 (2,269) Retained profi t/(loss) 1,410 (2,269) Net assets/(liabilities) 867 (394) Company results are taken from the most recent publicly available fi nancial statements. FORESIGHT ENTERPRISE VCT PLC Annual Report and Accounts 31 December 2022 27 GOVERNANCESTRATEGIC REPORT FINANCIAL STATEMENTS BY VALUE AS AT 31 DECEMBER 2022 TOP TEN INVESTMENTS CONTINUED INNOVATION CONSULTING GROUP LIMITED CALLEN-LENZ ASSOCIATES LIMITED TLS HOLDCO LIMITED AEROSPACE TOOLING CORPORATION LIMITED HERTFORDSHIRE www.govgrant.co.uk SALISBURY www.callenlenz.com LONDON www.truelens.co.uk DUNDEE www.atlturbineservices.co.uk SECTOR: BUSINESS SERVICES SECTOR: INDUSTRIALS & MANUFACTURING SECTOR: OTHER SECTOR: INDUSTRIALS & MANUFACTURING Innovation Consulting Group, trading as GovGrant, provides support services and advice to UK-based SME businesses seeking to gain access to Government tax incentives. Callen-Lenz develops, designs and manufactures air vehicles, vehicle components and navigation and communication software for high performance unmanned aerial vehicles ("UAVs") globally. True Lens Services (“TLS”) is based in Barwell, Leicestershire and is a specialist provider of lens manufacturing, refurbishment and servicing to the filmandtelevision markets. Founded in 2007, Aerospace Tooling Corporation (“ATL”) is a niche engineering company based in Dundee. ATL provides specialist inspection, maintenance, repair and overhaul services for components in high-specification aerospace and turbine engines. 31 December 2022 update FY22 was a volatile year for trading due to changes in the market around the R&D scheme. This resulted in a drop in revenue and EBITDA. Trading has now stabilised and GovGrant is currently on track to demonstrate growth in FY23. The company is increasingly targeting larger customers in a strategic shift. 31 December 2022 update Callen-Lenz continues to see sustained revenue growth and is investing in outsourced manufacturing to meet future demand for aircraft. While orderbook growth has been modest, the pipeline has grown significantly. Maintaining close links with customers will be key for anticipating future demand, which is supported by R&D work on defence programmes. 31 December 2022 update The principal driver of TLS’ performance has been the lens rehousing activities. The TV and film production market is very active in the post-pandemic period due to the backlog in content generation over the last 18 months; this has created strong momentum and demand for TLS’ services. Thebusiness has a healthy order book and has recently acquired a new property which will facilitate further growth over the next few years. 31 December 2022 update ATL is performing solidly. Customer price increases are beginning to flow through ahead of ATL’s increase in energy prices from September 2023. A new UK-based sales director has been appointed to focus on the domestic market which is viewed as key to future growth. Initial investment September 2015 Amount invested (£) 1,650,000 Accounting cost (£) 1,938,046 Valuation (£) 5,426,677 Basis of valuation Discounted offer received Equity held (%) 36.7% Income received in the year (£) — Cash returned up to 31December 2022 (£) 656,248 Initial investment August 2021 Amount invested (£) 2,375,000 Accounting cost (£) 2,375,000 Valuation (£) 5,403,103 Basis of valuation Discounted revenue multiple Equity held (%) 12.5% Income received in the year (£) — Cash returned up to 31December 2022 (£) — Initial investment December 2015 Amount invested (£) 100 Accounting cost (£) 100 Valuation (£) 4 ,677,028 Basis of valuation Discounted earnings multiple Equity held (%) 42.5% Income received in the year (£) — Cash returned up to 31December 2022 (£) — Initial investment June 2013 Amount invested (£) 2,000,000 Accounting cost (£) 415,255 Valuation (£) 4,302,320 Basis of valuation Discounted earnings multiple Equity held (%) 47.0% Income received in the year (£) — Cash returned up to 31December 2022 (£) 1,536,849 £’000 Year ended 30 September 2022 Year ended 30 September 2021 Sales N/A N/A Profit before tax N/A N/A Retained profit N/A N/A Net assets 2,148 2,647 £’000 Year ended 28 February 2022 Year ended 28 February 2021 Sales N/A N/A Profit before tax N/A N/A Retained profit N/A N/A Net assets 3,268 1,593 £’000 Year ended 31 December 2021 Year ended 31 December 2020 Sales — — Profit before tax 3,235 167 Retained profit 2,620 136 Net assets 2,912 291 £’000 Year ended 30 June 2022 Year ended 30 June 2021 Sales 7,406 7,391 Profit before tax 927 1,120 Retained profit 864 1,207 Net assets 2,637 2,353 In accordance with Section 444 of the Companies Act 2006, a statement of income has not been delivered in the financial statements available on Companies House. In accordance with Section 444 of the Companies Act 2006, a statement of income has not been delivered in the financial statements available on Companies House. 28 FORESIGHT ENTERPRISE VCT PLC Annual Report and Accounts 31 December 2022 INNOVATION CONSULTING GROUP LIMITED CALLEN-LENZ ASSOCIATES LIMITED TLS HOLDCO LIMITED AEROSPACE TOOLING CORPORATION LIMITED HERTFORDSHIRE www.govgrant.co.uk SALISBURY www.callenlenz.com LONDON www.truelens.co.uk DUNDEE www.atlturbineservices.co.uk SECTOR: BUSINESS SERVICES SECTOR: INDUSTRIALS & MANUFACTURING SECTOR: OTHER SECTOR: INDUSTRIALS & MANUFACTURING Innovation Consulting Group, trading as GovGrant, provides support services and advice to UK-based SME businesses seeking to gain access to Government tax incentives. Callen-Lenz develops, designs and manufactures air vehicles, vehicle components and navigation and communication software for high performance unmanned aerial vehicles ("UAVs") globally. True Lens Services (“TLS”) is based in Barwell, Leicestershire and is a specialist provider of lens manufacturing, refurbishment and servicing to the filmandtelevision markets. Founded in 2007, Aerospace Tooling Corporation (“ATL”) is a niche engineering company based in Dundee. ATL provides specialist inspection, maintenance, repair and overhaul services for components in high-specification aerospace and turbine engines. 31 December 2022 update FY22 was a volatile year for trading due to changes in the market around the R&D scheme. This resulted in a drop in revenue and EBITDA. Trading has now stabilised and GovGrant is currently on track to demonstrate growth in FY23. The company is increasingly targeting larger customers in a strategic shift. 31 December 2022 update Callen-Lenz continues to see sustained revenue growth and is investing in outsourced manufacturing to meet future demand for aircraft. While orderbook growth has been modest, the pipeline has grown significantly. Maintaining close links with customers will be key for anticipating future demand, which is supported by R&D work on defence programmes. 31 December 2022 update The principal driver of TLS’ performance has been the lens rehousing activities. The TV and film production market is very active in the post-pandemic period due to the backlog in content generation over the last 18 months; this has created strong momentum and demand for TLS’ services. Thebusiness has a healthy order book and has recently acquired a new property which will facilitate further growth over the next few years. 31 December 2022 update ATL is performing solidly. Customer price increases are beginning to flow through ahead of ATL’s increase in energy prices from September 2023. A new UK-based sales director has been appointed to focus on the domestic market which is viewed as key to future growth. Initial investment September 2015 Amount invested (£) 1,650,000 Accounting cost (£) 1,938,046 Valuation (£) 5,426,677 Basis of valuation Discounted offer received Equity held (%) 36.7% Income received in the year (£) — Cash returned up to 31December 2022 (£) 656,248 Initial investment August 2021 Amount invested (£) 2,375,000 Accounting cost (£) 2,375,000 Valuation (£) 5,403,103 Basis of valuation Discounted revenue multiple Equity held (%) 12.5% Income received in the year (£) — Cash returned up to 31December 2022 (£) — Initial investment December 2015 Amount invested (£) 100 Accounting cost (£) 100 Valuation (£) 4 ,677,028 Basis of valuation Discounted earnings multiple Equity held (%) 42.5% Income received in the year (£) — Cash returned up to 31December 2022 (£) — Initial investment June 2013 Amount invested (£) 2,000,000 Accounting cost (£) 415,255 Valuation (£) 4,302,320 Basis of valuation Discounted earnings multiple Equity held (%) 47.0% Income received in the year (£) — Cash returned up to 31December 2022 (£) 1,536,849 £’000 Year ended 30 September 2022 Year ended 30 September 2021 Sales N/A N/A Profit before tax N/A N/A Retained profit N/A N/A Net assets 2,148 2,647 £’000 Year ended 28 February 2022 Year ended 28 February 2021 Sales N/A N/A Profit before tax N/A N/A Retained profit N/A N/A Net assets 3,268 1,593 £’000 Year ended 31 December 2021 Year ended 31 December 2020 Sales — — Profit before tax 3,235 167 Retained profit 2,620 136 Net assets 2,912 291 £’000 Year ended 30 June 2022 Year ended 30 June 2021 Sales 7,406 7,391 Profit before tax 927 1,120 Retained profit 864 1,207 Net assets 2,637 2,353 In accordance with Section 444 of the Companies Act 2006, a statement of income has not been delivered in the financial statements available on Companies House. In accordance with Section 444 of the Companies Act 2006, a statement of income has not been delivered in the financial statements available on Companies House. FORESIGHT ENTERPRISE VCT PLC Annual Report and Accounts 31 December 2022 29 GOVERNANCESTRATEGIC REPORT FINANCIAL STATEMENTS BY VALUE AS AT 31 DECEMBER 2022 TOP TEN INVESTMENTS CONTINUED SPEKTRIX LIMITED BIOFORTUNA LTD LONDON www.spektrix.com WIRRAL www.biofortuna.com SECTOR: TECHNOLOGY, MEDIA &TELECOMMUNICATIONS SECTOR: HEALTHCARE Spektrix is an enterprise software company, providing ticketing, CRM, marketing and fundraising software to venues in the performing arts sector across the UK and US. Biofortuna, established in 2008, is a molecular diagnostics business based in the North West. The company has developed unique expertise in the development and manufacture of freeze dried, stabilised assays. Biofortuna develops and contract manufactures on behalf of customers from the in vitro diagnostics and broader lifesciencessector. 31 December 2022 update Spektrix has seen strong growth, with both new client wins in the US and UK and the arts sector largely recovering following the significant impact of COVID-19. The company continued to develop its technology offering and invest in staff in the UK and US. During the year the business attracted investment from a US institutional investor to further accelerate growth in market share. 31 December 2022 update Biofortuna had a good year of trading; however, rising energy costs across the UK has impacted profitability. There continues to be significant projects in the pipeline which are expected to result in further growth in the next quarter, and the company plans to invest in new machinery to increase project scope. Initial investment December 2018 Amount invested (£) 2,998,350 Accounting cost (£) 2,380,350 Valuation (£) 4,295,837 Basis of valuation Price of last funding round Equity held (%) 5.1% Income received in the year (£) 211,507 Cash returned up to 31December 2022 (£) 829,507 Initial investment April 2012 Amount invested (£) 3,517,537 Accounting cost (£) 3,517,537 Valuation (£) 3,746, 570 Basis of valuation Discounted revenue multiple Equity held (%) 45.0% Income received in the year (£) — Cash returned up to 31December 2022 (£) 997,040 £’000 Year ended 31 December 2021 Year ended 31 December 2020 Sales 9,248 7,201 Loss before tax (1,069) (2,268) Retained loss (522) (2,013) Net assets 546 1,068 £’000 Year ended 31 March 2022 Year ended 30 March 2021 Sales N/A N/A Profit before tax N/A N/A Retained profit N/A N/A Net assets 5,072 7,704 In accordance with Section 444 of the Companies Act 2006, a statement of income has not been delivered in the financial statements available on Companies House. 30 FORESIGHT ENTERPRISE VCT PLC Annual Report and Accounts 31 December 2022 FORESIGHT ENTERPRISE VCT PLC Annual Report and Accounts 31 December 2022 31 GOVERNANCESTRATEGIC REPORT FINANCIAL STATEMENTS PORTFOLIO OVERVIEW 31 December 2022 31 December 2021 Investment (by value) Date of thefirst investment Sector Valuation methodology Investment (byvalue) Accounting cost £ Valuation £ Accounting cost £ Valuation £ Addition £ Disposal proceeds £ Net valuation movement £ 1. Specac International Limited 2015 Industrials & Manufacturing Discounted earnings multiple 1. 2,054,761 10,788,670 1 2,554,761 11,339,823 — (500,000) (51,153) 2. Datapath Group Limited 2007 Technology, Media and Telecommunications Discounted offer received 2. 11,081,243 10,491,390 1 11,081,243 14,163,526 — — (3,672,136) 3. Hospital Services Group Limited 2015 Healthcare Discounted earnings multiple 3. 1,200,000 6,850,996 1 1,200,000 5,676,313 — — 1,174,683 4. Roxy Leisure Holdings Limited 2019 Consumer & Leisure Discounted earnings multiple 4. 2,500,000 5,937, 355 1 2,500,000 4,972,145 — — 965,210 5. Innovation Consulting Group Limited 2015 Business Services Discounted offer received 5. 1,938,046 5,426,677 1 1,938,046 7,129,563 — — (1,702,886) 6. Callen-Lenz Associates Limited 2021 Industrials & Manufacturing Discounted revenue multiple 6. 2,375,000 5,403,103 1 2,375,000 2, 537,284 — — 2,865,819 7. TLS Holdco Limited 2015 Other Discounted earnings multiple 7. 100 4,677,028 1 100 3,880,846 — — 796,182 8. Aerospace Tooling Corporation Limited 2013 Industrials & Manufacturing Discounted earnings multiple 8. 415,255 4,302,320 1 415,255 4, 297,4 89 — — 4,831 9. Spektrix Limited 2018 Technology, Media and Telecommunications Price of last funding round 9. 2,380,350 4,295,837 1 2,118,000 2,986,004 880,350 (618,000) 1 ,047,483 10. Biofortuna Ltd 2012 Healthcare Discounted revenue multiple 10. 3,517,537 3,746,570 1 3,517,537 5,591,851 — — (1,845,281) 11. Fourth Wall Creative Limited 2019 Consumer & Leisure Discounted revenue multiple 11. 2,900,000 3,607,752 2,900,000 2,760,611 — — 847,141 12. Clubspark Group Ltd 2019 Technology, Media and Telecommunications Discounted revenue multiple 12. 1,860,000 3, 257, 564 1,860,000 3,269,395 — — (11,831) 13. PH Realisations 2020 Limited 2013 Technology, Media and Telecommunications Discounted earnings multiple 13. 2,162,929 2,633,592 2,162,929 2,633,592 — — — 14. Protean Software Limited 2015 Technology, Media and Telecommunications Discounted offer received 14. 1,795,229 2,629,229 1,795,229 3,047,422 — — (418 ,193) 15. IMMJ Systems Limited 2020 Healthcare Discounted revenue multiple 15. 1,750,000 2,575,331 1,750,000 1,817,836 — — 757,495 16. Copptech UK Limited 2022 Industrials & Manufacturing Price of last funding round 16. 2,455,000 2,455,000 — — 2,455,000 — — 17. Newsflare Limited 2021 Technology, Media and Telecommunications Discounted revenue multiple 17. 2,000,000 2,406,491 2,000,000 2,000,000 — — 406,491 18. Hexarad Group Limited 2021 Healthcare Price of last funding round 18. 1,549,999 2,378,829 850,000 850,000 699,999 — 828,830 19. NorthWest EHealth Limited 2021 Healthcare Discounted revenue multiple 19. 1,500,000 2,334,513 1,500,000 2,677,901 — — (343,388) 20. Ten Health & Fitness Limited 2019 Healthcare Discounted revenue multiple 20. 2,000,000 2,228,835 2,000,000 1,856,781 — — 372,054 21. Titania Group Limited 2020 Business Services Discounted revenue multiple 21. 1,250,000 1,922,333 1,250,000 1,753,007 — — 169,326 22. Itad (2015) Limited 2015 Business Services Discounted earnings multiple 22. 1,371,726 1,911,496 1,371,726 2,355,950 — — (444,454) 23. Steamforged Holdings Limited 2018 Consumer & Leisure Discounted revenue multiple 23. 1,600,000 1,889,053 1,600,000 1,751,287 — — 137,766 32 FORESIGHT ENTERPRISE VCT PLC Annual Report and Accounts 31 December 2022 31 December 2022 31 December 2021 Investment (by value) Date of thefirst investment Sector Valuation methodology Investment (byvalue) Accounting cost £ Valuation £ Accounting cost £ Valuation £ Addition £ Disposal proceeds £ Net valuation movement £ 1. Specac International Limited 2015 Industrials & Manufacturing Discounted earnings multiple 1. 2,054,761 10,788,670 1 2,554,761 11,339,823 — (500,000) (51,153) 2. Datapath Group Limited 2007 Technology, Media and Telecommunications Discounted offer received 2. 11,081,243 10,491,390 1 11,081,243 14,163,526 — — (3,672,136) 3. Hospital Services Group Limited 2015 Healthcare Discounted earnings multiple 3. 1,200,000 6,850,996 1 1,200,000 5,676,313 — — 1,174,683 4. Roxy Leisure Holdings Limited 2019 Consumer & Leisure Discounted earnings multiple 4. 2,500,000 5,937, 355 1 2,500,000 4,972,145 — — 965,210 5. Innovation Consulting Group Limited 2015 Business Services Discounted offer received 5. 1,938,046 5,426,677 1 1,938,046 7,129,563 — — (1,702,886) 6. Callen-Lenz Associates Limited 2021 Industrials & Manufacturing Discounted revenue multiple 6. 2,375,000 5,403,103 1 2,375,000 2, 537,284 — — 2,865,819 7. TLS Holdco Limited 2015 Other Discounted earnings multiple 7. 100 4,677,028 1 100 3,880,846 — — 796,182 8. Aerospace Tooling Corporation Limited 2013 Industrials & Manufacturing Discounted earnings multiple 8. 415,255 4,302,320 1 415,255 4, 297,4 89 — — 4,831 9. Spektrix Limited 2018 Technology, Media and Telecommunications Price of last funding round 9. 2,380,350 4,295,837 1 2,118,000 2,986,004 880,350 (618,000) 1 ,047,483 10. Biofortuna Ltd 2012 Healthcare Discounted revenue multiple 10. 3,517,537 3,746,570 1 3,517,537 5,591,851 — — (1,845,281) 11. Fourth Wall Creative Limited 2019 Consumer & Leisure Discounted revenue multiple 11. 2,900,000 3,607,752 2,900,000 2,760,611 — — 847,141 12. Clubspark Group Ltd 2019 Technology, Media and Telecommunications Discounted revenue multiple 12. 1,860,000 3, 257, 564 1,860,000 3,269,395 — — (11,831) 13. PH Realisations 2020 Limited 2013 Technology, Media and Telecommunications Discounted earnings multiple 13. 2,162,929 2,633,592 2,162,929 2,633,592 — — — 14. Protean Software Limited 2015 Technology, Media and Telecommunications Discounted offer received 14. 1,795,229 2,629,229 1,795,229 3,047,422 — — (418 ,193) 15. IMMJ Systems Limited 2020 Healthcare Discounted revenue multiple 15. 1,750,000 2,575,331 1,750,000 1,817,836 — — 757,495 16. Copptech UK Limited 2022 Industrials & Manufacturing Price of last funding round 16. 2,455,000 2,455,000 — — 2,455,000 — — 17. Newsflare Limited 2021 Technology, Media and Telecommunications Discounted revenue multiple 17. 2,000,000 2,406,491 2,000,000 2,000,000 — — 406,491 18. Hexarad Group Limited 2021 Healthcare Price of last funding round 18. 1,549,999 2,378,829 850,000 850,000 699,999 — 828,830 19. NorthWest EHealth Limited 2021 Healthcare Discounted revenue multiple 19. 1,500,000 2,334,513 1,500,000 2,677,901 — — (343,388) 20. Ten Health & Fitness Limited 2019 Healthcare Discounted revenue multiple 20. 2,000,000 2,228,835 2,000,000 1,856,781 — — 372,054 21. Titania Group Limited 2020 Business Services Discounted revenue multiple 21. 1,250,000 1,922,333 1,250,000 1,753,007 — — 169,326 22. Itad (2015) Limited 2015 Business Services Discounted earnings multiple 22. 1,371,726 1,911,496 1,371,726 2,355,950 — — (444,454) 23. Steamforged Holdings Limited 2018 Consumer & Leisure Discounted revenue multiple 23. 1,600,000 1,889,053 1,600,000 1,751,287 — — 137,766 FORESIGHT ENTERPRISE VCT PLC Annual Report and Accounts 31 December 2022 33 GOVERNANCESTRATEGIC REPORT FINANCIAL STATEMENTS PORTFOLIO OVERVIEW CONTINUED 31 December 2022 31 December 2021 Investment (by value) Date of thefirst investment Sector Valuation methodology Investment (byvalue) Accounting cost £ Valuation £ Accounting cost £ Valuation £ Addition £ Disposal proceeds £ Net valuation movement £ 24. I-Mist Group Limited 2020 Industrials & Manufacturing Discounted revenue multiple 24. 1,614,500 1,764,252 1,614,500 1,761,491 — — 2,761 25. Strategic Software Applications Ltd 2022 Business Services Price of last funding round 25. 1,750,000 1,750,000 — — 1,750,000 — — 26. Additive Manufacturing Technologies Ltd 2021 Technology, Media and Telecommunications Discounted revenue multiple 26. 1,737,499 1,737,499 1,737,499 1,737,499 — — — 27. Positive Response Corporation Ltd 2014 Business Services Discounted revenue multiple 27. 884,195 1,710,657 1,009,195 1,592,454 — (125,000) 243,203 28. Homelink Healthcare Limited 2022 Healthcare Discounted revenue multiple 28. 1,075,000 1,693,115 — — 1,075,000 — 618,115 29. Crosstown Dough Ltd 2021 Consumer & Leisure Discounted revenue multiple 29. 1,500,000 1,636,110 1,500,000 1,500,000 — — 136,110 30. So-Sure Limited 2022 Consumer & Leisure Discounted revenue multiple 30. 1,600,000 1,600,000 — — 1,600,000 — — 31. Rovco Limited 2019 Technology, Media and Telecommunications Discounted price of last funding round 31. 1,476,880 1,476,880 950,000 652,316 526,880 — 297,68 4 32. Iphigenie Limited 2015 Other Discounted earnings multiple 32. 100 1,261,403 100 1,272,341 — — (10,938) 33. ABL Investments Limited 2015 Business Services Discounted earnings multiple 33. 1,494,075 1,114,116 1,494,075 769,483 — — 344,633 34. Whitchurch PE 1 Limited 2014 Other Discounted earnings multiple 34. 378,000 632,533 378,000 650,320 — — (17,787) 35. Luminet Networks Limited 2018 Technology, Media and Telecommunications Discounted earnings multiple 35. 960,000 621,800 960,000 380,334 — — 241,466 36. Cole Henry PE 2 Limited 2014 Other Discounted earnings multiple 36. 200,000 356,557 200,000 367,766 — — (11,209) 37. Weduc Holdings Limited 2018 Technology, Media and Telecommunications Discounted revenue multiple 37. 23,750 258,471 23,750 204,355 — — 54,116 38. Kingsclere PE 3 Limited 2014 Other Discounted earnings multiple 38. 100,000 203,253 100,000 210,887 — — (7,634) 39. Sindicatum Carbon Capital Limited 2007 Other Nil value 39. 544,538 — 544,538 — — — — 40. Vio Healthtech Limited 2018 Healthcare Nil value 40. 675,578 — 675,578 384,544 — — (384,544) 41. Biotherapy Services Limited 2019 Healthcare Nil value 41. 2,250,000 — 2,250,000 2,378,376 — — (2,378,376) 42. TFC Europe Limited 2007 Industrials & Manufacturing Sold 42. — — 2,149,307 10,330,550 — (15,407,883) 5,077,333 43. Codeplay Software Limited 2018 Technology, Media and Telecommunications Sold 43. — — 300,000 1,697,425 — (4, 300, 599) 2,603,174 69,921,290 111,966,610 64,626,368 115,238,767 8,987,229 (20,951,482) 8,692,096 1. Top Ten Investments by value shown on pages 26 to 30. 34 FORESIGHT ENTERPRISE VCT PLC Annual Report and Accounts 31 December 2022 31 December 2022 31 December 2021 Investment (by value) Date of thefirst investment Sector Valuation methodology Investment (byvalue) Accounting cost £ Valuation £ Accounting cost £ Valuation £ Addition £ Disposal proceeds £ Net valuation movement £ 24. I-Mist Group Limited 2020 Industrials & Manufacturing Discounted revenue multiple 24. 1,614,500 1,764,252 1,614,500 1,761,491 — — 2,761 25. Strategic Software Applications Ltd 2022 Business Services Price of last funding round 25. 1,750,000 1,750,000 — — 1,750,000 — — 26. Additive Manufacturing Technologies Ltd 2021 Technology, Media and Telecommunications Discounted revenue multiple 26. 1,737,499 1,737,499 1,737,499 1,737,499 — — — 27. Positive Response Corporation Ltd 2014 Business Services Discounted revenue multiple 27. 884,195 1,710,657 1,009,195 1,592,454 — (125,000) 243,203 28. Homelink Healthcare Limited 2022 Healthcare Discounted revenue multiple 28. 1,075,000 1,693,115 — — 1,075,000 — 618,115 29. Crosstown Dough Ltd 2021 Consumer & Leisure Discounted revenue multiple 29. 1,500,000 1,636,110 1,500,000 1,500,000 — — 136,110 30. So-Sure Limited 2022 Consumer & Leisure Discounted revenue multiple 30. 1,600,000 1,600,000 — — 1,600,000 — — 31. Rovco Limited 2019 Technology, Media and Telecommunications Discounted price of last funding round 31. 1,476,880 1,476,880 950,000 652,316 526,880 — 297,68 4 32. Iphigenie Limited 2015 Other Discounted earnings multiple 32. 100 1,261,403 100 1,272,341 — — (10,938) 33. ABL Investments Limited 2015 Business Services Discounted earnings multiple 33. 1,494,075 1,114,116 1,494,075 769,483 — — 344,633 34. Whitchurch PE 1 Limited 2014 Other Discounted earnings multiple 34. 378,000 632,533 378,000 650,320 — — (17,787) 35. Luminet Networks Limited 2018 Technology, Media and Telecommunications Discounted earnings multiple 35. 960,000 621,800 960,000 380,334 — — 241,466 36. Cole Henry PE 2 Limited 2014 Other Discounted earnings multiple 36. 200,000 356,557 200,000 367,766 — — (11,209) 37. Weduc Holdings Limited 2018 Technology, Media and Telecommunications Discounted revenue multiple 37. 23,750 258,471 23,750 204,355 — — 54,116 38. Kingsclere PE 3 Limited 2014 Other Discounted earnings multiple 38. 100,000 203,253 100,000 210,887 — — (7,634) 39. Sindicatum Carbon Capital Limited 2007 Other Nil value 39. 544,538 — 544,538 — — — — 40. Vio Healthtech Limited 2018 Healthcare Nil value 40. 675,578 — 675,578 384,544 — — (384,544) 41. Biotherapy Services Limited 2019 Healthcare Nil value 41. 2,250,000 — 2,250,000 2,378,376 — — (2,378,376) 42. TFC Europe Limited 2007 Industrials & Manufacturing Sold 42. — — 2,149,307 10,330,550 — (15,407,883) 5,077,333 43. Codeplay Software Limited 2018 Technology, Media and Telecommunications Sold 43. — — 300,000 1,697,425 — (4, 300, 599) 2,603,174 69,921,290 111,966,610 64,626,368 115,238,767 8,987,229 (20,951,482) 8,692,096 1. Top Ten Investments by value shown on pages 26 to 30. FORESIGHT ENTERPRISE VCT PLC Annual Report and Accounts 31 December 2022 35 GOVERNANCESTRATEGIC REPORT FINANCIAL STATEMENTS In 2022, the Manager was voted “Best VCT Investment Manager” at the Growth Investor Awards. ABOUT THE MANAGER James Livingston Partner and Co-Head ofPrivateEquity Matt Smith Partner and Co-Head ofPrivateEquity Claire Alvarez Partner James joined Foresight Group in 2007 from Deloitte’s strategy consulting team. James has 18 years of experience and is a member of the investment committee and the executive committee. Alongside Matt Smith, James manages the private equity team. James is responsible for originating, negotiating and managing growth and buyout investments in a variety of sectors. During his time at Foresight Group, James has led numerous successful transactions including growth and replacement capital transactions. Notably, in 2016 he led the investment into Simulity, and nine months later its sale to ARM, generating 3x return and a 400% IRR. Other successfully exited investments include FFX and Channel Safety Systems. James holds a Master’s degree in Natural Sciences and Management studies from Cambridge University as well as the CIMA Advanced Diploma in Management Accounting. Matt joined Foresight Group in 2010 from Rothschild, where he spent six years advising companies in a range of sectors on a variety of transaction types. Matt has 18 years of experience and is a member of the investment committee and the executive committee. Alongside James Livingston, Matt manages the private equity team. Matt is responsible for originating, negotiating and managing growth and buyout investments in a variety of sectors. He has a particular focus on ESG considerations and has helped develop Foresight Group’s approach. Matt led on a number of investments including ITAD, Agar, MPR, Poppy & Jacks and Mowgli. He has sold a number of successful investments including MPR, Flowrite, TFC, Mowgli and Clubhouse Golf. Matt graduated from Oxford University with a Master’s degree in Biological Sciences and a postgraduate degree in Physiology. Claire joined Foresight Group’s Manchester office in 2016 from Deloitte where she focused on transaction and restructuring services across a range of corporate finance assignments. Claire is responsible for sourcing and executing investments and providing ongoing strategic and financial advice to existing portfolio companies. Claire has led on a number of investments in Foresight Regional Investment LPs including Argyle, DA Languages, Hedges Direct and Tudor Group. Claire holds an MBA from Manchester Business School as well as a Corporate Finance Certificate from the Securities and Investment Institute. She also holds a degree in Management from Lancaster University. 