Foresight

FOR A SMARTER FUTURE

FORESIGHT SOLAR & TECHNOLOGY

VCT plc

ANNUAL REPORT AND ACCOUNTS
31 MARCH 2021

Shareholder Information

Foresight Solar & Technology VCT plc is managed by Foresight Group LLP which is regulated by the Financial Conduct Authority. 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 may increase the risk to the value of, and the income from, the investment.

As part of our investor communications policy, shareholders can arrange a mutually convenient time to speak to the Company's investment management team at Foresight Group. If you are interested, please call Foresight Group (see details below).

Contact us

Foresight Group is always keen to hear from investors. If you have any feedback about the service you receive or any queries, please contact the Investor Relations team:

Telephone: 020 3667 8181
Email: [email protected]
www.foresightgroup.eu

FP Foresight
UK Infrastructure
Income Fund
WINNER
FUND MANAGER OF
THE YEAR AROUND

INVESTMENT
TAX EFFICIENCY
AWARDS 2018/19
Best Laminated—VCT

Key Dates

Annual General Meeting	23 September 2021
Interim results to 30 September 2021	December 2021
Annual results to 31 March 2022	July 2022

Dividends

The Board has made the decision that Foresight Solar & Technology VCT plc (the "Company") will no longer pay dividends by cheque. All future cash dividends will be credited to your nominated bank/building society account. If you are currently receiving dividends via cheque, a dividend mandate form will be sent to you. Please contact the Investor Relations team if you have any questions regarding this.

Share price

The Company's Ordinary Shares and Foresight Williams Technology Shares are listed on the London Stock Exchange. The mid-price of the Company's Ordinary Shares is given daily in the Financial Times in the Investment Companies section of the London Share Service. Share price information can also be obtained from many financial websites.

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 | Values History | Payments
Payments Enquiry Dividends | Other payment types
Address Change Change registered address to which all communications are sent
Bank Details Update Update your bank details to which dividend payments are made
Outstanding Payments Reissue payments using our online replacement service
Downloadable Forms Dividend mandates | Stock transfer | Change of address

Alternatively you can contact Computershare by phone on 0370 707 4017

Trading shares

The Company's Ordinary Shares and Foresight Williams Technology 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 Solar & Technology 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 their original purchase may lose any tax reliefs claimed. Investors who are in any doubt about selling their shares should consult their financial adviser.

Please call Foresight Group if you or your adviser have any questions about this process.

Contents

Highlights

Key Metrics 2
Dividend History 3

Chairman's Statement

Investment Manager's Review

Ordinary Shares 8
Ordinary Shares Portfolio Overview 12
Foresight Williams Technology Shares 20
Foresight Williams Technology Shares Portfolio Overview 24
About the Investment Manager 28

Strategic Report

Governance

Board of Directors 38
Directors' Report 40
Corporate Governance 44
Directors' Remuneration Report 48
Audit Committee Report 51
Statement of Directors' Responsibilities 52
Unaudited non-statutory analysis of the share classes 53

Independent Auditor's Report to the members of Foresight Solar & Technology VCT Plc

Financial Statements

Income Statement 64
Reconciliation of Movements in Shareholders' Funds 65
Balance Sheet 66
Cash Flow Statement 67
Notes to the Accounts 68

Notice of Annual General Meeting

Glossary of Terms

FCA Notice

Corporate Information

Highlights

Ordinary Shares
Total Net Assets
as at 31 March 2021
£24.2m

Ordinary Shares
Net Asset Value per share
as at 31 March 2021
68.9p

Foresight Williams Technology Shares
Total Net Assets
as at 31 March 2021
£9.8m

Foresight Williams Technology Shares
Net Asset Value per share
as at 31 March 2021
98.0p

Ordinary Shares Fund

After payment of 2.0p in dividends, Net Asset Value per Ordinary Share at 31 March 2021 was 68.9p (31 March 2020: 72.7p).
An interim dividend of 2.0p per Ordinary Share was paid during the year on 25 September 2020.
At 31 March 2021, the fund held positions in 11 UK solar assets, with a total installed capacity of 69.7MW.
During the year, our existing portfolio companies successfully completed the disposal of its holdings in Littlewood and Telecomponents.

Foresight Williams Technology Shares Fund

During the year, under the Offers for subscription for the Foresight Williams Technology Shares fund (the "FWT Shares fund"), dated 20 December 2019 and 30 December 2020, £8.9m of new funds were raised.
During the year, the fund invested in its first four investments in Additive Manufacturing Technologies Limited, Audioscenic Limited, Cambridge GaN Devices Limited & Refeyn Limited, investing a total of £1.4m.
Since the end of the reporting period, a further £2.5m has been raised, bringing the total funds raised to £12.5m.
Since the end of the reporting period, a further seven investments have been made, bringing total deployment to £5.0m.

Key Metrics

	31 March 2021		31 March 2020
	Ordinary Shares	FWT Shares	Ordinary Shares	FWT Shares
Total net assets	£24.2m	£9.8m	£25.8m	£1.1m
Net asset value per share	68.9p	98.0p	72.7p	99.1p
Net asset value total return*	114.9p	98.0p	116.7p	99.1p
Share price	68.5p	100.0p	80.5p	100.0p
Share price total return*	114.5p	100.0p	124.5p	100.0p
Dividends paid in the year	2.0p	—	6.0p	—
Dividend yield*	2.9%	—	7.5%	—
Shares in issue	35,109,032	10,021,408	35,460,961	1,145,927
Share price premium/(discount) to NAV*	(0.6%)	2.0%	10.7%	0.9%
Average discount on buybacks*	2.0%	n/a	0.9%	n/a
Shares bought back during the year under review	351,929	—	7,786,631	—
Ongoing charges ratio (Company)*	3.1%		2.9%

Foresight Solar & Technology VCT plc Annual report and accounts 31 March 2021

Highlights

Ordinary Shares NAV Total Return (%)	1 year	3 years	5 years
Ordinary Shares NAV Total Return as at 31 March 2021*	(1.5%)	(10.6%)	(6.8%)

*Definitions of the Alternative Performance Measures (APMs) can be found in the Glossary on page 90 and the Strategic Report on page 30.

Ordinary Shares Dividends Paid and NAV Total Return (rebased)

Dividend History

Ordinary Shares
Date	Dividend per share
25 September 2020	2.0p
22 November 2019	3.0p
26 April 2019	3.0p
23 November 2018	3.0p
27 April 2018	3.0p
24 November 2017	3.0p
7 April 2017	3.0p
18 November 2016	3.0p
8 April 2016	3.0p
13 November 2015	3.0p
10 April 2015	3.0p
14 November 2014	3.0p
4 April 2014	3.0p
25 October 2013	3.0p
12 April 2013	2.5p
31 October 2012	2.5p
Cumulative	46.0p
Former C Shares
---	---
Date	Dividend per share
27 April 2018	2.5p
24 November 2017	2.5p
7 April 2017	2.5p
18 November 2016	2.5p
8 April 2016	2.5p
13 November 2015	2.5p
10 April 2015	2.5p
14 November 2014	2.5p
Cumulative	20.0p

Foresight Solar & Technology VCT plc Annual report and accounts 31 March 2021

Chairman's Statement

Ernie Richardson

Chairman of Foresight Solar & Technology VCT plc

On behalf of the Board, I am pleased to present the Annual Report and Accounts for Foresight Solar & Technology VCT Plc for the year ended 31 March 2021 and to provide you with an update on the developments affecting the Company.

As with previous recent publications, my introduction to the Annual Report and Accounts will be split between the two share classes, the Ordinary Shares and the FWT Shares, with a general section for the Company as a whole at the end.

ORDINARY SHARES

Performance and portfolio activity

The underlying net asset value decreased by 1.8p per Ordinary Share before deducting the 2.0p per Ordinary Share dividend paid during the year.

This decrease was driven by a fall in the underlying value of the portfolio caused by a further reduction in market power prices forecast by the energy industry's independent, external modelling agencies. The COVID-19 pandemic has been a factor in the decrease in the market forecast power prices, but otherwise will have a limited impact on the assets within the investment portfolio given their underlying nature, and as a result of the strategic decision to maintain a high proportion of fixed revenues linked to government subsidies and fixed price arrangements in the short and medium term.

Furthermore, during the first UK national lockdown in April, the Investment Manager moved swiftly to implement its Business Continuity Plan and co-ordinated closely with its operational service providers to ensure the safety of its staff and stakeholders and the operational stability of the portfolio. This rapid and co-ordinated action between key service providers meant that there was no operational disruption during the year as a result of the pandemic.

There were no new acquisitions in the UK portfolio during the year. As reported in the Interim Report to 30 September 2020, the sale of the Italian rooftop asset, Telecomponenti, completed in December 2020, delivering a return of 1.2x to the Company.

The Board was also pleased with the Investment Manager's sale of the Littlewood site, completing in December 2020 at a material uplift to its valuation pre-sale. A sale of Greenersite, the smallest asset in the portfolio, is also being pursued.

Following the award of the Spanish claim (equivalent to £2m-£2.5m, or 5.7-7.1p per Ordinary Share), consistent with prior communications, there continues to remain significant challenges with respect to collectability. The Company continues to follow up this claim in the courts and as such, the Board has not assigned any current value to the claim in the net asset value reported.

The Board was also pleased that the Investment Manager was able to complete the refinancing of the investment portfolio in June 2020, reducing finance costs across the portfolio. With a portfolio now solely situated in the UK, the Board consider the Ordinary Shares fund to be optimally invested and well placed to maximise future returns for Shareholders.

The overall performance of the Ordinary Shares remains robust and the total return since inception as at 31 March 2021 was 114.9p per Ordinary Share.

Foresight Solar & Technology VCT plc Annual report and accounts 31 March 2021

Chairman's Statement

Cash and working capital

The Ordinary Shares had cash and liquid resources of £0.5m at 31 March 2021 (excluding cash held in portfolio companies).

The Company receives regular interest and loan stock payments and dividends from its underlying investments enabling it to continue to fund its dividend policy as well as meeting expenses in the ordinary course of business as they fall due.

Dividends and share buybacks

In its original prospectus, the Board's stated objective was to pay dividends of 5.0p per Ordinary Share each year throughout the life of the Company after the first year. The level of dividends was not, however, guaranteed.

Following the completion of the tender offer last year, the Board considered the future dividend policy of the Ordinary Shares fund. With the objective of maximising long-term future returns for Ordinary Shareholders, the Board will endeavour to pay out dividends derived from the income generated by the underlying portfolio, rather than a fixed pence per share. The Board and the Investment Manager hope that this may be enhanced by additional 'special' dividends as and when particularly successful portfolio exits are made. The impact of COVID-19 will be taken into consideration when the Board considers dividends in the near term.

During the year, an interim dividend of 2.0p per Ordinary Share was paid on 25 September 2020. This means that total dividends of 46.0p per Ordinary Share have been paid during the ten years since launch.

During the year under review, the Ordinary Shares fund repurchased 351,929 shares for cancellation at a cost of £243,000, at an average discount to NAV of 2.0%. No new Ordinary Shares were issued during the year.

Management fees

The annual management fee of the Ordinary Shares fund is calculated as 1.5% of Net Assets and equated to £379,000 during the year.

In the context of realisations achieved during the year and the continuing professional management of the portfolio, the Board believe that the annual management fee represents good value for investors.

Green Economy Mark

The Board is pleased that the Company continues to be classified as a Green Economy Issuer by the London Stock Exchange ("LSE"). This is an initiative launched by the LSE supporting sustainable finance on its markets. The Green Economy Mark recognises listed companies with 50% or more of revenues from environmental solutions.

FWT SHARES

The Foresight Williams Technology VCT share class (the "FWT Shares") was launched in December 2019, and represents an exciting investment opportunity made possible by the collaboration between Foresight Group and Williams Advanced Engineering ('WAE'), a technology and engineering services business, originally spun out of the Williams Formula 1 business.

The share class provides investors with the opportunity to invest in a portfolio of early-stage companies with high growth-potential, developing innovative and occasionally transformational technologies across a range of different sectors. It builds on the successful relationship that Foresight and WAE have enjoyed from their launch of the Foresight Williams Technology EIS Fund (the 'EIS fund') in November 2016, which has raised over £50 million to date and has made over twenty investments across a range of different sectors so far.

Fundraising and share issues

The Offers for subscription, dated 20 December 2019 and relaunched on 30 December 2020, are each up to £20 million (with an overallotment facility for up to an additional £10 million) through the issue of FWT Shares. During the year, across both Offers, 8.9 million FWT Shares were allotted, raising a further £8.9m, bringing the total funds raised to over £10.0m.

Post year end, a further 2.5 million FWT Shares were allotted, increasing the total funds raised to £12.5m.

Portfolio and deal activity

As at year end, the FWT Shares had made investments totalling £1.4m in four exciting companies: Additive Manufacturing Technologies Limited, Audioscenic Limited, Cambridge GaN Devices Limited and Refeyn Limited. Post year end, the FWT Shares made investments in six new companies plus one follow on investment in Additive Manufacturing Technologies Limited. Further details of all of these deals are included in the Investment Manager's review.

Management fees

The annual management fee of the FWT Shares fund is calculated as 2.0% of Net Assets and equated to £75,000 during the year.

Foresight Solar & Technology VCT plc Annual report and accounts 31 March 2021

Chairman's Statement

COMPANY

Auditor

The Board launched a tender for its audit contract following the signing of the 2020 Annual Report and Accounts. The previous auditor, KPMG LLP, was invited to tender alongside several other firms. Following this tender process, Deloitte LLP was appointed as company auditor for the year ending 31 March 2021. The Board is pleased with the appointment but would like to record its thanks to KPMG LLP for its services and advice over the past seven years.

Board composition

Mike Liston resigned from the Board on 3 February 2021. On behalf of the Board, I would like to place on record our thanks to Mike for his contribution to the success of the Company since launch and wish him well for the future.

The Board was delighted to announce that, following an independent professional search, Carol Thompson was appointed as non-executive director with effect from 22 March 2021. Carol is an experienced non-executive director and brings over 25 years' experience in governance and strategic financial management to her new role, and has spent large parts of her career as a board member in technology and regulated businesses. She has held senior positions at Hellman & Friedman, a leading private equity investment firm, and JP Morgan. Carol will be offering herself for election at the forthcoming AGM and if elected, will be appointed as chair of the Audit Committee, as well as a member of the Nomination and Management Engagement and Remuneration Committees.

Listing of Investment Manager

The Company's Investment Manager, Foresight Group LLP, undertook a successful listing on the London Stock Exchange as Foresight Group Holdings Ltd (FSG) on 9 February 2021. The Board welcomes the additional visibility and profile this will provide for its Investment Manager and is confident that the services provided by the Investment Manager will remain of the same high standard following its listing.

Annual General Meeting

With social distancing restrictions now relaxed as at the date of this report, we are planning to hold a usual physical Annual General Meeting this year, along with an update from the Investment Manager, taking place at the offices of Foresight Group in London on 23 September 2021 at 12.30pm.

If you intend to attend the AGM, please also notify us by email at [email protected] in case there are any changes to arrangements that need to be communicated at short notice.

Shareholders will note that it is proposed by resolution 11 to adopt new articles of association ("New Articles"). The key changes to the New Articles are to provide for the ability to hold virtual and hybrid general meetings. The Board wishes to note its preference is to hold AGMs by way of an open meeting and AGMs will only be held virtually where absolutely necessary.

Outlook

Following the successful refinancing of the underlying portfolio, the Company will continue to seek to optimise the performance of the existing Ordinary Shares portfolio including fixing power price agreements (PPAs) when they are deemed attractive, and pay dividends through a combination of income earned and realised gains.

Over the medium to long term, once all Ordinary Shareholders have reached their minimum 5-year qualifying holding period, the Board and the Investment Manager will, if appropriate, begin a managed process of returning the value of the Ordinary Shares fund to its Shareholders.

The Company will also continue to raise new funds in the FWT Shares fund and seek appropriate qualifying investments for this share class.

Ernie Richardson
Chairman
27 August 2021

Foresight Solar & Technology VCT plc Annual report and accounts 31 March 2021

ORDINARY SHARES

Investment Manager's Review

Portfolio summary and performance

The Investment Manager has focused on delivering positive operational performance from the assets within the portfolio. The portfolio performed well with revenue 0.7% above budget aided by high levels of solar irradiation which was 5.3% above budget during the year.

The assets in the portfolio achieved a strong performance during the year despite production outages occurring at two sites. Some sites were also affected by snowfall in the early part of 2021. Further details on performance of the individual assets are included on pages 12 to 17. The operation of the assets has not been affected materially by national or regional COVID-19 lockdowns.

As anticipated, in June 2020 a new cross-portfolio debt facility was agreed with the existing lender, refinancing all project-level debt for the UK solar assets. The term of the new facility runs until 31 December 2023. By working with the existing lender, which is familiar with the whole portfolio, the Investment Manager was able to secure preferable terms on the loans.

The disposal of two smaller assets was completed and there were no acquisitions during the year.

Disposals

The existing portfolio companies sold two assets during the year. Telecomponenti – which was the fund's sole remaining foreign asset – was sold at a profit during the year. Littlewood was also sold in a profitable exit at a price significantly above the prior valuation. A large part of the proceeds for these disposals were used to repay the majority of the borrowings originally used to finance the acquisition of Littlewood, with much of the remainder retained within the portfolio company or paid up to the Company. These disposals are illustrative of demand for these assets among certain investors which we hope, in due course, feeds through to valuation maximisation in the future. A sale of the Greenersite, the smallest UK asset, is also being pursued.

Market update

COVID-19

As the UK went into lockdown in March 2020, the energy industry saw a sharp contraction in energy demand across the country which resulted in wholesale energy prices reaching historic lows. Following an overall drop in electricity demand of 20%, the UK slowly recovered in June 2020 as lockdown restrictions eased, businesses and schools began to reopen and the holiday period came to an end in early September. With the acceleration of the vaccination program in 2021 and the reopening of businesses, energy consumption is slowly returning to pre-pandemic levels.

Green Investment

Governments in the UK and across Europe continue to remain supportive of the renewables sector and have made commitments to green energy and decarbonisation as central pillars of their pandemic recovery packages. In November the UK Prime Minister announced plans for a Green Industrial Revolution which included a 'Ten Point Plan' which promised to mobilise up to £12 billion of state investment and potentially three times as much from the private sector in a bid to create 250,000 'green jobs'. The UK has also stated its intention to use both the G7 Summit in June and the COP26 Summit in November to push other countries to follow its ambitious net carbon neutral plans. Despite the disruption caused by the emergence of COVID-19 during 2020, the UK continued its path towards its 2050 decarbonisation goal with renewables continuing to play an increasing role. While the extensive pipeline of UK subsidy free solar expected to be constructed during the year fell short of expectations, it is estimated that a further 545 MW of solar capacity was connected in 2020, 60% of which was utility scale.