36 FORESIGHT ENTERPRISE VCT PLC Annual Report and Accounts 31 December 2022 Management The Company has appointed Foresight Group LLP (“the Manager”) to provide investment management and administration services. The Manager prefers to take a lead role in the companies in which it invests. Larger investments may be syndicated with other investing institutions, or strategic partners with similar investment criteria. In considering a prospective investment in a company, particular regard will be paid to: • Evidence of high-margin products or services capable of addressing fast-growing markets • The company’s ability to sustain a competitive advantage • The strength of the management team • The existence of proprietary technology • The company’s prospects of being sold or achieving a fl otation within three to fi ve years Foresight Group LLP was voted "Best VCT Investment Manager" at the Growth Investor Awards 2022. The Manager was most recently shortlisted for “Environmental, Social and Governance – GP”, “UK Small-cap House of the Year (EV on entry of less than €25m)” and “UK Small-cap Deal of the Year” for the Codeplay Software exit by Real Deals Private Equity Awards 2022. The Manager was also shortlisted for “Best ESG Investment Fund: Private Equity” at the ESG Investing Awards 2023, as well as “Venture/Growth Cap House of the year” at the Unquote British Private Equity Awards 2022. Recent awards also include “Fund Manager of the Year 2018” by the PLC Awards and “Generalist VCT of the Year” in 2018/19 by Investment Week Tax Effi cient Awards. The Manager was also shortlisted for “Best EIS Investment Manager 2018” by EISA Awards and “Best Venture Capital Trust Provider 2018” by Moneyfactors Investment Life & Pensions. FORESIGHT ENTERPRISE VCT PLC Annual Report and Accounts 31 December 2022 37 GOVERNANCESTRATEGIC REPORT FINANCIAL STATEMENTS Management continued The growing private equity investment team of 51 is proactive and hands-on, with a focus on investing up to £5million in UK growth companies across a broad range of sectors. The team, based out of offices in London, Manchester, Nottingham, Edinburgh, Leeds, Dublin and Cambridge, with smaller satellite offices in Leicester and Milton Keynes, searches for investment opportunities across the whole of the UK. Since inception, the Manager has worked intensively to invest in, manage and realise a large number of investments. The team completes a considerable number of new deals and exits each year and supports investee companies pursuing various different strategies, including organic growth, buy & build and turnarounds. The team combines executives from varying backgrounds across corporate finance, consulting, accounting, private equity and industry. Between them, they have experience of more than 500 private equity and corporate finance transactions and have managed more than 200investments, the majority of these during their timeat Foresight Group. This team has c.350 years’ worth of collective investment experience and combines investors’ capital and its own expertise with the intention of creating long-term Shareholder value and generating attractive returns forShareholders. The Manager has an active and direct portfolio management approach, taking a non-executive directorship position on each investee company board. The Foresight Investor Director will influence, support and, where necessary, strengthen or change management, in order to protect and build Shareholder value. This hands-on role involves regular dialogue with the executive and non-executive team on growth, markets, strategy, products and tactics and a continuous evaluation of the performance of the team as a whole. As a matter of policy, the Manager also has the right to appoint a senior industry expert as chair. The Manager works particularly closely with the investee companies in the following areas: • Definition and review of strategy and its implementation • Recruitment and incentivisation of key management and board members • Planning for growth, international expansion and newproduct/service introduction • Fundraising from banks and other external sources • Proactive monitoring • Merger, acquisition and exit planning • ESG compliance ABOUT THE MANAGER CONTINUED 38 FORESIGHT ENTERPRISE VCT PLC Annual Report and Accounts 31 December 2022 CO-INVESTMENTS Co-investments have been made by other funds that the Manager advises and manages, as follows: Investment Foresight Enterprise VCT Accounting cost £ Foresight VCT Accounting cost £ Other Foresight funds Accounting cost £ Total equity managed by Foresight % ABL Investments Limited 1,494,075 2,750,000 — 57. 3 Additive Manufacturing Technologies Ltd 1,737,499 1,720,296 5,275,002 25.0 Aerospace Tooling Corporation Limited 415,255 150,000 — 82.2 Biofortuna Ltd 3,517,537 1,172,517 — 59.8 Callen-Lenz Associates Limited 2,375,000 2,351,485 — 25.0 Clubspark Group Ltd 1,860,000 2,756,085 — 30.6 Cole Henry PE 2 Limited 200,000 100,000 — 50.0 Copptech UK Limited 2,455,000 2,430,694 — 10.1 Crosstown Dough Ltd 1,500,000 1,485,149 — 20.0 Datapath Group Limited 11,081,243 7, 563, 365 — 40.0 Fourth Wall Creative Limited 2,900,000 4,292,299 — 41.5 Hexarad Group Limited 1,549,999 1,534,653 — 22.5 Homelink Healthcare Limited 1,075,000 1,064,356 — 22.6 Hospital Services Group Limited 1,200,000 3,320,000 3,500,000 81.6 I-Mist Group Limited 1,614,500 1,598,515 1,271,000 39.7 IMMJ Systems Limited 1,750,000 1,732,674 — 21.0 Innovation Consulting Group Limited 1,938,046 1,605,000 — 72.4 Itad (2015) Limited 1,371,726 2,750,000 — 35.0 Kingsclere PE 3 Limited 100,000 100,000 — 50.0 Luminet Networks Limited 960,000 3,783,251 — 47.9 Newsflare Limited 2,000,000 1,980,198 — 16.3 NorthWest EHealth Limited 1,500,000 1,485,149 — 27.7 PH Realisations 2020 Limited 2,162,929 1,664,893 1,000,000 85.0 Positive Response Corporation Ltd 884,195 875,000 — 63.9 Protean Software Limited 1,795,229 2,500,000 — 63.5 Rovco Limited 1,476,880 1 ,457,630 3,130,774 16.2 Roxy Leisure Holdings Limited 2,500,000 2,467, 933 4,500,000 27.9 So-Sure Limited 1,600,000 1,584,158 1,000,000 18.7 Specac International Limited 2,054,761 800,000 — 85.2 Spektrix Limited 2,380,350 5,467,811 — 16.8 Steamforged Holdings Limited 1,600,000 2,364,532 1,000,000 31.9 Strategic Software Applications Ltd 1,750,000 1,732,673 — 26.3 Ten Health & Fitness Limited 2,000,000 2,958,591 — 44.1 Titania Group Limited 1,250,000 1, 237,624 — 16.7 Weduc Holdings Limited 23,750 54,145 — 28.7 Whitchurch PE 1 Limited 378,000 100,000 — 50.0 Companies valued at £nil have been excluded from the table above. Where the Manager controls over 50% of an investment by virtue of its discretionary management of one or more funds under management, decisions either have to be taken by the individual boards of the shareholding companies inrespect of their individual holdings or voting is limited to 50%. FORESIGHT ENTERPRISE VCT PLC Annual Report and Accounts 31 December 2022 39 GOVERNANCESTRATEGIC REPORT FINANCIAL STATEMENTS DIRECTORS’ DUTY TO PROMOTE THE SUCCESS OF THE COMPANY The Directors have a duty to promote the success of the Company for the benefit of Shareholders as a whole and to describe how they have performed this duty having regard to matters set out in Section 172(1) of the Companies Act 2006. STAKEHOLDERS AND S172 THE MANAGER SHAREHOLDERS The principal relationship is with the Manager and the Manager’s Review contains further information on this. Its investment management service is fundamental to the long-term success of the Company through the pursuit of the investment objective. TheBoard reviews the investment performance of the Company and the ability of the Manager to produce satisfactory investment performance. It seeks to maintain a constructive working relationship with the Manager and, on an annual basis, the Management Engagement & Remuneration Committee reviews the appropriateness of the Manager’s appointment. The Board receives and reviews detailed presentations and reports from the Manager to enable the Directors to exercise effective oversight of the Company’sactivities. As explained in more detail in note 13, the Directors have prepared a calculation incorporating estimated future dividends over the vesting period and expect a performance incentive fee to become payable during the vesting period. Therefore, a liability of £280,000 has been recognised as at 31 December 2022 (2021: £nil). To help the Board in its aim to act fairly between the Company’s members, it encourages communications with all Shareholders. The Annual and Half-Yearly Reports are issued to Shareholders and are available on the Company’s website, together with other relevantinformation including quarterly factsheets. The Manager and members of the Board are available to meet the Shareholders at investor forums held throughout the year. Directors are also available to meet with Shareholders at the AGM. Shareholders’ views may also be considered during the Board’s annual strategy reviews. The Board has also established guidelines in accordance with which the Manager implements share buybacks at a target discount of 7.5% to the prevailing NAV per share. Inaddition, the Board continues to adopt a target dividend policy of at least 5% of the opening NAV pershare ofthat financialyear. Following the successful realisations of TFC Europe and Codeplay Software, the Board declared a special interim dividend of 3.8p per share 8 November 2022, returning £8.1 million to Shareholders. 40 FORESIGHT ENTERPRISE VCT PLC Annual Report and Accounts 31 December 2022 In fulfilling this duty, the Directors consider the likely consequences of their actions over the long term and onotherstakeholders. As a third-party-managed VCT, the Company does not have employees. Its main stakeholders therefore comprise its Shareholders, who are also its customers,portfolio companies, the environment and society and its principal suppliers. These suppliers are external firms engaged by the Board to provide, amongst other services, investment management, secretarial, registrar, audit and legal services. PORTFOLIO COMPANIES OTHER SUPPLIERS As described in more detail within the Corporate Governance Report, theBoard is committed to maintaining and demonstrating high standards of corporate governance in relation to the Company’s business conduct. TheBoard also expects high standards at the companies in which the Company is invested. In this regard, it is satisfied that the Manager consistently and proactively engages with investee companies on environmental, social and governance matters, where these are material to the investment case and therefore to the long-term success of the Company. The team of 51 investment professionals is well resourced and, collectively, has a deep knowledge and understanding across corporate finance, consulting, accountancy and private equity. More detail on this can be found in the Responsible Investment section of the Manager’sReview. Where environmental, social and governance matters impinge upon the investment case, the Manager engages with investee companies to encourage the issues to be addressed through that company’s “100-day plan”. The Manager is well placed to undertake this activity, which has always been an integrated element of its investment process. The Manager seeks to maintain constructive relationships with the Company’s other suppliers on behalf of the Company, typically through regular communications and provision of relevant information. While the Manager supports the aims and objectives of the FRC’s Stewardship Code, it is not currently a signatory. It is, however, working to ensure alignment with the Stewardship Code, and will periodically review its position regarding becoming a signatory in future. A statement to that effect is noted on the Manager’s website and can be found at: www.foresightgroup.eu/stewardship-code. In summary, the Board’s primary focus is to promote the long-term success of the Company for the benefit of its Shareholders, with a view to achieving the investment objective in a manner consistent with its stated investment policy and strategy. In doing so, and as described above, it has due regard to the impact of its actions on other stakeholders and the wider community. FORESIGHT ENTERPRISE VCT PLC Annual Report and Accounts 31 December 2022 41 GOVERNANCESTRATEGIC REPORT FINANCIAL STATEMENTS ESG values form an integral part of the Manager’s day-to-day decision making, with all new investments made since May 2018 subject to ESG due diligence and ongoing ESG monitoring. This accounts for 56% of the current portfolio, with the view of reaching 100% as legacy investments are sold. Central to its investment approach are five ESG Principles which are used to evaluate investee companies. Overall, 40 individual key performance indicators are considered under the five Principles. The Manager invests in a wide range of sectors and believes its approach covers the key tests that should be applied to assess a company’s ESG performance, throughout the life cycle of an investment: RESPONSIBLE INVESTMENT Often referred to as Responsible Investment, Environmental, Social and Governance principles ("ESG") provide not only a key basis for generating attractive returns for investors, but also to help build better quality businesses in the UK, creating jobs and making a positive contribution to society. Strategy and awareness Does the business demonstrate a good awareness of corporate social responsibility? Is this reflected in its processes and management structure? Environmental Does the company follow good practice for limiting or mitigating its environmental impact, in the context of its industry? How does it encourage the responsible use of the world’s resources? Social What impact does the company have on its employees, customers and society as a whole? Is it taking steps to improve the lives of others, either directly, such as through job creation, or indirectly? Governance Does the company and its leadership team demonstrate integrity? Are the correct policies and structures in place to ensure it meets its legislative and regulatory requirements? Third-party interaction Is the principle of corporate responsibility evidenced in the company’s supply chain and customers? How does it promote ESG values and share best practice? 42 FORESIGHT ENTERPRISE VCT PLC Annual Report and Accounts 31 December 2022 UN SDGs The UN’s Sustainable Development Goals (“SDGs”) also represent a key driver and important lens through which corporate and investment activities are reviewed. In May 2021, the Manager formalised its Impact Themes for private equity investments into four areas: • Health • Quality Employment at Scale • Research and Innovation • Sustainable, Inclusive, Local Infrastructure and theEnvironment These outcome-focused themes are aligned with the UN’s SDGs. They help the Manager assess any opportunities in the business model, and by mapping its investments to them the private equity team can identify the value and benefi ts for the companies, society and the environment. Each portfolio company is subject to an annual assessment where progress against each of the fi ve Principles and four Impact Themes are measured and an evaluation matrix updated to allow progress to be tracked and continuous improvement encouraged. The diagram below shows the specifi c SDGs that theManager has scope to contribute to across all of its activities. Credentials The Manager has been a member of the UK Sustainable Investment and Finance Association since 2009 and a signatory to the Principles for Responsible Investment (“PRI”) since 2013. The Manager is an accredited Living Wage Employer and a signatory of the HM Treasury Women in Finance Charter, committing to implement recommendations to improve gender diversity in fi nancial services. Portfolio companies are encouraged to pursue similar objectives. Climate Change Statement The Manager has a long-term investing vision and its strategy aligns with the UN’s Sustainable Development Goals and the decarbonisation targets set out in the Paris Agreement of 2015. As such, taking actions to mitigate the risks posed by climate change, whilst also investing to generate commercial returns for our investors, must be done hand in hand. The Manager has been a signatory to the United Nations-backed PRI since 2013. PRI is a globally recognised voluntary framework concerned with the incorporation of ESG considerations into the investment decision-making process. It provides a basis for potential and existing investors to judge the quality of a company’s ESG processes and positioning within an industry sector. In 2020, the Manager received an “A+” for Strategy and Governance, and “A” for Private Equity and Infrastructure investments. The Board supports the Manager’s views on climate change and ESG and its vigorous process in the evaluation of an asset’s environmental and social impact during due diligence and thereafter. For each material risk identifi ed during due diligence, a mitigation plan is proposed in the investment submission and these actions form part of each portfolio company’s “100-day plan” post-investment. From an environmental perspective, analysis relating to the implementation of good industry practice in limiting and mitigating the potentially adverse environmental impact of acompany’s operations has four principal components: • Environmental policy and track record • Energy and resource usage and environmental impact • Environmental impact of products and services • Environmental performance improvements Regular monitoring post-investment ensures that standards are maintained in respect of ESG issues where there is a change in either the regulatory or operating environment or the composition of the managementteam. GOVERNANCE FINANCIAL STATEMENTSSTRATEGIC REPORT FORESIGHT ENTERPRISE VCT PLC Annual Report and Accounts 31 December 2022 43 Climate Change Statement continued The FCA reporting requirements consistent with the Task Force on Climate-related Financial Disclosures (“TCFD”) commencing from 1 January 2021 do not currently apply to the Company. They will, however, be kept under review and the Board and Manager will take noteofanyrecommended changes. The Manager continues its journey to full alignment with the recommendations of the TCFD. Further details are noted in the Foresight Group Holdings Limited Annual Report and Accounts and can be found at: www.foresightgroup.eu Environmental, human rights, employee, social and community issues The Board recognises the requirement under Section 414 of the Companies Act 2006 to provide information about environmental matters (including the impact of the Company’s business on the environment), employee, human rights, social and community issues; and information about any policies it has in relation to these matters and the effectiveness of these policies. The Company does not have any policies in place for human rights, environmental, social and community issues due to having no office premises, no employees and its purchases being services as opposed to tangible products. The Manager’s policies in respect of all the above issues can be found on its website www.foresightgroup.eu. Diversity The Board currently comprises one female and three male Directors. There is no formal diversity policy in place, however the Board is conscious of the need for diversity and will actively seek and encourage male and female candidates from all ethnic backgrounds when appointing new Directors. The Manager has an equal opportunities policy and, as at 31 December 2022, employed 214 men (2021: 165) and 134women (2021: 103). Global greenhouse gas emissions The Company has no greenhouse gas emissions to report from the operations of the Company, nor does it have responsibility for any other emissions sources under the Companies Act 2006 (Strategic Report and Directors’ Reports) Regulations 2013. We believe in delivering sustainable growth and incorporate ESG into our management process. RESPONSIBLE INVESTMENT CONTINUED 44 FORESIGHT ENTERPRISE VCT PLC Annual Report and Accounts 31 December 2022 PRINCIPAL RISKS, RISK MANAGEMENT AND REGULATORY ENVIRONMENT RISKS The Board carries out half-yearly reviews of the risk environment, including emerging risks, in which the Company operates. The principal risks and uncertainties identified by the Board which might affect the Company’s business and future performance, and the steps taken with a view to their mitigation, are set out below. Emerging risks that have also been considered include those of climate change, inflationary pressures, energy prices, the cost of living crisis, interest rates, supply chain issues, energy prices and the Russian invasion of Ukraine. In addition, tensions are increasing in the relationship between the United States and China over the future of Taiwan, where a large proportion of sophisticated microchips are manufactured and exported to businesses in the West, including those in the Company's portfolio. While emerging risks are by nature difficult to predict, the Board and Manager's response to issues that may directly or indirectly effect the portfolio is immediate and evolves constantly. The Board, with the help of the Manager’s extensive research resources and market intelligence, surveys the full risk landscape of the Company in order to identify increasing and emerging risks to which the Company may be exposed to in the future. The Board questions which parts of the Company’s business may be vulnerable to disruption, including the business models of its investee companies and third party suppliers. Analysis performed, including the portfolio's exposure to Russia and Ukraine and the effect of interest rates on individual investee companies in the year, is circulated to the Board and a best course of action decided. The impact of such risks on the Company's portfolio is under continuous assessment by the Manager. The Board and Manager therefore believe that emerging risks are mitigated and monitored to the best extent possible. Further details of the Board’s climate change considerations are provided in the Climate Change Statement in the Responsible Investment section on pagepages 43 and 44. MARKET RISK Risk description: Macroeconomic changes, geopolitical developments, including the risk of war, or external shocks affect the investment community in general and lead to a fall in the valuation of investee companies, a drop in the Company’s share price or widening discount to Net Asset Value, resulting in capital losses for Shareholders. Key controls and mitigation: The Manager ensures the portfolio is diversified and the Board reviews it at least quarterly. The Company also maintains sufficient cash reserves to be able to provide additional funding to investee companies where appropriate and to repurchase its own shares. STRATEGIC AND PERFORMANCE RISK Risk description: The Board fails to set appropriate strategic objectives and fails to monitor the Company’s implementation of strategy which leads to poor performance. Unattractive objectives or prolonged poor performance leads to a lack of investor demand for the Company’s shares, resulting in difficulty raising new capital, a lack of cash available to fund buybacks and an inability to control a widening discount. Key controls and mitigation: The Board and the Manager meet on an annual basis for a specific session to assess the Company’s strategy. Investment strategy and performance are further monitored quarterly at Board meetings. Newly identified Increased level of risk Decreased level of risk Similar level of risk FORESIGHT ENTERPRISE VCT PLC Annual Report and Accounts 31 December 2022 45 GOVERNANCESTRATEGIC REPORT FINANCIAL STATEMENTS INTERNAL CONTROL RISK Risk description: The control environments at service providers, including the Manager, have inadequate procedures for the identification, evaluation and management of risks, cyber security and data protection, putting the Company’s assets and data at risk. Key controls and mitigation: The Board carries out semi-annual reviews of the system of internal and cyber controls, both financial and non-financial, operated by the Manager and other service providers and asks the external auditor to report on the Manager’s control procedures. These include controls designed to ensure that the Company’s assets are safeguarded and that proper accounting records are maintained. LEGISLATIVE AND REGULATORY RISK Risk description: The Company fails to comply with applicable laws and regulations including VCT Rules, UK Listing Authority Rules, AIC Code on Corporate Governance, Stewardship Code, Companies Act, Bribery Act, Market Abuse Regulations, data protection rules, Criminal Finances Act and relevant Taxes Acts and as a result loses its approval as a VCT. Radical changes to VCT rules limit satisfactory investment returns and the ability to issue new shares, leading to a reduction in the sale of investee companies. This leads to a cash flow issue which restricts dividend payments or share buybacks and the Company’s ability to control a widening discount. The "Sunset Clause" for EIS and VCT reliefs has to be reviewed by the government by 6 April 2025. The clause provides that income tax relief will no longer be given to subscriptions made on or after 6 April 2025, unless the legislation is amended to make the scheme permanent, or the “sunset clause” is extended. In extreme circumstances, the current VCT regime ending on 5 April2025 is not renewed or extended, causing shareholders to cease to benefit from tax-free dividends and capital gains tax exemption after that date. Key controls and mitigation: The Manager is contracted to provide company secretarial, accounting and administration services through qualified professionals and the Board receives regular updates on compliance with relevant regulations. The Company, the Manager and the VCT status adviser are, between them, members of the VCT Managers Association, EIS Association and the AIC and are regularly consulted by HMRC and Treasury, or reply to consultations, before changes in legislation take place, often enabling a middle ground to be agreed onlegislative changes. The Board and Manager review corporate governance and regulatory changes on a continual basis and seek additional advice as and when required. The government has the power to extend or remove the sunset clause through secondary legislation, which would allow the VCT & EIS schemes to operate in their current form beyond the current expiry date of the scheme. The then Chancellor Kwasi Kwarteng announced during his mini-budget of 23 September 2022 that venture capital schemes will be safeguarded beyond 2025 but no further details were given as to how this will be implemented. To date, the now Chancellor Jeremy Hunt has yet to clarify. However, through correspondence with the Treasury Select Committee, the Chancellor has stated that it is the government's firm intention to extend the VCT and EIS schemes beyond the sunset on 6 April 2025 and that further details will be provided in due course. The Treasury Select Committee also notes that the UK should be able to extend the scheme without European Commission approval, clarified by the recently announced Northern Ireland Protocol, the Windsor Framework. Newly identified Increased level of risk Decreased level of risk Similar level of risk RISKS CONTINUED 46 FORESIGHT ENTERPRISE VCT PLC Annual Report and Accounts 31 December 2022 VCT QUALIFYING STATUS RISK Risk description: The Company is required at all times to observe the conditions laid down in the Income Tax Act 2007 for the maintenance of approved VCT status. Theloss of such approval could lead to the Company ceasing to be exempt from corporation tax on capital gains, to investors being liable to pay income tax on dividends received from the Company and capital gains tax on the disposal of their shares, and, in certain circumstances, to investors being required to repay theinitial income tax relief on their investment. Key controls and mitigation: Legal advice is taken for each transaction to ensure all investments are qualifying. Advance assurance, where appropriate, is sought from HMRC ahead of completion. The Manager keeps the Company’s VCT qualifying status under continual review, seeking to take appropriate action to maintain it where required, and its