Brexit

2020 marked the year the UK left the European Union, with the EU-UK Trade and Cooperation Agreement agreed on 24 December 2020 and ratified by the UK Parliament on 30 December 2020. The impact on the Company is expected to be limited considering the measures implemented in recent years including maintaining robust levels of spare parts. The Investment Manager will continue to review the impact of the Agreement on the Company's operations.

Foresight Solar & Technology VCT plc Annual report and accounts 31 March 2021

ORDINARY SHARES

Investment Manager's Review

Revenues

During the year, the majority of revenue from the UK portfolio investments came from subsidies (predominantly under the ROC scheme) and other green benefits. These revenues are directly and explicitly linked to inflation for 20 years from the accreditation date under the ROC regime and subject to Retail Price Index ("RPI") inflationary increases applied by Ofgem in April of each year. The remaining revenues derive from electricity sales by our UK portfolio companies, which are subject to wholesale electricity price movements.

The average power price achieved during the year was as high as £67.25 per MWh, representing increases from the average price achieved in the 12 months to 31 March 2020 (£44.45 per MWh). Power prices rose gradually throughout the year as the emergence from COVID-19 lockdown increased demand. There remains volatility and uncertainty about market factors affecting prices in the short to medium term. The Investment Manager continues to monitor these to seek the best opportunities to enter into short term price fixing arrangements when they arise.

During the year there was a 5.3% decrease in long term power price forecasts. This was driven by a major reduction in forecast electricity demand as a result of COVID-19 induced economic restrictions. The Investment Manager uses these forward-looking power price assumptions to assess the likely future income of the portfolio investments for valuation purposes.

The Company's assumptions are formed from a blended average of the forecasts provided by third party consultants and are updated on a quarterly basis. The forecasts anticipate a small increase in prices over 2021-2031 and then remain broadly stable over the longer term.

This decrease from the March 2020 figure is largely driven by global factors including the pandemic, fluctuating exchange rates, weather events and the impact of gas prices on power prices. The various lockdown measures announced across Europe over Winter 2020 will continue to incite volatility in power prices, with near-term contracts falling following strong gas supply to Europe.

Power Purchase Agreements ("PPAs") are entered into between each portfolio company and regulated retail energy suppliers in the UK electricity supply market. Under the PPAs, each portfolio company will sell the entirety of the generated electricity and ROCs. Electricity can be sold at a fixed price for an agreed duration, or at a variable rate, as agreed from time to time.

The PPA strategy adopted by our portfolio companies seeks to optimise their revenues from the power generated, while keeping the flexibility to manage their solar assets appropriately. The Boards of our portfolio companies, with assistance from Foresight, constantly assess conditions in the electricity market and set their pricing strategy on the basis of likely future movements.

The Company's strategy is to maintain c.30% of the portfolio under fixed pricing agreements, with the remainder selling electricity at a variable market rate. As at the year end date, the assets with fixed arrangements currently account for 34% of capacity.

Sustainable Investing

Sustainability lies at the heart of the Investment Manager's approach, and the Investment Manager believes that investing responsibly, seeking to make a positive social and environmental impact, is critical to its long-term success. These factors have been integrated into the investment process, and are actively supported by all involved, regardless of seniority. Foresight continues to refine its sustainability tracking to further improve its investment processes, enhance the sustainability performance of existing assets and demonstrate more comprehensively the environmental benefits and social contribution of the Company's activities, implementing Foresight Group's Sustainable Investing in Infrastructure Strategy. This strategy focuses on ensuring all assets are evaluated prior to acquisition and throughout their ownership, in accordance with Foresight Group's Sustainability Evaluation Criteria.

There are five central themes to the Criteria, which cover the key areas of sustainability. The five criteria are:

Sustainable Development Contribution: The development of affordable and clean energy and improved resource and energy efficiency.
Environmental Footprint: Assessing potential environmental impact such as emissions to air, land and water, effects on biodiversity and noise and light pollution
Social Engagement: Engagement and consultation with local stakeholders. Ensuring a positive local economic and social impact, community engagement and the health and wellbeing of stakeholders.
Governance: Compliance with relevant laws and regulations and ensuring best practice is followed.
Third Party Interactions: Third party due diligence is conducted on key counterparties to ensure adherence to the aforementioned criteria where relevant.

Foresight Solar & Technology VCT plc Annual report and accounts 31 March 2021

10
Foresight Solar & Technology VCT plc Annual report and accounts 31 March 2021

ORDINARY SHARES

Investment Manager's Review

Land Management

Compliance audits have been carried out on all UK sites held by portfolio companies, confirming that they are in line with government permits and conditions. Foresight Group remains a working partner of the Solar Trade Association's Large Scale Asset Management Working Group. Foresight is a signatory to the Solar Farm Land Management Charter and seeks to ensure that the solar farms operated by all of our portfolio companies are managed in a manner that maximises the agricultural, landscaping, biodiversity and wildlife potential, which can also contribute to lowering maintenance costs and enhancing security. As such, Foresight Group regularly inspects sites and advises portfolio companies to develop site specific land management and biodiversity enhancement plans to secure long term gains for wildlife and ensure that the land and environment are maintained to a high standard. This includes:

Management of grassland areas within the security fencing to promote wildflower meadows and sustainable sheep grazing;
Planting and management of hedgerows and associated hedge banks;
Management of field boundaries between security fencing and hedgerows;
Sustainable land drainage and pond restoration;
Installation of insect hotels and reptile hibernacula;
Installation of boxes for bats, owls and kestrels; and
Installation of beehives by local beekeepers.

Most solar parks are designed to enable sheep grazing and the remaining plants are investigated for alterations to ensure that the farmland on which the solar assets are located can remain useful in agricultural production, which is a frequent desire of local communities.

Examples of sustainable land management activities across the portfolio include:

Free-range chickens grazing at the New Kaine site
The grounds of Turweston continue to be managed as wildflower meadow
Beehives are on site at Turweston
Bird and bat boxes have been installed at Basin Bridge
At Turweston additional gates with sufficient gaps at the lower edge were installed to allow for safe wildlife passage across the site
Trees and hedgerows have been planted, and hedge infill work undertaken at Dove View and Hurcott.

Social and Community Engagement

Foresight Group actively seeks to engage with the local communities around the solar assets operated by our portfolio companies and regularly attends parish meetings to encourage community engagement and promote the benefits of their solar assets.

Due to COVID-19, there were no site visits during the year and the Investment Manager was unable to attend parish meetings. However, the Investment Manager has continued to make annual community payments for Marchington, which have been extended to reflect the site's 40-year consent.

ORDINARY SHARES

Investment Manager's Review

Health and Safety

Health and safety audits have been carried out at all assets during the year and there have been no reportable or material health and safety incidents.

In May 2020 there was a fire close to the Stables farm asset. Although outside of the boundaries of the site, the event was recorded and investigated as a Near Miss to identify and eliminate any fire hazards from the premises.

Safety, Health, Environment and Quality ("SHEQ") performance and risk management are a top priority at all levels for Foresight Group. To further improve the management of SHEQ risks, reinforce best practice and ensure non-compliance with regulations is avoided, Foresight Group continues to work with independent health and safety consultants who regularly visit the assets operated by our portfolio companies to ensure they not only meet, but exceed, industry and legal standards. The consultants have confirmed that all sites are compliant with applicable regulations.

Recommendations have been investigated with follow-up actions agreed to help raise standards further. During the year, improvements to method statements have been made relating to the safe isolation of central inverters. The health and safety advisor provided additional recommendations to plan movement around the sites. The advisor noted that wet weather conditions make traversing the sites difficult in some places, especially when completing manual handling of heavy parts. Recommendations included a warning regarding driving off-road, which will be implemented for applicable sites by the Operation and Maintenance companies.

Outlook

Despite a fall in external power prices negatively impacting the portfolio valuation in the early part of the year, it has otherwise been another positive year for the Company with strong performance from the assets.

The Ordinary Shares fund has a solar-only investment mandate and therefore has an exposure to power pricing. Valuations are particularly influenced by long-term power price forecasts which have fallen over the life of this fund due to a reduction in the cost of renewable energy and the cost of capital that supports new renewable energy deployment. At the time of writing, there are reasons to believe that this downward trend may be at an end. Power prices over the winter period have exceeded pre-pandemic levels and these power price levels have persisted into the spring period following this reporting period.

The Investment Manager successfully concluded the negotiation of new debt terms with the existing lender to refinance the majority of the UK solar assets, with pricing materially less than the previous arrangements. Long-term renewable energy projects typically have inflation-linked income streams, often with a high degree of Government backing through subsidies, which will be unaffected by a slowdown in economic growth.

The Investment Manager is working on various fronts to extend the operating lives of all assets in the portfolio which is expected to add value when the assets are eventually sold. There is cautious optimism that asset values will trade up over the next couple of years before the next exit is considered.

The Company will continue to focus on delivering strong operational performance across the portfolio.

Foresight Group LLP
Investment Manager
27 August 2021

Foresight Solar & Technology VCT plc Annual report and accounts 31 March 2021

ORDINARY SHARES

Investment Manager's Review

Portfolio Overview

Turweston Solar Farm, Northamptonshire

Investment date December 2014

The portfolio company trading on the site performed above the expected level of production due to the good availability of the plant and high irradiance levels.

	31 March 2021
Voting rights in the relevant portfolio companies	49%
Valuation	£6,065,802
	Year ended 31 March 2021
---	---
Income	£2,587,078
EBITDA	£83,736
Net liabilities	(£2,032,408)

Laurel Hill Solar Farm, County Down

Investment date September 2017

The portfolio company trading on the site performed below the expected level of production despite high levels of irradiance. This poor performance was caused by delays to the replacement of transformers, faulty inverters and snowfall. The majority of the losses incurred will be recovered from the EPC contractor as part of the FAC process.

	31 March 2021
Voting rights in the relevant portfolio companies	49%
Valuation	£3,400,875
	Year ended 31 March 2021
---	---
Income	£1,380,351
EBITDA	(£76,214)
Net liabilities	(£1,610,071)

Foresight Solar & Technology VCT plc Annual report and accounts 31 March 2021

ORDINARY SHARES

Investment Manager's Review

Hurcott Solar Farm, Somerset

Investment date November 2018

The portfolio company trading on the site performed above the expected level of production due to the good availability of the plant and high irradiance levels.

	31 March 2021
Voting rights in the relevant portfolio company	49%
Valuation	£3,343,112
	Year ended 31 March 2021
---	---
Income	£1,791,687
EBITDA	(£619,482)
Net liabilities	(£3,914,316)

Saron Solar Farm, Carmarthenshire

Investment date March 2015

The portfolio company trading on the site performed above the expected level of production despite a communication issue that affected 63 of the inverters at the site. The positive performance was driven by high irradiance levels.

	31 March 2021
Voting rights in the relevant portfolio company	49%
Valuation	£2,753,991
	Year ended 31 March 2021
---	---
Income	£728,072
EBITDA	£1,428,053
Net liabilities	(£1,505,375)

Foresight Solar & Technology VCT plc Annual report and accounts 31 March 2021

ORDINARY SHARES

Investment Manager's Review

Basin Bridge Solar Farm, Leicestershire

Investment date August 2018

The portfolio company trading on the site performed above the expected level of production due to the good availability of the plant and high irradiance levels.

	31 March 2021
Voting rights in the relevant portfolio company	49%
Valuation	£1,710,664
	Year ended 31 March 2021
---	---
Income	£738,771
EBITDA	£557,871
Net liabilities	(£825,181)

Dove View Solar Farm, Staffordshire

Investment date August 2018

The portfolio company trading on the site performed above the expected level of production due to the good availability of the plant and high irradiance levels.

	31 March 2021
Voting rights in the relevant portfolio company	49%
Valuation	£1,459,829
	Year ended 31 March 2021
---	---
Income	£533,256
EBITDA	£266,762
Net liabilities	(£1,083,216)

Foresight Solar & Technology VCT plc Annual report and accounts 31 March 2021

ORDINARY SHARES

Investment Manager's Review

Marchington Solar Farm, Staffordshire

Investment date July 2016

The portfolio company trading on the site performed above the expected level of production due to the good availability of the plant and high irradiance levels.

	31 March 2021
Voting rights in the relevant portfolio company	49%
Valuation	£1,450,482
	Year ended 31 March 2021
---	---
Income	£562,187
EBITDA	£1,135,572
Net liabilities	(£494,334)

Beech Farm Solar, Staffordshire

Investment date August 2018

The portfolio company trading on the site performed above the expected level of production despite outages caused by the main circuit breaker. The positive performance was driven by high irradiance levels.

	31 March 2021
Voting rights in the relevant portfolio company	49%
Valuation	£1,192,233
	Year ended 31 March 2021
---	---
Income	£538,286
EBITDA	£363,110
Net liabilities	(£814,734)

Foresight Solar & Technology VCT plc Annual report and accounts 31 March 2021

ORDINARY SHARES

Investment Manager's Review

Stables Solar Farm, Leicestershire

Investment date August 2018

The portfolio company trading on the site performed above the expected level of production due to the good availability of the plant and high irradiance levels.

	31 March 2021
Voting rights in the relevant portfolio company	49%
Valuation	£692,945
	Year ended 31 March 2021
---	---
Income	£244,385
EBITDA	£131,434
Net liabilities	(£685,540)

New Kaine Solar Farm, Kent

Investment date March 2015

The portfolio company trading on the site performed above the expected level of production due to the good availability of the plant and high irradiance levels.

	31 March 2021
Voting rights in the relevant portfolio company	49%
Valuation	£408,331
	Year ended 31 March 2021
---	---
Income	£268,735
EBITDA	£147,501
Net liabilities	(£285,423)

Foresight Solar & Technology VCT plc Annual report and accounts 31 March 2021

ORDINARY SHARES

Investment Manager's Review

Greenersite Solar Farm, Herefordshire

Investment date March 2013

The portfolio company trading on the site performed above the expected level of production due to the good availability of the plant and high irradiance levels.

	31 March 2021
Voting rights in the relevant portfolio company	100%
Valuation	£332,655
	Year ended 31 March 2021
---	---
Income	£49,915
EBITDA	£26,355
Net assets	£145,256

Foresight Solar & Technology VCT plc Annual report and accounts 31 March 2021

ORDINARY SHARES

Investment Manager's Review

Portfolio details as at 31 March 2021 were as follows:

| Name of asset | Date of investment | 31 March 2021
Valuation (£) | Valuation
Methodology | 31 March 2020
Valuation (£) |
| --- | --- | --- | --- | --- |
| Turweston Solar Farm | December 2014 | 6,065,802 | Discounted cashflow | 4,929,689 |
| Laurel Hill Solar Farm | September 2017 | 3,400,875 | Discounted cashflow | 3,423,121 |
| Hurcott Solar Farm | November 2018 | 3,343,112 | Discounted cashflow | 3,548,024 |
| Saron Solar Farm | March 2015 | 2,753,991 | Discounted cashflow | 2,719,980 |
| Basin Bridge Solar Farm | August 2018 | 1,710,664 | Discounted cashflow | 1,912,027 |
| Dove View Solar Farm | August 2018 | 1,459,629 | Discounted cashflow | 1,615,127 |
| Marchington Solar Farm | July 2016 | 1,450,482 | Discounted cashflow | 1,812,348 |
| Beech Farm Solar | August 2018 | 1,192,233 | Discounted cashflow | 1,187,749 |
| Stables Solar Farm | August 2018 | 602,945 | Discounted cashflow | 637,035 |
| New Kaine Solar Farm | March 2015 | 408,331 | Discounted cashflow | 468,961 |
| Greenersite Solar Farm | March 2013 | 332,655 | Discounted cashflow | 358,064 |
| Telecomponenti
Rooftop Solar | November 2017 | — | Expected sales
proceeds | 491,954 |
| Subtotal | | 22,720,719 | | 23,104,079 |
| Other net assets held by
the portfolio companies | | 1,189,854 | | 2,146,111 |
| Amounts receivable by Youtan
Limited from the Company | | — | | 16,919,693 |
| Total | | 23,910,573 | | 42,169,883 |

Portfolio companies will either trade on a solar site themselves or a wholly owned subsidiary will do so. The valuations above reflect the total value attributable to the Company's holding in these portfolio companies as at the relevant date, which is stated net of any existing borrowings made by that portfolio company or their subsidiary.

The driver behind the decrease in the amounts receivable by Youtan Limited from the Company from the value on 31 March 2020 was the release of the Company's liability from its wholly owned subsidiary, Youtan Limited. As explained further in Note 2, this had nil impact to the overall Net Asset Value of the Company.

The portfolio companies, or their wholly owned subsidiaries, may borrow to fund acquisitions and may also employ proceeds from the disposal of assets.

Foresight Solar & Technology VCT plc Annual report and accounts 31 March 2021

Investing for a smarter future for more than 35 years

Sustainable Infrastructure Foresight's Five criteria

£6.5BN
sustainable infrastructure
Assets under Management

2.9GW
of renewable generation assets

Good Health & Well-being
Affordable & Clean Energy
Industry, Innovation & Infrastructure
Climate Action
Life on Land
Climate Change Resilience

Investment strategies that support sustainable economic and social development

1 Sustainable development contribution

2 Environmental footprint

3 Social welfare

4 Governance

5 Third party interactions

Biodiversity Management
Resource & Feedstock Sustainability
Water, Waste & Emissions Management
Decommissioning

Health & Safety
Local Social Impact
Local Economic Impact

Legal, Employment & Human-Rights
Compliance
Management Structure & Board
Composition

Reputational Risk
Counterparty ESG Performance
Supply Chain Sustainability

One of the first external fund managers appointed by the UK Green Investment Bank

Helped shape the Green Investment Handbook

Foresight Williams Technology Share class

Engineering and Technology Adviser

Williams Advanced Engineering (WAE) is a technology and engineering services business born out of the Williams Formula One Team in 2010. The company provides world class technical innovation, engineering, testing and manufacturing services to deliver energy efficient performance to customers. WAE's capabilities in new materials, electrification and battery technology, aerodynamics and thermodynamics, business performance and specialist low volume manufacturing apply across all sectors, including automotive and motorsport, aerospace and defence, energy and sports science, and healthcare.

Working in close collaboration with its customers and partners, WAE helps meet the sustainability and technology challenges of the 21st century and improve performance.

In December 2019, EMK Capital acquired a majority stake in WAE, which represented a natural next step in WAE's evolution, unlocking potential for further growth. WAE today employs 350 people engaged in many innovative and transformative technical areas for a growing list of clients.

With its work across a range of industry sectors, WAE is well positioned to identify growing market opportunities and technologies. Through its reputation and commercial relationships, WAE also has access to an exciting pool of investment opportunities and several of the investments made through the FWT strategy to date have been sourced by WAE. Given this market insight and technical expertise, WAE can assist with technical due diligence on small to medium sized businesses ("SMEs") and provide services to support with the development of technologies and portfolio firms towards commercialisation.

The Williams name is synonymous with world class engineering, innovation and performance and investee companies can benefit from this association (subject to agreement with each investee company).

Sectors and competencies

The FWT Share class fits perfectly with our business model and allows us to take the learnings and technologies from Motor Sport and apply them to other industries.

Craig Wilson
Managing Director, WAE

Technology and engineering innovation at its core

The core strategy of the Foresight Williams Technology share class is to focus on early stage companies with strong intellectual property, operating in attractive, substantial markets where Williams' technology, engineering, commercial and promotional added-value support and Foresight's financial and commercial skills may offer distinct advantages to investee companies. Rather than having a particular sector focus, the share class invests principally in early stage UK technology companies aligned to capabilities where WAE can add value. The Investment Manager will also consider co-investing with the Foresight Williams Technology EIS Fund, or other VCTs, family offices and/or university spin out funds. This is to provide additional investment for companies as well as spreading the risk in early stage investment.

Investors have access to a diverse technology base with innovation at its heart. With the combination of the technical, commercial and promotional experience of WAE alongside Foresight's investment expertise, experience of early-stage opportunities and nurturing of UK SMEs, portfolio companies will be offered dedicated support to accelerate their technologies towards commercialisation.

Foresight and WAE work with a wide range of organisations and advisers to identify and develop a strong pipeline of opportunities. This ensures a breadth of investments across different markets and technology areas that are aligned to the potential for WAE to add value, such as those listed to the right.

Foresight Solar & Technology VCT plc Annual report and accounts 31 March 2020

22
Foresight Solar & Technology VCT plc Annual report and accounts 31 March 2021

FORESIGHT WILLIAMS TECHNOLOGY SHARES

Investment Manager's Review

Summary

Between its launch on 20 December 2019 and the year end, the Foresight Williams Technology Shares (“the FWT fund”) had raised £10.0 million. The Offer provides investors with the opportunity to invest in a portfolio of early-stage companies with high growth-potential, developing innovative and occasionally transformational technologies across a range of different sectors. As at 31 March 2021, the FWT fund had made four investments totalling £1.4 million:

Additive Manufacturing Technologies (AMT): a manufacturer of systems that automate the postprocessing covering functionality including unpacking, surface smoothing, sealing and colouring of 3D printed parts.

Audioscenic: a University of Southampton spin-out applying computer vision software to create 3D immersive audio experiences initially in consumer soundbars.

Cambridge GaN: a developer of a new generation of gallium nitride semiconductor power devices.

Refeyn: a spin-out from the University of Oxford developing a new generation of biomolecule analysis instrumentation based on weighing molecules using light, known as mass photometry.

Further information relating to each of these investments can be found on pages 24 to 26.

Post period acquisitions

Subsequent to the year end, the FWT fund has made seven further investments, totalling £3.6 million, including:

INSPhERE

In April, the FWT fund completed its investment into INSPhERE, a Bristol-based company pioneering measurement systems that enhance the accuracy of automated production lines, boosting productivity and profitability for manufacturers. INSPhERE's measurement systems meet the growing demand from high value manufacturing customers for smarter “Industry 4.0” automation solutions. The company's philosophy is to develop measurement systems that monitor and control the manufacturing process itself, rather than simply checking parts once they have been produced. INSPhERE's in-process metrology systems operate in real-time, automatically measuring the accuracy of the production line robots and instructing self-correction, creating a closed-loop control system. This not only avoids downtime but also provides significantly quicker line set up, reducing waste, improving productivity and ultimately enhancing profitability for manufacturers.

Machine Discovery

The FWT fund completed its investment into Machine Discovery in April 2021. Machine Discovery is an ambitious early-stage software company that was spun out of the University of Oxford in 2019 to develop machine learning technology that simplifies, automates and accelerates simulation tasks. Machine learning is used in artificial intelligence. Software algorithms allow computers to

analyse massive qualities at once, and learn from past data to identify meaningful patterns, all at extraordinary speed. Today, simulations used in the engineering and technology sectors are increasingly complex and costly. Machine Discovery is commercialising a new software platform, based on a new type of algorithm to make these simulations much faster, easier and less costly.

VECTOR Photonics

The FWT fund's investment into Vector Photonics, a University of Glasgow spin-out commercialising the next generation of semiconductor lasers, was completed in April. Known as a PCSEL (photonic crystal surface emitting laser), Vector Photonics' design uses a photonic crystal with a series of reflectors to control and confine the laser. This results in dramatically improved performance including faster switching speeds, longer wavelengths (>1000 nanometre) and higher output power. This novel design is expected to reduce the overall manufacturing cost of laser devices and provide real benefits over existing laser technology. Areas expected to benefit include some of the fastest growing technology markets in the world; data communications, additive manufacturing (including metal and plastic printing), LiDAR (light detection and ranging) and optical sensing.

Fundraising

The Offer, made possible through an innovative collaboration between Foresight Group and Williams Advanced Engineering Ltd, continues to build positive momentum in the market. Since the year end, a further

£2.5 million has been raised, bringing the total raised to £12.5 million.

FORESIGHT WILLIAMS TECHNOLOGY SHARES
Investment Manager's Review

Climate Change Statement

The Investment 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 2015 Paris Agreement. To meaningfully assist international efforts to limit the global temperature increase this century to 2 degree Celsius, the Investment Manager follows the recommendations of the Task Force for Climate-Related Financial Disclosures ("TCFD") by integrating analysis of climate related risks and opportunities in the investment cycle and increasing awareness of climate related issues internally and throughout its operations.

Recognising the importance of assessing the climate-related risks that have the potential to materially impact its business, the Investment Manager actively participates or supports a number of other climate related initiatives and organisations:

Principles for Responsible Investment. The Investment Manager has been a signatory of the Principles for Responsible Investment ("PRI") since 2013. The PRI is a UN supported network of global investors working to promote sustainable investment through the incorporation of environmental, social and governance ("ESG") principles.
UN Global Compact. Founded in 2000, the United Nations Global Compact ("UNGC") is the world's largest corporate sustainability initiative. The Investment Manager has been a member since 2019 and joins over 9,000 companies across 165 countries in its commitment to responsible and sustainable practices. The Investment Manager's first Communication on Progress was published in June 2021.
Initiative Climat International. The Investment Manager recognises that a global systemic challenge such as climate change requires a collaborative approach and to this end, it has become a member of the initiative Climat International ("iCI"). The Investment Manager is engaging with its peers in the industry to find ways to reduce the carbon emissions of investee companies whilst taking into account the unique challenges faced by companies with smaller operations, such as those within the FWT Shares portfolio.

The Company supports the Investment Manager's views on climate change and ESG and its vigorous process in the evaluation of environmental and social impacts throughout the investment lifecycle. For each material risk identified during due diligence, a mitigation plan is proposed in the investment submission and these actions form part of the 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

As long-term stewards of its investors' capital, the Investment Manager will use its experience and capabilities to guide its investee companies towards better sustainability and ESG performance throughout the course of its investment through to exit.

Pipeline

The onset of the COVID-19 pandemic and the strict lockdown measures introduced in March 2020 triggered a slowdown in investment activity in the market targeted by the FWT fund. Encouragingly, the Investment Manager started to see a recovery in the demand for growth capital towards the end of the summer, supporting the development of a healthy pipeline of opportunities as the fund began to invest. The Investment Manager expects this to increase as the economy recovers from the pandemic. At the time of writing, two further deals had passed the

Investment Manager's final Investment Committee stage and were nearing completion. On three further deals, terms and exclusivity had been agreed and, subject to Investment Committee approval, were progressing to due diligence.

Foresight Group LLP
Investment Manager
27 August 2021

Foresight Solar & Technology VCT plc Annual report and accounts 31 March 2021

FORESIGHT WILLIAMS TECHNOLOGY SHARES

Investment Manager's Review

Foresight Williams Technology Fund Portfolio Summary

		31 March 2021			31 March 2020
Name of asset	Date of Investment	Accounting Cost (£)	Valuation (£)	Valuation Methodology	Accounting Cost (£)	Valuation (£)
Cambridge GaN Devices Limited	January 2021	360,807	360,807	Price of last funding round	—	—
Additive Manufacturing Technologies Limited	October 2020	360,000	360,000	Price of last funding round	—	—
Refeyn Limited	November 2020	360,000	360,000	Price of last funding round	—	—
Audioscenic Limited	October 2020	359,995	359,995	Price of last funding round	—	—
Total		1,440,802	1,440,802		—	—

Cambridge GaN Devices Limited
www.camdevices.com

First Investment	Accounting Cost	Carrying Value	Change in Value for Year	% Equity Held
January 2021	£360,807	£360,807	—	2.0%

Cambridge GaN Devices (CGD) is a University of Cambridge spin out founded in 2016. The company has developed a new generation of gallium nitride (GaN) semiconductor power devices. GaN power devices are smaller, more efficient and up to 100 times faster than silicon alternatives. Target sectors include consumer electronics, industrial lighting, data centres and automotive.

The FWT fund invested £360,807 into CGD in January 2021 as part of a £6.9 million funding round alongside Foresight Williams EIS, the Business Growth Fund and IQ Capital.

The company is very early stage and has generated limited revenue to date. However, the development of the company's four products remains on track.

Foresight Solar & Technology VCT plc Annual report and accounts 31 March 2021

FORESIGHT WILLIAMS TECHNOLOGY SHARES Investment Manager's Review

Foresight Williams Technology Fund Portfolio Summary (continued)

Additive Manufacturing Technologies Limited www.amtechnologies.co.uk
First Investment	Accounting Cost	Carrying Value	Change in Value for Year	% Equity Held
October 2020	£360,000	£360,000	—	1.8%

Additive Manufacturing Technologies Limited (AMT) is developing machines for post-processing of 3D printed parts; removal of excess polymer (depowdering), surface smoothing/polishing, colouring (if required) and inspection. AMT's goal is to provide a fully automated end-to-end solution with robots linking each stage.

The FWT fund invested £360,000 into AMT in October 2020 as part of a £2.5 million funding round alongside Foresight Williams EIS and the UK Government from its Future Fund scheme.

Despite the challenges of lockdowns and Brexit, the company has made positive progress in the last six months. The company has signed a global distribution agreement and is continuing to attract high profile customers. For these reasons, as well as there being continued progress on product and IP development, and further strengthening in the market, Foresight is supporting a larger growth investment round, which is expected to complete in Q2 2021.

Refeyn Limited www.refeyn.com				REFEYN
First Investment	Accounting Cost	Carrying Value	Change in Value for Year	% Equity Held
November 2020	£360,000	£360,000	—	0.6%

Refeyn is commercialising a new generation of scientific instrumentation for the detection, imaging and accurate mass determination of single biomolecules in solution using light scattering. Its instrumentation is significantly faster, easier to use and lower cost than other existing high accuracy techniques. The company was spun out from the Chemistry Department at the University of Oxford in early 2018.

The FWT fund invested £360,000 into Refeyn in November 2020 in a round led by new investor Northpond Ventures, a US-based $500m life-sciences focused fund, alongside Oxford Sciences Innovation ("OSI") and the University of Oxford as well as Foresight Williams EIS.

Trading remains resilient and the company continues to grow. The new CEO, appointed at the time of the recent funding round, is settling in well. The flagship product, the OneMP, continues to satisfy many customers' requirements and is generating strong demand as a result.

Foresight Solar & Technology VCT plc Annual report and accounts 31 March 2021

FORESIGHT WILLIAMS TECHNOLOGY SHARES

Investment Manager's Review

Foresight Williams Technology Fund Portfolio Summary (continued)

| Audioscenic Limited
www.audioscenic.com | | | AUDIOSCENIC | |
| --- | --- | --- | --- | --- |
| First Investment | Accounting Cost | Carrying Value | Change in Value
for Year | % Equity Held |
| October 2020 | £359,995 | £359,995 | — | 8.8% |

Audioscenic is developing an immersive 3D audio technology for loudspeaker systems that will revolutionise the way users experience sound. The system monitors the location of a listener's head using head tracking technology and then beams a separate sound wave to their left and right ears, creating an immersive 3D audio experience far beyond what a conventional surround sound system can offer.

The FWT fund invested £359,995 into Audioscenic in October 2020 as part of a £1.5 million funding round alongside Foresight Williams EIS and existing investors, IP Group.

Since investment, Audioscenic has continued to develop its core technology and is now in early discussions with several brands, OEMs (Original Equipment Manufacturers) and ODMs (Original Design Manufacturers) to license the technology into a range of products.

Foresight Solar & Technology VCT plc Annual report and accounts 31 March 2021

Investment Manager's Review

About the Investment Manager

The Company's Investment Manager is Foresight Group LLP ("Foresight"), which is responsible for the investment of the Company's capital. Currently, the portfolio consists of companies that own ground-based solar power plants in the UK or are early stage companies developing innovative technologies. The Investment Manager also advises portfolio companies on their borrowing strategy, the sale of the electricity they generate and in the administration of green benefits.

Foresight is an infrastructure and private equity investment manager listed on the London Stock Exchange. Foresight manages assets of over £7.2 billion, raised from UK and international pension funds and other institutional investors, private and high net worth individuals and family offices. Founded in 1984, in total Foresight manages 33 funds on behalf of institutional and retail investors including three venture capital trusts that are listed on the premium segment of the Official List and are admitted to trading on the Main Market. Foresight has won a number of awards recognising its accomplishments in this area. Most recently, receiving the Best Venture Capital Trust Provider Commended recognition at ILP Moneyfacts Awards 2020. Foresight's largest office is in London with regional UK offices in Cambridge, Manchester, Nottingham, Milton Keynes, Leicester, Edinburgh and Guernsey and international offices in Sydney, Rome, Madrid and Luxembourg. Foresight has 234.4 full time employees including an extensive back office team comprising finance, investor relations, sales, marketing, compliance, HR, IT and administration.

Infrastructure

Foresight established its solar investment team in 2007 and launched its first solar fund, Foresight European Solar Fund, in early 2008. Foresight Solar VCT plc (later renamed Foresight Solar & Technology VCT plc) was launched in November 2010 and the Group has since raised over £200 million for solar-focused Enterprise Investment Schemes. It also launched the largest listed solar fund in the UK, Foresight Solar Fund Limited ("FSFL") in 2013, a fund with a gross asset value of over £1.0 billion currently. In total, the team manages over 130 solar plants totalling over 1.3GW of existing operational capacity across the UK, Australia, Italy, Spain and Portugal.

The team has broadened its focus which now extends across the energy infrastructure sector and beyond. Foresight is one of the largest renewable energy investors in Europe, managing over 290 projects with over 2.7GW of capacity in the UK, Europe and Australia. Foresight manages one of the largest solar portfolios in Europe and has mobilised over £1bn of private sector capital into the UK energy from waste and biomass sectors. Foresight also manages a portfolio of more than 800MW of onshore wind projects and a portfolio of in excess of 230MW renewable-enabling infrastructure assets in reserve power and battery storage.

The Group's dedicated multinational infrastructure team of 107 consists of an Investment Team and an Asset Management Team of specialist portfolio accountants, in-house legal personnel and specialised engineers. The team possesses a comprehensive suite of capabilities, from investment origination and execution, including sourcing and structuring transactions, to ongoing active asset management within the specialist sector of energy infrastructure.

The Company's Investment Team is responsible for new asset acquisitions, pipeline development, value enhancement of the Company and also advises the Board on the optimal borrowing strategy of the Company. The investment team is supported by UK-based solar analysts with additional support from Foresight's Italian and Australian offices.

Private equity

Foresight's Private Equity Team traces its roots back to Foresight Group's origins as an early stage technology investor. In 1997, Foresight raised one of the first VCTs, the then technology/media focused and now generalist Foresight VCT plc. The Foresight Williams Technology share class represents a return to technology investing, which is a core part of Foresight's DNA.

Foresight's growing private equity investment team of 33 is pro-active and hands-on, focused on investing typically up to £5 million in UK growth companies across a broad range of sectors. In addition to Foresight VCT plc and Foresight Enterprise VCT plc, the team manages the Foresight Williams Technology EIS Fund. Foresight has also raised regionally focused institutional funds, cornerstoned variously by local government pension funds, the British Business Bank and the Scottish Government. The team is based out of offices in London, Manchester, Nottingham, Edinburgh and Cambridge with smaller satellite offices in Leicester and Milton Keynes.

The team currently manages a portfolio of more than 115 SME investments across a broad range of sectors including business services, consumer and leisure, healthcare, industrials and manufacturing and technology, media and telecommunications ("TMT").

Foresight Solar & Technology VCT plc Annual report and accounts 31 March 2021

Investment Manager's Review

Evolution of Foresight Solar & Technology VCT plc

In April 2010, the British Government introduced index linked feed-in tariffs ('FiTs') providing minimum inflation-linked prices for electricity produced from various renewable sources, including solar power generating assets. This FiT provided the opportunity for Foresight to launch the Company and utilise its expertise and resources to invest in solar projects.

The Ordinary shares fund was originally a five year planned exit VCT with an option to remain in the fund as a longer-term investor. The fund targeted minimum dividends of 5p per share per annum after the first two years and a minimum return of £1.30 per share after five years.

In 2013, the Company raised an additional £13m from shareholders in a “C” shares fund, targeting investment in sub 5MW solar power plants in the UK, supported by the Government's Renewable Obligation (RO) scheme.

The "C" shares fund was a five year planned exit VCT with an option to remain invested in the fund for the long term. The fund targeted minimum dividends of 5p per share per annum from year two, and a minimum target return of £1.20 after five years.

In February 2016, the Company launched a new "D" shares fund in order to invest in complementary asset classes within the energy and infrastructure sectors including smart data, international solar and wider infrastructure offering a similar risk profile.

The D shares fund raised £4.9m before it closed on 31 January 2017. A small top-up offer in March 2017 led to the D shares fund's total fund raising being £5.6m.

The Ordinary shares fund completed a tender offer on May 2017, buying back 10,966,024 shares for £11.0m.

2010	2013	2016
In June 2018, the Company completed the merger of the Ordinary, C and D shares funds into a single enlarged Ordinary Share class to unite its shareholder base and offer enhanced liquidity by the pooling of the existing cash reserves in each fund.	In December 2019, the Company launched the Foresight Williams Technology share class, to invest principally in early stage UK technology companies.	In March 2020, the Ordinary Shares fund of the Company successfully completed a tender offer, buying back 7,435,016 shares for £6m.
2018	2019	2020
---	---	---

Foresight Solar & Technology VCT plc Annual report and accounts 31 March 2021

Strategic Report

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.