reports are reviewed by the Board on a quarterly basis. The Board has also retained Shakespeare Martineau LLP to undertake anindependent VCT status monitoring role. INVESTMENT VALUATION AND LIQUIDITY RISK Risk description: Most of the Company’s investments are in small and medium-sized unquoted companies which are VCT qualifying holdings, and which by their nature entail a higher level of risk, subjective valuations and lower liquidity than investments in larger quoted companies. Unquoted companies have no published market price for their shares. The value of the shares needs to be calculated based on other information using estimates and judgements, and is reliant on the accuracy and completeness of some information provided by investee companies. As the Manager's remuneration is based on the Company's Net Asset Value, there is an inherent conflict of interest in valuations of the portfolio by the Manager. The Company may not be able to sell its investments in unquoted companies. Insufficient capital realisations and the Company’s inability to raise new capital could prevent the Company from meeting its financial objectives and restrict dividends and buybacks. Key controls and mitigation: The Manager aims to limit the risk attaching to the portfolio as a whole by careful selection, close monitoring and timely realisation of investments, by carrying out rigorous due diligence procedures and maintaining a spread of holdings in terms of industry sector. The Board reviews the investment portfolio and its realisation profile with the Manager on a quarterlybasis. Valuations are prepared in accordance with the IPEV Valuation Guidelines, as discussed in more detail in note 1 to the accounts. Sensitivity analysis is disclosed in note 14. The Board reviews portfolio valuations quarterly and the external auditor performs an annual review, as noted in the auditor’s report. FORESIGHT ENTERPRISE VCT PLC Annual Report and Accounts 31 December 2022 47 GOVERNANCESTRATEGIC REPORT FINANCIAL STATEMENTS In accordance with principle 21 of the AIC Code of Corporate Governance published by the AIC in February 2019, the Directors have assessed the prospects of the Company over the three-year period to 31December2025. This three-year period is used bythe Board during the strategic planning process and is considered reasonable for a business of its nature andsize. In making this statement, the Board carried out a robust assessment of the principal risks facing the Company, including those that might threaten its business model, future performance, solvency or liquidity. The Board concentrated its eff orts on the major factors that aff ect the economic, regulatory and political environment. The Board also considered the ability of the Company to raise fi nance and deploy capital. This assessment took account of the availability and likely eff ectiveness of the mitigating actions that could be taken to avoid or reduce the impact of the underlying risks, including the Manager adapting its investment process to take account of the more restrictive VCT investment rules thatcurrentlyapply. The Directors have also considered the Company’s income and expenditure projections and underlying assumptions for the next three years and found these tobe realistic and sensible. Stress testing on the cash fl ow forecast has not been performed, due to the discretionary nature of the main infl ows and outfl ows. If fewer funds are raised, and fewer realisations achieved, then fewer investments and buybacks can be made and reduced dividends can be paid. The contracted ongoing costs of the Company aresuffi ciently covered for the next three years. Based on the Company’s processes for monitoring cash fl ow, share price discount, review of the investment objective and policy, asset allocation, sector weightings and portfolio risk profi le, the Board has concluded that there is a reasonable expectation that the Company will be able to continue in operation and meet its liabilities as they fall due over the three years to31December2025. VIABILITY STATEMENT This Strategic Report has been prepared in accordance with the requirements of Section 414 of the Companies Act 2006 and best practice. Its purpose is to inform the members of the Company and help them to assess how the Directors have performed their duty to promote the success of the Company, in accordance with Section172 of the Companies Act 2006. Future strategy The Board and the Manager believe that the strategy of continuing to qualify as a VCT and focusing on growth private equity investments is currently in the best interests of Shareholders and the historical information reproduced in this report is evidence of positive recent performance in this area. The Company’s performance relative to its peer group will depend on the Manager’s ability to allocate the Company’s assets eff ectively, make successful investments and manage its liquidity appropriately. This Strategic Report has been approved for issue by the Board. Raymond Abbott Chair 28 April 2023 48 FORESIGHT ENTERPRISE VCT PLC Annual Report and Accounts 31 December 2022 WHAT’S IN THIS SECTION BOARD OF DIRECTORS 50 DIRECTORS’ REPORT 52 CORPORATE GOVERNANCE 58 AUDIT COMMITTEE REPORT 62 DIRECTORS’ REMUNERATION REPORT 64 STATEMENT OF DIRECTORS’ RESPONSIBILITIES 68 GOVERNANCE FORESIGHT ENTERPRISE VCT PLC Annual Report and Accounts 31 December 2022 49 GOVERNANCESTRATEGIC REPORT FINANCIAL STATEMENTS BOARD OF DIRECTORS Appointed 22 June 2017 Experience Raymond previously served as chair of Foresight 3VCT plc from 2014 until the merger with the Company. Prior to this he was a Non-Executive Director of the Company . Raymond has over 30 years’ experience in private equity covering fund investment, direct venture investment, growth capital and buyouts. This includes as managing director of Alliance Trust Equity Partners, developing a £300 million fund of funds programme for Alliance Trust focused on Western European lower to mid-market buyout funds. Raymondfounded Albany Ventures, with a focus on software and healthcare investments, which was acquired by Alliance Trust. Raymond has gained extensive experience as a non-executive director in public and private companies helping with strategy, finance and governance. Other positions Chair of Integrated Environmental Solutions Limited. Non-executive director of Schroder UK Public Private Trust PLC. Beneficial shareholding 60,818 shares Appointed 10 September 2020 Experience Gay is a Chartered Accountant with over 30 years of experience in private and public sector finance. Sheis Chair of the Audit Committee and has extensive experience of governance, compliance and risk management. She is very familiar with the challenges of stakeholder management, business growth and development. She was part of the founding team at the £140million award-winning Eden Project, leading the funding and setting up the innovative social enterprise structure. After 13 years as managing director at Eden she went on to join the Royal Botanic Gardens, Kew as director of public programmes, responsible for rebranding the gardens and growing the commercial income streams. She was director of finance at Plymouth University for five years prior to joining Eden, encouraging spin-out companies and enterprise initiatives. Other positions Director of Lowland Investment Company plc, director of Asia Dragon Trust plc and director of the Secured Income Fund plc. Beneficial shareholding Nil shares Raymond Abbott Chair of the Board Gaynor Coley Non-Executive Director 50 FORESIGHT ENTERPRISE VCT PLC Annual Report and Accounts 31 December 2022 Appointed 3 October 2014 Experience Simon spent 28 years at Robert Fleming Holdings and subsequently at Fleming Family and Partners where he focused on private equity investing. Prior to this he joined Glenwood Management, a Californian-based venture capital fund, and subsequently joined Robert Fleming on the fund management side. He then joined Fleming Family and Partners Asset Management Limited (“FF&P”) where he was responsible for $500million of private equity investments, including both fund investments and directly heldco-investments. Simon served as Chair of the Company from 31March2017 to 22 June 2017. Other positions Simon chairs an investment committee of a US family office and co-chairs an investment committee of an African-focused private equity manager, 54Capital. Beneficial shareholding 34,841 shares Appointed 14 February 2017 Experience Michael has extensive experience in funds, banking and other capital markets. He was most recently the regional managing director, corporate banking for RBS International with responsibility for The Royal Bank of Scotland’s Corporate Banking Business in the Crown Dependencies and British Overseas Territories. In a career spanning 31 years with The Royal Bank of Scotland Group plc, Michael has undertaken a variety of roles including that of auditor, and has extensive general management and lending experience across anumber of industries. Michael is a Fellow of The Chartered Institute of Bankers in Scotland and a qualified corporatetreasurer. Other positions Michael is a non-executive director of Triton Investment Management Ltd, a non-executive director of JTC plc, an advisory board member of Japanese private equity group, J-Star, and a non-executive director of the FTSE 250 listed GCP Infrastructure Investments Limited. Beneficial shareholding 28,448 shares Simon Jamieson Non-Executive Director Michael Gray Non-Executive Director Sector by cost Sector by cost 100% non- executive 22 years combined tenure Audit Committee Management Engagement & Remuneration Committee Nomination Committee Chair 25% female GOVERNANCESTRATEGIC REPORT FINANCIAL STATEMENTS FORESIGHT ENTERPRISE VCT PLC Annual Report and Accounts 31 December 2022 51 Activities and status The principal activity of the Company during the year was the making of investments in unquoted companies in the UK. The Company is not an investment company within the meaning of Section 833 of the Companies Act 2006. It has satisfied the requirements as a VCT under Sections 274–280A of the Income Tax Act 2007. Confirmation of the Company’s qualification as a VCT has been received up to 31 December 2021 and the Directors have managed and intend to continue to manage the Company’s affairs in such a manner as to comply with these regulations. Results and dividends The total profit attributable to Shareholders for the year amounted to £6,222,000 (2021: £21,577,000). TheBoard paid an interim dividend of 3.5p per share on 30June2022 and a special interim dividend of 3.8p per share on 30 December 2022 following successful realisations of TFC Europe and CodeplaySoftware. Net Asset Value Total Return During the year ended 31 December 2022, the Company’s principal indicator of performance, NAV Total Return, increased 4.5% (2021: 18.0%) from 69.1p per share as at 31 December 2021 to 72.2p per share as at 31December2022. Share issues During the year 20,149,160shares and 2,748,080shares were issued pursuant to an offer for subscription and the dividend reinvestment scheme respectively. Shareswere issued at issue prices ranging from 63.70p to 74.92ppershare. At 31December2022, theCompanyhad 213,316,422shares in issue. Share buybacks During the year the Company repurchased 2,387,781 shares for cancellation at a cost of £1,471,000. No shares bought back by the Company are held in treasury. Sharebuybacks have been completed at an average discount of7.5%. Principal risks, risk management and regulatory environment A summary of the principal risks faced by the Company isset out in the Strategic Report on pages 45 to 47. Financial instruments Details of all financial instruments used by the Company during the year are given in note 15 to the accounts. Policy of paying creditors The Company does not subscribe to a particular code but follows a policy whereby suppliers are paid by the due date and investment purchases are settled in accordance with the stated terms. At the year end, trade creditors represented an average credit period of two days (2021:less than one day). Management The Company has appointed Foresight Group LLP (“the Manager”) to provide investment management, accounting and administration services. Annually, the Management Engagement & Remuneration Committee reviews the appropriateness of the Manager’s appointment. In carrying out its review, the Management Engagement & Remuneration Committee considers the investment performance of the Company and the ability of the Manager to produce satisfactory investment performance. It also considers the length of the notice period of the investment management contract and fees payable to the Manager, together with the standard of other services provided, which include company secretarial services. It is the Board’s opinion that the continuing appointment of the Manager on the terms agreed is in the interests of Shareholders as a whole. Thelast review was undertaken in April2023. Theprincipal terms of the management agreement are set out in note 3 to the accounts. DIRECTORS' REPORT The Directors present their report and the financial statements of the Company for theyear ended 31December 2022. 52 FORESIGHT ENTERPRISE VCT PLC Annual Report and Accounts 31 December 2022 The annual expenses cap is 2.4% of net assets, which is one of the lower expenses caps of any VCT with total assets over £50 million. No Director has an interest in any contract to which the Company is a party other than their own appointment. Foresight Group LLP was appointed as Manager on 27January 2020 and earned fees of £2,724,000 in the year to 31 December 2022 (2021: £2,416,000). Foresight Group LLP received £178,000 excluding VAT (2021:£161,000) during the year in respect of secretarial, administrative, accounting and custodian services to theCompany. A performance incentive fee of £280,000 (2021: £nil) has been provided for at the year end. Foresight Group LLP also received from investee companies arrangement fees of £261,000 (2021: £395,000) and directors’ fees of £706,000 (2021: £554,000). £ Management fee 2,724,000 Directors’ fees 706,000 Performance incentive fee 280,000 Arrangement fees 261,000 Secretarial fee 178,000 4,149,000 All amounts are stated, where applicable, net of VAT. The Manager is also a party to the performance incentive agreements described in note 13 to the accounts. At the time of writing, officers and staff of the Manager held a total of 248,313 shares in the Company. Performance-related incentives The Manager is entitled to a payment equal to 15% of dividends paid to Shareholders, subject to the total return (Net Asset Value plus cumulative dividends paid per share) exceeding 100.0p (‘‘High Watermark’’), bothimmediately before and after the performance incentive fee is paid. After each distribution is made to Shareholders where a performance incentive is paid, the High Watermark required to be achieved by the Company to trigger a further performance incentive fee will be amended to take account of the dividend paid. As a result of performance incentive fee payments made in previous years, the High Watermark at as 31 December 2022 was108.5p (2021: 108.5p). Further details can be found innote 13 to the accounts. The performance incentive fee may be satisfied by either a cash payment or the issue of shares (or by a combination of both) ultimately at the Board’s discretion and, as such, qualifies as a share-based payment. Any new shares to be issued to the Manager would be calculated by dividing the performance fee cash equivalent amount by the latest Net Asset Value per share after adding the cumulative dividends to be paid. No performance incentive fee was paid in the year (2021:£nil). A performance incentive fee accrual of £280,000 (2021: £nil) has been provided for as at the year end as the Company expects the total return to reach the High Watermark after the next dividend payment date. Further details can be found in note 13 to the accounts. Venture Capital Trust status Foresight Enterprise VCT plc has been granted approval as a Venture Capital Trust (“VCT”) under Sections 274-280A of the Income Tax Act 2007 for the year ended 31December 2021. The next complete review willbe carried out for the year ended 31 December 2022. Itisintended that the business of the Company be carried onso as to maintain its VCT status. The Board and the Manager have managed, and continue to manage, the business in order to comply with the legislation applicable to VCTs. The Board has appointed Shakespeare Martineau LLP to monitor and provide continuing advice in respect of the Company’s compliance with applicable VCT legislation and regulation. Reviews of prospective investments are carried out by advisers assisting on the relevant investment transaction. As at 31 December 2022, theCompany had 100.0% (by VCT value) of its applicablefunds in such VCT qualifying holdings. GOVERNANCESTRATEGIC REPORT FINANCIAL STATEMENTS FORESIGHT ENTERPRISE VCT PLC Annual Report and Accounts 31 December 2022 53 DIRECTORS' REPORT CONTINUED VCT tax benefit for Shareholders To obtain VCT tax reliefs on subscriptions up to £200,000 per annum, a VCT investor must be a “qualifying” individual over the age of 18 with UK taxable income. The tax reliefs for subscriptions since6April2006 are: • Income tax relief of up to 30% on subscription byqualifying investors for new shares • VCT dividends (including capital distributions of realised gains on investments) are not subject to income tax in the hands of qualifying investors • Capital gains on disposal of VCT shares by qualifying investors are tax-free, whenever the disposal occurs The upfront income tax relief will be forfeited by Shareholders if the shares are not held for five years or the Company loses its approval as a VCT in that period. The other tax reliefs will similarly be lost if the Company loses its approval as a VCT. Substantial shareholdings So far as the Board is aware, there were no individual shareholdings representing 3% or more of the Company’s issued share capital at the date of this report. Likely future developments Please refer to the Manager’s Review on page 21 for moredetails on likely future developments. Alternative Investment Fund Managers Directive (“AIFMD”) The AIFMD came into force on 22 July 2013 and sets out the rules for the authorisation and ongoing regulation of managers (“AIFMs”) that manage alternative investment funds (“AIFs”) in the EU. The Company qualifies as a small authorised AIF and so is required to comply, although additional costs and administration requirements are not material. The Company’s approval was confirmed in August2014. This has not affected the current arrangements with the Manager, who continues to report to the Board and manage the Company’s investments on adiscretionarybasis. Valuation policy Investments held by the Company have been valued in accordance with the International Private Equity and Venture Capital (“IPEV”) Valuation Guidelines (December2022 and further COVID-19 guidance for March 2020) developed by the British Venture Capital Association and other organisations. Throughthese guidelines, investments are valued as defined at “fairvalue”. Wherethe investment being valued was made recently, its cost would normally provide a good starting point for estimating fair value. Ateach measurement date, fairvalue is estimated using appropriate valuation techniques. Investments quoted or traded on a market are valued at bid price. The portfolio valuations are prepared by the Manager, reviewed and approved by theBoard quarterly and are subject to annual review by the external auditor. Statutory Instrument 2008/410 schedule 7 part 6 The following disclosures are made in accordance with Statutory Instrument 2008/410 Schedule 7 Part 6. Capital structure The Company’s issued share capital as at 28April2023 was 235,358,591 Ordinary Shares of 1 penny each. Further information on the share capital oftheCompanyisdetailed in note 11 to the accounts. Voting rights in the Company’s shares Details of the voting rights in the Company’s shares at thedate of this report are given in note 5 in the Notice of Annual General Meeting on page 98. Notifiable interests in the Company’s voting rights At the date of this report no notifiable interests had been declared in the Company’s voting rights. Auditor Pursuant to Section 487(2) of the Companies Act 2006, the Board has decided to propose the reappointment of Deloitte LLP as auditor and a resolution concerning this will be proposed at the Annual General Meeting. 54 FORESIGHT ENTERPRISE VCT PLC Annual Report and Accounts 31 December 2022 Audit information Pursuant to Section 418(2) of the Companies Act 2006, each of the Directors confirms that (a) so far as they are aware, there is no relevant audit information of which the Company’s auditor is unaware; and (b) they have taken all steps they ought to have taken to make themselves aware of any relevant audit information and to establish that the Company’s auditor is aware of such information. Companies Act 2006 disclosures In accordance with Schedule 7 of the Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008, as amended, the Directors disclose thefollowing information: • The Company’s capital structure and voting rights are summarised above, and there are no restrictions on voting rights nor any agreement between holders of securities that result in restrictions on the transfer of securities or on voting rights • There exist no securities carrying special rights with regard to the control of the Company • The rules concerning the appointment and replacement of Directors, amendment of the Articles of Association and powers to issue or buy back the Company’s shares are contained in the Articles of Association of the Company and the Companies Act2006 • The Company does not have any employee share scheme • There exist no agreements to which the Company is party that may affect its control following a takeoverbid • There exist no agreements between the Company and its Directors providing for compensation for loss of office that may occur following a takeover bid or for any other reason Conflicts of interest The Directors have declared any conflicts or potential conflicts of interest to the Board which has the authority to approve such conflicts. The Company Secretary maintains the Register of Directors’ Conflicts of Interest which is reviewed quarterly by the Board and when changes are notified. The Directors advise the Company Secretary and Board as soon as they become aware of any conflicts of interest. Directors who have conflicts of interest do not take part in discussions concerning their own conflicts. Whistleblowing The Board has been informed that the Manager has arrangements in place in accordance with the UK Corporate Governance Code’s recommendations by which staff may, in confidence, raise concerns within theirrespective organisations about possible improprieties in matters of financial reporting or othermatters. On the basis of that information, adequate arrangements are in place for the proportionate and independent investigation of such matters and, where necessary, forappropriate follow-up action to be taken. Going concern The Company’s business activities, together with the factors likely to affect its future development, performance and position, are set out in the Strategic Report. The financial position of the Company, its cash flows, liquidity position and borrowing facilities are referred to in the Chair’s Statement, Strategic Report and Notes to the Accounts. In addition, the Annual Report and Accounts include the Company’s objectives, policies and processes for managing its capital; its financial risk management objectives; details of its financial instruments and hedging activities; and its exposures tocredit risk and liquidity risk. GOVERNANCESTRATEGIC REPORT FINANCIAL STATEMENTS FORESIGHT ENTERPRISE VCT PLC Annual Report and Accounts 31 December 2022 55 DIRECTORS' REPORT CONTINUED Going concern continued The Company has adequate financial resources together with investments and income generated therefrom across a variety of industries and sectors. As a consequence, the Board believes that the Company is able to manage itsbusiness risks. Three year cash flow projections to 31 December 2025 have been reviewed and show that the Company has sufficient funds to meet both its contracted expenditure and its discretionary cash outflows in the form of share buybacks and dividends. The Company has no external loan finance in place and therefore is not exposed to any gearing covenants, although its underlying investments may have external loan finance. The Directors have considered the impact of the difficult economic outlook, inflationary pressures, energy costs, COVID-19, Brexit and Russia’s invasion of Ukraine during their assessment of going concern and have reasonable expectation that the Company has adequate resources to continue in operational existence for the foreseeable future. Thus they continue to adopt the going concern basis of accounting in preparing the annual accounts. Post-balance sheet events are disclosed in note 20. Directors’ remuneration Following changes to the Companies Act 2006, UK investment companies must comply with new regulations in relation to Directors’ remuneration. Directors’ fees can only be paid in accordance with a remuneration policy which has been approved by Shareholders. The Company must also publish a Directors’ Remuneration Report that complies with a new set of disclosure requirements. Seepages 64 to 67. Directors’ indemnification and insurance To the extent permitted by law, the Directors have the benefit of indemnities under the Articles of Association of the Company against liabilities they may incur acting intheir capacity as Directors of the Company. An insurance policy is maintained by the Company which indemnifies the Directors of the Company against certain liabilities that may arise in the conduct of their duties. There is no cover against fraudulent or dishonest actions. Annual General Meeting A formal notice convening the Annual General Meeting on8 June 2023 can be found on pages 96 to 99. Resolutions 1 to 8 will be proposed as ordinary resolutions, meaning that for each resolution to be passed more than half of the votes cast at the meeting must be in favour of the resolution. Resolutions 9 and 10 will be proposed as special resolutions, meaning that for each resolution to be passed at least 75% of the votes cast at the meeting must be in favour of the resolution. Resolutions 8 to 10 renew share issue and buyback authorities granted at previous general meetings of the Company and are explained in further detail below. The Directors believe that the proposed resolutions are in the interests of Shareholders and accordingly recommend Shareholders to vote in favour ofeach resolution. Resolution 8 Resolution 8 will authorise the Directors to allot relevant securities generally, in accordance with Section 551 of the Companies Act 2006, up to an aggregate nominal amount of 1,150,000 (representing 48.9% of the issued share capital of the Company as at the date of this Annual Report). This authority will be used for the purposes listed under the authority requested under Resolution 9. This includes authority to issue shares pursuant to the dividend reinvestment scheme operated by the Company, performance incentive fee arrangements with Foresight Group LLP and relevant individuals of the Foresight Group LLP investment team and further top-up offers for subscription to raise new funds for the Company if the Board believes this to be in the best interests of the Company. All new offers are intended to be at an offer price linked to NAV. The authority conferred by Resolution 8 is in substitution for all existing authorities and will expire (unless renewed, varied or revoked by the Company in a general meeting) on the fifth anniversary of the passing of the resolution save that the Company may allot equity shares after such date in pursuant of a contract or contracts made prior to the expiration of this authority. 