Investment Objective

Foresight Solar & Technology VCT plc consists of two share classes, the Ordinary Shares and FWT Shares. The Ordinary Share class is fully invested in unquoted companies that seek to generate solar electricity and, in most cases, benefit from long-term government-backed price guarantees.

The key ongoing objective of the Ordinary Shares fund is to generate an attractive return for investors, through a combination of tax-free income, buybacks and tender offers.

The FWT Share class intends to invest principally in early stage UK technology companies.

The Company originally raised £37.8m through an Ordinary Share issue in 2010/2011 and 2011/2012, and subsequently a "C" shares fund of £13.1m and a "D" shares fund of £5.6m. On 29 June 2018, the C and D shares funds were merged with the Ordinary Shares fund. The number of Ordinary Shares in issue at 31 March 2021 was 35,109,032 and 1,222,778 Deferred Shares.

The Company launched the FWT Shares in December 2019. The number of FWT Shares in issue at 31 March 2021 was 10,021,408.

Investment objectives

Performance and Key Performance Indicators (KPIs)

The results and performance of the Company are discussed further in the Directors' Report.

The Board expects the Investment 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 an overall NAV per share or NAV total return. Additional key performance indicators and Alternative Performance Measures ("APMs") reviewed by the Board include the premium/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 higher/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 2.

The ongoing charges ratio for the year was 3.1%. The Director's note that regular share buy-backs at a competitive discount to NAV is an essential KPI and also accretive for existing shareholders. Share buy-backs were completed at an average discount of 2.0%. Further details of the Company's KPIs can be found in the Glossary of Terms on page 90.

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 Investment Manager's Report. The Board assesses the performance of the Investment 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 may disappoint. 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 for attractive returns to shareholders.

Strategies for achieving objectives

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, but not limited to, ordinary and preference shares, loan stock, convertible securities, and fixed-interest securities and cash. Unquoted investments are usually structured as a combination of ordinary shares and loan stock. Pending investment in unquoted securities, 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

Foresight Solar & Technology VCT plc Annual report and accounts 31 March 2021

Strategic Report

based in the UK and which are Qualifying Companies for the purposes of VCT Rules.

Asset mix

The Company consists of two share classes, the Ordinary Shares and FWT Shares. The Ordinary Share class has invested in unquoted companies that seek to generate solar electricity and, in most cases, benefit from long-term government-backed price guarantees. The FWT Share class invests principally in early stage UK technology companies. The Board has always ensured that at least 80% (and prior to 1 April 2020, 70%) of net share capital raised has been invested in Qualifying Companies. Any uninvested funds are held in cash and a range of permitted liquidity investments.

Risk diversification and maximum exposures

Risk has been spread by investing in a number of different companies which have targeted a variety of separate locations for their solar power assets in the case of the Ordinary Shares, and by investing in a range of different businesses within different industry sectors at different stages of development, using a mixture of securities, in the case of the FWT Shares. The maximum amount invested by the Company in any one company has been limited to 15% of the portfolio at the time of investment in accordance with VCT Rules. The value of an investment is expected to increase over time as a result of trading progress and a continuous assessment is made of its suitability for sale. Although risk is spread across different portfolio companies, concentration risk, particularly in the case of the Ordinary Shares, is fairly high given that a significant portion are UK Solar projects owned by Qualifying Companies, in which Qualifying Investments were made by the Ordinary Shares fund and the C Shares fund (which existed prior to the merging of the Ordinary, C and D share classes), which have been merged to form larger trading groups.

Borrowing powers

The Company's Articles permit borrowing, to give a degree of investment flexibility. Under the Company's Articles no money may be borrowed without the sanction of an ordinary resolution if the principal amount outstanding of all borrowings by the Company and its subsidiary undertakings (if any), then exceeds, or would as a result of such borrowing exceed, a principal amount equal to the aggregate of the share capital and reserves of the Company and each of its subsidiary undertakings as shown in the audited balance sheet. The underlying portfolio companies in which the Company invests may utilise bank borrowing or other debt arrangements to finance asset purchases but such borrowing would be non-recourse to the Company.

Other Foresight managed funds

The Company may invest alongside other funds managed or advised by the Investment Manager. Where more than one fund is able to participate in an investment opportunity, allocations will generally be made in proportion to the net cash raised for each such fund, 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 Investment Manager also provides investment management services or advice to Foresight VCT plc, Foresight Enterprise VCT plc, Foresight Nottingham Fund LP, Foresight Environmental Fund LP, Foresight Solar Fund Limited, Foresight Inheritance Tax Solutions, Foresight AD EIS, Foresight Energy Infrastructure EIS, Foresight Regional Investment LP, Foresight Williams Technology EIS Fund, Foresight Italian Green Bond Fund, MEIF ESEM Equity LP, Scottish Growth Scheme - Foresight Group Equity Partners LP, NI Opportunities LP, John Laing Environmental Assets Group Limited, Foresight Energy Infrastructure Partners, particularly in the case of the Ordinary Shares, Foresight Regional Investment II LP, Foresight Regional Investment III LP and Foresight NI Opportunities II LP.

VCT regulation

The investment policy is designed to ensure that the Company continues to qualify and is approved as a VCT by HM Revenue & Customs ("HMRC"). Amongst other conditions, 80% of the Company's investment portfolio must comprise Qualifying Holdings in Qualifying Companies. As at 31 March 2021, 92.01% of the Company's investment portfolio was held in Qualifying Holdings.

Management

The Company has appointed Foresight Group LLP ("the Investment Manager") to provide investment management and administration services.

The Investment 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.

A review of the investment portfolio and of market conditions during the year is included within the Investment Manager's Report.

Foresight Solar & Technology VCT plc Annual report and accounts 31 March 2021

Strategic Report

Co-investments have been made by other funds that the Investment Manager advises and manages, as follows:

	Foresight Solar & Technology VCT plc £	Foresight Inheritance Tax Solutions £	Foresight Williams Technology EIS Fund £	Total Equity Managed by Foresight %
Ordinary Shares
Solektra Limited	1,401,200	592,425	—	60.58
FWT Shares
Additive Manufacturing Technologies Limited	360,000	—	2,390,000	13.79
Audioscenic Limited	359,995	—	689,997	25.71
Cambridge GaN Devices Limited	360,807	—	451,182	4.41
Refeyn Limited	360,000	—	2,985,005	9.05

Where the Investment 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%.

Environmental, human rights, employee, social and community issues

The Company's investments have been made in companies with clean energy and environmental infrastructure projects which have clear environmental benefits.

The Board recognises the requirement under Section 414 of the Act to provide information about environmental matters (including the impact of the Company's business on the environment), employee, human rights, social and community issues; including information about any policies it has in relation to these matters and 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 only suppliers being that of the service industry, as opposed to tangible products.

The Manager's policies in respect of all the above issues can be found on Foresight Group's website www.foresightgroup.eu.

Further, in relation to environmental, social and community impact please refer to the Investment Manager's Review for more information on Foresight Group's Responsible Investment Principles.

The PRI Association, established in 2006, is a global collaborative network of investors working together to put the six Principles for Responsible Investment into practice. As an investment manager, Foresight has a duty to act in the best long-term interests of our beneficiaries. In this fiduciary role, Foresight believes that Environmental, Social, and corporate Governance ("ESG") issues can affect the performance of investment portfolios (to varying degrees across companies, sectors, regions, asset classes and through time). Foresight also recognises that applying these Principles may better align investors with broader objectives of society. For the 2020 PRI Annual Assessment, Foresight were pleased to be awarded the highest possible score (A+) for Strategy and Governance. We were also awarded A ratings for both our Private Equity and Infrastructure assessments. These strong results further demonstrate our commitment to sustainability and responsible business practices.

Signatory of:

Gender diversity

The Board currently comprises two male Directors and one female Director. The Board is conscious of the need for diversity and will consider both male and female candidates when appointing new Directors. More information on the Boards approach to diversity is given in the Corporate Governance section on page 44.

Foresight Solar & Technology VCT plc Annual report and accounts 31 March 2021

Strategic Report

The Investment Manager has a Diversity & Inclusion policy and as at 31 March 2021 employed 158 men and 85 women.

Dividend policy

The Board originally planned to pay dividends of 5.0p per Ordinary Share each year throughout the life of Foresight Solar & Technology VCT plc after the first year, payable bi-annually via dividends of 2.5p per share in April and November each year. The level of dividends is not however, guaranteed.

Following the completion of the tender offer, which reduced the size of the fund, the Board has considered the future dividend policy of the Ordinary Shares fund. With the objective of maximising long-term future returns for Ordinary Shareholders, the Board will endeavour to pay out dividends derived from the income generated by the underlying portfolio, rather than a fixed pence per share.

Dividends for the FWT Shares Fund are anticipated to be paid from year four onwards at a targeted average rate of 5% per annum of the NAV of the FWT Shares.

Purchase of own shares

The Company's buyback policy is, subject to adequate cash availability, to consider repurchasing shares when they become available in order to help provide liquidity to the market in the Company's shares.

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. In fulfilling this duty, the Directors consider the likely consequences of their actions over the long term and on other stakeholders.

As an 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 a small number of suppliers. These suppliers are external firms engaged by the Board to provide, amongst others, investment management, secretarial, registrar and legal and professional services. The principal relationship is with the Investment Manager and the Investment 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 Investment Manager to produce satisfactory investment performance. It seeks to maintain a constructive working relationship with the Investment Manager and on an annual basis the Management Engagement & Remuneration Committee reviews the appropriateness of the Investment Manager's appointment.

The Board receives and reviews detailed presentations and reports from the Investment Manager to enable the Directors to exercise effective oversight of the Company's activities.

The Investment 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.

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 Investment Manager and members of the Board are available to meet with shareholders at the AGM.

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 Investment Manager consistently and proactively engages with portfolio 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. More detail on this can be found in the Investment Manager's Review.

While the Investment Manager supports the aims and objectives of the Stewardship Code, it is not currently a signatory to the Code. A statement explaining the Investment Manager's position can be found on their website at www.foresightgroup.eu/responsible-investing/governance/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 Solar & Technology VCT plc Annual report and accounts 31 March 2021

Strategic Report

Principal risks, risk management and regulatory environment

The Board carries out a regular and robust review of the risk environment in which the company operates. The principal risks and uncertainties identified by the Board which might affect the Company's business model and future performance, and the steps taken with a view to their mitigation, are as follows:

Economic risk: events such as economic recession, external shocks or general fluctuation in stock markets and interest rates may affect the performance and the valuation of investee companies and their ability to access adequate financial resources, as well as affecting the Company's own share price and discount to net asset value.

Mitigation: The Company invests in a diversified portfolio of investments spanning various industry sectors and maintains sufficient cash reserves to be able to provide additional funding to investee companies where appropriate and to repurchase its own shares.

VCT qualifying status risk: 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 losing its exemption from corporation tax on capital gains, to investors being liable to pay income tax on dividends received from the Company and, in certain circumstances, to investors being required to repay the initial income tax relief on their subscriptions.

Mitigation: the Investment 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 RW Blears LLP to undertake an independent VCT status monitoring role.

Investment and liquidity risk: many of the Company's investments are in small and medium-sized unquoted companies which are Qualifying Holdings, and which by their nature entail a higher level of risk and lower liquidity than investments in larger quoted companies.

Mitigation: the Directors aim to limit the risk attaching to the portfolio as a whole by careful selection, close monitoring and timely realisation of investments and by carrying out rigorous due diligence procedures. The Board reviews the investment portfolio with the Investment Manager on a regular basis.

Valuation of unquoted investments: Unquoted companies are unlisted and there is no published market price for their shares. The value of the shares needs to be calculated based on other available information using estimates and judgements. As a result, the values calculated can be subjective.

Mitigation: 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 15. The Board reviews portfolio valuations quarterly and the external auditor performs an annual review, as noted in the auditor's report.

Legislative and regulatory risk

in order to maintain its approval as a VCT, the Company is required to comply with current VCT Rules in the UK, which reflect the European Commission's State aid rules. Changes to the UK legislation or the State aid rules in the future could have an adverse effect on the Company's ability to achieve satisfactory investment returns whilst retaining its VCT approval.

Mitigation: The Board and the Investment Manager monitor political developments and where appropriate seek to make representations either directly or through relevant trade bodies.

Internal control risk: The Company's assets could be at risk in the absence of an appropriate internal control regime. This could lead to theft, fraud, cybercrime and/or an inability to provide accurate reporting and monitoring.

Mitigation: The Board carries out regular reviews of the system of internal controls, both financial and non-financial, operated by the Investment Manager and other service providers. These include controls designed to ensure that the Company's assets are safeguarded and that proper accounting records are maintained.

Natural disasters: severe weather/natural disasters could lead to reduction in performance and value of the assets.

Mitigation: there is no mitigation that can be taken against natural disasters; however, our Operations and Maintenance provider is able to respond quickly to repair any damage and reduce the amount of down time. The projects are also adequately insured against such events.

Financial risk: inappropriate accounting policies might lead to misreporting or breaches of regulations.

Foresight Solar & Technology VCT plc Annual report and accounts 31 March 2021

Strategic Report

Mitigation: the Investment Manager is continually reviewing accounting policies and regulations, and its reports are reviewed by the Board on a quarterly basis.

Market risk: All investments are impacted by market risk. Many factors including terrorist activity and political developments can negatively impact stock markets worldwide. In times of adverse sentiment there can be very little, if any, market demand for shares in smaller companies.

Mitigation: The Board keeps the portfolio under regular review and the Investment Manager ensures the portfolio is diversified.

Credit risk: The Company holds a number of financial instruments and cash deposits and is dependent on the counterparties discharging their commitment.

Mitigation: The Directors challenge and the Investment Manager reviews the credit-worthiness of the counterparties to these instruments and cash deposits and seeks to ensure there is no undue concentration of credit risk with any one party.

Brexit: The Board recognises that Brexit is a process that involves significant uncertainty and therefore the impact on the economy in general and the repercussions on individual businesses are difficult to anticipate.

Mitigation: The Board and the Investment Manager follow Brexit developments closely with a view to identifying where changes could affect the areas of the market in which the Company specialises. Although hopefully this should be relatively limited as the majority of the businesses the Company invests in are largely UK focused, there will be an impact particularly where sales or purchases are outside the UK.

Covid-19 and Climate change: Further details on climate change are provided in the Climate Change Statement in the Investment Manager's Report on page 23. The potential impact of Covid-19 on the companies in which the Company invests is under continual assessment. Both the Investment Manager and the Company's other key service providers implemented their business continuity plans and have not seen a noticeable disruption to services.

Viability Statement

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 March 2024.

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 an 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 efforts on the major factors that affect the economic, regulatory and political environment. The Board also specifically considered the impact of the COVID-19 pandemic when carrying out its assessment.

The Board also considered the ability of the Company to raise finance and deploy capital. This assessment took account of the availability and likely effectiveness of the mitigating actions that could be taken to avoid or reduce the impact of the underlying risks, including the Investment Manager adapting their investment process to take account of the more restrictive VCT investment rules.

The Board 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.

Based on the Company's processes for monitoring cash flow, share price discount, ongoing review of the investment objective and policy, asset allocation, sector weightings and portfolio risk profile, 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 March 2024.

Performance-related incentives

Ordinary Shares fund

The performance incentive arrangements were novated from Foresight Group CI Limited to the Investment Manager on 27 January 2020.

The Investment Manager is entitled to a performance incentive fee of 30% of Total Return exceeding a threshold of 130.0p per Ordinary Share from 30 June 2017 increasing by a simple 5% per annum going forward, i.e. 136.5p for the Company's financial year ending 30 June 2018, 141.6p for the period ending 31 March 2019, 148.7p for the year ending 31 March 2020 and so on.

FWT Shares fund

The Investment Manager is entitled to a performance incentive fee of 20% of Distributions exceeding a threshold of 110.0p per FWT Share (subject to annual adjustment of this hurdle in line with the Retail Price Index).

Foresight Solar & Technology VCT plc Annual report and accounts 31 March 2021

Strategic Report

Valuation Policy

Investments held by the Company have been valued in accordance with the International Private Equity and Venture Capital Valuation ("IPEV") guidelines (December 2018) 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 itself made recently, its cost may provide a good starting point for estimating fair value. At each measurement date, fair value is estimated using appropriate valuation techniques. The portfolio valuations are prepared by Foresight Group, reviewed and approved by the Board quarterly and subject to review by the auditors annually.

A broad range of assumptions are used in our valuation models. These assumptions are based on long-term forecasts and are not affected by short-term fluctuations in inputs, be it economic or technical. Under the normal course of events, we would expect asset valuations to reduce each period due to the finite nature of the cash flows.

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 30% on subscription for new shares, which is forfeited by shareholders if the shares are not held for more than five years;
VCT dividends (including capital distributions of realised gains on investments) are not subject to income tax in the hands of qualifying holders; and
Capital gains on disposal of VCT shares are tax-free, whenever the disposal occurs.

Venture Capital Trust status

Foresight Solar & Technology VCT plc is approved by HMRC as a venture capital trust (VCT) in accordance with the VCT Rules. It is intended that the business of the Company be carried on so as to maintain its VCT status. The Directors and the Investment Manager have managed, and continue to manage, the business in order to comply with the legislation applicable to VCTs. In addition, the Board has appointed RW Blears LLP to monitor and provide continuing advice in respect of the Company's compliance with applicable VCT Rules. As at 31 March 2021 the Company had 92.01% (2020: 92.21%) of its funds in such VCT Qualifying Holdings.

The upfront income tax relief will be forfeited by shareholders if the shares are not held for five years.

Future strategy

The Company will continue to seek to optimise the existing portfolio in terms of performance including the refinancing of the portfolio assets at lower interest rates and fixing power price agreements (PPAs) when they are deemed attractive, and pay dividends through a combination of income earned and realised gains made.

Once all Ordinary Shareholders have reached their minimum 5-year qualifying holding period, the Board and the Investment Manager will, if appropriate, begin a managed process of returning the value of the Ordinary Shares fund to its Shareholders.

The Company will also continue to raise new funds in the FWT Shares fund and continue to deploy funds into appropriate qualifying investments for this share class.

Ernie Richardson
Chairman
27 August 2021

Foresight Solar & Technology VCT plc Annual report and accounts 31 March 2021

38
Foresight Solar & Technology VCT plc Annual report and accounts 31 March 2021

Governance

Board of Directors

66 The wide ranging backgrounds and experience of the Directors provides a strong and complementary balance of skills, knowledge and wisdom to the Company's affairs.