56 FORESIGHT ENTERPRISE VCT PLC Annual Report and Accounts 31 December 2022 Resolution 9 Resolution 9 will sanction, in a limited manner, the disapplication of pre-emption rights in respect of the allotment of equity securities (i) with an aggregate nominal amount of up to £550,000 pursuant to offer(s) for subscription, (ii) with an aggregate nominal amount of up to 10% of the issued share capital pursuant to the dividend reinvestment scheme operated by the Company at a subscription price per share which may be less than the Net Asset Value per share, as may be prescribed by the scheme terms, (iii) with an aggregate nominal amount of up to £100,000 pursuant to performance incentive arrangements with Foresight Group LLP and relevant individuals of the Foresight Group LLP investment team at a subscription price which may be less than the Net Asset Value per share and (iv) with an aggregate nominal amount of up to 10% of the issued share capital from time to time for general purposes, in each case where the proceeds of such issue may be used in whole or part to purchase the Company’s shares. The authority conferred by Resolution 9 is in substitution for all existing authorities and will expire (unless renewed, varied or revoked by the Company in a general meeting) at the conclusion of the Annual General Meeting to be held in 2024 or, if earlier, on the date falling 15 months after the passing of the resolution, save that the Company shall be entitled to make offers or agreements before the expiry of such authority which would or might require equity securities to be allotted after such expiry and Directors shall be entitled to allot equity securities pursuant to any such offers or agreements as if the authority conferred hereby had not expired. Resolution 10 It is proposed by Resolution 10 that the Company be authorised to make market purchases of the Company’s own shares. Under this authority the Directors may purchase up to 35,280,252 shares (representing approximately 14.99% of the Company’s shares in issue at the date of this Annual Report) or, if lower, such number of shares (rounded down to the nearest whole share) as shall equal 14.99% of the issued share capital at the date the resolution is passed. When buying shares, the Company cannot pay a price per share which is more than 105% of the average of the middle market quotation for a share taken from the London Stock Exchange daily official list on the five business days immediately before the day on which shares are purchased or, if greater, the amount stipulated by Article 5(6) of the Market Abuse Regulation (EU) 596/2014 (as such Regulation forms part of UK law and as amended). The authority conferred by Resolution 10 is in substitution for all existing authorities and will expire (unless renewed, varied or revoked by the Company in a general meeting) at the conclusion of the Annual General Meeting to be held in 2024 or, if earlier, on the date falling 15 months after the passing of the resolution, save that the Company may purchase its shares after such date in pursuance of a contract or contracts made prior to the expiration of this authority. Front-end VCT income tax relief is only obtainable by an investor who makes an investment in new shares issued by the Company. This means that investors may be willing to pay more for new shares issued by the Company than they would pay to buy shares from an existing Shareholder. Therefore, in the interest of Shareholders who may wish to sell shares from time to time, the Company proposes to renew the authority to buy-in shares, as it enables the Board to provide a degree of liquidity in the Company’s shares. Whilst, generally, the Company does not expect that Shareholders will want to sell their shares within five years of subscribing for them because this would lead to a loss of tax relief, the Directors anticipate that from time to time a Shareholder may need to sell shares within this period. In making purchases the Company will deal only with member firms of the London Stock Exchange and at a discount to the then prevailing Net Asset Value per share of the Company’s shares to ensure that existing Shareholders’ interests are protected. This report has been approved for issue by the Board. Foresight Group LLP Secretary 28 April 2023 GOVERNANCESTRATEGIC REPORT FINANCIAL STATEMENTS FORESIGHT ENTERPRISE VCT PLC Annual Report and Accounts 31 December 2022 57 The AIC Code addresses the Principles and Provisions set out in the UK Corporate Governance Code (“theAICCode”) issued by the Financial Reporting Council, as well as setting out additional Provisions on issues that are of specific relevance to the Company. The Board considers that reporting against the Principles and Provisions of the AIC Code, which has been endorsed by the Financial Reporting Council, provides more relevant information to Shareholders. The Company has complied with the Principles and Provisions of the AIC Code. The AIC Code is available on the AIC website (www.theaic.co.uk). It includes an explanation of how the AIC Code adapts the Principles and Provisions set out in the AIC Code to make them relevant for investment companies. Unless noted as an exception below, the requirements ofthe AIC Code were complied with throughout the yearended 31 December 2022. The Board The Board comprises four Directors, all of whom are non-executive and independent in accordance with AIC guidelines and Listing Rules. The Board actively encourages Directors to hold shares in the Company, ensuring that their personal interests are aligned with theinterests of Shareholders. The Board does not feel that such holdings call into question Directors' independence. The Chair has served on the Board for less than nine years from the date of his appointment in June 2017. The Board therefore considers the Chair independent in character and judgement and his re-election is sought every year. The Nomination Committee meets annually to discuss the appropriateness of the Board appointments and considers there to be no circumstances which are likely to impair the Chair’s independence. The Directors have significant relevant experience of similar investment funds to VCTs, regulatory organisations, corporate governance of listed companies, the private equity industry and investing in small companies. Division of responsibilities The Board is responsible to Shareholders for the proper management of the Company and meets at least quarterly and on an ad hoc basis as required. It has formally adopted a schedule of matters that are required to be brought to it for decision, thus ensuring that it maintains full and effective control over appropriate strategic, financial, operational and compliance issues. Amanagement agreement between the Company and the Manager sets out the matters over which the Manager has authority, including monitoring and managing the existing investment portfolio and the limits above which Board approval must be sought. All other matters are reserved for the approval of the Board of Directors. TheManager, in the absence of explicit instruction from the Board, is empowered to exercise discretion in the use of the Company’s voting rights. Individual Directors may, at the expense of the Company, seek independent professional advice on any matter that concerns them in the furtherance of their duties. The Board has access to the officers of the Company Secretary who also attend Board meetings. Representatives of the Manager attend all formal Board meetings although the Directors may on occasion meet without representatives of the Manager being present. Informal meetings with the Manager are also held between Board meetings as required. Attendance by Directors at Board and Committee meetings is detailed inthe table opposite. The Company Secretary provides full information on the Company’s assets, liabilities and other relevant information to the Board in advance of each Board meeting. In addition to the meetings on the following page, 18 further meetings were held in relation to the publication of corporate documents, fundraising, share issues, investments and Company strategy. The Board of Foresight Enterprise VCT plc has considered the Principles and Provisions of the AIC Code of Corporate Governance (the “AIC Code”). CORPORATE GOVERNANCE 58 FORESIGHT ENTERPRISE VCT PLC Annual Report and Accounts 31 December 2022 Board Audit Nomination Management Engagement & Remuneration Raymond Abbott 4/4 2/2 1/1 1/1 Gaynor Coley 4/4 2/2 1/1 1/1 Michael Gray 4/4 2/2 1/1 1/1 Simon Jamieson 4/4 2/2 1/1 1/1 In light of the responsibilities retained by the Board and its committees and of the responsibilities delegated to the Manager, Shakespeare Martineau LLP and other service providers, the Company has not appointed a chief executive officer, deputy chair or a senior independent non-executive director as recommended by the AIC Code. The provisions of the AIC Code which relate to the division of responsibilities between a chair and a chief executive officer are, accordingly, not applicable to the Company. Board committees The Board has adopted formal terms of reference, which are available to view by writing to the Company Secretary atthe registered office, for three standing committees which make recommendations to the Board in specificareas. The Audit Committee comprises Gaynor Coley (Chair), Raymond Abbott, Michael Gray and Simon Jamieson, allof whom are considered to have sufficient recent and relevant financial experience to discharge the role, andmeets at least twice a year to consider, amongst other things, the following: • Review the valuation of unquoted investments • Monitor the integrity of the Annual and Half-Yearly Reports of the Company and recommend the accounts to the Board for approval • Review the Company’s internal control and risk management systems • Make recommendations to the Board in relation totheappointment of the external auditor • Review and monitor the external auditor’s independence • Implement and review the Company’s policy on the engagement of the external auditor to supply non-audit services In the prior year, the Shareholders reappointed Deloitte LLP asthe Company’s auditor as proposed by the Board. The Audit Committee has performed an assessment of the audit process and the auditor’s report in the Audit Committee Report. The Directors have decided to recommend the reappointment of Deloitte LLP as auditor and a resolution concerning this will be proposed at the Annual General Meeting. Blick Rothenberg Limited provides the Company’s taxation services. The Management Engagement & Remuneration Committee comprises Michael Gray (Chair), Raymond Abbott, GaynorColey and Simon Jamieson and meets atleast annually to consider the levels of remuneration ofthe Directors. More details can be found in the Directors’ Remuneration Report. The Management Engagement &Remuneration Committee also reviews theappointment and terms of engagement of the Manager. The Board has decided that the entire Board of Directors should fulfil the role of the Management Engagement &Remuneration Committee due to itssize. The Nomination Committee comprises Michael Gray (Chair), Raymond Abbott, Gaynor Coley and Simon Jamieson and meets at least annually to consider the composition and balance of skills, knowledge and experience of the Board and to make nominations to the Board in the event of a vacancy. The Board has decided that the entire Board of Directors should fulfil the role ofthe Nomination Committee due to its size. GOVERNANCESTRATEGIC REPORT FINANCIAL STATEMENTS FORESIGHT ENTERPRISE VCT PLC Annual Report and Accounts 31 December 2022 59 CORPORATE GOVERNANCE CONTINUED Board committees continued The Board believes that, as a whole, it has an appropriate balance of skills, experience and knowledge. The Board believes that diversity of experience and approach, including gender diversity, amongst Board members is important and it is the Company’s policy to give careful consideration to issues of Board balance and diversity when making new appointments. The Board currently comprises three male Directors and one female Director. There is no formal diversity policy in place, however the Board is conscious of the need for diversity and will consider both male and female candidates from all ethnic backgrounds when making new appointments. The Nomination Committee makes recommendations to the Board on the Company’s succession plans and also considers the resolutions for the re-election of Directors. Board evaluation The Board undertakes a formal annual evaluation of its own performance and that of its committees, as recommended by the AIC Code. Initially, the evaluation takes the form of a questionnaire for the Chair and individual Directors. The Chair then discusses the results with the Board (and its committees) and following completion of this stage of the evaluation, the Chair will take appropriate action to address any issues arising from the process. Additionally, the Board intends for an external evaluation of its own performance and that of its committees to take place in 2023, which has been pushed back by one year to allow for the Board to be refreshed. Internal control The Directors have overall responsibility for the Company’s system of internal control and for reviewing its effectiveness. The internal controls system is designed to manage rather than eliminate the risks of failure to achieve the Company’s business objectives. The system is designed to meet the particular needs of the Company and the risks to which it is exposed and by its nature can provide reasonable, but not absolute, assurance against misstatement or loss. The Manager has an established system of financial control, including internal financial controls, to ensure that proper accounting records are maintained and that financial information for use within the business and for reporting to Shareholders is accurate and reliable and that the Company’s assets are safeguarded. The Manager was appointed as Company Secretary in 2017 with responsibilities relating to the administration of the non-financial systems of internal control. All Directors have access to the advice and services of the officers of the Company Secretary, who is responsible to the Board for ensuring that Board procedures and applicable rules and regulations are complied with. Pursuant to the terms of its appointment, the Manager invests the Company’s assets and has physical custody ofdocuments of title relating to equity investments. There is a continuous process for identifying, evaluating and managing the significant risks faced by the Company, that has been in place for the year under review and up to the date of approval of the Annual Report and Accounts, and this process is regularly reviewed by the Board and accords with the guidance. The process is based principally on the Manager’s existing risk-based approach to internal control whereby a risk register is created that identifies the key functions carried out by the Manager and other service providers, the individual activities undertaken within those functions, the risks associated with each activity and the controls employed to counter those risks. A residual risk rating is then applied. The Board is provided with reports highlighting all changes to the risk ratings and confirming the action that has been, or is being, taken. This process covers consideration of the key business, operational, compliance and financial risks facing the Company and includes consideration of the risks associated with the Company’s arrangements with the Manager, Shakespeare Martineau LLP and other service providers. The Audit Committee has carried out a review of the effectiveness of the system of internal control, together with a review of the operational and compliance controls and risk management, as it operated during the year, and reported its conclusions to the Board (which was satisfied with the outcome of the review). Such review procedures have been in place throughout the full financial year and up to the date of approval of the accounts, and the Board is satisfied with their effectiveness. These procedures are designed to manage, rather than eliminate, risk and, by their nature, can only provide reasonable, but not absolute, assurance against material misstatement or loss. The Board monitors the investment performance of the Company against its objectives at each Board meeting. 60 FORESIGHT ENTERPRISE VCT PLC Annual Report and Accounts 31 December 2022 The Board also reviews the Company’s activities since the last Board meeting to ensure that the Manager adheres to the agreed investment policy and approved investment guidelines and, if necessary, approves changes to such policy and guidelines. The Board has reviewed the need for an internal audit function. It has decided that the systems and procedures employed by the Manager, the Audit Committee and other third-party advisers provide sufficient assurance that a sound system of internal control, which safeguards Shareholders’ investments and the Company’s assets, is maintained. In addition, the Company’s financial statements are audited by external auditors. The Board has therefore concluded that it is not necessary to establish an internal audit function at present, but this policy will be kept under review. UK Stewardship Code While the Manager supports the aims and objectives of the FRC’s Stewardship Code, it is not currently a signatory. It is, however, working to ensure alignment with the Stewardship Code, and will periodically review its position regarding becoming a signatory in future. A statement to that effect is noted on the Manager’s website and can be found at: www.foresightgroup.eu/stewardship-code. Relations with Shareholders The Company communicates with Shareholders and solicits their views where it considers it is appropriate to do so. The Manager hosts regular investor forums for Shareholders and publishes quarterly factsheets, as well as information on new investments, on the Company’swebsite. Individual Shareholders are welcomed, to the Annual General Meeting, where they have the opportunity to ask questions of the Directors, including the Chair, as well as the Chairs of the Audit, Nomination and Management Engagement & Remuneration Committees. There is also an open invitation for Shareholders to meet the Manager. For more information on the Directors’ relations with Shareholders please refer to the Section 172(1) statement in the Strategic Report on pages 40 and 41. Raymond Abbott Chair 28 April 2023 GOVERNANCESTRATEGIC REPORT FINANCIAL STATEMENTS FORESIGHT ENTERPRISE VCT PLC Annual Report and Accounts 31 December 2022 61 AUDIT COMMITTEE REPORT The Audit Committee has identified and considered the following key areas of risk in relation to the business activities and financial statements of the Company: • Valuation of unquoted investments • Existence of unquoted investments • Venture Capital Trust status These issues were discussed with the Manager and the auditor at the conclusion of the audit of the financial statements, as explained below: Valuation of unquoted investments The Directors have met quarterly to assess the appropriateness of the estimates and judgements made by the Manager in the investment valuations. AsaVCT, the Company’s investments are predominantly in unquoted securities, which can be difficult to value and require the application of skill, knowledge and judgement by the Board and Audit Committee. During the valuation process the Manager follows the valuation methodologies for unlisted investments as set out in the IPEV Valuation Guidelines and appropriate industry valuation benchmarks. These valuation policies are set out in note 1 of the accounts. These were then further checked by the auditor and reviewed and challenged by the Audit Committee. The Manager confirmed to the Audit Committee that the investment valuations had been calculated consistently with prior years and in accordance with published industry guidelines, taking account of the latest available information about investee companies and current market data. Existence of unquoted investments For all investments made, both share certificates and loan stock documentation are held by the Manager in the Company’s own name and regular reconciliations are carried out by the Manager to ensure that valid documents of title are held. Venture Capital Trust status Maintaining VCT status and adhering to the tax rules of Section 274 of ITA 2007 is critical to both the Company and its Shareholders for them to retain their VCT taxbenefits. The Manager confirmed to the Audit Committee that the conditions for maintaining the Company’s status as an approved VCT had been met throughout the year. TheManager seeks legal advice in advance for all qualifying investments and reviews the Company’s qualifying status in advance of realisations being made and throughout the year. The Audit Committee is in regular contact with the Manager and any potential issues with VCT status would be discussed at or between formal meetings. In addition, an external third-party review of VCT status is conducted by Shakespeare Martineau LLP on a quarterly basis and this is reported to both the Board, Audit Committee and the Manager. Gaynor Coley Chair of the Audit Committee 62 FORESIGHT ENTERPRISE VCT PLC Annual Report and Accounts 31 December 2022 Auditor’s assessment The Manager and auditor confirmed to the Audit Committee that they were not aware of any material misstatements. Having reviewed the reports received from the Manager and auditor, the Audit Committee is satisfied that the key areas of risk and judgement have been addressed appropriately in the financial statements and that the significant assumptions used in determining the value of assets and liabilities have been properly appraised and are sufficiently robust. TheAudit Committee considers that Deloitte LLP has carried out its duties as auditor in a diligent and professional manner. During the year, the Audit Committee assessed the effectiveness of the current external audit process by assessing and discussing specific audit documentation presented to it in accordance with guidance issued by the Auditing Practices Board. The audit partner is rotated every five years, ensuring that objectivity and independence is not impaired. The current audit partner, Chris Hunter, assumed responsibility for the audit in 2019. Deloitte LLP was appointed as auditor in November 2019, with its first audit for the year ended 31 March 2020. No tender for the audit of the Company has been undertaken since this date and the Audit Committee does not intend to put the audit out to tender during the current financial year. As part of its review of the continuing appointment of the auditor, the Audit Committee considers the need to put the audit out to tender, its fees and independence from the Manager along with any matters raised during each audit. DeloitteLLP is not engaged for non-audit services. The Audit Committee considered the performance of the auditor during the year and agreed that Deloitte LLP continued to provide a good level of service and maintained a good knowledge of the VCT market, making sure audit quality continued to be maintained. The Audit Committee met in April 2022 to review the Annual Report and Accounts for the year ended 31December 2021 and the Company’s risk register, inSeptember 2022 to review the Half-Yearly Report, theaudit plan for the year ended 31 December 2022 and the Company’s risk register, and in April 2023 to review the Annual Report and Accounts for the year ended 31December 2022. Gaynor Coley Chair of the Audit Committee 28 April 2023 GOVERNANCESTRATEGIC REPORT FINANCIAL STATEMENTS FORESIGHT ENTERPRISE VCT PLC Annual Report and Accounts 31 December 2022 63 Introduction The Board has prepared this report in accordance with the requirements of Schedule 8 of the Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008. An ordinary resolution to approve this report will be put to the members at the forthcoming Annual General Meeting. The law requires the Company’s auditor, Deloitte LLP, to audit certain of the disclosures provided. Where disclosures have been audited, they are indicated as such. The auditor’s opinion is included in the Independent Auditor’s Report. Annual Statement from the Chair of the Management Engagement & Remuneration Committee The Board, which is profiled on pages 50 and 51, consists solely of Non-Executive Directors and considers at least annually the level of the Directors’ fees. During the year, remuneration for the Directors was increased following Shareholder approval of the remuneration policy and remuneration report at the Annual General Meeting. In April 2023, the Committee concluded, following a review of the level of Directors’ fees, there would be an increase of 2.5% to the base salary of Directors effective 1 July 2023. This followed a 4.0% increase in the base fee of Directors, effective 1 July 2022, agreed by the Committee in April 2022. Consideration by the Directors of matters relating to Directors’ remuneration The Management Engagement & Remuneration Committee comprises four Directors: Michael Gray (Chair), Raymond Abbott, Gaynor Coley andSimonJamieson. The Management Engagement & Remuneration Committee meets at least annually to consider the levels of remuneration of the Directors, specifically reflecting the time commitment and responsibilities of the role. The Management Engagement & Remuneration Committee also undertakes external comparisons and reviews to ensure that the levels of remuneration paid are broadly in line with industry standards and members have access to independent advice where they consider it appropriate. During the year neither the Board nor the Management Engagement & Remuneration Committee has been provided with external advice or services by any person, but has received industry comparison information from the Manager and industry research carried out by third parties in respect of Directors’ remuneration. The remuneration policy set by the Board is described on the following page. Individual remuneration packages are determined by the Management Engagement & Remuneration Committee within the framework of thispolicy. Directors are not involved in deciding their own individual remuneration. Michael Gray Chair of the Management Engagement & Remuneration Committee DIRECTORS’ REMUNERATION REPORT 64 FORESIGHT ENTERPRISE VCT PLC Annual Report and Accounts 31 December 2022 Remuneration policy The Board’s policy is that the remuneration of Non-Executive Directors should reflect time spent and the responsibilities borne by the Directors for the Company’s affairs and should be sufficient to enable candidates of high calibre to be recruited. The levels of Directors’ fees paid by the Company for the year ended 31 December 2022 were agreed during the year. It is considered appropriate that no aspect of Directors’ remuneration should be performance related in light of the Directors’ non-executive status, and Directors are not eligible for bonuses or other benefits. The Company’s policy is to pay the Directors monthly in arrears, to the Directors personally (or to a third party if requested by any Director, although no such request has been made). None of the Directors have a service contract but, under letters of appointment dated 22June2017 for Raymond Abbott, 10September2020 for Gaynor Coley, 14February2017 for Michael Gray and 3October2014 for Simon Jamieson, they may resign by giving six months’ notice in writing to the Board or by mutual consent. Nocompensation is payable to Directors on leavingoffice. The above remuneration policy was last approved by Shareholders at the Annual General Meeting on 9June2022 and it is the intention of the Board that the above remuneration policy will, subject to Shareholder approval, come into effect immediately following the Annual General Meeting of the Company on 8June2023. Shareholders’ views in respect of Directors’ remuneration may be communicated at the Company’s Annual General Meeting and are taken into account in formulating the Directors’ remuneration policy. At the last Annual General Meeting, 87.9% of Shareholders voted for the resolution approving the Directors’ Remuneration Report, showing significant Shareholder support. Please refer to page 67 for the Directors’ remunerationtables. Retirement by rotation All Directors retire and may offer themselves forre-election every year. Details of individual emoluments and compensation The emoluments in respect of qualifying services of each person who served as a Director during the year are shown on page 67. No Director has waived or agreed towaive any emoluments from the Company in either thecurrent or previous year. No other remuneration was paid or payable by the Company during the current or previous year, nor were any expenses claimed by or paid to them other than for expenses incurred wholly, necessarily and exclusively in furtherance of their duties as Directors of the Company. The Company’s Articles of Association do not set an annual limit on the level of Directors’ fees but fees must be considered within the wider remuneration policy notedabove. Directors’ liability insurance is held by the Company inrespect of the Directors. GOVERNANCESTRATEGIC REPORT FINANCIAL STATEMENTS FORESIGHT ENTERPRISE VCT PLC Annual Report and Accounts 31 December 2022 65 DIRECTORS’ REMUNERATION REPORT CONTINUED Share Price Total Return The graph below charts the total Shareholder return to 31 December 2022, on the hypothetical value of £100 invested on 1 January 2018. The return is compared to the total Shareholder return on a notional investment of £100 in the AIC VCT Generalist sector. Share Price Total Return (pence) 140 130 80 150 160 31 December 2017 31 December 2018 31 December 2019 31 December 2020 31 December 2021 31 December 2022 Foresight EnterpriseVCT plc Share Price Total Return AIC VCT Generalist sector Share Price Total Return 100 90 110 120 Share Price Total Return (pence) (rebased) Directors The Directors who held offi ce during the year or up to the date of signing the Annual Report and their interests in the issued shares of 1p each of the Company were as follows: 31 December 2022 31 December 2021 Shares Shares Raymond Abbott 60,818 1 60,818 1 Gaynor Coley — — Michael Gray 28,448 28,448 Simon Jamieson 34,841 34,841 Total 124,107 124,107 1. 10,744 shares held by Raymond Abbott’s wife and 17,837 shares held through an Interactive Investor account. All the Directors’ share interests shown above were held benefi cially. There have been no changes in the Directors’ share interests between 31 December 2022 and the date of this report. In accordance with the UK Corporate Governance Code and the Board’s policy, Mr Abbott, Ms Coley, Mr Gray and MrJamieson retire annually and, being eligible, off er themselves for re-election. Biographical notes on the Directors are given on pages 50 and 51. The Board believes that Mr Abbott’s, Ms Coley’s and Mr Gray’s skills, experience and knowledge continue to complement each other and benefi t the Company and recommends their re-election to the Board. None of the Directors has a contract of service with the Company. 66 FORESIGHT ENTERPRISE VCT PLC Annual Report and Accounts 31 December 2022 Audited information The information below has been audited. See the Independent Auditor’s Report on pages 70 to 75. Directors’ fees Directors’ taxable Total remuneration Total remuneration year ended benefits 1 year ended year ended year ended 31 December 2022 31 December 2022 31 December 2022 31 December 2021 (£) (£) (£) (£) 2 Raymond Abbott 33,925 — 33,925 32,950 Gaynor Coley 30,675 3,054 33,729 29,775 Michael Gray 26,400 720 27,120 25,650 Simon Jamieson 25,150 — 25,150 23,983 Total 116,150 3,774 119,924 112,358 1. Relates to expenses incurred for attending meetings at the Company’s principal place of business. 2. There were no taxable benefits received by Directors in the year. The Directors are not eligible for pension benefits, share options or long-term incentive schemes. Directors’ fees are reviewed annually, and fees were last increased on 1 July 2022 after consideration of fees paid to other VCT directors and available independent research. Votes cast For and Against the Directors’ Remuneration Report for the year ended 31 December 2021: Shares and percentage Shares and percentage of votes cast of votes cast Number of For Against votes withheld 87. 9% 12.1% 9,516,979 votes 1,309,139 votes 260,470 votes In accordance with Companies Act 2006 legislation, the table below sets out the relative importance of spend on pay when compared to distributions to Shareholders in the form of dividends and share buybacks. Year ended Year ended 31 December 2022 31 December 2021 Dividends £14,983,000 £8,086,000 Share buybacks £1,471,000 £1,481,000 Total Shareholder distributions £16,454,000 £9,567,000 Directors’ fees excluding employer's National Insurance contributions £116,150 £112,358 Directors’ fees % of Shareholder distributions 0.7% 1.2% Approval of report An ordinary resolution for the approval of this Directors’ Remuneration Report will be put to Shareholders at the forthcoming Annual General Meeting. This Directors’ Remuneration Report was approved by the Board on 28 April 2023 and is signed on its behalf by Michael Gray (Director). On behalf of the Board Michael Gray Chair of the Management Engagement & Remuneration Committee 28 April 2023 GOVERNANCESTRATEGIC REPORT FINANCIAL STATEMENTS FORESIGHT ENTERPRISE VCT PLC Annual Report and Accounts 31 December 2022 67 Statement of Directors’ responsibilities in respect of the Annual Report and Accounts The Directors are responsible for preparing the Annual Report and Accounts in accordance with applicable law and regulations. Company law requires the Directors to prepare financial statements for each financial year. Under that law they have elected to prepare the financial statements in accordance with UK Accounting Standards including FRS 102, the Financial Reporting Standard applicable in the UK and Republic of Ireland. Under company law the Directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Company and its profit or loss for that year. In preparing these financial statements, the Directors are required to: • Select suitable accounting policies and then apply them consistently • Make judgements and estimates that are reasonable • State whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements • Assess the Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern • Use the going concern basis of accounting unless they either intend to liquidate the Company or to cease operations, or have no realistic alternative but to do so The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company’s transactions and disclose with reasonable accuracy at any time the financial position of the Company and enable them to ensure that the financial statements comply with the Companies Act 2006. They are responsible for such internal control as they determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error, and have general responsibility for taking such steps as are reasonably open to them to safeguard the assets of theCompany and to prevent and detect fraud and otherirregularities. Under applicable law and regulations, the Directors are also responsible for preparing a Strategic Report, Directors’ Report, Directors’ Remuneration Report and Corporate Governance Statement that complies with thatlaw and those regulations. The Directors are responsible for the maintenance andintegrity of the corporate and financial information included on the Company’s website. Legislation in the UK governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions. Statement of the Directors in respect of the Annual Report We confirm that to the best of our knowledge: • The financial statements, prepared in accordance with the applicable accounting standards, give a true and fair view of the assets, liabilities, financial position and profit or loss of the Company • The Directors’ Report and the Strategic Report include a fair review of the development and performance of the business and the position of the issuer, together with a description of the principal risks and uncertainties that they face We consider the Annual Report and Accounts, taken as a whole, are fair, balanced and understandable and provide the information necessary for Shareholders to assess the Company’s position and performance, business model and strategy. On behalf of the Board Raymond Abbott Chair 28 April 2023 STATEMENT OF DIRECTORS’ RESPONSIBILITIES 68 FORESIGHT ENTERPRISE VCT PLC Annual Report and Accounts 31 December 2022 WHAT’S IN THIS SECTION INDEPENDENT AUDITOR'S REPORT 70 INCOME STATEMENT 76 RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS’ FUNDS 77 BALANCE SHEET 78 CASH FLOW STATEMENT 79 NOTES TO THE ACCOUNTS 80 NOTICE OF ANNUAL GENERAL MEETING 96 GLOSSARY OF TERMS 100 FINANCIAL CONDUCT AUTHORITY 101 CORPORATE INFORMATION 102 SHAREHOLDER INFORMATION 103 ADDITIONAL INFORMATION 104 FINANCIAL STATEMENTS GOVERNANCE FINANCIAL STATEMENTSSTRATEGIC REPORT FORESIGHT ENTERPRISE VCT PLC Annual Report and Accounts 31 December 2022 69 Report on the audit of the financial statements 1. Opinion In our opinion the financial statements of Foresight Enterprise VCT plc (the “Company”): • Give a true and fair view of the state of the Company’s affairs as at 31 December 2022 and of its return for the year then ended • Have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice, including Financial Reporting Standard 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland” • Have been prepared in accordance with the requirements of the Companies Act 2006 We have audited the financial statements which comprise: • The Income Statement • The Balance Sheet • The Statement of Changes in Equity • The Cash Flow Statement • The related Notes 1 to 20 The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland” (United Kingdom Generally Accepted Accounting Practice). 2. Basis for opinion We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the auditor’s responsibilities for the audit of the financial statements section of our report. We are independent of the Company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the Financial Reporting Council’s (the ‘FRC’s’) Ethical Standard as applied to listed public interest entities, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We confirm that we have not provided any non-audit services prohibited by the FRC’s Ethical Standard to the Company. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. TO THE MEMBERS OF FORESIGHT ENTERPRISE VCT PLC INDEPENDENT AUDITOR'S REPORT 3. Summary of our audit approach Key audit matters The key audit matter that we identified in the current year was the valuation of unquoted investments. Within this report, key audit matters are identified as follows: Newly identified Increased level of risk Similar level of risk Decreased level of risk Materiality The materiality that we used in the current year was £2.7m, which was determined on the basis of 2% of the Net Asset Value of the Company at year end. Scoping Audit work to respond to the risks of material misstatement was performed directly by the engagement team. Significant changes inour approach There were no significant changes to our audit approach in the current year. 70 FORESIGHT ENTERPRISE VCT PLC Annual Report and Accounts 31 December 2022 4. Conclusions relating to going concern In auditing the financial statements, we have concluded that the Directors’ use of the going concern basis of accounting in the preparation of the financial statements is appropriate. Our evaluation of the Directors’ assessment of the Company’s ability to continue to adopt the going concern basis of accounting included: • Considering as part of our risk assessment the nature of the Company, its business model and related risks including where relevant the impact of the evolving economic landscape, the requirements of the applicable financial reporting framework and the system of internal control • Challenging the underlying data and key assumptions through assessing the forecasted cash flows and the impact of external market forces, and evaluating the Directors’ plans for future actions in relation to their going concern assessment • Assessing the relevant disclosures about whether the Directors considered it appropriate to adopt the going concern basis of accounting in preparing the Financial Statements Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the Company’s ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue. In relation to the reporting on how the Company has applied the UK Corporate Governance Code, we have nothing material to add or draw attention to in relation to the Directors’ statement in the financial statements about whether the Directors considered it appropriate to adopt the going concern basis of accounting. Our responsibilities and the responsibilities of the Directors with respect to going concern are described in the relevant sections of this report. 5. Key audit matters Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial statements of the current period and include the most significant assessed risks of material misstatement (whether or not due to fraud) that we identified. These matters included those which had the greatest effect on: the overall audit strategy, the allocation of resources in the audit; and directing the efforts of the engagement team. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. 5.1. Valuation of unquoted investments Key audit matter description The Company holds unquoted investments of £112 million representing 80.7% of the entity’s net assets (2021: £115.2 million, 86.5%). The valuation of the investments held by the VCT, due to materiality in the context of the financial statements as a whole, is considered to be one of the areas which has the greatest effect on our overall audit strategy and allocation of resources in planning and completing our audit. The unquoted investments are valued in line with IPEV Guidelines and carry a higher degree of judgement. We have identified current economic conditions as being a factor potentially impacting the valuation of certain investments. Specifically, factors such as high inflation and energy prices, increasing interest rates and supply chain issues may result in increased risk over the valuation of certain investments. Therefore, we have pinpointed the key audit matter to the valuation of unquoted investments which have been particularly impacted by one or more of these factors, with the valuation of the remaining portfolio being classified as higher risk. Refer to note 1b to the financial statements for the accounting policy on unquoted investments and details of the investments are disclosed in note 8 to the financial statements. Critical accounting judgement and key sources of estimation uncertainty is disclosed in note 1l. The valuation of investment risk is included within the Audit Committee report on page 62. GOVERNANCESTRATEGIC REPORT FINANCIAL STATEMENTS FORESIGHT ENTERPRISE VCT PLC Annual Report and Accounts 31 December 2022 71 TO THE MEMBERS OF FORESIGHT ENTERPRISE VCT PLC INDEPENDENT AUDITOR'S REPORT CONTINUED 5. Key audit matters continued 5.1. Valuation of unquoted investments continued How the scope of our audit responded to the key audit matter We have performed the following testing to address the key audit matter: • Obtained an understanding of relevant controls in place over the valuation of unquoted investments through enquiry of management and detailed review of documentation of relevant controls • Assessed the valuation methodology applied for compliance with the IPEV Guidelines and assessed the assumptions adopted • Tested the judgemental inputs around maintainable Revenue/EBITDA by performing back testing against latest financial information and historical performance where available, to assess and evaluate the appropriateness of the assumption on those inputs • Evaluated any adjustments made in relation to the impact of inflation and other market risks on the performance of the investee companies, scrutinising cash position and forecasts as relevant • Assessed the suitability and accuracy of the multiple from a basket of comparable transactions/quoted companies • Tested a sample of unquoted investee company data (e.g. financial information and capital structures) to supporting documentation • Assessed whether any critical judgement or sources of estimation uncertainty are applied and appropriately disclosed Key observations Based on our testing, we concluded that the valuation of the unquoted investments is reasonable. 6. Our application of materiality 6.1. Materiality We define materiality as the magnitude of misstatement in the financial statements that makes it probable that the economic decisions of a reasonably knowledgeable person would be changed or influenced. We use materiality both in planning the scope of our audit work and in evaluating the results of our work. Based on our professional judgement, we determined materiality for the financial statements as a whole as follows: Materiality £2.7m (2021: £2.66m) Basis for determining materiality 2% (2021: 2%) of Net Asset Value. Rationale for the benchmark applied Net Asset Value is the primary measure used by the shareholders in assessing the performance of the Company as an investment entity. NAV Materiality Nav £138.5m Materiality £2.7m Audit Committee reporting threshold £135k 6.2. Performance materiality We set performance materiality at a level lower than materiality to reduce the probability that, in aggregate, uncorrected and undetected misstatements exceed the materiality for the Financial Statements as a whole. Performance materiality was set at 70% of materiality for the 2022 audit (2021: 70%). In determining performance materiality, we considered the quality of the Company’s overall control environment and management’s willingness to correct identified errors in previous audits. 6.3. Error reporting threshold We agreed with the Audit Committee that we would report to the Committee all audit differences in excess of £135k (2021: £133k), as well as differences below that threshold that, in our view, warranted reporting on qualitative grounds. We also report to the Audit Committee on disclosure matters that we identified when assessing the overall presentation of the Financial Statements. 72 FORESIGHT ENTERPRISE VCT PLC Annual Report and Accounts 31 December 2022 7. An overview of the scope of our audit 7.1. Scoping Our audit was scoped by obtaining an understanding of the entity and its environment, including internal control, and assessing the risks of material misstatement. Audit work to respond to the risks of material misstatement was performed directly by the audit engagement team. 7.2. Our consideration of the control environment The investment management and accounting and reporting operations were undertaken by the Manager, the safeguarding of assets resides with the Manager. We have obtained an understanding of the Manager’s systems of internal control and reviewed the Manager’s controls report. In the current year, we took a controls reliance strategy over the valuation of unquoted investments. This consisted of testing the relevant controls over the review, challenge and approval of the unquoted investment valuation. 7.3. Our consideration of climate-related risks As part of our risk assessment, we have considered the potential impact of climate change on the VCT’s business and its financial statements. We obtained an understanding of the process for identifying climate- related risks, the processes and controls in place, as well as the determination of any mitigating actions. The Manager continues to develop its assessment of the potential impact of environmental, social and governance (“ESG”) related risks, including climate change. As outlined in the strategic report on page 45, the Board considers climate change to be an emerging risk within the business. As part of our assessment of our key audit matter, we considered whether there was a heightened element of climate risk in relation to the key judgements in the valuation of unquoted investments. Details of the Board’s climate change considerations are provided in the Climate Change Statement in the Responsible Investment section on pages 43 and 44. We have assessed whether the risks identified by the entity are consistent with our understanding of the business and read the disclosures in the Annual Report to consider whether they are materially consistent with the financial statements and our knowledge obtained in the audit. 8. Other information 8.1. Scoping The other information comprises the information included in the Annual Report, other than the financial statements and our auditor’s report thereon. The Directors are responsible for the other information contained within the Annual Report. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard. 9. Responsibilities of Directors As explained more fully in the Directors’ responsibilities statement, the Directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the Directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, the Directors are responsible for assessing the Company’s ability to continue as a going concern, disclosing as applicable, matters related to going concern and using the going concern basis of accounting unless the Directors either intend to liquidate the Company or to cease operations, or have no realistic alternative but to do so. 10. Auditor’s responsibilities for the audit of the financial statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected toinfluence the economic decisions of users taken on thebasis of these financial statements. A further description of our responsibilities for the audit of the financial statements is located on the FRC’s website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report. GOVERNANCESTRATEGIC REPORT FINANCIAL STATEMENTS FORESIGHT ENTERPRISE VCT PLC Annual Report and Accounts 31 December 2022 73 TO THE MEMBERS OF FORESIGHT ENTERPRISE VCT PLC INDEPENDENT AUDITOR'S REPORT CONTINUED In addition, we considered provisions of other laws and regulations that do not have a direct effect on the financial statements but compliance with which may be fundamental to the Company’s ability to operate or to avoid a material penalty. These included the Company’s compliance with VCT regulations. 11.2. Audit response to risks identified As a result of performing the above, we identified the valuation of unquoted investments as a key audit matter related to the potential risk of fraud. The key audit matters section of our report explains the matter in more detail and also describes the specific procedures we performed in response to that key audit matter. In addition to the above, our procedures to respond to risks identified included the following: • Reviewing the financial statement disclosures and testing to supporting documentation to assess compliance with provisions of relevant laws and regulations described as having a direct effect on the financial statements • Enquiring of management and the Audit Committee concerning actual and potential litigation and claims • Performing analytical procedures to identify any unusual or unexpected relationships that may indicate risks of material misstatement due to fraud • Reading minutes of meetings of those charged with governance, and reviewing correspondence with HMRC and the FCA • In addressing the risk of fraud through management override of controls, testing the appropriateness of journal entries and other adjustments; assessing whether the judgements made in making accounting estimates are indicative of a potential bias; and evaluating the business rationale of any significant transactions that are unusual oroutside the normal course of business We also communicated relevant identified laws and regulations and potential fraud risks to all engagement team members, including internal specialists, and remained alert to any indications of fraud or non-compliance with laws and regulations throughout theaudit. Report on other legal and regulatory requirements 12. Opinions on other matters prescribed by the Companies Act 2006 In our opinion the part of the Directors’ remuneration report to be audited has been properly prepared in accordance with the Companies Act 2006. 11. Extent to which the audit was considered capable of detecting irregularities, including fraud Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below. 11.1. Identifying and assessing potential risks related to irregularities In identifying and assessing risks of material misstatement in respect of irregularities, including fraud and non-compliance with laws and regulations, we considered the following: • The nature of the industry and sector, control environment and business performance including the design of the Company’s remuneration policies, key drivers for Directors’ remuneration, bonus levels and performance targets • Results of our enquiries of management and the Audit Committee about their own identification and assessment of the risks of irregularities including those that are specific to the Company's sector • Any matters we identified having obtained and reviewed the Company’s documentation of their policies and procedures relating to: • Identifying, evaluating and complying with laws and regulations and whether they were aware of any instances of non-compliance • Detecting and responding to the risks of fraud and whether they have knowledge of any actual, suspected or alleged fraud • The internal controls established to mitigate risks of fraud or non-compliance with laws and regulations • The matters discussed among the audit engagement team regarding how and where fraud might occur in the Financial Statements and any potential indicators of fraud As a result of these procedures, we considered the opportunities and incentives that may exist within the organisation for fraud and identified the greatest potential for fraud in the following areas: valuation of unquoted investments. In common with all audits under ISAs (UK), we are also required to perform specific procedures to respond to the risk of management override. We also obtained an understanding of the legal and regulatory framework that the Company operates in, focusing on provisions of those laws and regulations that had a direct effect on the determination of material amounts and disclosures in the financial statements. The key laws and regulations we considered in this context included the UK Companies Act and Listing Rules. 74 FORESIGHT ENTERPRISE VCT PLC Annual Report and Accounts 31 December 2022 • Adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us • The financial statements are not in agreement with the accounting records and returns We have nothing to report in respect of these matters. 14.2. Directors’ remuneration Under the Companies Act 2006 we are also required to report if in our opinion certain disclosures of Directors’ remuneration have not been made or the part of the Directors’ remuneration report to be audited is not in agreement with the accounting records and returns. We have nothing to report in respect of these matters. 15. Other matters which we are required to address 15.1. Auditor tenure Following the recommendation of the Audit Committee, we were appointed by the Board of Directors on 30 August 2019 to audit the financial statements for the year ending 31 December 2019 and subsequent financial periods. The period of total uninterrupted engagement including previous renewals and reappointments of the firm is 4 years, covering the years ending 31 December 2019 to 31 December 2022. 15.2. Consistency of the audit report with the additional report to the Audit Committee Our audit opinion is consistent with the additional report to the Audit Committee we are required to provide in accordance with ISAs (UK). 16. Use of our report This report is made solely to the Company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the Company’s members those matters we are required to state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company and the Company’s members as a body, for our audit work, for this report, or for the opinions we have formed. Chris Hunter CA (Senior statutory auditor) For and on behalf of Deloitte LLP Statutory Auditor Edinburgh, United Kingdom 28 April 2023 In our opinion, based on the work undertaken in the course of the audit: • The information given in the strategic report and the Directors’ report for the financial year for which the financial statements are prepared is consistent with the financial statements • The strategic report and the Directors’ report have been prepared in accordance with applicable legal requirements In the light of the knowledge and understanding of the Company and its environment obtained in the course of the audit, we have not identified any material misstatements in the strategic report or the Directors’ report. 