Ernie Richardson
Chairman

Ernie Richardson
Chairman of the Board

Position	Chairman of the Board
Appointed	1 January 2019
Experience	Ernie was appointed as Chairman of the Board in September 2019, having joined the Board in January 2019. Ernie has over 30 years' experience in the venture capital sector and was until 2009 chief executive of venture capital investment firm MTI. He is a graduate chemical engineer and Fellow of the Chartered Institute of Management Accountants and has served as a member of the Council of the British Venture Capital Association and also served as Chair of the investment committee of the National Endowment for Science, Technology and the Arts. He also has over 20 years' operational management experience gained within businesses including British Steel Chemicals Division and chemicals company Laporte Industries and is chairman of several smaller companies. He has also served as Financial Controller of the European Division of the Royal Bank of Canada.
Other positions	Director of Thomas Swan Holdings Limited, Eastwood Langley Limited and Zeti Limited
Beneficial Shareholding	FWT Shares 40,000

Governance

Tim Dowlen

Director

Position	Director
Appointed	6 July 2010
Experience	A director of insurance broking companies from 1973 to 2016, Tim was most recently a divisional director of City-based Lloyd's broking firm Tasker & Partners where he was responsible for developing the retail insurance broking activities of the firm. Tim was for many years Senior Examiner in liability insurance for the Chartered Insurance Institute. A practising expert witness since 1998, he has given independent evidence to the Courts in over 130 disputes in the insurance sector and is director, insurance, of GBRW Expert Witness Limited. Tim has specialised in the venture capital sector since starting his own insurance firm in 1974. He acted as insurance broker to a number of fund managers and other financial institutions.
Other positions	Director of Woking Street Angels
Beneficial	Ordinary Shares 29,558
Shareholding

Carol Thompson

Director

Position	Director
Appointed	22 March 2021
Experience	Carol brings over 25 years' experience in governance and strategic financial management to her new role, and has spent large parts of her career as a board member in technology and regulated businesses. She has held senior positions at Hellman & Friedman, a leading private equity investment firm, and JP Morgan. She has also held non-executive and advisory roles at a number of firms including Livingbridge, DWF and JP Morgan.
Carol serves as a non-executive director, and also chairs the Company's audit committee.
Other positions	Director of AAA Rated Limited
Beneficial	Nil
Shareholding

Foresight Solar & Technology VCT plc Annual report and accounts 31 March 2021

GOVERNANCE

Directors' Report

The Directors present their report and the audited accounts of the Company for the year ended 31 March 2021.

The Board

The Board of the Company consists of three non-executive directors: Ernie Richardson (Chairman), Tim Dowlen & Carol Thompson. There have been no changes to the Board composition from the year end to the date of this report. Further information on the Board and their biographies are included on pages 38 and 39.

Activities and status

The principal activity of the Company during the year was the making of investments in unquoted companies in the United Kingdom. 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 the VCT Rules. Confirmation of the Company's qualification as a VCT has been received up to 31 March 2020 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 loss attributable to equity shareholders for the year amounted to £0.8m (2020: £6.9m). The Board paid an interim dividend of 2.0p per Ordinary Share on 25 September 2020 (2020: two interim dividends totalling 6.0p per Ordinary Share).

Net asset value total return

During the year ended 31 March 2021, the Company's principal indicator of performance, net asset value total return per Ordinary Share decreased 1.5% from 116.7p per share at 31 March 2020 to 114.9p per share at 31 March 2021.

The net asset value total return for the FWT shares was 98.0p per share at 31 March 2021 (2020: 99.1p).

Share issues

During the year the Company allotted 8,875,481 FWT Shares under the Offers for Subscription dated 20 December 2019 and 30 December 2020 at a NAV of 100.0p per share.

At 31 March 2021, the Company had 35,109,032 Ordinary Shares, 1,222,778 Deferred Shares, and 10,021,408 FWT Shares in issue.

Share buybacks

During the year the Company repurchased 351,929 Ordinary Shares for cancellation at a total cost of £0.2m. No shares bought back by the company are held in treasury. Share buybacks have been completed at an average discount of 2.0% to net asset value.

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.

Principal risks, risk management and regulatory environment

A summary of the principal risks faced by the Company are set out in the Strategic Report on pages 34 and 35.

Engagement with suppliers, customers and others in a business relationship with the Company

A summary of the engagement with suppliers, customers and others in a business relationship with the Company can be found in the Strategic Report on page 30.

Corporate governance

Please refer to the Corporate Governance section for the Company's corporate governance.

Management

The Company has appointed Foresight Group LLP ("the Investment Manager") to provide investment management 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

Foresight Solar & Technology VCT plc Annual report and accounts 31 March 2021

GOVERNANCE

Directors' Report

the investment performance of the Company and the ability of the Investment 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 Investment Manager, together with the standard of other services provided which include Company Secretarial services. It is the Directors' opinion that the continuing appointment of the Investment Manager on the terms agreed is in the interests of shareholders as a whole. The last review was undertaken in July 2020. Foresight Group LLP is the Secretary of the Company. The principal terms of the management agreement are set out in note 3 to the accounts.

No Director has an interest in any contract to which the Company is a party.

Foresight Group LLP, who was appointed as investment manager on 27 January 2020 earned fees of £0.5m in the year to 31 March 2021 (2020: £0.1m, prior to this Foresight Group CI Limited who acted as investment manager until 27 January 2020 earned fees of £0.5m). Foresight Group LLP received, directly and indirectly, £0.2m excluding VAT (2020: £0.1m) during the year in respect of secretarial, administrative and custodian services to the Company.

Foresight Group LLP also received from investee companies arrangement fees of £43,000 (31 March 2020: £nil) and directors' fees of £15,000 (31 March 2020: £nil) as a result of the investments made by the Company.

The Investment Manager is also a party to the performance incentive agreements described in note 13 to the accounts and earned performance incentive fees of nil (2020: £nil). All amounts are stated, where applicable, net of Value Added Tax.

VCT status monitoring

The Company has retained RW Blears LLP as legal and VCT status advisers on, inter alia, compliance with legislative requirements. The Directors monitor the Company's VCT status at meetings of the Board.

Substantial shareholdings

So far as the Directors are aware, there were no individual shareholdings representing 3% or more of the Company's issued share capital at the date of this report.

Financial instruments

Details of all financial instruments used by the Company during the year are given in note 15 to the accounts.

Likely future developments

Please refer to the Investment Manager's Report on pages 11 and 23 for more details on likely future developments.

Directors indemnification and insurance

The Directors have the benefit of indemnities under the articles of association of the Company against, to the extent only as permitted by law, 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.

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 zero days (2020: 10 days).

Alternative Investment Fund Managers Directive (AIFMD)

The AIFMD came into force on 22 July 2013 and sets out the rules for the authorisation and on-going regulation of managers (AIFMs) that manage alternative investment funds (AIFs) in the EU. The Company qualifies as an AIF and so is required to comply, although additional cost and administration requirements are not material. The Company's approval was confirmed in August 2014. This has not affected the current arrangements with the Investment Manager, who continues to report to the Board and manage the Company's investments on a discretionary basis.

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.

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 27 August 2021 was 35,109,032 Ordinary Shares, 1,222,778 Deferred Shares and 12,558,204 FWT Shares.

The Ordinary Shares represent 73.7% of total ordinary share capital and the FWT Shares represent 26.3% of total ordinary share capital. Further information on the share capital of the Company is detailed in note 11 of the notes to the financial statements.

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 6 in the Notice of Annual General Meeting on page 88.

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 S487(2) of the Companies Act 2006, the Board proposed the appointment of Deloitte LLP and a

Foresight Solar & Technology VCT plc Annual report and accounts 31 March 2021

GOVERNANCE

Directors' Report

resolution concerning this will be proposed at the Annual General Meeting.

Companies Act 2006 Disclosures

In accordance with Schedule 7 of the Large and Medium Size 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; and
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.

Foresight Group, as Investment Manager, manages several funds that invest in solar projects. To ensure that projects are allocated equitably between funds, a formal allocation policy is followed.

Whistleblowing

The Board has been informed that the Investment Manager has arrangements in place in accordance with the UK Corporate Governance Code's recommendations by which staff of the Investment Manager or Secretary of the Company 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 within their respective organisations.

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 Chairman's Statement, Strategic Report and Notes to the accounts. In addition, the 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 Directors believe that the Company is able to manage its business risks. Cash flow projections have been reviewed, with particular focus on the impact of Covid-19 and show that the Company has sufficient funds to meet both its contracted expenditure and its discretionary cash outflows in the form of share buy backs and dividends.

The Directors have considered both the impact of Covid-19 and Brexit during their assessment of going concern and have a 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.

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 which complies with a new set of disclosure requirements. See pages 48 to 50.

Annual General Meeting

A formal notice convening the Annual General Meeting on 23 September 2021 can be found from page 86.

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 to 11 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 supplement and renew share issue and buyback authorities granted at previous general meetings of the Company and together with Resolution 11 are explained in further detail below.

Foresight Solar & Technology VCT plc Annual report and accounts 31 March 2021

GOVERNANCE

Directors' Report

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 £300,000 (representing approximately 63% of the current issued ordinary share capital of the Company) for the purposes listed under the authority requested under Resolution 9. This includes authority to issue shares pursuant to the performance incentive fee arrangements with Foresight Group LLP and 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. Any offer is intended to be at an offer price linked to NAV. The authority conferred by Resolution 8 will expire on the fifth anniversary of the passing of the resolution, and will be in addition to all other existing authorities.

Resolution 9

Resolution 9 will sanction, in a limited manner, the disapplication of preemption rights in respect of the allotment of equity securities (i) with an aggregate nominal value of up to £300,000 in each class of share in the Company pursuant to offer(s) for subscription, (ii) with an aggregate nominal value of up to 10% of the issued share capital in the Company pursuant to the performance incentive arrangements with Foresight Group LLP and (iii) with an aggregate nominal value of up to 10% of the issued share capital in the Company, in each case where the proceeds of such issue may in whole or in part be used to purchase the Company's shares. This authority will expire at the conclusion of the Annual General Meeting to be held in 2022 and will be in addition to all other existing authorities.

Resolution 10

It is proposed by Resolution 10 that the Company be empowered to make market purchases (within the meaning of Section 693(4) of the Companies Act 2006) of its own shares. Under this authority the Directors may purchase up to 5,262,844 Ordinary Shares and 1,882,475 FWT Shares (representing approximately 14.99% of each share class at the date of this Annual Report). 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 shares taken from the London Stock Exchange daily official list on the five business days preceding the day on which shares are purchased or, if greater, the amount stipulated by Article 5(6) of the Market Abuse Regulation. This authority shall expire at the conclusion of the Annual General Meeting to be held in 2022.

Whilst, generally, the Company does not expect shareholders will want to sell their shares within five years of acquiring them because this may 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. 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 an investor may be willing to pay more for new shares issued by the Company than he would pay to buy shares from an existing shareholder. Therefore, in the interest of shareholders who may need to sell shares from time to time, the Company proposes to renew the authority to buy-in shares for the benefit of new as well as existing shareholders. This authority when coupled with the ability to issue new shares for the purposes of financing a purchase of shares in the market, enables one company to purchase shares from a shareholder and effectively to sell on those shares through the company to a new investor with the potential benefit of full VCT tax relief. In making purchases the Company will deal only with member firms of the London Stock Exchange at a discount to the then prevailing net asset value per share of the Company's shares to ensure that existing shareholders are not disadvantaged.

Resolution 11

It is proposed by Resolution 11 to adopt new articles of association ("New Articles"). The key changes in the New Articles provide for the ability to hold virtual and hybrid general meetings, with consequential changes relating to definitions, how notices can be sent, attendance and meeting procedure and when shareholders in attendance at general meetings virtually will count and be able to vote. This will make it easier for shareholders to take part in future general meetings, particularly where the Company is unable to hold a physical meeting.

The New Articles will also permit the Directors of the Company to postpone an already convened general meeting because of unforeseen circumstances and the ability to then hold the general meeting at a different time or place or by an alternative electronic facility.

The Board wishes to note its preference is to hold AGMs by way of an open meeting and AGMs will only be held virtually where absolutely necessary.

A copy of the proposed New Articles (tracked showing the changes) will be available for inspection during normal business hours (excluding Saturdays, Sundays and public holidays) at the registered office of the Company and online at https://www.foresightgroup.eu/retail-investors/vct/foresight-solar-technology-vct-plc/reports-and-accounts/ until the close of the meeting. Copies will also be available at the location of the Annual General Meeting (for 15 minutes prior to the meeting and during the meeting).

This report has been approved for issue by the Board.

Foresight Group LLP
Company Secretary
27 August 2021

Registered address:
The Shard
32 London Bridge Street
London SE1 9SG

Foresight Solar & Technology VCT plc Annual report and accounts 31 March 2021

GOVERNANCE

Corporate Governance

The Board of Foresight Solar & Technology VCT plc has considered the Principles and Provisions of the AIC Code of Corporate Governance (“AIC Code”). The AIC Code addresses the Principles and Provisions set out in the UK Corporate Governance Code (“the 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 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 March 2021.

The Board

The Board comprises three directors, all of whom are non-executive and independent of the Investment Manager and considered independent for the purposes of the AIC Code and the Listing Rules. The Chairman has served on the Board for less than nine years from the date of his appointment in January 2019. The Board therefore considers the Chairman 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 other circumstances which are likely to impair the Chairman's independence.

Division of responsibilities

The Directors have significant relevant experience of similar investment funds, regulatory organisations, corporate governance of listed companies, the private equity industry and investing in small companies.

The Board is responsible to shareholders for the proper management of the Company and meets at least quarterly and more often 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 its Investment Manager sets out the matters over which the Investment 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 Investment 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 Investment Manager attend all formal Board Meetings although the Directors may on occasion meet without representatives of the Investment Manager being present. Informal meetings with the Investment Manager are also held between Board Meetings as required. Attendance by Directors at Board and Committee meetings is detailed in the table below.

The Company Secretary provides full information on the Company's

Foresight Solar & Technology VCT plc Annual report and accounts 31 March 2021

GOVERNANCE

Corporate Governance

assets, liabilities and other relevant information to the Board in advance of each Board Meeting.

In addition to the below, eight further meetings were held in relation to the allotment of FWT shares.

Meeting attendance during the year

	Board	Audit
Ernie Richardson	4/4	2/2
Mike Liston
(resigned 3 February 2021)	3/3	2/2
Tim Dowlen	4/4	2/2
Carol Thompson
(appointed 22 March 2021)	0/0	0/0

Two meetings for the nomination committee and one meeting for the remuneration committee took place during the year, which were attended by all three directors in office at the time.

In light of the responsibilities retained by the Board and its committees and of the responsibilities delegated to the Investment Manager, RW Blears LLP and other service providers, the Company has not appointed a chief executive officer, deputy Chairman 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 chairman 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 Carol Thompson (Chair), Tim Dowlen and Ernie Richardson, all of whom are considered to have sufficient recent and relevant financial experience to discharge the role, and meets, amongst other things, to consider the following:

Monitor the integrity of the financial statements of the Company and approve the accounts;
Review the Company's internal control and risk management systems;
Make recommendations to the Board in relation to the appointment of the external auditors;
Review and monitor the external auditors' independence; and
Implement and review the Company's policy on the engagement of the external auditors to supply non-audit services.

As a result of the tender process carried out in 2020, the Board appointed Deloitte LLP as the Company's auditor.

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 appointment 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 Nomination Committee comprises Ernie Richardson (Chairman), Tim Dowlen and Carol Thompson and intends to meet 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, and also considers the resolutions for

the annual re-election of directors. The Board believes that, as a whole, it has an appropriate balance of skills, experience and knowledge. The Board also 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 Management Engagement & Remuneration Committee (which has responsibility for reviewing the remuneration of the Directors) comprises Ernie Richardson (Chairman), Tim Dowlen and Carol Thompson and 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. The Management Engagement & Remuneration Committee also reviews the appointment and terms of engagement of the Investment Manager.

Board evaluation

The Board undertakes a formal annual evaluation of its own performance and that of its committees, as recommended by provision 21 of the UK Corporate Governance Code. Initially, the evaluation takes the form of a questionnaire for the Board (and its committees). The Chairman then discusses the results with the Board (and its committees) and following completion of this stage of the evaluation, the Chairman will take appropriate action to address any issues arising from the process.

Foresight Solar & Technology VCT plc Annual report and accounts 31 March 2021

GOVERNANCE

Corporate Governance

Relations with shareholders

The Company communicates with shareholders and solicits their views where it considers it is appropriate to do so. Foresight Group hosts regular investor forums for shareholders and publishes quarterly fact sheets, as well as information on new investments, on its website.

The Board may from time to time seek feedback through shareholder questionnaires and an open invitation for shareholders to meet the Investment Manager. The Company is not aware of any institutions owning shares in the Company.

Internal control

The Directors of Foresight Solar & Technology VCT plc 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 Board's appointment of Foresight Group as accountant and administrator has delegated the financial administration to Foresight Group. It 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.

RW Blears LLP provide legal advice and assistance in relation to the maintenance of VCT tax status, the operation of the agreements entered into with Foresight Group and the application of the venture capital trust legislation to any company in which the Company is proposing to invest.

Foresight Group LLP was appointed by the Board as Company Secretary in November 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 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, Foresight Group invests the Company's assets in venture capital and other investments and in its capacity as administrator has physical custody of documents of title relating to equity investments.

Following publication of Internal Control: Guidance for Directors on the UK Corporate Governance Code (the Turnbull guidance), the Board confirms that there is a continuous process for identifying, evaluating and managing the significant risks faced by the Company, that have been in place for the year under review and up to the date of approval of the annual report and financial statements, and that this process is regularly reviewed by the Board and accords with the guidance. The process is based principally on the Investment Manager's existing risk-based approach to internal control whereby a test matrix is created that identifies the key functions carried out by the Investment Manager and other service providers, the individual activities undertaken within those functions, the risks associated with each activity and the controls employed to minimise those risks. A residual risk rating is then applied. The Board is provided with reports highlighting all material 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 Foresight Group and RW Blears LLP.

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 in comparison to its objective at each Board meeting. The Board also reviews the Company's activities since the last Board meeting to ensure that the Investment 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 Investment Manager, the Audit

Foresight Solar & Technology VCT plc Annual report and accounts 31 March 2021

GOVERNANCE

Corporate Governance

Committee and other third party advisers provide sufficient assurance that a sound system of internal control, which safeguards shareholders' investment and the Company's assets, is maintained. In addition, the Company's financial statements are audited by external auditors. An internal audit function, specific to the Company, is therefore considered unnecessary.