13. Corporate Governance Statement The Listing Rules require us to review the Directors' statement in relation to going concern, longer-term viability and that part of the Corporate Governance Statement relating to the Company’s compliance with the provisions of the UK Corporate Governance Code specified for our review. Based on the work undertaken as part of our audit, we have concluded that each of the following elements of the Corporate Governance Statement is materially consistent with the financial statements and our knowledge obtained during the audit: • The Directors’ statement with regards to the appropriateness of adopting the going concern basis of accounting and any material uncertainties identified set out on pages 55 and 56 • The Directors’ explanation as to its assessment of the Company’s prospects, the period this assessment covers and why the period is appropriate set out on page 48 • The Directors' statement on fair, balanced and understandable set out on page 68 • The Board’s confirmation that it has carried out a robust assessment of the emerging and principal risks set out on pages 45 to 47 • The section of the Annual Report that describes the review of effectiveness of risk management and internal control systems set out on pages 60 and 61 • The section describing the work of the Audit Committee set out on pages 59 and 60 14. Matters on which we are required to report by exception 14.1. Adequacy of explanations received and accounting records Under the Companies Act 2006 we are required to report to you if, in our opinion: • we have not received all the information and explanations we require for our audit; or GOVERNANCESTRATEGIC REPORT FINANCIAL STATEMENTS FORESIGHT ENTERPRISE VCT PLC Annual Report and Accounts 31 December 2022 75 76 FORESIGHT ENTERPRISE VCT PLC Annual Report and Accounts 31 December 2022 FOR THE YEAR ENDED 31 DECEMBER 2022 INCOME STATEMENT Year ended Year ended 31 December 2022 31 December 2021 Revenue Capital Total Revenue Capital Total Notes £’000 £’000 £’000 £’000 £’000 £’000 Realised gains on investments 8 — 17,493 17,493 — 5,763 5,763 Investment holding (losses)/gains 8 — (8,465) (8,465) — 17,449 17,449 Income 2 871 — 871 1,408 — 1,408 Investment management fees 3 (681) (2,323) (3,004) (604) (1,812) (2,416) Other expenses 4 (673) — (673) (627) — (627) (Loss)/return on ordinary activities before taxation (483) 6,705 6,222 177 21,400 21,577 Taxation 5 — — — — — — (Loss)/return on ordinary activities after taxation (483) 6,705 6,222 177 21,400 21,577 (Loss)/return per share 7 (0.2)p 3.3p 3.1p 0.1p 11.1p 11.2p The total columns of this statement are the profit and loss account of the Company and the revenue and capital columns represent supplementary information. All revenue and capital items in the above Income Statement are derived from continuing operations. No operations were acquired or discontinued in the year. The Company has no recognised gains or losses other than those shown above, therefore no separate statement oftotal comprehensive income has been presented. The Company has only one class of business and one reportable segment, the results of which are set out in the Income Statement and Balance Sheet. There are no potentially dilutive capital instruments in issue and, therefore, no diluted earnings per share figures are relevant. The basic and diluted earnings per share are, therefore, identical. The notes on pages 80 to 95 form part of these financial statements. FORESIGHT ENTERPRISE VCT PLC Annual Report and Accounts 31 December 2022 77 Share Capital Called-up premium redemption Distributable Capital Revaluation Year ended share capital account reserve reserve 1 reserve 1 reserve Total 31 December 2022 Notes £’000 £’000 £’000 £’000 £’000 £’000 £’000 As at 1 January 2022 1,928 52,996 549 74,246 (47,963) 51,490 133,246 Share issues in the year 2 11 229 15,681 — — — — 15,910 Expenses in relation to share issues 3 — (474) — — — — (474) Repurchase of shares 11 (24) — 24 (1,471) — — (1,471) Realised gains on disposal of investments 8 — — — — 17,493 — 17,493 Investment holding losses 8 — — — — — (8,465) (8,465) Dividends paid 6 — — — (14,983) — — (14,983) Management fees charged to capital 3 — — — — (2,323) — (2,323) Revenue loss for the year — — — (483) — — (483) As at 31 December 2022 2,133 68,203 573 57,309 (32,793) 43,025 138,450 Share Capital Called-up premium redemption Distributable Capital Revaluation Year ended share capital account reserve reserve 1 reserve 1 reserve Total 31 December 2021 Notes £’000 £’000 £’000 £’000 £’000 £’000 £’000 As at 1 January 2021 1,939 67,458 523 68,307 (51,914) 34,041 120,354 Share issues in the year 2 15 918 — — — — 933 Expenses in relation to share issues 3 — (51) — — — — (51) Repurchase of shares (26) — 26 (1,481) — — (1,481) Cancellation of share premium — (15,329) — 15,329 — — — Realised gains on disposal of investments — — — — 5,763 — 5,763 Investment holding gains — — — — — 17,449 17,449 Dividends paid 6 — — — (8,086) — — (8,086) Management fees charged to capital 3 — — — — (1,812) — (1,812) Revenue return for the year — — — 177 — — 177 As at 31 December 2021 1,928 52,996 549 74,246 (47,963) 51,490 133,246 1. Reserve is available for distribution; total distributable reserves at 31 December 2022 total £24,516,000 (2021: £26,283,000). 2. Includes the dividend reinvestment scheme. 3. Expenses in relation to share issues includes trail commission for prior years’ fundraising. The notes on pages 80 to 95 form part of these financial statements. RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS GOVERNANCESTRATEGIC REPORT FINANCIAL STATEMENTS BALANCE SHEET AT 31 DECEMBER 2022 Registered number: 03506579 As at As at 31 December 31 December 2022 2021 Notes £’000 £’000 Fixed assets Investments held at fair value through profit or loss 8 111,966 115,238 Current assets Debtors 9 2,152 1,028 Cash and cash equivalents 24,814 17,113 26,966 18,141 Creditors Amounts falling due within one year 10 (482) (133) Net current assets 26,484 18,008 Net assets 138,450 133,246 Capital and reserves Called-up share capital 11 2,133 1,928 Share premium account 68,203 52,996 Capital redemption reserve 573 549 Distributable reserve 57,309 74, 246 Capital reserve (32,793) (47,963) Revaluation reserve 43,025 51,490 Equity Shareholders’ funds 138,450 133,246 Net Asset Value per share 12 64.9p 69.1p The financial statements were approved by the Board of Directors and authorised for issue on 28 April 2023 and were signed on its behalf by: Raymond Abbott Chair 28 April 2023 The notes on pages 80 to 95 form part of these financial statements. 78 FORESIGHT ENTERPRISE VCT PLC Annual Report and Accounts 31 December 2022 Year ended Year ended 31 December 31 December 2022 2021 Notes £’000 £’000 Cash flow from operating activities Loan interest received from investments 2 653 346 Dividends received from investments 2 38 1,022 Deposit and similar interest received 2 202 2 Investment management fees paid 3 (2,766) (2,416) Secretarial fees paid 4 (178) (161) Other cash payments 4 (433) (447) Net cash outflow from operating activities (2,484) (1,654) Cash flow from investing activities Purchase of investments 8 (9,987) (13,163) Proceeds on sale of investments 8 20,951 12,700 Proceeds on deferred consideration 8 234 — Net cash inflow/(outflow) from investing activities 11,198 (463) Cash flow from financing activities Proceeds of fundraising 13,987 — Expenses of fundraising (361) (36) Repurchase of own shares (1,467) (1,444) Equity dividends paid 6 (13,172) (7,152) Net cash outflow from financing activities (1,013) (8,632) Net inflow/(outflow) of cash for the year 7,701 (10,749) Reconciliation of net cash flow to movement in net funds Increase/(decrease) in cash and cash equivalents for the year 7,701 (10,749) Net cash and cash equivalents at start of year 17,113 27, 862 Net cash and cash equivalents at end of year 24,814 17,113 Analysis of changes in net debt At At 1 January 31 December 2022 Cash flow 2022 £’000 £’000 £’000 Cash and cash equivalents 17,113 7,701 24,814 The notes on pages 80 to 95 form part of these financial statements. CASH FLOW STATEMENT FOR THE YEAR ENDED 31 DECEMBER 2022 GOVERNANCESTRATEGIC REPORT FINANCIAL STATEMENTS FORESIGHT ENTERPRISE VCT PLC Annual Report and Accounts 31 December 2022 79 1 Accounting policies Foresight Enterprise VCT plc is a public limited company incorporated in England and Wales and its registered office is at The Shard, 32 London Bridge Street, London, United Kingdom, SE1 9SG. The Company has been approved as a Venture Capital Trust by HMRC under Section 259 of the Income Taxes Act 2007. The shares of the Company were first admitted to the Official List of the UK Listing Authority and trading on the London Stock Exchange on 3 February 1998. The Company's principal activity is to provide private investors with regular dividends and capital growth from a portfolio of investments in fast-growing unquoted companies in the UK. A summary of the principal accounting policies, all of which have been applied consistently throughout the year, is set out below: a) Basis of accounting The financial statements have been prepared under the Companies Act 2006, and in accordance with United Kingdom Generally Accepted Accounting Practice (“UKGAAP”) including FRS 102 “TheFinancial Reporting Standard applicable intheUK and Republic of Ireland” and the Statement of Recommended Practice (“SORP”): Financial Statements of Investment Trust Companies and Venture Capital Trusts issued in November 2014 andupdated in October 2019 and July 2022. The financial statements have been prepared under the historical cost convention as modified by the revaluation ofinvestments. The Company presents its Income Statement in a three-column format to give Shareholders additional detail of the performance of the Company split between items of a revenue or capital nature. As permitted by FRS 102, paragraph 14.4, investments are held as part of an investment portfolio, and their value to the Company is through their marketable value as part of a portfolio of investments, rather than as a medium through which the Company carries out its business. Therefore, the investments are not considered to be associated undertakings. Where the Company’s interest in an investment is greater than 50% of the investee company’s total equity, specific clauses are included in the investee company’s articles of association to prevent the Company from exercising control. Therefore, these investments are not considered to be subsidiary undertakings. The Company is exempt from preparing consolidated accounts under the investment entities exemption as permitted by FRS 102. Going concern The Company’s business activities, together with the factors likely to affect its future development, performance and position, are set out in the Strategic Report. The financial position of the Company, itscash flows, liquidity position and borrowing facilities are referred to in the Chair’s Statement, Strategic Report and Notes to the Accounts. In addition, the Annual Report and Accounts include the Company’s objectives, policies and processes formanaging its capital; its financial risk management objectives; details of its financial instruments and hedging activities; and its exposures to credit risk andliquidity risk. The Company has sufficient financial resources together with investments and income generated therefrom across a variety of industries and sectors. As a consequence, the Board believes that the Company is able to manage its business risks. Cash flow projections have been reviewed and show that the Company has sufficient funds to meet both its contracted expenditure and its discretionary cash outflows in the form of share buybacks and dividends. The Company has no external loan finance in place and therefore is not exposed to any gearing covenants, although its underlying investments may have external loan finance. The Directors have considered the impact of the difficult economic outlook, inflationary pressures, energy prices, COVID-19, Brexit, the Russian invasion of Ukraine and mounting tensions with China during their assessment of going concern and have reasonable expectation that the Company has adequate resources to continue in operational existence for the foreseeable future. Thus they continue to adopt the going concern basis of accounting in preparing the annual financialstatements. b) Assets held at fair value through profit or loss – investments All investments held by the Company are classified as “fair value through profit or loss”. The Board values investments in accordance with the International Private Equity and Venture Capital (“IPEV”) Valuation Guidelines, as updated in December 2022 including further COVID-19 guidance in March 2020. This classification is followed as the Company’s business is to invest in financial assets with a view to profiting from their total return in the form of capital growth and income. Purchases and sales of unlisted investments are recognised when the contract for acquisition or sale becomes unconditional. FOR THE YEAR ENDED 31 DECEMBER 2022 NOTES TO THE ACCOUNTS 80 FORESIGHT ENTERPRISE VCT PLC Annual Report and Accounts 31 December 2022 Unquoted investments are stated at fair value by the Board in accordance with the following rules, which are consistent with the IPEV Valuation Guidelines. When valuing an unquoted investment at fair value the following factors will be considered: (i) Where a value is indicated by a material arms-length transaction by an independent third party in the shares of a company, this value will be used (ii) In the absence of (i), and depending upon both the subsequent trading performance and investment structure of an investee company, the valuation basis will usually move to either: a) An earnings multiple basis. The shares may be valued by applying a suitable price-earnings ratio to that company’s historic, current or forecast earnings before interest, tax, depreciation and amortisation (“EBITDA”) (theratio used being based on a comparable sector but the resulting value being adjusted to reflect points of difference identified by the Manager compared to the sector including, inter alia, illiquidity) b) Where a company’s under-performance against plan indicates a diminution in the value of the investment, a write down against cost is made, as appropriate. Where the value of an investment has fallen permanently below cost, the loss is treated as a permanent write down and as a realised loss, even though the investment is still held. The Board assesses the portfolio for such investments and, after agreement with the Manager, will agree the values that represent the extent to which a realised loss should be recognised. This is based upon an assessment of observable evidence of that investment’s prospects, to determine whether there is potential for the investment to recover in value (iii) Premiums on loan stock investments are accrued at fair value when the Company receives the right to the premium and when considered recoverable (iv) Where an earnings multiple or cost less impairment basis is not appropriate and overriding factors apply, discounted cash flow, a net asset valuation, a price of a recent or the last funding round, venture capital method or industry-specific valuation benchmarks may be applied. An example of an industry-specific valuation benchmark would be the application of a multiple to that company’s historic, current or forecast revenue (the multiple being based on a comparable sector but with the resulting value being adjusted to reflect points of difference including, inter alia, illiquidity). The venture capital method (“VCMethod”) of valuation calculates and discounts the present value of the expected exit proceeds from an investment, taking account of both time and risk (v) In estimating the fair value of the investments held, the Manager has considered the COVID-19 pandemic, the Russian invasion of Ukraine, inflationary pressures and the difficult economic outlook which may impact the fair value of the investments and the sectors in which they operate. The COVID-19 pandemic and the Russian invasion of Ukraine have had a significant impact in many sectors across the globe. The Manager has applied assumptions based on a best estimate of likely outcome for each individual investment and applied discounts where itisconsidered necessary c) Income Dividends receivable on unquoted equity shares are brought into account when the Company’s rights to receive payment are established and there is no reasonable doubt that payment will be received. Otherincome such as interest is included on an accruals basis. Loan interest income is calculated using the effective interest method and recognised onan accruals basis. d) Expenses All expenses (inclusive of VAT) are accounted for on an accruals basis. Expenses are charged through the revenue column of the Income Statement, with the exception that 75% of the fees payable to the Manager for management fees are allocated against the capital column of the Income Statement. The basis of the allocation of management fees is expected to reflect the revenue and capital split of long-term returns in the portfolio. GOVERNANCESTRATEGIC REPORT FINANCIAL STATEMENTS FORESIGHT ENTERPRISE VCT PLC Annual Report and Accounts 31 December 2022 81 1 Accounting policies continued e) Share-based payments The Manager is entitled to a performance incentive fee equal to 15% of dividends paid to Shareholders, subject to the total return (Net Asset Value plus cumulative dividends paid per share) exceeding a High Watermark, both immediately before and after the performance incentive fee is paid. The performance incentive fee may be satisfied by either a cash payment or the issue of shares (or by a combination of both) ultimately at the Board’s discretion, and therefore falls within the definition of a share-based payment under FRS 102.26. However, the Board considers that the incentive fee arrangement should be accounted for as a cash-settled transaction; with the option of settling in shares in the event of any cash flow restrictions. The fair value of the amount payable to the Manager is recognised as an expense, with a corresponding increase in liabilities (or equity if the share-based payment is settled by the issue of shares), over the year in which the Manager becomes unconditionally entitled to payment or when the Board considers it likely such payment will become due over the medium term. The liability (or equity) is remeasured at each balance sheet date and at settlement date. Any changes in the fair value of the liability (or equity) are recognised as a performance incentive fee in the Income Statement. f) Basic financial instruments Trade and other debtors Trade and other debtors are recognised initially at transaction price less attributable transaction costs. Subsequent to initial recognition they are measured at amortised cost less any impairment losses. If the arrangement constitutes a financing transaction, for example if payment is deferred beyond normal business terms, then it is measured at the present valueof future payments, discounted at a market rate of interest for a similar debt instrument. Trade and other creditors Trade and other creditors are recognised initially at transaction price plus attributable transaction costs. Subsequent to initial recognition they are measured at amortised cost. If the arrangement constitutes a financing transaction, for example if payment is deferred beyond normal business terms, then it is measured at the present value of future payments, discounted at a market rate of interest for a similar debt instrument. Investments in preference and ordinary shares Investments in preference and ordinary shares are measured initially at transaction price less attributable transaction costs. Subsequent to initial recognition, investments that can be measured reliably are measured at fair value with changes recognised in profit or loss. Other investments are measured at cost less impairment in profit or loss. Cash and cash equivalents Cash and cash equivalents comprise cash balances, calldeposits, money market funds and fixed-term funds. g) Other financial instruments Other financial instruments not meeting the definition of basic financial instruments include non-current investments and are recognised initially at fair value. Subsequent to initial recognition, other financial instruments are measured at fair value with changes recognised in profit or loss except investments in equity instruments that are not publicly traded and whose fair value cannot otherwise be measured reliably shall be measured at cost less impairment. h) Taxation Any tax relief obtained in respect of management fees allocated to capital is reflected in the capital column of the Income Statement and a corresponding amount is charged against the revenue column. The tax relief is the amount by which corporation tax payable is reduced as a result of these capital expenses. i) Deferred taxation Provision is made for corporation tax at the current rates on the excess of taxable income over allowable expenses. A provision is made on all material timing differences arising from the different treatment of items for accounting and tax purposes. A deferred tax asset is recognised only to the extent that there will be taxable profits in the future against which the asset can be offset. It is considered too uncertain that this will occur and, therefore, no deferred tax asset has been recognised. NOTES TO THE ACCOUNTS CONTINUED FOR THE YEAR ENDED 31 DECEMBER 2022 82 FORESIGHT ENTERPRISE VCT PLC Annual Report and Accounts 31 December 2022 j) Reserves The capital and revenue reserves are made up of the following elements: (i) Capital reserve The following are accounted for in this reserve: • Gains and losses on realisation of investments, including the reversal of prior year revaluation reserves • Permanent diminution in value of investments • 75% of management fee expense, together with the related tax effect to this reserve in accordance with the policies • Income and costs for the year (capital items) (ii) Revaluation reserve (unrealised capital reserve) Increases and decreases in the valuation of investments held at the year end are accounted for in this reserve, except to the extent that the diminution is deemed permanent. (iii) Distributable reserve The following are accounted for in this reserve: • Repurchase of shares • Cancellation of share premium • Dividends paid • Income and costs for the year (revenue items) In accordance with stating all investments at fair value through profit and loss, all such movements through both the revaluation and capital reserves are shown within the Income Statement for the year. k) Investment recognition and derecognition Investments are recognised at the trade date, being the date that the risks and rewards of ownership are transferred to the Company. Upon initial recognition, investments are held at the fair value of the consideration payable. Transaction costs in respect of acquisitions made are recognised directly in the Income Statement. Investments are derecognised when the risks and rewards of ownership are deemed to have transferred to a third party. Upon realisation, the gain or loss on disposal is recognised in the Income Statement. l) Critical accounting judgement and key sources of estimation uncertainty The preparation of the financial statements requires the Board to make judgements and estimates that affect the application of policies and reported amounts of assets, liabilities, income and expenses. In the Board’s opinion, there was no critical accounting judgement applied. TheBoard considers that the only area where the Manager makes critical estimates and assumptions that may have a significant effect on the financial statements relates to the fair valuation of unquoted investments. Trading results of investee companies may differ from the estimates made. The underlying assumptions are reviewed on each valuation date. The Board considers that the fair value of investments not quoted in an active market involves critical estimates and assumptions because they are determined by the Manager, using valuation methods and techniques generally recognised as standard within the industry. Valuations use observable data to the extent practicable. However, they also rely on significant unobservable inputs about the maintainable earnings; comparable multiples and discounts. Furthermore, changes in these inputs and assumptions could affect the reported fair value of unquoted investments. The determination of what constitutes “observable” requires significant judgement by the Manager. The Manager considers observable data to be market data that is readily available, regularly distributed or updated, reliable and verifiable, not proprietary, and provided by independent sources that are actively involved in the relevant market. Both the Audit Committee and the auditor review the Manager’s valuations in detail. Sensitivity analysis is performed on the portfolio as a whole and for more detail on this please refer to note15. The Board notes that the Manager also makes estimates relating to the share-based payment expense and liability but does not consider this to have a significant effect on the financial statements. GOVERNANCESTRATEGIC REPORT FINANCIAL STATEMENTS FORESIGHT ENTERPRISE VCT PLC Annual Report and Accounts 31 December 2022 83 2 Income Year ended Year ended 31 December 31 December 2022 2021 £’000 £’000 Loan stock interest 631 381 Deposit and similar interest received 202 2 Dividends receivable 38 1,025 871 1,408 3 Investment management fees Year ended Year ended 31 December 31 December 2022 2021 £’000 £’000 Investment management fees charged to the revenue account 681 604 Investment management fees charged to the capital account 1 2,323 1,812 3,004 2,416 1. Included within investment management fees is an accrual of £280,000 (2021: £nil) relating to performance incentive fees charged to the capital account. The Manager advises the Company on investments under an agreement dated 27 January 2020. The Manager receives an annual investment management fee, paid quarterly in advance, of an amount equal to 2% of net assets of the Company. If the annual expenses of the Company exceed 2.35% of the Company’s net assets, the excess is borne by the Manager through a reduction in its fees. The excess at 31 December 2022 was £nil (2021: £nil). This agreement may be terminated by either party giving to the other not less than 12 months’ notice, at any time after the third anniversary, being 27 January 2023. Details of the performance incentive fees are given in note 13. 