Directors' Professional Development

Full details of duties and obligations are provided at the time of appointment and are supplemented by further details as requirements change, although there is no formal induction programme for the Directors as recommended by the Code. Directors are also provided on a regular basis with key information on the Company's policies, regulatory and statutory requirements and internal controls. Changes affecting Directors' responsibilities are advised to the Board as they arise. Directors also participate in industry seminars.

UK Stewardship Code

Bribery Act 2010

The Company is committed to carrying out business fairly, honestly and openly. The Investment Manager has established policies and procedures to prevent bribery within its organisation.

Ernie Richardson
Chairman
27 August 2021

Foresight Solar & Technology VCT plc Annual report and accounts 31 March 2021

GOVERNANCE

Directors' Remuneration Report

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 for the approval of 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 auditors' opinion is included in the Independent Auditor's Report on pages 56 to 63.

Annual Statement from the Chairman of the Remuneration Committee

The Board, which is profiled on pages 38 to 39, consists solely of non-executive directors and considers at least annually the level of the Board's fees.

Consideration by the Directors of matters relating to Directors' remuneration

The Management Engagement and Remuneration Committee comprises all three Directors: Ernie Richardson (Chairman), Tim Dowlen and Carol Thompson.

The Management Engagement and Remuneration Committee has responsibility for reviewing the remuneration of the Directors, specifically reflecting the time commitment and responsibilities of the role, and meets at least annually.

The Management Engagement and 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 and Remuneration Committee have been provided with advice or services by any person in respect of its consideration of the Directors' remuneration.

The remuneration policy set by the Board is described below. Individual remuneration packages are determined by the Remuneration Committee within the framework of this policy.

No Director is involved in deciding their own remuneration.

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 on 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 March 2021 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 as requested by any Director.

The above remuneration policy was last approved by Shareholders at the Annual General Meeting on 24 September 2020 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 23 September 2021. The Directors' Remuneration Policy is available to view by writing to the Company Secretary at the registered office.

Shareholders' views in respect of Directors' remuneration are 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 88% of shareholders voted for the resolution approving the Directors' Remuneration Report, showing significant shareholder support.

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 and compensation of each person who served as a Director during the year are as shown on page 50. No Director has waived or agreed to waive any emoluments from the Company in the current year.

No other remuneration was paid or payable by the Company during the year nor were any expenses claimed or paid to them other than for expenses incurred wholly, necessarily and exclusively in furtherance of their duties as Directors of the Company.

Director liability insurance is held by the Company in respect of the Directors.

Total shareholder return

The graph on the following page charts the total shareholder return for the Ordinary Share class to 31 March 2021, on the hypothetical value of £100, invested on 1 April 2016. The total return is compared to the UK long term power price forecasts (rebased), which is considered by the Board an appropriate external indicator against which to measure the performance of the Ordinary Shares.

Foresight Solar & Technology VCT plc Annual report and accounts 31 March 2021

GOVERNANCE

Directors' Remuneration Report

Foresight Solar & Technology VCT plc - Ordinary Shares total returns and UK long term power price forecasts (rebased)

Directors

The Directors who held office during the year and their interests in the issued shares of 1p each of the Company were as follows:

	31 March 2021		31 March 2020
	Ordinary Shares	FWT Shares	Ordinary Shares	FWT Shares
Ernie Richardson	—	40,000	—	20,000
Tim Dowlen	29,558	—	29,558	—
Carol Thompson	—	—	—	—
Mike Liston
(resigned 3 February 2021)	—	—	—	—
Total	29,558	40,000	29,558	20,000

All the Directors' share interests shown above were held beneficially.

In accordance with the UK Corporate Governance Code and the Board's policy, Mr Richardson and Mr Dowlen retire annually and, being eligible, offer themselves up for re-election. Biographical notes on the Directors are given on pages 38 to 39. The Board believes that Mr Richardson's, Mr Dowlen's and Ms Thompson's skills, experience and knowledge continue to complement each other and add value to the Company and recommends their re-election to the Board. None of the directors has a contract of service with the Company.

Foresight Solar & Technology VCT plc Annual report and accounts 31 March 2021

GOVERNANCE

Directors' Remuneration Report

	Audited Directors' fees year ended 31 March 2021 (£)	Audited Directors' fees year ended 31 March 2020 (£)
Ernie Richardson	28,250	25,854
Tim Dowlen	22,500	22,500
Carol Thompson (appointed on 22 March 2021)	692	—
Mike Liston (resigned on 3 February 2021)	19,010	22,500
David Hurst-Brown (resigned on 19 September 2019)	—	13,292
Total	70,452	84,146

The Directors are not eligible for pension benefits, share options, long-term incentive schemes, taxable benefits, annual incentives or clawback.

Votes cast for and against the Directors' Remuneration Report for the year ended 31 March 2020

Shares and Percentage of votes cast For	Shares and Percentage of votes cast Against
88.4%	11.6%
2,187,906 votes	287,174 votes

In accordance with new 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 31 March 2021	Year ended 31 March 2020
Dividends	£709,000	£2,583,000
Share buybacks	£243,000	£6,390,000
Total Shareholder distributions	£952,000	£8,973,000
Directors fees	£70,452	£84,146
Directors fees % of Shareholder distributions	7.4%	0.9%

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. In addition to this, Resolution 2, which is seeking shareholder approval for the Directors Remuneration Policy, will, if approved, take effect from the AGM and will be valid for a period of three years unless renewed, varied or revoked by the Company at a general meeting.

This Directors' Remuneration Report was approved by the Board on 27 August 2021 and is signed on its behalf by Ernie Richardson (Chairman).

On behalf of the Board

Ernie Richardson
Chairman
27 August 2021

Foresight Solar & Technology VCT plc Annual report and accounts 31 March 2021

GOVERNANCE

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 and existence of unquoted investments; and
Compliance with HM Revenue & Customs conditions for maintenance of approved Venture Capital Trust Status.

These issues were discussed with the Investment 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 Investment Manager in the investment valuations. As a Venture Capital Trust the Company's investments are predominantly in unlisted securities, which can be difficult to value and requires the application of skill, knowledge and judgement by the Board and Audit Committee. During the valuation process the Board and Audit Committee and the Investment Manager follow the valuation methodologies for unlisted investments as set out in the International Private Equity and Venture Capital Valuation guidelines and appropriate industry valuation benchmarks. These valuation policies are set out in Note 1 of the accounts. These were then further reviewed by the Audit Committee. The Investment Manager confirmed to the Audit Committee that the investment valuations had been calculated consistently with prior periods and in accordance with published industry guidelines, taking account of the latest available information about portfolio companies and current market data. Furthermore, the Investment Manager held discussions regarding the investment valuations with the auditor.

Venture Capital Trust status

Maintaining venture capital trust status and adhering to the VCT Rules is critical to both the Company and its shareholders for them to retain their VCT tax benefits.

The Investment Manager confirmed to the Audit Committee that the conditions for maintaining the Company's status as an approved venture capital trust had been met throughout the year.

The Investment Manager obtains legal advice from RW Blears LLP 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 Investment Manager and any potential issues with Venture Capital Trust Status would be discussed at or between formal meetings. In addition, an external third party review of Venture Capital Trust Status is conducted by RW Blears LLP on a quarterly basis and this is reported to both the Board and Audit Committee and the Investment Manager.

The Investment Manager confirmed to the Audit Committee that they were not aware of any material misstatements. Having reviewed the reports received from the Investment Manager and RW Blears LLP, 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.

Auditor assessment

The Investment Manager and auditor confirmed to the Audit Committee that they were not aware of any material misstatements. Having reviewed the reports received from the Investment 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 director 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 2020. Deloitte LLP was appointed as auditor on 8 January 2021, with their first audit for the year ended 31 March 2021 and the Audit Committee does not intend to put the audit out to tender during the next financial year. No tender for the audit of the Company has been undertaken since this date. As part of its review of the continuing appointment of the auditors, the Audit Committee considers the need to put the audit out to tender, its fees and independence from the Investment 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 provided a high level of service and maintained a good knowledge of the venture capital trust market, making sure audit quality continued to be maintained.

The Audit Committee met in July 2020 to review the annual audited accounts for the year ended 31 March 2020 and the Company's risk register and in December 2020 to review the interim report and the Company's risk register. No other significant items were noted during the year.

Carol Thompson

Audit Committee Chair

27 August 2021

Foresight Solar & Technology VCT plc Annual report and accounts 31 March 2021

GOVERNANCE

Statement of Directors' Responsibilities

Statement of Directors' Responsibilities in respect of the Annual Report and Financial Statements

The Directors are responsible for preparing the Annual Report and the financial statements, in accordance with applicable law and regulations.

Company law requires the Directors to prepare financial statements for each financial year. Under that law the Directors have elected to prepare the financial statements in accordance with 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 of 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 and prudent;
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; and
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 its 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 comply 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.

We confirm that to the best of our knowledge:

the financial statements, prepared in accordance with the applicable set of accounting standards, give a true and fair view of the assets, liabilities, financial position and profit or loss of the Company; and
the Directors' Report and the Strategic Report includes 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, is fair, balanced and understandable and provides the information necessary for shareholders to assess the Company's position and performance, business model and strategy.

On behalf of the Board

Ernie Richardson
Chairman
27 August 2021

Foresight Solar & Technology VCT plc Annual report and accounts 31 March 2021

UNAUDITED NON-STATUTORY ANALYSIS OF THE SHARE CLASSES

Income Statement

for the year ended 31 March 2021

	Ordinary Shares			FWT Shares
	Revenue £'000	Capital £'000	Total £'000	Revenue £'000	Capital £'000	Total £'000
Investment holding losses	—	(17,500)	(17,500)	—	—	—
Income	17,667	—	17,667	—	—	—
Investment management fees	(95)	(284)	(379)	(19)	(56)	(75)
Interest payable	(71)	—	(71)	—	—	—
Other expenses	(362)	—	(362)	(116)	—	(116)
Profit/(loss) before taxation	17,139	(17,784)	(645)	(135)	(56)	(191)
Taxation	—	—	—	—	—	—
Profit/(loss) after taxation	17,139	(17,784)	(645)	(135)	(56)	(191)
Profit/(loss) per share	48.4p	(50.2)p	(1.8)p	(3.5)p	(1.5)p	(5.0)p

Balance Sheet

at 31 March 2021

	Ordinary Shares £'000	FWT Shares £'000
Fixed assets
Investments held at fair value through profit or loss	23,911	1,441
Current assets
Debtors	216	893
Cash and cash equivalents	533	7,543
	749	8,436
Creditors
Amounts falling due within one year	(482)	(59)
Net current assets	267	8,377
Net assets	24,178	9,818
Capital and reserves:
Called-up share capital	351	100
Share premium	—	7,515
Capital redemption reserve	203	—
Distributable reserve	35,995	2,260
Capital reserve	(12,510)	(57)
Revaluation reserve	139	—
Equity shareholders' funds	24,178	9,818
Number of shares in issue	35,109,032	10,021,408
Net asset value per share	68.9p	98.0p

At 31 March 2021 there was an inter-share debtor/creditor of £52,000 which has been eliminated on aggregation.

Foresight Solar & Technology VCT plc Annual report and accounts 31 March 2021

UNAUDITED NON-STATUTORY ANALYSIS OF THE SHARE CLASSES

Reconciliations of Movements in Shareholders' Funds

for the year ended 31 March 2021

Ordinary Shares	Called-up share capital £'000	Share premium account £'000	Capital redemption reserve £'000	Distributable reserve £'000	Capital reserve £'000	Revaluation reserve £'000	Total £'000
As at 1 April 2020	354	6,967	200	12,853	(12,226)	17,639	25,787
Expenses in relation to prior year share issues	—	(7)	—	(5)	—	—	(12)
Repurchase of shares	(3)	—	3	(243)	—	—	(243)
Cancellation of share premium	—	(6,960)	—	6,960	—	—	—
Investment holding losses	—	—	—	—	—	(17,500)	(17,500)
Dividends paid	—	—	—	(709)	—	—	(709)
Management fees charged to capital	—	—	—	—	(284)	—	(284)
Revenue profit for the year	—	—	—	17,139	—	—	17,139
As at 31 March 2021	351	—	203	35,995	(12,510)	139	24,178
FWT Shares	Called-up share capital £'000	Share premium account £'000	Capital redemption reserve £'000	Distributable reserve £'000	Capital reserve £'000	Revaluation reserve £'000	Total £'000
---	---	---	---	---	---	---	---
As at 1 April 2020	11	1,134	—	(8)	(1)	—	1,136
Share issues in the year	89	9,062	—	—	—	—	9,151
Expenses in relation to share issues	—	(277)	—	—	—	—	(277)
Expenses in relation to prior year share issues	—	(1)	—	—	—	—	(1)
Cancellation of share premium	—	(2,403)	—	2,403	—	—	—
Management fees charged to capital	—	—	—	—	(56)	—	(56)
Revenue loss for the year	—	—	—	(135)	—	—	(135)
As at 31 March 2021	100	7,515	—	2,260	(57)	—	9,818

Foresight Solar & Technology VCT plc Annual report and accounts 31 March 2021

INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF FORESIGHT SOLAR AND TECHNOLOGY VCT PLC

Auditor's Report

Report on the audit of the Financial Statements

1. Opinion

In our opinion the Financial Statements of Foresight Solar & Technology VCT PLC (the Company):

give a true and fair view of the state of the Company's affairs as at 31 March 2021 and of its loss 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"; and
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 Reconciliation of Movement in Shareholders' Funds;
the Balance Sheet;
the Cash Flow Statement; and
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 the non-audit services prohibited by the FRC's Ethical Standard were not provided to the Company.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

3. Summary of our audit approach

Key audit matters	The key audit matter that we identified in the current year was the valuation of solar assets and unquoted investments.
Materiality	The materiality that we used in the current year was £339,000, which was determined on the basis of 1% 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.

Foresight Solar & Technology VCT plc Annual report and accounts 31 March 2021

INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF FORESIGHT SOLAR AND TECHNOLOGY VCT PLC

Auditor's Report

3. Summary of our audit approach (continued)

Significant changes in our approach

In the prior year, materiality was based on 1% of total assets by the previous auditor. We have based our materiality on net assets as this is the primary measure used by the Shareholders in assessing the performance of the Company as an investment entity, as noted in section 6.1.

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:

Evaluating the nature of the Company, its business model and related risks including where relevant the impact of the COVID-19 pandemic and Brexit, the requirements of the applicable financial reporting framework and the system of internal control;
Evaluating the Directors' assessment of the Company's ability to continue as a going concern, including challenging the underlying data and key assumptions used to make the assessment, including planned investment realisations, through review of 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; and
Assessing the appropriateness of the going concern disclosures in 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.

Foresight Solar & Technology VCT plc Annual report and accounts 31 March 2021

INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF FORESIGHT SOLAR AND TECHNOLOGY VCT PLC

Auditor's Report

5.1. Valuation of unquoted investments

| Key audit matter description | The valuation of the solar assets and technology 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.

Of the investments balance of £25,352,000, £23,911,000 are held in solar assets, which are valued using a discounted cash flow methodology as no liquid market exists. The complexity of this methodology, as well as the significant judgements around factors including discount rate, useful economic lives and power prices, means that there is a risk that the fair value of these investments, either through error or manipulation, is not appropriate.

The unquoted investments balance totals £1,441,000 and are valued in line with International Private Equity and Venture Capital Valuation (“IPEVCV”) Guidelines and may carry a higher degree of judgement that our audit will focus on. There is therefore a key audit matter over the valuation of these unquoted technology investments as these could be incorrectly recorded through error or manipulation.

Refer to note 1b to the financial statements for the accounting policy on solar assets and 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 are disclosed in note 1f to the Financial Statements. The valuation of investment risk is included within the Audit Committee report on page 51. |
| --- | --- |
| How the scope of our audit responded to the key audit matter | Our testing over both asset types included:
- Obtaining an understanding of the relevant controls in place over the valuation process adopted by management and the Board;
- Assessing whether the valuation models, methods and assumptions adopted by management and the Board are appropriate and in line with the IPEVCV Guidelines;

Together with our valuation specialists, our testing over the solar assets included:
- Challenging management concerning the discount rates applied to individual investments and each sector, by comparing to relevant peers and recent market transactions;
- Challenging assumptions such as assumed power prices and useful economic lives of the assets by referencing to available market data and forecasts; and
- Assessing the historical accuracy of management’s cash flow forecasts used in the discounted cash flow models against actual results.

Our testing over the unquoted technology investments included:
- Testing 100% of unquoted investment additions made during the year, agreeing against investment agreements and other supporting documentation such as Companies House filings;
- Assessing the investee company’s performance against development milestones and business plan, including assessment of the investment papers, investees’ latest management accounts for any indications of a potential change in fair value since the time of acquisition; and
- Assessing whether any critical judgements or sources of estimation uncertainty were applied and appropriately disclosed. |
| Key observations | Based on our testing, we concluded that the valuation of the solar assets and unquoted investments is reasonable. |

Foresight Solar & Technology VCT plc Annual report and accounts 31 March 2021

INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF FORESIGHT SOLAR AND TECHNOLOGY VCT PLC

Auditor's Report

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	£339,000 (2020: £400,000)
Basis for determining materiality	1% of net asset value (2020: 1% of total assets)
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.

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 60% of materiality for the 2021 audit. In determining performance materiality, we considered our risk assessment, including our assessment of the Company's overall control environment and that we do not rely on controls. We also considered that there has been a low number of corrected and uncorrected misstatements identified in the prior year by the previous auditor and the fact that this was our first year of auditing the Company.

6.3. Error reporting threshold

We agreed with the Audit Committee that we would report to the Committee all audit differences in excess of £16,950, 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.

Foresight Solar & Technology VCT plc Annual report and accounts 31 March 2021

INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF FORESIGHT SOLAR AND TECHNOLOGY VCT PLC

Auditor's Report

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

Investment management and accounting and reporting operations were undertaken by the Manager. We have obtained an understanding of the Manager's systems of internal controls and considered in our risk assessment the overall control environment. As a result, given the simple nature of the operations and environment, we have not relied on controls in our audit approach.

8. Other information

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.

Foresight Solar & Technology VCT plc Annual report and accounts 31 March 2021

INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF FORESIGHT SOLAR AND TECHNOLOGY VCT PLC

Auditor's Report

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;
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 and relevant internal specialists, including tax and valuations specialists, 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 area: valuation of solar assets and 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.

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 solar assets and 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, the Audit Committee and external legal counsel concerning actual and potential litigation and claims;

Foresight Solar & Technology VCT plc Annual report and accounts 31 March 2021

INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF FORESIGHT SOLAR AND TECHNOLOGY VCT PLC

Auditor's Report

11.2. Audit response to risks identified (continued)

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; and
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.