4 Other expenses Year ended Year ended 31 December 31 December 2022 2021 £’000 £’000 Accounting and secretarial services (excluding VAT) 178 161 Directors’ remuneration including employer’s National Insurance contributions 121 117 Auditor’s remuneration (excluding VAT) 1 53 50 Other 321 299 673 627 1. The auditor’s remuneration relates to the audit of the financial statements. There were no non-audit fees paid to the Company’s auditor during the year (2021: £nil). The Manager is responsible for external costs such as legal and accounting fees incurred on transactions that do not proceed to completion (“abort expenses”). In line with common practice, the Manager retains the right to charge arrangement and syndication fees and Directors’ or monitoring fees to companies in which the Company invests. The Manager is the Company Secretary and received annual fees, paid quarterly in advance, for administration services provided of £178,000 (2021: £161,000). The annual administration fee is adjusted annually in line with the UKRetail Prices Index. The normal annual running costs of the Company are capped at an amount equal to 2.35% of the net assets of the Company as at the end of each financial year, with any excess being borne by the Manager. FOR THE YEAR ENDED 31 DECEMBER 2022 NOTES TO THE ACCOUNTS CONTINUED 84 FORESIGHT ENTERPRISE VCT PLC Annual Report and Accounts 31 December 2022 5 Tax on ordinary activities Year ended 31 December 2022 Year ended 31 December 2021 Revenue Capital Total Revenue Capital Total £’000 £’000 £’000 £’000 £’000 £’000 Current tax Corporation tax — — — — — — Total current tax — — — — — — Deferred tax — — — — — — Total tax — — — — — — Factors affecting the total tax charge for the year: The tax assessed for the year is lower (2021: lower) than the standard rate of corporation tax in the UK of 19% (2021:19%). The differences are explained below: Year ended Year ended 31 December 31 December 2022 2021 £’000 £’000 Profit on ordinary activities before taxation 6,222 21,577 Corporation tax at 19% (2021: 19%) 1,182 4,100 Effect of: Realised capital gains not allowable (3,324) (1,095) Unrealised capital losses/(gains) not taxable 1,608 (3,315) Unutilised management expenses 541 505 Dividend income not taxable (7) (195) Total tax charge for the year — — As a qualifying VCT the Company is exempt from tax on capital gains; therefore, no provision for deferred tax has been recognised in respect of any capital gains or losses arising on the revaluation or disposal of investments. A deferred tax asset is recognised only to the extent that there will be taxable profits in the future against which the asset can be offset. It is considered too uncertain that this will occur and, therefore, no deferred tax asset has been recognised for surplus management expenses. At year end, there is an unrecognised deferred tax asset of approximately £5,623,000 (2021: £4,916,000). 6 Dividends Year ended Year ended 31 December 31 December 2022 2021 £’000 £’000 Dividends – paid in the year 14,983 8,086 The dividends paid in the year were split between a cash dividend of £13,213,000 (2021: £7,152,000) and the value of the dividend reinvestment scheme of £1,811,000 (2021: £934,000) offset by the receipt of historic unclaimed dividends from the Registrar, which have remained unclaimed for at least 12 years and hence automatically forfeited pursuant to the Articles of Association, totalling £41,000 in the year (2021: £nil). As at 31 December 2022, reserves available for dividend distribution total £24,516,000 (2021: £26,283,000) comprising the capital and distributable reserves. In accordance with Section 259 of the Income Tax Act 2007, a VCT may not retain more than 15% of its qualifying income in any one accounting year. The payment of the dividends noted above satisfies this requirement. GOVERNANCESTRATEGIC REPORT FINANCIAL STATEMENTS FORESIGHT ENTERPRISE VCT PLC Annual Report and Accounts 31 December 2022 85 FOR THE YEAR ENDED 31 DECEMBER 2022 NOTES TO THE ACCOUNTS CONTINUED 7 Return per share Year ended Year ended 31 December 31 December 2022 2021 £’000 £’000 Total return after taxation 6,222 21,577 Total return per share (note a) 3.1p 11.2p Revenue (loss)/profit from ordinary activities after taxation (483) 177 Revenue (loss)/profit per share (note b) (0.2)p 0.1p Capital profit from ordinary activities after taxation 6,705 21,400 Capital profit per share (note c) 3.3p 11.1p Weighted average number of shares in issue in the year (note d) 198,639,819 193,445,500 Notes: a) Total profit per share is total profit after taxation divided by the weighted average number of shares in issue during the year b) Revenue (loss)/profit per share is revenue (loss)/profit after taxation divided by the weighted average number of shares in issue during the year c) Capital profit per share is capital profit after taxation divided by the weighted average number of shares in issue during the year d) The weighted average number of shares is calculated by taking the number of shares issued and bought back during the year, multiplying each by the percentage of the year for which that share number applies and then totalling with the number of shares in issue at the beginning of the year 8 Investments held at fair value through profit or loss 31 December 31 December 2022 2021 £’000 £’000 Unquoted investments 111,966 115,238 £’000 Book cost at 1 January 2022 64,626 Investment holding gains 50,612 Valuation at 1 January 2022 115,238 Movements in the year: Purchases at cost 8,987 Disposal proceeds 1 (20,951) Realised gains 2 17, 259 Investment holding losses 3 (8,567) Valuation at 31 December 2022 111,966 Book cost at 31 December 2022 69,921 Investment holding gains 42,045 Valuation at 31 December 2022 111,966 1. The Company received £20,951,000 (2021: £12,700,000) from the disposal of investments during the year. The book cost of these investments when they were purchased was £3,692,000 (2021: £6,937,000). These investments have been revalued over time and until they were sold any unrealised gains or losses were included in the fair value of the investments. 2. Realised gains in the Income Statement include deferred consideration receipts from Hallmarq Limited (£1,000), Accrosoft Limited (£23,000), FFX Group Limited (£79,000) and Ixaris Systems Ltd (£131,000). 3. Investment holding losses in the Income Statement include the deferred consideration debtor increase of £102,000. The debtor movement reflects the recognition of amounts receivable in respect of Codeplay Software Limited (£418,000) andFFX Group Limited (£79,000), offset by receipts in respect of Accrosoft Limited (£23,000), FFX Group Limited (£79,000) and Ixaris Systems Ltd(£131,000) andprovisions made against balances in respect of Mologic Ltd. (£157,000) and Accrosoft Limited (£5,000). 86 FORESIGHT ENTERPRISE VCT PLC Annual Report and Accounts 31 December 2022 9 Debtors 31 December 31 December 2022 2021 £’000 £’000 Accrued interest 25 46 Prepayments 60 17 Deferred consideration 980 878 Other debtors 1,087 87 2,152 1,028 10 Creditors: amounts falling due within one year 31 December 31 December 2022 2021 £’000 £’000 Trade creditors 19 3 Accruals 141 90 Other creditors 42 40 Provision for performance incentive payment 280 — 482 133 11 Called-up share capital 31 December 31 December 2022 2021 £’000 £’000 Allotted, called-up and fully paid: 213,316,422 shares of 1p each (2021: 192,806,963) 2,133 1,928 Share issues and share buybacks During the year 20,149,160 shares and 2,748,080 shares were issued pursuant to an offer for subscription and the dividend reinvestment scheme respectively. Shares were issued at issue prices ranging from 63.70p to 74.92p per share. This share issue was under the VCT provisions that commenced on 6 April 2006, namely: 30% upfront income tax relief which can be retained by qualifying investors if the shares are held for the minimum five-year holding period. As part of the Company’s buyback programme, during the year, 2,387,781 shares were purchased for cancellation atacost of £1,471,000. Shares No. Share capital at 1 January 2022 192,806,963 Shares allotted 20,149,160 Dividend reinvestment 2,748,080 Share buybacks (2,387,781) Share capital at 31 December 2022 213,316,422 GOVERNANCESTRATEGIC REPORT FINANCIAL STATEMENTS FORESIGHT ENTERPRISE VCT PLC Annual Report and Accounts 31 December 2022 87 FOR THE YEAR ENDED 31 DECEMBER 2022 NOTES TO THE ACCOUNTS CONTINUED 12 Net Asset Value per share The Net Asset Value per share is based on net assets at the end of the year and on the number of shares in issue atthat date. 31 December 31 December 2022 2021 Net assets £138,450,000 £133,246,000 No. of shares at year end 213,316,422 192,806,963 Net Asset Value per share 64.9p 69.1p 13 Share-based payments The Manager is entitled to a performance incentive fee, designated a share-based payment due to its nature, equalto 15% of dividends paid to Shareholders, subject to the total return (Net Asset Value plus cumulative dividends paid per share on or after 11 January 2011) exceeding 100p (“High Watermark”), both immediately before and after the performance incentive fee is paid. After each distribution is made to Shareholders where a performance incentive is paid, the High Watermark required to be achieved by the Company to trigger a further performance incentive fee will be amended to take account of the dividend paid. As a result of performance incentive fee payments made in previous years, the High Watermark as at 31December2022 was 108.5p (2021: 108.5p). The total return as at 31 December 2022 was 109.3p (2021: 106.1p). Noperformance incentive fee or share-based payment was paid during the year (2021: £nil). However,asat 31December 2022, the Company has accrued an amount of £280,000 in relation to future performance incentive fees asitisconsidered likely such payment will become due over the medium term. The terms and conditions of the grant are as follows: Grant date: Date that the total return is greater than the High Watermark. Vesting conditions: Expected total return is greater than the High Watermark both before and after the performance incentive fee. Vesting period: 24 February 2012 – 31 December 2025. Method of settlement accounting: Cash (with the option of settling in shares in the event of any cash flow restrictions). The expected volatility is based on the historical performance and dividends of the fund, adjusted for any expected changes to future performance and dividends of the fund. The vesting period is limited to three years from the balance sheet date as the Directors do not consider that the future performance of the fund and the future dividends to be paid by the fund can be accurately estimated beyond that date. The Directors have prepared a calculation incorporating estimated future dividends over the vesting period and expect a performance incentive fee to become payable during the vesting period. Therefore, a liability of £280,000 hasbeenrecognised as at 31December2022 (2021: £nil). 14 Contingent assets and liabilities The Company had no contingent assets or contingent liabilities at 31 December 2022 (2021: £nil). 88 FORESIGHT ENTERPRISE VCT PLC Annual Report and Accounts 31 December 2022 15 Financial instrument risk management The Company’s financial instruments comprise: • Equity shares, debt securities and fixed interest securities that are held in accordance with the Company’s investmentobjective as set out in the Directors’ Report • Cash, liquid resources, short-term debtors and creditors that arise directly from the Company’s operations Classification of financial instruments The Company held the following categories of financial instruments at fair value, as at 31 December 2022: 31 December 31 December 2022 2021 £’000 £’000 Investment portfolio 111,966 115,238 Cash and cash equivalents 24,814 17,113 Total 136,780 132,351 The investment portfolio consists of unquoted investments. Unquoted investments consist of equity in and loans to investee companies and are valued at fair value through profit or loss. The main financial risks arising from the Company’s financial instruments are market price risk, interest rate risk, credit risk and liquidity risk. The Board regularly reviews and agrees policies for managing each of these risks which are summarised below. Market price risk Market price risk arises from uncertainty about the future prices of financial instruments held in accordance with the Company’s investment objectives. It represents the potential loss that the Company might suffer through holding investments in the face of adverse market movements. The Board manages market price risk through the application ofventure capital disciplines and investment structuring delegated to the Manager. The investments in equity and loan stocks of unquoted companies are rarely traded and as such the prices are more difficult to determine than those of more widely traded securities. In addition, the ability of the Company to realise the investments at their carrying value will at times not be possible if there are no willing purchasers. The ability of the≈Company to purchase or sell investments is also constrained by the requirements set down for VCTs. The potential maximum exposure to market price risk, being the value of the investment portfolio as at 31 December 2022, was £111,966,000 (2021: £115,238,000). Market price risk sensitivity analysis can be found on page 92. Interest rate risk The fair value of the Company’s fixed rate securities and the net revenue generated from the Company’s floating rate securities may be affected by interest rate movements. Investments are often in early-stage businesses, which are relatively high-risk investments sensitive to interest rate fluctuations. Due to the short time to maturity of some of the Company’s fixed rate investments, it may not be possible to reinvest in assets which provide the same rates as those currently held. When making investments of an equity and debt nature, consideration is given during the structuring process to the potential implications of interest rate risk and the resulting investment is structured accordingly. Themaximum exposure to interest rate risk was £37,463,000, being the total value of the loan stock investments and cash as at 31 December 2022 (2021: £31,026,000). Floating rate investments relate to the interest-bearing deposit account which earned interest based on the Bank of England rate of 3.5% at 31 December 2022. As at 31December2022, if the interest rate increased or decreased by 10 basis points the interest earned would increase ordecrease by£24,814. GOVERNANCESTRATEGIC REPORT FINANCIAL STATEMENTS FORESIGHT ENTERPRISE VCT PLC Annual Report and Accounts 31 December 2022 89 FOR THE YEAR ENDED 31 DECEMBER 2022 NOTES TO THE ACCOUNTS CONTINUED 15 Financial instrument risk management continued Interest rate risk continued Total Weighted average Weighted average portfolio interest rate time for which rate is fixed 31 December 31 December 31 December 31 December 31 December 31 December 2022 2021 2022 2021 2022 2021 Company portfolio £’000 £’000 % % Days Days Loan stock – exposed to fixed interest rate risk 12,649 13,913 9.9 9.8 352 502 Loan stock – exposed to variable interest rate risk — — — — — — Cash 24,814 17,113 2.7 0.1 — — Total exposed to interest rate risk 37,463 31,026 Credit risk Credit risk is the risk of failure by counterparties to deliver securities or cash to which the Company is entitled. TheCompany has exposure to credit risk in respect of the loan stock investments it has made in investee companies, most of which have no security attached to them, and where they do, such security ranks beneath any bank debt that an investee company may owe. The Board manages credit risk in respect of cash and cash equivalents by ensuring there is a spread of cash balances such that none exceed 15% of the Company’s total investment assets by VCT value. These cash and cash equivalents are investment grade funds, and so credit risk is considered to be low. The Manager receives management accounts from portfolio companies, and members of the Manager’s investment management team often sit on the boards of unquoted portfolio companies; this enables the close identification, monitoring and management of investment-specific credit risk. The maximum exposure to credit risk at 31 December 2022 was £39,555,000 (2021:£32,037,000) based on cash and cash equivalents and other receivables (amounts due on investments, dividends and interest). As at 31 December 2022, the Company’s assets are held in its own name in certificated form and therefore custodian default risk is negligible. An analysis of the Company’s assets exposed to credit risk is provided in the table below: 31 December 31 December 2022 2021 £’000 £’000 Loan stock investments 12,649 13,913 Deferred consideration 980 878 Other debtors 1,112 133 Cash and cash equivalents 24,814 17,113 Total 39,555 32,037 90 FORESIGHT ENTERPRISE VCT PLC Annual Report and Accounts 31 December 2022 Liquidity risk The investments in equity and fixed interest stocks of unquoted companies that the Company holds are not traded and they are not readily realisable. The Company may not be able to realise the investments at their carrying value if there are no willing purchasers. The Company’s ability to sell investments may also be constrained by the qualification requirements set down for VCTs. The maturity profile of the Company’s loan stock investments disclosed below indicates that these assets are also not readily realisable until dates up to five years from the year end. To counter these risks to the Company’s liquidity, the Manager maintains sufficient cash and money market funds to meet running costs and other commitments. The Company typically invests its surplus funds in high-quality money market and fixed-term funds which are all accessible within seven days, in line with VCT rules. 31 December 31 December 2022 2021 Maturity analysis: £’000 £’000 – in one year or less 33,028 25,426 – in more than one year but no more than two years 1,484 675 – in more than two years but no more than three years 1,894 1,763 – in more than three years but no more than four years 800 2,362 – in more than four years but no more than five years 257 800 Total 37,463 31,026 Sensitivity analysis Equity price sensitivity The Board believes the Company’s investments are mainly exposed to equity price risk, as the Company holds 100% ofits investments in the form of sterling-denominated investments in small companies. All of the investments made in unquoted companies, irrespective of the instruments the Company holds (whether shares or loan stock), carry a full equity risk, even though some of the loan stocks may be secured on assets (as they will be behind any prior ranking bank debt in the investee company). The Board considers that even the loan stocks are “quasi-equity” in nature, as the value of the loan stocks is determined by reference to the enterprise value of the investee company. Such value is considered to be sensitive to changes in quoted share prices, in so far as such changes eventually affect the enterprise value of unquoted companies. The table below shows the impact on profit and net assets if there were to be a 15% (2021: 15%) movement in overall share prices, which might in part be caused by changes in interest rate levels, but it is not considered practical to evaluate separately the impact of changes in interest rates upon the value of the Company’s portfolio ofinvestments in unquoted companies. The sensitivity analysis below assumes that each of these sub-categories of investments (shares and loan stocks) held by the Company produces an overall movement of 15%, and that the portfolio of investments held by the Company is perfectly correlated to this overall movement in share prices. This percentage reflects a number of factors, including the performance of the underlying investee companies as well as the wider market uncertainties associated with the difficult economic outlook, inflationary pressures, energy prices, Brexit, the spread of COVID-19 and Russia’s invasion of Ukraine. However, Shareholders should note that this level of correlation would not be the case in reality. Movements may occur in the value of both quoted and unquoted companies and result from changes in the market or alternatively as a result of assumptions made when valuing the portfolio or a combination of the two. GOVERNANCESTRATEGIC REPORT FINANCIAL STATEMENTS FORESIGHT ENTERPRISE VCT PLC Annual Report and Accounts 31 December 2022 91 FOR THE YEAR ENDED 31 DECEMBER 2022 NOTES TO THE ACCOUNTS CONTINUED 15 Financial instrument risk management continued Sensitivity analysis continued Equity price sensitivity continued 31 December 31 December 2022 2021 Return and Return and net assets net assets If overall share prices fell by 15% (2021: 15%), with all other variables held constant – decrease (£’000) (16,795) (17,286) Decrease in Net Asset Value per share (in pence) (7. 87)p (8.97)p 31 December 31 December 2022 2021 Return and Return and net assets net assets If overall share prices increased by 15% (2021: 15%), with all other variables held constant – increase (£’000) 16,795 17, 286 Increase in Net Asset Value per share (in pence) 7.87p 8.97p The impact of a change of 15% has been selected as this is considered reasonable given the current level of volatility observed both on a historical basis and market expectations for future movement. The range in equity prices is considered reasonable given the historic changes that have been observed. Interest rate sensitivity Although the Company holds investments in loan stocks that pay interest, the Board does not believe that the value of these instruments is interest rate sensitive. This is because all of the interest is fixed, so not at risk of interest rate movements (2021: no interest rate risk). Fair value hierarchy The following table shows financial instruments recognised at fair value, analysed between those whose fair value is based on: • Quoted prices (unadjusted) in active markets for identical assets or liabilities (Level 1) • Inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (as prices) or indirectly (derived from prices) (Level 2) • Inputs for the instrument that are not based on observable market data (unobservable inputs) (Level 3) Level 1 Level 2 Level 3 Total As at 31 December 2022 £’000 £’000 £’000 £’000 Unquoted investments — — 111,966 111,966 Financial assets — — 111,966 111,966 Level 1 Level 2 Level 3 Total As at 31 December 2021 £’000 £’000 £’000 £’000 Unquoted investments — — 115,238 115,238 Financial assets — — 115,238 115,238 Transfers During the year there were no transfers between Levels 1, 2 or 3. 92 FORESIGHT ENTERPRISE VCT PLC Annual Report and Accounts 31 December 2022 16 Management of capital The Company’s objectives when managing capital are to safeguard the Company’s ability to continue as a going concern, so that it can provide an adequate return to Shareholders. In accordance with VCT requirements, the Company must have at least 80% of its total assets (as measured under VCT rules) in qualifying holdings (these being investments in a relatively high-risk asset class of small UK companies meeting VCT requirements). Effective 6 April 2018, where new funds are raised, the Company must invest 30% of such funds in qualifying holdings within 12 months following the end of the accounting year in which that capital was subscribed, with the balance being invested within approximately three years of that capital being subscribed. The Company accordingly has limited scope to manage its capital structure in light of changes in economic conditions and the risk characteristics of the underlying assets. Subject to this overall constraint upon changing the capital structure, the Company may adjust the amount of dividends paid to Shareholders, issue new shares, or sell assets if so required to maintain a level of liquidity to remain agoingconcern. Although, as the investment policy implies, the Board may consider borrowing, there are no current plans to do so. Itregards the net assets of the Company as the Company’s capital, as the level of liabilities is small and the management of them is not directly related to managing the return to Shareholders. There has been no change inthisapproach from the previous year. 17 Related party transactions No Director has an interest in any contract to which the Company is a party other than their appointment and remuneration as Directors. Please refer to page 67 for the Directors’ remuneration tables. 18 Transactions with the Manager Foresight Group LLP was appointed as Manager in January 2020 and earned fees of £2,724,000 in the year ended 31December 2022 (2021: £2,416,000). Although no performance fee was paid in the year (2021: £nil), aliability of £280,000 has been recognised as at the year end (2021: £nil). Foresight Group LLP is the Company Secretary (appointed in November 2017) and received accounting and company secretarial services fees of £178,000 during the year (2021: £161,000). At 31 December 2022, the amount due to Foresight Group LLP was £nil (2021: £nil). No amounts have been written off in the year in respect of debts due to or from the Manager. GOVERNANCESTRATEGIC REPORT FINANCIAL STATEMENTS FORESIGHT ENTERPRISE VCT PLC Annual Report and Accounts 31 December 2022 93 FOR THE YEAR ENDED 31 DECEMBER 2022 NOTES TO THE ACCOUNTS CONTINUED 19 Related undertakings Under Section 409 of the Companies Act 2006, the Company is required to disclose specified details of all its related undertakings, including significant holdings which are undertakings where the Company’s holding amounted to 20% or more of the nominal value of any class of shares as at 31 December 2022. These are listed below. The percentage holding does not reflect the percentage voting rights in the Company as a whole. All holdings are direct. Please note that where holdings stated are above 50%, this is as a result of (i) holding 50% or more of a particular share class as opposed to the entire share capital, (ii) holding 50% or more of the share capital but with restricted rights, or (iii) is a legacy, historic, permitted non-qualifying holding and, therefore, not in breach of VCT rules. Investee company name Latest accounts year end Profit/(loss) after tax for year £’000 Aggregate capital and reserves £’000 Class and percentage of shares held ABL Investments Limited 31/12/2021 N/A 1 (2,318) A Ordinary 34.9% Aerospace Tooling CorporationLimited 30/06/2022 864 2,637 A Ordinary 57.1% Biofortuna Ltd 31/03/2022 N/A 1 5,072 A Ordinary 86.4% B Ordinary 39.4% Biotherapy Services Limited 30/06/2022 N/A 1 (227) A Ordinary 50.0% Callen-Lenz Associates Limited 28/02/2022 N/A 1 3,268 A Ordinary 50.0% Clubspark Group Ltd 31/03/2022 N/A 1 1,930 A Ordinary 40.0% AA Ordinary 40.0% Cole Henry PE 2 Limited 31/03/2022 (22) 463 Ordinary 50.0% Copptech UK Limited N/A 2 N/A N/A B Ordinary 29.9% Crosstown Dough Ltd 31/01/2022 (318) 3,749 A Ordinary 50.0% Datapath Group Limited 31/03/2022 3,498 29,609 A Ordinary 66.7% Fourth Wall Creative Limited 30/09/2021 N/A 1 8,205 A Ordinary 40.0% Hexarad Group Limited 30/06/2021 N/A 1 1,943 AB Ordinary 50.0% AD Ordinary 35.0% Homelink Healthcare Limited 31/12/2021 N/A 1 (1,038) A Ordinary 38.7% Hospital Services Group Limited 30/09/2021 1,173 4,687 A Ordinary 26.5% I-Mist Group Limited 31/12/2021 N/A 1 3,118 A Ordinary 35.9% IMMJ Systems Limited 31/03/2022 N/A 1 (3,214) A Ordinary 50.0% Innovation Consulting GroupLimited 30/09/2022 N/A 1 2,148 A Ordinary 50.8% Iphigenie Limited 31/12/2021 10 472 A Ordinary 100.0% Itad (2015) Limited 31/01/2022 836 (783) A Ordinary 31.2% Kingsclere PE 3 Limited 31/03/2022 (15) 373 Ordinary 50.0% Luminet Networks Limited 31/03/2022 (1,238) (6,640) A Ordinary 20.0% Newsflare Limited 31/07/2021 N/A 1 (969) Series B Ordinary 38.2% NorthWest EHealth Limited 31/12/2021 (7) 6,968 AB Ordinary 50.0% PH Realisations 2020 Limited 31/12/2018 (In administration) (1,522) (3,361) A Ordinary 50.0% Positive Response Corporation Ltd 31/03/2022 N/A 1 261 A Ordinary 50.0% Protean Software Limited 31/03/2022 N/A 1 905 A Ordinary 37.5% Rovco Limited 31/12/2021 N/A 1 (1,610) A Ordinary 24.4% 94 FORESIGHT ENTERPRISE VCT PLC Annual Report and Accounts 31 December 2022 Investee company name Latest accounts year end Profit/(loss) after tax for year £’000 Aggregate capital and reserves £’000 Class and percentage of shares held Roxy Leisure Holdings Limited 31/12/2020 (2,269) (394) A Ordinary 20.0% So-Sure Limited 31/12/2021 N/A 1 541 A Ordinary 38.1% Specac International Limited 31/03/2022 1,493 5,776 A Ordinary 50.0% Spektrix Limited 31/12/2021 (533) 546 B Ordinary 30.0% Steamforged Holdings Limited 31/03/2021 (1,131) (1,035) A Ordinary 32.0% Strategic Software ApplicationsLtd 31/03/2022 N/A 1 (674) A Ordinary 50.0% Ten Health & Fitness Limited 31/12/2021 N/A 1 (1,767) A Ordinary 40.0% AA Ordinary 40.0% Titania Group Limited 30/04/2022 N/A 1 2,539 A Ordinary 50.0% TLS Holdco Limited 31/12/2021 2,620 2,912 A Ordinary 100.0% Vio Healthtech Limited 31/12/2022 N/A 1 424 C Ordinary 21.7% Weduc Holdings Limited N/A 2 N/A N/A A Ordinary 30.0% AB Ordinary 26.7% Whitchurch PE 1 Limited 31/03/2022 (36) 627 Ordinary 50.0% 1. In accordance with Section 444 of the Companies Act 2006, a statement of income has not been delivered in the financial statements available on Companies House. 2. The company is yet to deliver financial statements to Companies House. 20 Post-balance sheet events The Company announced a £20 million Prospectus offer on 14 October 2022, implemented the use of the £10 million over-allotment facility on 17 March 2023 and made the following issues of Ordinary Shares post year end: Ordinary NAV to calculate Date Shares issue price 19 January 2023 1,449,747 63.7p 23 February 2023 3,136,556 63.7p 15 March 2023 2,975,995 63.7p 28 March 2023 3,632,401 63.7p 5 April 2023 8,693,406 66.5p 26 April 2023 2,154,064 66.5p 22,042,169 The offer was closed to new applications on 24 April 2023 and the final allotment was made on 26 April 2023 having raised gross proceeds of £22.6 million, £21.7 million after expenses. In advance of the allotment of Ordinary Shares on 5 April 2023, the Board announced that the unaudited NAV as at 5 April 2023 was 66.5p per share. The increase of 2.5% in NAV since 31 December 2022 was a result of the successful realisations of Innovation Consulting Group Limited on 31 March 2023 and Datapath Group Limited on 31 March 2023. GOVERNANCESTRATEGIC REPORT FINANCIAL STATEMENTS FORESIGHT ENTERPRISE VCT PLC Annual Report and Accounts 31 December 2022 95 8 JUNE 2023 NOTICE OF ANNUAL GENERAL MEETING Order of events 1.00pm Manager presentation Immediately following the Manager presentation Formal business of the Annual General Meeting Notice is hereby given that the Annual General Meeting of Foresight Enterprise VCT plc (“the Company”) will be held on 8 June 2023 at 1.00pm at the offices of Foresight Group LLP, The Shard, 32 London Bridge Street, London SE1 9SG for the purpose of considering and, if thought fit, passing the following resolutions, of which Resolutions 1 to 8 will be proposed as ordinary resolutions and Resolutions 9 and 10 will be proposed as special resolutions. Resolution 1 To receive the Report and Accounts for the year ended 31 December 2022. Resolution 2 To approve the Directors’ Remuneration Report. Resolution 3 To approve the Directors’ Remuneration Policy. Resolution 4 To re-elect Raymond Abbott as a Director. Resolution 5 To re-elect Gaynor Coley as a Director. Resolution 6 To re-elect Michael Gray as a Director. Resolution 7 To reappoint Deloitte LLP as auditor and to authorise the Directors to fix the auditor’s remuneration. Resolution 8 That, in substitution for all existing authorities, the Directors be and they are generally and unconditionally authorised in accordance with Section 551 of the Companies Act 2006 to exercise all the powers of the Company to allot shares of 1p each in the capital of the Company (“Shares”) and to grant rights to subscribe for, or to convert any security into, Shares (“Rights”), up to an aggregate nominal amount of £1,150,000, provided that this authority shall expire (unless renewed, varied or revoked by the Company in a general meeting) on the fifth anniversary of the date of the passing of this resolution, save that the Company shall be entitled to make offers or agreements before the expiry of such authority which would or might require Shares to be allotted or Rights to be granted after such expiry and the Directors shall be entitled to allot Shares and grant Rights pursuant to any such offers or agreements as if this authority had not expired. 96 FORESIGHT ENTERPRISE VCT PLC Annual Report and Accounts 31 December 2022 Resolution 9 That, in substitution for all existing authorities, the Directors be and they are empowered pursuant to Section 570 and Section 573 of the Companies Act 2006 to allot equity securities (within the meaning of Section 560 of that Act) for cash either pursuant to the authority conferred by Resolution 8 above or by way of a sale of treasury shares as if Section 561(1) of that Act did not apply to any such allotment, provided that this power shall be limited to: (a) The allotment of equity securities with an aggregate nominal amount of up to but not exceeding £550,000 pursuant to offer(s) for subscription; (b) The allotment of equity securities with an aggregate nominal amount of up to but not exceeding an amount equal to 10% of the issued share capital from time to time pursuant to the dividend reinvestment scheme operated by the Company at a subscription price per Share which may be less than the net asset value per Share, as may be prescribed by the scheme terms; (c) The allotment of equity securities with an aggregate nominal amount of up to but not exceeding £100,000 by way of an issue of Shares (which may be at a subscription price per Share which is less than the net asset value per Share) pursuant to performance incentive arrangements with Foresight Group LLP and relevant individuals of the Foresight Group LLP investment team; and (d) The allotment (otherwise than pursuant to sub-paragraphs (a) to (c) of this resolution) to any person or persons of equity securities with an aggregate nominal amount of up to but not exceeding an amount equal to 10% of the issued share capital from time to time. In each case where the proceeds may be used in whole or part to purchase shares in the capital of the Company, and shall expire (unless renewed, varied or revoked by the Company in a general meeting) on the conclusion of the Annual General Meeting of the Company to be held in the year 2024, or, if earlier, on the date falling 15 months after the passing of this resolution, save that the Company shall be entitled to make offers or agreements before the expiry of such authority which would or might require equity securities to be allotted after such expiry and the Directors shall be entitled to allot equity securities pursuant to any such offers or agreements as if the authority conferred hereby had not expired. Resolution 10 That, in substitution for all existing authorities, the Company be empowered to make market purchases (within the meaning of Section 693(4) of the Companies Act 2006) of its own shares on such terms and in such manner as the Directors shall from time to time determine, provided that: (i) The aggregate number of Shares to be purchased shall not exceed 35,280,252 or, if lower, such number of Shares (rounded down to the nearest whole Share) as shall equal 14.99% of the Company’s Shares in issue at the date of passing of this resolution; (ii) The minimum price which may be paid for a Share is 1p (the nominal value thereof); (iii) The maximum price which may be paid for a Share is the higher of (1) an amount equal to 105% of the average of the middle market quotation for a Share taken from the London Stock Exchange daily official list for the five business days immediately preceding the day on which the Shares are purchased and (2) the amount stipulated by Article 5(6) of the Market Abuse Regulation (EU) 596/2014 (as such Regulation forms part of UK law and as amended); (iv) The authority conferred by this resolution shall expire (unless renewed, varied or revoked by the Company in a general meeting) on the conclusion of the Annual General Meeting of the Company to be held in the year 2024 or, ifearlier, on the date falling 15 months after the passing of this resolution; and (v) The Company may make a contract to purchase Shares under the authority conferred by this resolution prior to the expiry of such authority which will or may be executed wholly or partly after the expiration of such authority and may make a purchase of Shares pursuant to such contract. By order of the Board Foresight Group LLP Company Secretary 28 April 2023 The Shard 32 London Bridge Street London SE1 9SG GOVERNANCESTRATEGIC REPORT FINANCIAL STATEMENTS FORESIGHT ENTERPRISE VCT PLC Annual Report and Accounts 31 December 2022 97 NOTES 1. No Director has a service contract with the Company. Directors’ appointment letters with the Company will be available for inspection at the registered office of the Company until the time of the meeting and from 15minutes before the meeting at the location of the meeting, as well as at the meeting. 2. Pursuant to Regulation 41 of the Uncertificated Securities Regulations 2001, entitlement to attend and vote at the meeting and the number of votes that may be cast thereat will be determined by reference to the Register of Members of the Company at the close of business on the day which is two days (excluding non-working days) before the end of the meeting or adjourned meeting. Changes to the Register of Members of the Company after the relevant deadline shall be disregarded in determining the rights of any person to attend and vote at themeeting. 3. A member entitled to attend and vote at the meeting is entitled to appoint a proxy or proxies to attend, speakand vote on their behalf. A proxy need not also be a member but must attend the meeting to represent you. Details of how to appoint the Chair of the meeting or another person as your proxy using the form of proxy are set out in the notes on the form of proxy which is enclosed. If you wish your proxy to speak on your behalf at the meeting, you will need to appoint your own choice of proxy (not the Chair) and give your instructions directly tothem. 4. You may appoint more than one proxy, provided each proxy is appointed to exercise rights attached to different shares. You may not appoint more than one proxy to exercise rights attached to any one share. To appoint more than one proxy, (an) additional form(s) of proxy may be obtained by contacting Computershare Investor Services plc on 0370 703 6385. Please indicate in the box next to the proxy holder’s name the number of shares in relation to which they are authorised to act as your proxy. Please also indicate by ticking the box provided if the proxy instruction is one of multiple instructions being given. All forms must be signed and returned together in the sameenvelope. 5. As at 27 April 2023 (being the last business day prior to the publication of this notice), the Company’s issued share capital was 235,358,591 shares of 1p each in the capital of the Company, carrying one vote each. Therefore, the total voting rights in the Company as at 27 April 2023 was 235,358,591. 6. Any person to whom this notice is sent who is a person nominated under Section 146 of the Companies Act 2006 to enjoy information rights (a “Nominated Person”) may, under an agreement between them and the member bywhom they were nominated, have a right to be appointed (or to have someone else appointed) as a proxy for the meeting. If a Nominated Person has no such proxy appointment right or does not wish to exercise it, they may, under any such agreement, have a right to give instructions to the Shareholder as to the exercise ofvotingrights. 7. The statement of the rights of members in relation to the appointment of proxies in paragraphs 3 to 4 above does not apply to Nominated Persons. The rights described in those paragraphs can only be exercised by members of the Company. 8. Appointment of a proxy will not preclude a member from subsequently attending and voting at the meeting should they subsequently decide to do so. You can only appoint a proxy using the procedures set out in these notes and the notes to the form of proxy. 9. The Register of Directors’ Interests will be available for inspection at the meeting. Where the Company holds a virtual meeting, the Register of Directors’ Interests will be available for inspection on the Company’s website www.foresightenterprisevct.com. 10. Information regarding the meeting, including the information required by Section 311A of the Companies Act 2006, is available from www.foresightenterprisevct.com. 11. A vote withheld is not a vote in law, which means that the vote will not be counted in the calculation of votes for or against the resolution. If you either select the “Discretionary” option or if no voting indication is given, your proxy will vote or abstain from voting at their discretion. Your proxy will vote (or abstain from voting) as they think fit in relation to any other matter which is put before the meeting. 98 FORESIGHT ENTERPRISE VCT PLC Annual Report and Accounts 31 December 2022 12. A form of proxy and reply paid envelope is enclosed. To be valid, it should be lodged with the Company’s registrar, Computershare Investor Services plc, The Pavilions, Bridgwater Road, Bristol BS99 6ZY or the proxy must be registered electronically at www.investorcentre.co.uk/eproxy, in each case so as to be received no later than 48hours (excluding non-business days) before the time appointed for holding the meeting or any adjourned meeting. To vote electronically, you will be asked to provide your Control Number, Shareholder Reference Number and PIN, which are detailed on your proxy form. This is the only acceptable means by which proxy instructions may be submitted electronically. CREST members who wish to appoint a proxy or proxies through the CREST electronic proxy appointment service may do so for the meeting (and any adjournment of the meeting) by following the procedures described in the CREST Manual (available via www.euroclear.com). CREST Personal Members or other CREST sponsored members (and those CREST members who have appointed a voting service provider) should refer to their CREST sponsor or voting service provider, who will be able to take the appropriate action on their behalf. In order for a proxy appointment or instruction made by means of CREST to be valid, the appropriate CREST message (a “CREST Proxy Instruction”) must be properly authenticated in accordance with Euroclear UK & International Limited’s (“EUI”) specifications and must contain the information required for such instructions, as described in the CREST Manual. The message (regardless of whether it constitutes the appointment of a proxy or an amendment to the instruction given to a previously appointed proxy) must, in order to be valid, be transmitted so as to be received by the issuer’s agent (ID 3RA50) by the latest time(s) for receipt of proxy appointments specified in note 3 above. For this purpose, the time of receipt will be taken to be the time (as determined by the timestamp applied to the message by the CREST Applications Host) from which the issuer’s agent is able to retrieve the message by enquiry to CREST in the manner prescribed by CREST. After this time any change of instructions to a proxy appointed through CREST should be communicated to them by other means. CREST members (and, where applicable, their CREST sponsors or voting service providers) should note that EUI does not take available special procedures in CREST for any particular messages. Normal system timings and limitations will therefore apply in relation to the input of CREST Proxy Instructions. It is the responsibility of the CREST member concerned to take (or, if the CREST member is a CREST personal member or sponsored member or has appointed a voting service provider, to procure that their CREST sponsor or voting service provider takes) such action as shall be necessary to ensure that a message is transmitted by means of the CREST system by any particular time. In this connection, CREST members (and, where applicable, their CREST sponsors or voting service providers) are referred, in particular, to those sections of the CREST Manual concerning practical limitations of the CREST system and timings. The Company may treat as invalid a CREST Proxy Instruction in the circumstances set out in Regulation 35(5)(a) of the Uncertificated Securities Regulations 2001. 13. Under Section 319A of the Companies Act 2006, the Company must answer any question you ask relating to the business being dealt with at the meeting unless answering the question would interfere unduly with the preparation for the meeting or involve the disclosure of confidential information or the answer has already been given on a website in the form of an answer to a question or it is undesirable in the interests of the Company or the good order of the meeting that the question be answered. 14. Pursuant to Chapter 5 of Part 16 of the Companies Act 2006 (Sections 527 to 531), where requested by a member or members meeting the qualification criteria, the Company must publish on its website, a statement setting out any matter that such members propose to raise at the meeting relating to the audit of the Company’s accounts (including the auditor’s report and the conduct of the audit) that are to be laid before the meeting. Where the Company is required to publish such a statement on its website it may not require the members making the request to pay any expenses incurred by the Company in complying with the request, it must forward the statement to the Company’s auditor no later than the time the statement is made available on the Company’s website and the statement may be dealt with as part of the business of the meeting. GOVERNANCESTRATEGIC REPORT FINANCIAL STATEMENTS FORESIGHT ENTERPRISE VCT PLC Annual Report and Accounts 31 December 2022 99 GLOSSARY OF TERMS VCT A Venture Capital Trust as defined intheIncome Tax Act 2007. Net Asset Value or NAV The Net Asset Value (“NAV”) is the amount by which total assets exceed total liabilities, i.e. the difference between what the Company owns and what it owes. It is equal to Shareholders’ equity, sometimes referred to as Shareholders’funds. Net Asset Value per share or NAV per share Net Asset Value expressed as an amount per share. Movement in NAV Total Return This is the movement in the NAV per share at the start of the year to the NAV per share at the end of the year plus all dividends paid per share in the year. TheNAV at the start of the year was 69.1p (2021: 62.1p), dividends paid during the year were 7.3p (2021: 4.2p) with NAV at the end of the year being 64.9p (2021: 69.1p). As such, NAV Total Return at the end of the year was 72.2p (2021: 73.3p). Therefore, the movement in NAV Total Return in the year was 4.5% (2021:18.0%). Share Price Total Return The sum of the current share price of 58.5p (2021: 61.5p) plus all dividends paid per share since the share consolidation in 2005 being 66.8p (2021:59.5p). Thisgiving a Share Price Total Return of125.3p (2021: 121.0p). Discount to NAV A discount to NAV is the percentage by which the mid-market share price of the Company of 58.5p (2021: 61.5p) is lower than the Net Asset Value per share of 64.9p (2021: 69.1p). This giving adiscount to NAV of 9.9% (2021: 11.0%). Dividends paid in the year The total dividends paid in the year per share of 7.3p (2021: 4.2p). Dividend yield The sum of dividends paid during the year of 7.3p (2021: 4.2p) expressed as a percentage of the mid-market share price at the year-end date of 58.5p (2021:61.5p). This giving a dividend yield of 12.5% (2021: 6.8%). Shares bought back in the year The total number of shares which were bought back in the year, being 2,387,781 (2021: 2,564,645). Average discount on buybacks The average of the percentage by which the buyback price is lower than the Net Asset Value per share at the point of the buyback. Ongoing charges ratio The sum of expenditure incurred in the ordinary course of business after adding back the performance incentive provision to total expenses in the year being £3.3million (2021: £3.0 million) expressed as a percentage of the Net Asset Value at the end of the year after adding back special dividends paid during the year to the year end net assets being £145.5million (2021: £133.2million). Qualifying Company A company satisfying certain conditions under the VCT legislation. Theconditions are detailed but include that the company must be unquoted (companies listed on AIM or AQUIS can qualify), have a permanent establishment in the UK, apply the money raised for the purposes of growth and development of a qualifying trade within a certain time period and not be controlled by another company. There are additional restrictions relating to the size and stage of the company to focus investment into earlier-stage businesses, as well as maximum investment limits (certain of such restrictions and limits being more flexible for “knowledge intensive” companies). VCT funds cannot be used by a Qualifying Company to acquire shares in another company or a trade. Qualifying investment An investment which consists of shares or securities first issued to the VCT (and held by it ever since) by a Qualifying Company and satisfying certain conditions under the VCT legislation. Manager Foresight Group LLP. 100 FORESIGHT ENTERPRISE VCT PLC Annual Report and Accounts 31 December 2022 Report a scam If you are approached by fraudsters please tell theFCA using the share fraud reporting form at www.fca.org.uk/scams, where you can fi nd out more about investment scams. You can also call the FCA Consumer Helpline on 0800111 6768. If you have already paid money to share fraudsters you should contact Action Fraud on 0300 123 2040. In association with 5,000 people contact the Financial Conduct Authority about share fraud each year, with victims losing an average of £20,000. Beware of share fraud Fraudsters use persuasive and high-pressure tactics to lure investors intoscams. They may off er to sell shares that turn out to be worthless or non-existent, or to buy shares at an infl ated price in return for an upfrontpayment. While high profi ts are promised, ifyou buy or sell shares in this way you will probably lose your money. How to avoid share fraud • Keep in mind that fi rms authorised by the FCA are unlikely to contact you out of the blue with an off er to buy or sell shares. • Do not get into a conversation, note the name of the person and fi rm contacting you and then end thecall. • Check the Financial Services Register from www.fca.org.uk to see if theperson and fi rm contacting you is authorised by the FCA. • Beware of fraudsters claiming to befrom an authorised fi rm, copying its website or giving you false contact details. • Use the fi rm’s contact details listed on the Register if you want to call itback. • Call the FCA on 0800 111 6768 if the fi rm does not have contact details on the Register or you are told they are out of date. • Search the list of unauthorised fi rms to avoid at www.fca.org.uk/scams. • Consider that if you buy or sell shares from an unauthorised fi rm you will not have access to the Financial Ombudsman Service orFinancial Services Compensation Scheme. • Think about getting independent fi nancial and professional advice before you hand over any money. • Remember: if it sounds too good tobe true, it probably is! FINANCIAL CONDUCT AUTHORITY GOVERNANCESTRATEGIC REPORT FINANCIAL STATEMENTS FORESIGHT ENTERPRISE VCT PLC Annual Report and Accounts 31 December 2022 101 CORPORATE INFORMATION COMPANY NUMBER 03506579 DIRECTORS Raymond Abbott (Chair) Gaynor Coley Michael Gray Simon Jamieson COMPANY SECRETARY Foresight Group LLP The Shard 32 London Bridge Street London SE1 9SG MANAGER Foresight Group LLP The Shard 32 London Bridge Street London SE1 9SG AUDITOR Deloitte LLP 20 Castle Terrace Edinburgh EH1 2DB SOLICITORS AND VCT STATUS ADVISERS Shakespeare Martineau LLP No. 1 Colmore Square Birmingham B4 6AA and 60 Gracechurch Street London EC3V 0HR REGISTRAR Computershare Investor Services plc The Pavilions Bridgwater Road Bristol BS99 6ZY MARKET MAKER Panmure Gordon & Co One New Change London EC4M 9AF 102 FORESIGHT ENTERPRISE VCT PLC Annual Report and Accounts 31 December 2022 SHAREHOLDER INFORMATION Foresight Enterprise VCT plc, formerly Foresight 4 VCT plc, is a Venture Capital Trust aiming to provide investors with regular dividends and capital growth from a portfolio of investments infast-growing unquoted companies in the UK. For details on the Company’s investment policy pleaserefer to the Strategic Report. www.foresightenterprisevct.com Enquiries The Board and Manager are always keen to hear from investors. If you have any feedback about the service you receive or any queries relating to Foresight Enterprise VCT plc, please contact the Investor Relations team: 020 3667 8181 [email protected] www.foresightgroup.eu Annual and Half-Yearly Reports, as well as quarterly factsheets and information on new investments, can beviewed online. As part of the Manager’s investor communications policy, investor forums are held throughout the year. Shareholders can also arrange a mutually convenient time to meet the Manager’s investment team. Please contact Investor Relations if you are interested. Dividends All cash dividends will be credited to your nominated bank/building society account. Your options are: • Receive your dividends in sterling via direct credit to a UK domiciled bank account • Reinvest your dividends for additional shares in the Company through our dividend reinvestment scheme www.investorcentre.co.uk Investors can manage their shareholding online using Investor Centre, Computershare’s secure website. Shareholders just require their Shareholder Reference Number (“SRN”), which can be found on any communications previously received from Computershare, to access the following: Holding enquiry Balances l Values History l Payments lReinvestments Payments enquiry Dividends l Other payment types Address change Change registered address to which allcommunications are sent Bank details update Please ensure bank details are up todate in order to receive your dividends Outstanding payments Reissue payments using our online replacement service Downloadable forms for Dividend mandates l Stock transfer l Dividend reinvestment l Change of address Alternatively, you can contact Computershare by phoneon 0370703 6388 Key dates Annual General Meeting 8 June 2023 Half-Yearly results to 30 June 2023 September 2023 Annual results to 31 December 2023 April 2024 GOVERNANCESTRATEGIC REPORT FINANCIAL STATEMENTS FORESIGHT ENTERPRISE VCT PLC Annual Report and Accounts 31 December 2022 103 ADDITIONAL INFORMATION Important information Foresight Enterprise VCT plc currently conducts its affairs so that its shares can be recommended by IFAs to ordinary retail investors in accordance with the FCA’s rules in relation to non-mainstream pooled investment products and intends to continue to do so for the foreseeable future. The shares are excluded from the FCA’s restrictions which apply to non-mainstream pooled investment products because they are shares in a VCT. Past performance is not necessarily a guide to future performance. Stock markets and currency movements may cause the value of investments and the income from them to fall as well as rise and investors may not get back the amount they originally invested. Where investments are made in unquoted securities and smaller companies, their potential volatility increases the risk to the value of, and the income from, the investment. Trading shares The Company’s shares are listed on the London Stock Exchange. Share price information is available on the Manager’s website and can also be obtained from many financial websites. The Company’s shares can be bought and sold in the same way as any other quoted company on the London Stock Exchange via a stockbroker. The primary market maker for Foresight Enterprise VCT plc is Panmure Gordon & Co. You can contact Panmure Gordon by phone on 0207886 2716 or 0207 886 2717 Investment in VCTs should be seen as a long-term investment and Shareholders selling their shares within five years of original subscription may lose any tax reliefs claimed. Investors who are in any doubt about selling their shares should consult their independent financial adviser. Please contact the Manager if you or your adviser have any questions about this process. Privacy policy We respect your privacy and are committed to protecting your personal data. If you would like to find out more about the measures the Manager takes in processing your personal information, please refer to the privacy policy, which can be found at www.foresightgroup.eu/privacy-policy. 104 FORESIGHT ENTERPRISE VCT PLC Annual Report and Accounts 31 December 2022 Designed and produced by lyonsbennett.com This report is printed on Nautillus made from FSC® recycled certified post‑consumer waste pulp. Printed sustainably in the UK by Pureprint, a CarbonNeutral® company with FSC® chain of custody and an ISO 14001 certified environmental management system recycling over 100% of all dry waste. Foresight Enterprise VCT plc The Shard 32 London Bridge Street London SE1 9SG www.foresightenterprisevct.com FORESIGHT ENTERPRISE VCT PLC Annual Report and Financial Statements 31 December 2022

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