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 period for which the Financial Statements are prepared is consistent with the Financial Statements; and
the Strategic Report and the Directors' Report have been prepared in accordance with applicable legal requirements.

In the light of the knowledge and understanding of the Company and its environment obtained in the course of the audit, we have not identified 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 page 42;
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 35;
the Directors' statement on fair, balanced and understandable set out on page 52;
the board's confirmation that it has carried out a robust assessment of the emerging and principal risks set out on page 34;
the section of the annual report that describes the review of effectiveness of risk management and internal control systems set out on page 46; and
the section describing the work of the Audit Committee set out on page 45.

Foresight Solar & Technology VCT plc Annual report and accounts 31 March 2021

INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF FORESIGHT SOLAR AND TECHNOLOGY VCT PLC

Auditor's Report

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
adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us; or
the Financial Statements 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 8th January 2021 to audit the Financial Statements for the year ending 31 March 2021 and subsequent financial periods. The period of total uninterrupted engagement including previous renewals and reappointments of the firm is 1 year, covering the year ended 31 March 2021.

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
27 August 2021

Foresight Solar & Technology VCT plc Annual report and accounts 31 March 2021

Financial Statements

Income Statement

for the year ended 31 March 2021

| | Notes | Year ended
31 March 2021 | | | Year ended
31 March 2020 | | |
| --- | --- | --- | --- | --- | --- | --- | --- |
| | | Revenue
£'000 | Capital
£'000 | Total
£'000 | Revenue
£'000 | Capital
£'000 | Total
£'000 |
| Investment holding losses | 8 | — | (17,500) | (17,500) | — | (7,881) | (7,881) |
| Realised losses on investments | 8 | — | — | — | — | (941) | (941) |
| Income | 2 | 17,667 | — | 17,667 | 3,385 | — | 3,385 |
| Investment management fees | 3 | (114) | (340) | (454) | (147) | (440) | (587) |
| Interest payable | | (71) | — | (71) | (397) | — | (397) |
| Other expenses | 4 | (478) | — | (478) | (449) | — | (449) |
| Profit/(loss) before taxation | | 17,004 | (17,840) | (836) | 2,392 | (9,262) | (6,870) |
| Taxation | 5 | — | — | — | — | — | — |
| Profit/(loss) after taxation | | 17,004 | (17,840) | (836) | 2,392 | (9,262) | (6,870) |
| Profit/(loss) per share: | | | | | | | |
| Ordinary Share | 7 | 48.4p | (50.2)p | (1.8)p | 5.6p | (21.6)p | (16.0)p |
| FWT Share | 7 | (3.5)p | (1.5)p | (5.0)p | (0.7)p | (0.1)p | (0.8)p |

The total column of this statement is 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 comprehensive income has been presented.

The notes on pages 68 to 85 form part of these Financial Statements.

Foresight Solar & Technology VCT plc Annual report and accounts 31 March 2021

Reconciliation of Movements in Shareholders' Funds

Year ended 31 March 2021	Called-up share capital £'000	Share premium account £'000	Capital redemption reserve £'000	Distributable reserve* £'000	Capital reserve* £'000	Revaluation reserve £'000	Total £'000
As at 1 April 2020	365	8,101	200	12,845	(12,227)	17,639	26,923
Share issues in the year	89	9,062	—	—	—	—	9,151
Expenses in relation to share issues	—	(277)	—	—	—	—	(277)
Expenses in relation to prior year share issues	—	(8)	—	(5)	—	—	(13)
Repurchase of shares	(3)	—	3	(243)	—	—	(243)
Cancellation of share premium	—	(9,363)	—	9,363	—	—	—
Investment holding losses	—	—	—	—	—	(17,500)	(17,500)
Dividends paid	—	—	—	(709)	—	—	(709)
Management fees charged to capital	—	—	—	—	(340)	—	(340)
Revenue profit for the year	—	—	—	17,004	—	—	17,004
As at 31 March 2021	451	7,515	203	38,255	(12,567)	139	33,996
Year ended 31 March 2020	Called-up share capital £'000	Share premium account £'000	Capital redemption reserve £'000	Distributable reserve* £'000	Capital reserve* £'000	Revaluation reserve £'000	Total £'000
---	---	---	---	---	---	---	---
As at 1 April 2019	432	7,032	122	19,426	(10,846)	25,520	41,686
Share issues in the year	11	1,162	—	—	—	—	1,173
Expenses in relation to share issues	—	(28)	—	—	—	—	(28)
Expenses in relation to prior year share issues	—	(26)	—	—	—	—	(26)
Repurchase of shares	(78)	—	78	(6,390)	—	—	(6,390)
Expenses in relation to tender offer	—	(39)	—	—	—	—	(39)
Realised losses on disposal of investments	—	—	—	—	(941)	—	(941)
Investment holding losses	—	—	—	—	—	(7,881)	(7,881)
Dividends paid	—	—	—	(2,583)	—	—	(2,583)
Management fees charged to capital	—	—	—	—	(440)	—	(440)
Revenue profit for the year	—	—	—	2,392	—	—	2,392
As at 31 March 2020	365	8,101	200	12,845	(12,227)	17,639	26,923

The notes on pages 68 to 85 form part of these Financial Statements
* Total distributable reserves at 31 March 2021 were £25,688,000 (2020: £618,000).

Foresight Solar & Technology VCT plc Annual report and accounts 31 March 2021

Financial Statements

Balance Sheet

at 31 March 2021

Registered Number: 07289280

	Notes	As at 31 March 2021 £'000	As at 31 March 2020 £'000
Fixed assets
Investments held at fair value through profit or loss	8	25,352	42,170
Current assets
Debtors	9	1,057	293
Cash		8,076	1,802
Creditors		9,133	2,095
Amounts falling due within one year	10	(489)	(17,342)
Net current assets/(liabilities)		8,644	(15,247)
Net assets		33,996	26,923
Capital and reserves
Called-up share capital	11	451	365
Share premium		7,515	8,101
Capital redemption reserve		203	200
Distributable reserve		38,255	12,845
Capital reserve		(12,567)	(12,227)
Revaluation reserve		139	17,639
Equity shareholders' funds		33,996	26,923
Net asset value per share
Ordinary Share	12	68.9p	72.7p
FWT Share	12	98.0p	99.1p

The accounts on pages 64 to 85 were approved by the Board of Directors and authorised for issue on 27 August 2021 and were signed on its behalf by:

Ernie Richardson
Chairman
27 August 2021

The notes on pages 68 to 85 form part of these Financial Statements.

Foresight Solar & Technology VCT plc Annual report and accounts 31 March 2021

Cash Flow Statement

for the year ended 31 March 2021

| | Year ended
31 March 2021
£'000 | Year ended
31 March 2020
£'000 |
| --- | --- | --- |
| Cash flow from operating activities | | |
| Deposit and similar interest received | 1 | 11 |
| Investment management fees paid | (435) | (600) |
| Secretarial fees paid | (172) | (128) |
| Other cash receipts/(payments) | 43 | (387) |
| Net cash outflow from operating activities | (563) | (1,104) |
| Cash flow from investing activities | | |
| Purchase of investments | (1,441) | — |
| Investments pending completion | (796) | — |
| Net proceeds on sale of investments | 759 | 5,280 |
| Investment income received | 406 | 3,129 |
| Net cash (outflow)/inflow from investing activities | (1,072) | 8,409 |
| Cash flow from financing activities | | |
| Proceeds of fund raising | 9,065 | 1,162 |
| Expenses of fund raising | (204) | (26) |
| Repurchase of own shares | (243) | (6,390) |
| Equity dividends paid | (709) | (2,583) |
| Net cash inflow/(outflow) from financing activities | 7,909 | (7,837) |
| | | |
| Net inflow/(outflow) of cash in the year | 6,274 | (532) |
| Reconciliation of net cash flow to movement in net funds | | |
| Increase/(decrease) in cash for the year | 6,274 | (532) |
| Net cash at start of year | 1,802 | 2,334 |
| Net cash at end of year | 8,076 | 1,802 |
| Analysis of changes in net debt | At 1 April 2020
£'000 | Cash Flows
£'000 | Other non-cash changes
£'000 | At 31 March 2021
£'000 |
| --- | --- | --- | --- | --- |
| Cash and cash equivalents | | | | |
| Cash | 1,802 | 6,274 | — | 8,076 |
| Borrowings | | | | |
| Loan with Youtan due within one year | 15,811 | — | (15,811) | — |

The notes on pages 68 to 85 form part of these financial statements.

Foresight Solar & Technology VCT plc Annual report and accounts 31 March 2021

68
Foresight Solar & Technology VCT plc Annual report and accounts 31 March 2021

Financial Statements

Notes to the Accounts

for the year ended 31 March 2021

1 Accounting policies

A summary of the principal accounting policies, all of which have been applied consistently throughout the year, are 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.

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 recognised as consolidated subsidiaries or associated undertakings, but are held at fair value through profit or loss.

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 Chairman's Statement, Strategic Report and Notes to the Accounts. In addition, the financial statements 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.

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 buy backs 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 given due consideration to the impact of COVID-19 and Brexit on the business, as set out in the Strategic Report and have reasonable expectation that the Company has adequate resources to continue in operational existence for the foreseeable future being at least 12 months from the date of signing of the financial statements. Thus they continue to adopt the going concern basis of accounting in preparing the annual financial statements.

Foreign Currencies

The Company's financial statements are presented in Pounds Sterling, which is also the Company's functional currency.

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 Directors value investments in accordance with the International Private Equity and Venture Capital ("IPEV") Valuation Guidelines, as updated in December 2018 with further COVID-19 guidance issued 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 unquoted investments are recognised when the contract for acquisition or sale becomes unconditional.

Foresight Solar & Technology VCT plc Annual report and accounts 31 March 2021

b) Assets held at fair value through profit or loss – investments (continued)

All unquoted investments are initially held at cost for an appropriate period where there is considered to have been no change in fair value. Where such a basis is no longer appropriate, unquoted investments are stated at fair value in accordance with the following rules which are consistent with the IPEV Valuation guidelines. Expenses incurred directly in relation to the acquisition of an asset will be capitalised, and thus added to the cost of the asset, as they are incurred.

The Company has direct investments in a number of portfolio companies ("portfolio companies"). The fair values of the portfolio companies are determined as the fair value of their net assets. The fair value of the underlying solar project investments held by the portfolio companies, or their wholly owned subsidiaries, which impact the value of the portfolio companies' net assets, are determined by using discounted cash flow valuation techniques or expected sales proceeds. The Directors base the fair value of the investments on information received from the Investment Manager. The Investment Manager's assessment of fair value of investments is determined in accordance with IPEV Valuation Guidelines. This relies on inputs relating to power price; Renewable Obligation Certificates ("ROCs") and Purchase Price Agreements ("PPA"); the output of the asset (including assumptions such as solar irradiation and technological performance of the asset); operating, maintenance and lease costs; tax; discount and inflation rates as applied to the cash flows; and the duration of the useful life of the asset.

Gains or losses on movement in fair value of the investments is recognised 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.

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. Loan interest income is calculated using the effective interest method and recognised on an accruals basis. Other income such as deposit interest is included on an accruals basis.

d) Expenses

All expenses (inclusive of VAT), including loan interest payable, 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 management fees payable to Foresight Group and 100% of any performance incentive fees payable to Foresight Group 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.

e) Share based payments

The performance incentive fee (classified as a share based payment) may be satisfied by either a cash payment or the issue of Ordinary Shares (or by a combination of both) ultimately at the discretion of the Investment Manager, and therefore falls within the definition of a share-based payment under FRS 102.26. As the Investment Manager has the choice of settlement, the arrangement is accounted for as a cash-settled transaction.

The fair value of the amount payable to the Investment Manager is recognised as an expense, with a corresponding increase in liabilities, over the vesting period.

The Board determines the fair value at each reporting date based on the amount of cash expected to be paid under the performance related incentive fee arrangement over the vesting period. This amount is not recognised until it is considered more likely than not that the performance condition will be met (delivery of the specified financial performance to exceed the hurdle rate during the vesting period). The vesting period is not fixed and is estimated as the period required to meet the performance condition. It is based on an estimate of the period required to meet future performance of the fund and future distributions.

The liability is remeasured at each balance sheet date and at settlement date. To the extent not paid, any changes in the fair value of the liability are recognised as a performance incentive fee in profit or loss over the vesting period.

f) Critical accounting judgments 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.

Financial Statements

Notes to the Accounts

for the year ended 31 March 2021

1 Accounting policies (continued)

f) Critical accounting judgments and key sources of estimation uncertainty (continued)

The Board considers that the only areas where the Investment Manager makes critical estimates and assumptions that may have a significant effect on the financial statements relates to the fair valuation of unquoted investments and the fair valuation of share-based payments, which are based on historical experience and other factors that are considered reasonable under the circumstances. Actual results may differ from these estimates and the underlying assumptions are reviewed on an ongoing basis.

The Board considers that the fair value of investments not quoted in an active market involves critical accounting estimates and assumptions because they are determined by the Investment 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 output of the asset (including assumptions such as solar irradiation and technological performance of the asset), power prices, operating costs, discount and inflation rates applied to the cash flows, and the duration of the useful economic life of the asset. 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 Investment Manager. Consideration has also been given to the impact of COVID-19 on the valuations and the recent IPEV valuation guidance released in March 2020 has been followed. For more information, please refer to Note 1b). The Investment 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.

The Board considers that there is a significant judgement involving an estimate regarding the assessment of the probability of achieving the hurdle which would trigger the payment of the performance related incentive fees due to the Investment Manager. A performance related incentive fee will be payable if the fund achieves the performance condition (delivery of the specified financial performance to exceed the hurdle rate during the vesting period).

The Board considers a number of factors and assumptions when assessing the probability of achieving the hurdle during the vesting period, including the current and projected NAV of the company, the distributions made to date, uncertainty around future returns and future expected distributions. Judgement is also exercised in determining the appropriate vesting period, being the period required to meet the performance condition. It is based on an estimate of the future performance of the fund and future distributions and the projected period to elapse before the distributions exceed the hurdle with respect to the performance related incentive fee.

g) Basic financial instruments

During the year the Company held trade and other debtors, trade and other creditors, and cash and cash equivalents balances.

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 using the effective interest method, less any impairment losses.

Trade and other creditors

Trade and other creditors (including long term borrowings) are recognised initially at transaction price plus attributable transaction costs. Subsequent to initial recognition they are measured at amortised cost.

Cash and cash equivalents

Cash and cash equivalents comprise cash balances and other equivalent assets classified as cash due to insignificant risk of valuation movements.

h) Other financial instruments

Other financial instruments not meeting the definition of Basic Financial Instruments include investments held at fair value through profit and loss 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.

i) Taxation

The Company is currently registered in the United Kingdom. The Company is taxed at 19% which is the general rate of corporation tax in the United Kingdom. However due to the Company's status as a Venture Capital Trust and the continued intention to meet the conditions required to comply with Part 6 of the Income Tax Act 2007, no provision for taxation is required in respect of any realised or unrealised appreciation of the Company's investments which arise.

Foresight Solar & Technology VCT plc Annual report and accounts 31 March 2021

i) Taxation (continued)

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.

j) Deferred taxation

Provision is made for corporation tax at the tax rate that is expected to apply to the reversal of the related difference, using tax rates enacted or substantively enacted at the balance sheet date 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.

k) Capital reserves

The capital and revenue reserves are made up of the following accounts:

(i) Capital reserve

The following are accounted for in this reserve:

Gains and losses on realisation of investments;
Permanent diminution in value of investments;
75% of management fee expense and 100% of any performance incentive expense, together with the related tax effect to this reserve in accordance with the policies; and
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; and
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 revaluation and realised capital reserves are shown within the Income Statement for the year.

2 Income

| | Year ended
31 March 2021
£'000 | Year ended
31 March 2020
£'000 |
| --- | --- | --- |
| Loan stock interest | 442 | 609 |
| Dividends received | 233 | 2,765 |
| Bank interest | 1 | 11 |
| Release of loans payable* | 16,991 | — |
| | 17,667 | 3,385 |

*Release of loans payable in the year relates to the release of the Company's loan liability from its wholly owned subsidiary, Youtan Limited and associated accrued interest. The release had an equal and opposite effect on the carrying value of Investments, resulting in a nil impact for the NAV of the Company.

72
^{} Foresight Solar & Technology VCT plc Annual report and accounts 31 March 2021

Financial Statements

Notes to the Accounts

for the year ended 31 March 2021

3 Investment management fees

	Year ended 31 March 2021 £'000	Year ended 31 March 2020 £'000
Investment management fees charged to the capital account	340	440
Investment management fees charged to the revenue account	114	147
	454	587

The Investment Manager advises the Company on investments in qualifying companies under an agreement dated 31 August 2010 (as novated to the Investment Manager and amended on 27 January 2020), and receives management fees, paid quarterly in advance, of 1.5% of Ordinary Share net assets, and 2% of FWT Share net assets. If the annual expenses of the Company exceed 3.6% of the Company's total assets less current liabilities, the Company is entitled to reduce the fees paid to the Investment Manager by the amount of the excess. This agreement may be terminated by either party giving to the other not less than twelve months' notice, at any time after the third anniversary being 27 January 2023.

Management fees are calculated on the most recently announced net assets and payable quarterly in advance. Supplemental management fees are paid in relation to funds raised during the quarter.

No performance incentive fee was accrued in the year (2020: none). See note 13 for further information.

4 Other expenses

	Year ended 31 March 2021 £'000	Year ended 31 March 2020 £'000
Secretarial services (excluding VAT)	169	131
Directors' remuneration including employer's National Insurance contributions	72	86
Auditor's remuneration excluding VAT¹	67	71
Other	170	161
	478	449

¹There were no non-audit fees paid to the Company's auditor during the year (31 March 2020: nil). The auditor remuneration is for the audit of the annual financial statements.

The Company has no employees other than the Directors.

5 Taxation

a) Analysis of charge in the year:

	Year ended 31 March 2021			Year ended 31 March 2020
	Revenue £'000	Capital £'000	Total £'000	Revenue £'000	Capital £'000	Total £'000
Corporation tax	—	—	—	—	—	—
Total tax for the year	—	—	—	—	—	—

5 Taxation (continued)

b) Factors affecting current tax charge for the year:

The tax assessed for the year is higher than (2020: higher than) the standard rate of corporation tax in the UK of 19% (2020: 19%). The differences are explained below:

	Year ended 31 March 2021 £'000	Year ended 31 March 2020 £'000
Loss before taxation	(836)	(6,870)
Corporation tax at 19%	(159)	(1,305)
Effect of:
Non taxable dividend income	(44)	(525)
Other non taxable income	(3,228)	—
Realised capital losses not deductible	—	179
Unrealised capital losses not taxable	3,325	1,497
Unutilised management expenses	(107)	154
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.

The Company has not recognised an estimated deferred tax asset of £1,474,000 (2020: £1,372,000) arising as a result of unutilised excess management expenses, due to uncertainty about the availability of future taxable profits to offset the losses against.

6 Dividends

	Year ended 31 March 2021 £'000	Year ended 31 March 2020 £'000
Ordinary Shares
Dividends - paid in the year - 2p per share (2020: 6p)	709	2,583
FWT Shares
Dividends - paid in the year - nil per share	—	—

The Board is not recommending a final dividend on the Ordinary Shares Fund or FWT Shares Fund for the year ended 31 March 2021.

Set out above are the total dividends payable in respect of the financial year, which is the basis on which the requirements of section 274 of The Income Tax Act 2007 are considered.

As at 31 March 2021, reserves available for dividend distribution total £25,688,000 (2020: £618,000) comprising the capital and distributable reserves. The dividend paid in the current year was paid solely from capital reserves.

In accordance with s529 of the Income Tax Act 2007, a venture Capital Trust may not retain more than 15% of its qualifying income in any accounting period. The payment of the interim dividend satisfied this requirement.

Foresight Solar & Technology VCT plc Annual report and accounts 31 March 2021

Financial Statements

Notes to the Accounts

for the year ended 31 March 2021

7 Return per share

	Year ended 31 March 2021		Year ended 31 March 2020
	Ordinary Shares £'000	FWT shares £'000	Ordinary Shares £'000	FWT Shares £'000
Total loss after taxation	(645)	(191)	(6,861)	(9)
Total loss per share (note a)	(1.8)p	(5.0)p	(16.0)p	(0.8)p
Revenue profit/(loss) from ordinary activities after taxation	17,139	(135)	2,400	(8)
Revenue profit/(loss) per share (note b)	48.4p	(3.5)p	5.6p	(0.7)p
Capital loss from ordinary activities after taxation	(17,784)	(56)	(9,261)	(1)
Capital loss per share (note c)	(50.2)p	(1.5)p	(21.6)p	(0.1)p
Weighted average number of shares in issue during the period (note d)	35,414,680	3,831,368	42,897,610	1,145,927

Notes:
a) Total loss per share is total loss after taxation divided by the weighted average number of shares in issue during the year.
b) Revenue profit/(loss) per share is revenue profit/(loss) after taxation divided by the weighted average number of shares in issue during the year.
c) Capital loss per share is capital loss after taxation divided by the weighted average number of shares in issue during the year.
d) The weighted average number of shares in issue in the prior year for the FWT shares reflect the weighted average number of shares in issue following the first allotment of shares.

8 Investments held at fair value through profit or loss

	2021 £'000	2020 £'000
Unquoted investments	25,352	42,170
	Ordinary Shares Fund £'000	FWT Shares Fund £'000
---	---	---
Book cost at 1 April 2020	24,531	—
Investment holding gains	17,639	—
Valuation at 1 April 2020	42,170	—
Movements in the year:
Purchases at cost	—	1,441
Disposal proceeds	(759)	—
Realised gains	—	—
Investment holding losses	(17,500)	—
Valuation at 31 March 2021	23,911	1,441
Book cost at 31 March 2021	23,772	1,441
Investment holding gains	139	—
Valuation at 31 March 2021	23,911	1,441

Foresight Solar & Technology VCT plc Annual report and accounts 31 March 2021

9 Debtors

| | 2021
£'000 | 2020
£'000 |
| --- | --- | --- |
| Investments pending completion* | 796 | — |
| Prepayments | 62 | 67 |
| Investment proceeds debtor | — | 10 |
| Interest receivable | 165 | 9 |
| Other debtors | 34 | 207 |
| | 1,057 | 293 |

*Money had been transferred to lawyers pending completion of three investments in the week after year end as further described in note 20.

10 Creditors

| | 2021
£'000 | 2020
£'000 |
| --- | --- | --- |
| Trade creditors | 2 | 97 |
| Accruals | 124 | 104 |
| Cash held on behalf of Shaftesbury Solar I UK Holdings Limited | 363 | — |
| Loan with Youtan Limited | — | 15,811 |
| Interest payable on loan with Youtan Limited | — | 1,109 |
| Other creditors | — | 221 |
| | 489 | 17,342 |

*The Company's liability from its wholly owned subsidiary, Youtan Limited, was released in full during the year. See note 2 for further information. The release had a nil impact on the NAV of the Company.

11 Called-up share capital

| | 2021
£'000 | 2020
£'000 |
| --- | --- | --- |
| Allotted, called up and fully paid: | | |
| 35,109,032 Ordinary Shares of 1p each (2020: 35,460,961) | 351 | 354 |
| 10,021,408 FWT Shares of 1p each (2020: 1,145,927) | 100 | 11 |
| | 451 | 365 |

On 29 June 2018 the C and D Shares funds were merged with the Ordinary Shares fund. On the basis of the conversion ratios, 16,884,973 C and D shares were converted into Ordinary Shares, and the remaining 1,222,778 C and D shares were converted into Deferred Shares. These Deferred Shares are not listed, and have no value attributable to them.

During the year, the Ordinary Shares fund repurchased 351,929 shares for cancellation at a cost of £243,000 during the year.

Under the offers for subscription dated 20 December 2019 and 30 December 2020, 8,875,481 shares were issued during the year in the FWT Shares Fund based on a net asset value of 100.0p per share. This share issue was under the new VCT provisions that commenced on 6 April 2006, namely: 30% up front income tax relief which can be retained by qualifying investors if the shares are held for the minimum five year holding period. There were 1,145,927 shares issued in the year ended 31 March 2020.

Details of voting rights are disclosed in the Notice of Annual General Meeting on page 86 onwards. A summary of the Investment Policy can be found in the Strategic Report on page 30.

| | Ordinary Shares
No. | FWT Shares
No. |
| --- | --- | --- |
| At 1 April 2020 | 35,460,961 | 1,145,927 |
| Allotment of shares | — | 8,875,481 |
| Repurchase of shares for cancellation | (351,929) | — |
| At 31 March 2021 | 35,109,032 | 10,021,408 |

76
Foresight Solar & Technology VCT plc Annual report and accounts 31 March 2021

Financial Statements

Notes to the Accounts

for the year ended 31 March 2021

12 Net asset value per share

Net asset value per Ordinary Share is based on net assets at the year end of £24,178,000 (2020: £25,787,000) and on 35,109,032 Ordinary Shares (2020: 35,460,961), being the number of Ordinary Shares in issue at that date.

Net asset value per FWT Share is based on net assets at the year end of £9,818,000 (2020: £1,136,000) and on 10,021,408 FWT Shares (2020: 1,145,927), being the number of FWT Shares in issue at that date.

13 Share based payments

Ordinary Shares

Up to 4 May 2017 and pursuant to the Original Agreement entered into between the Company and the Investment Manager on 31 August 2010, the Investment Manager was entitled to a performance related incentive fee (classified as a share based payment) on Ordinary Shares equal to 20% of total distributions over 100p and 30% of total distributions over 130p (the "original hurdle").

On 4 May 2017, the shareholders approved an amendment to the Original Agreement, allowing for the performance related incentive fee to be paid in respect of the net asset value of the shares held by the shareholders electing to remain in the fund as well as the shareholders exiting the fund as part of the Tender Offer on 7 May 2017.

On 4 May 2017, the shareholders also approved an amendment to the Original Agreement for future performance incentive fees whereby the Investment Manager was entitled to receive a performance related incentive fee on the Ordinary Shares equal to 20% of total return over 100p and 30% of total return over 130p (total return being net asset value plus historic distributions paid per Ordinary Share), with an additional growth hurdle of 5% per annum going forward (the "amended hurdle"), i.e. 136.5p for the Company's financial year ending 30 June 2018, 141.6p for the nine month period ending 31 March 2019, 148.7p for the year ending 31 March 2020, 156.1p for the year ending 31 March 2021 and so on.

The rights and obligations of Foresight Group CI Limited in respect of the performance incentive arrangements were novated to the Investment Manager on 27 January 2020. As a result, in respect of investments made before that date, any performance incentive fee which Foresight Group CI Limited was entitled was transferred to the Investment Manager on that date. The hurdle in the Original Agreement will continue to apply to any new Ordinary Shares that are issued in accordance with the Original Agreement.

As at 31 March 2021, the amended hurdle was 156.1p per share (2020: 148.7p) and the total return per Ordinary Share was 114.9p (2020: 116.7p). The hurdle was not exceeded at any point during the year (2020: hurdle was not exceeded at any point during the year). Therefore, no performance related incentive fee expense was recognised in respect of share-based payments during the year (2020: £nil).

The Directors currently do not expect a future performance related incentive fee to become payable over the vesting period. This is because the additional annual growth hurdle of 5% is greater than the combined future projected annual dividend distributions and net asset growth. As such the fund's total returns are not expected to exceed the amended hurdle. Therefore, as at and for the year ended 31 March 2021, no performance related incentive fee expense or liability was recognised (2020: £nil).

The terms and conditions of the share-based payments are as follows:

Grant Date: 31 August 2010 (subject to an amendment on 4 May 2017)

Vesting conditions: Expected total return exceeds the original hurdle

Vesting date: 8 May 2017

Method of settlement accounting: Cash (with the option of settling in shares in the event of any cash flow restrictions).

Arrangement was settled in cash.

Grant Date: 4 May 2017

Vesting conditions: Expected total return exceeds the amended hurdle

Vesting period: Variable from 4 May 2017

Method of settlement accounting: Cash (with the option of settling in shares in the event of any cash flow restrictions).

Foresight Solar & Technology VCT plc Annual report and accounts 31 March 2021

FWT Shares

The threshold for the FWT Shares is 20% of distributions in excess of 110.0p per FWT Share, subject to annual adjustment of this hurdle in line with the Retail Price Index (the "FWT share threshold").

At the year end date, the FWT share threshold was not satisfied and no expense or liability was recognised.

Grant Date: 27 January 2020

Vesting conditions: Distributions exceed the FWT share threshold

Vesting period: Variable from 27 January 2020

Method of settlement accounting: Cash (with the option of settling in shares in the event of any cash flow restrictions).

14 Capital commitments and contingent liabilities

The Company had no capital commitments or contingent liabilities at 31 March 2021 (2020: £nil).

15 Financial instrument risk management

The Company's financial instruments comprise:

Unquoted investments and qualifying loan stock held in the investment portfolio as well as cash and investments in money market funds that are held in accordance with the Company's investment objective as set out in the Directors' Report.
Cash, liquid resources, short-term debtors, creditors that arise directly from the Company's operations.

Classification of financial instruments

The Company held the following categories of financial instruments all of which are included in the Balance Sheet at fair value, at 31 March 2021:

| Company | 31 March 2021
£'000 | 31 March 2020
£'000 |
| --- | --- | --- |
| Assets held at fair value through profit and loss | | |
| Investments held at fair value | 25,352 | 42,170 |

The investment portfolio consists of unquoted investments. Unquoted investments consist of equity in and loans to portfolio companies and are valued at fair value through profit or loss.

The main risks arising from the Company's financial instruments are credit risk, valuation risk, regulatory risk, interest risk, foreign exchange risk and liquidity risk. The Board regularly reviews and agrees policies for managing each of these risks.

Detailed below is a summary of the financial risks to which the Company is exposed, and the policies agreed by the Board for management of these risks.

Credit risk

Credit risk is the risk of failure by counterparties to deliver securities which the Company has paid for, or the failure by counterparties to pay for securities which the Company has delivered. The Company has exposure to credit risk in respect of the loan stock investments it has made into portfolio companies and interest receivable from portfolio companies, most of which have no security attached to them, and where they do, such security ranks beneath any bank debt that a portfolio company may owe. The Board has delegated the management of credit risk in respect of loan stock to the Investment Manager. The Investment Manager receives full year accounts from portfolio companies, and members of the 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 Company also has exposure to credit risk in respect of its current asset investments, cash and other debtors. The Board manages credit risk in respect of the current asset investments and cash by ensuring a spread of such investments in separate money market funds such that none exceed 15% of the Company's total investment assets. These money market funds are investment grade funds, and so credit risk is considered to be low. The Company currently invests its cash holdings and loan stock (indirectly) with Barclays. Its money market holdings are with HSBC, Goldman Sachs (previously RBS), Blackrock and Insight Investments. The maximum exposure to credit risk at 31 March 2021 was £17,480,000 (31 March 2020: £11,196,000) based on loan stock, cash, money market funds and other receivables (amounts due on investments). The majority of the Company's assets are held in its own name in certificated form and therefore custodian default risk is negligible.

78
Foresight Solar & Technology VCT plc Annual report and accounts 31 March 2021

Financial Statements

Notes to the Accounts

for the year ended 31 March 2021

15 Financial instrument risk management (continued)

An analysis of the Company's assets exposed to credit risk is provided in the table below:

| Credit risk | 31 March 2021
£000 | 31 March 2020
£000 |
| --- | --- | --- |
| Loan stocks | 8,409 | 9,168 |
| Other debtors | 995 | 226 |
| Cash | 8,076 | 1,802 |
| Total | 17,480 | 11,196 |

Price risk

Through direct investments in portfolio companies, the Company's Ordinary Shares primarily invests in solar investments via unquoted equity and loan securities. The FWT Shares primarily invests in early stage UK technology companies. The Company's investment portfolio is recognised in the Balance Sheet at fair value, in accordance with IPEV Valuation Guidelines.

Price risk is the risk that the fair value or cash flows of a financial instrument will fluctuate due to changes in market prices. At 31 March 2021, the Company's direct investments in the portfolio companies were valued at net assets excluding the outstanding loans issued by the Company. A 10% increase/decrease in valuation of the total portfolio would result in a valuation movement of £2,535,000 (2020: £4,217,000).

The Board have selected the impact of a change of 10% as this is considered reasonable given the current level of volatility observed both on a historical basis and market expectations for future movement.

As the valuation of the direct investments is directly impacted by the valuation of the underlying investments in solar assets, the impact of changes in unobservable inputs is discussed in more detail on page 81.

Liquidity risk

The investments in equity and fixed interest stocks of unquoted portfolio companies that the Company holds are not traded and they are not readily realisable. The ability of the Company to realise the investments at their carrying value may at times not be possible if there are no willing purchasers. The Company's ability to sell investments may also be constrained by the requirements set down for VCTs.

The maturity profile of the Company's loan stock investments disclosed within the consideration of credit risk above indicates that these assets are also not readily realisable until dates up to one year from the year-end.

To counter these risks to the Company's liquidity, the Investment Manager maintains sufficient cash and money market funds to meet running costs and other commitments. The Company invests its surplus funds in high quality money market funds which are all accessible on an immediate basis.

| Maturity analysis: | 31 March 2021
£000 | 31 March 2020
£000 |
| --- | --- | --- |
| - in one year or less | 16,485 | 10,970 |
| - in more than one year but less than two years | — | — |
| - in more than two years but less than three years | — | — |
| - in more than three years but less than four years | — | — |
| - in more than four years but less than five years | — | — |
| Total | 16,485 | 10,970 |

Foresight Solar & Technology VCT plc Annual report and accounts 31 March 2021

15 Financial instrument risk management (continued)

Foreign currency risk

Foreign currency risk arises as the values of recognised monetary assets and monetary liabilities denominated in other currencies fluctuate due to changes in foreign exchange rates. The majority of the Company's assets are in the United Kingdom and denominated in sterling, and therefore the directors do not consider foreign currency risk to be material. As at 31 March 2021, the company had a residual holding in one existing portfolio company denominated in Euro (EUR). Therefore, the Company is exposed to foreign currency risk in respect of this portfolio company. The applicable exchange rate as at 31 March 2021 was £:€ 1.1713 (2020: £:€ 1.1211).

An analysis of the Company's assets exposed to foreign currency risk is provided in the table below:

| Foreign exchange risk | 31 March 2021
£'000 | 31 March 2020
£'000 |
| --- | --- | --- |
| Investments - EUR | 416 | 836 |
| Total | 416 | 836 |

If the Euro was to strengthen/weaken 10% against the pound, the value of the Euro denominated assets would increase/decrease by £42,000 (2020: £84,000).

Interest rate risk

The fair value of the Company's loan stock and cash investments may be affected by interest rate movements. The Board does not consider this to be a significant risk as the loan stock interest rates are all fixed. The benchmark rate, which determines the interest payments received on cash and loan balances held, is the bank base rate which was 0.1% at 31 March 2021 (0.1% at 31 March 2020).

Company	Total fixed portfolio		Weighted average interest rate		Weighted average time for which rate is fixed
	31 March 2021
£'000	31 March 2020
£'000	31 March 2021
%	31 March 2020
%	31 March 2021
Days	31 March 2020
Days
Short term fixed interest securities
Loan stock
— exposed to fixed interest rate risk*	8,409	9,168	5.0	5.0	—	—
Cash and cash equivalents	8,076	1,802	—	0.1	—	—
Total exposed to interest rate risk	16,485	10,970

*100% of the Company's loan stock investments exposed to fixed interest rate risk as at 31 March 2021 is repayable on demand with no fixed term. Therefore, the weighted average time for which the rate is fixed for those loans is nil.

80
Foresight Solar & Technology VCT plc Annual report and accounts 31 March 2021

Financial Statements

Notes to the Accounts

for the year ended 31 March 2021

15 Financial instrument risk management (continued)

Fair value hierarchy

In accordance with amendments to FRS 102, the following table shows financial instruments recognised at fair value, analysed between those whose fair value is based on:

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); and
Inputs for the instrument that are not based on observable market data (unobservable inputs) (Level 3).

| As at 31 March 2021 | Level 1
£'000 | Level 2
£'000 | Level 3
£'000 | Total
£'000 |
| --- | --- | --- | --- | --- |
| Unquoted investments | — | — | 25,352 | 25,352 |
| Financial assets | — | — | 25,352 | 25,352 |
| As at 31 March 2020 | Level 1
£'000 | Level 2
£'000 | Level 3
£'000 | Total
£'000 |
| --- | --- | --- | --- | --- |
| Unquoted investments | — | — | 42,170 | 42,170 |
| Financial assets | — | — | 42,170 | 42,170 |

Transfers

During the year there were no transfers between levels 1, 2 or 3.

Sensitivity analysis of changes in key inputs and assumptions which may significantly change valuations

For each class of fair valued instruments, if changing one or more of the inputs or reasonably possible alternative assumptions would change the fair value significantly, accounting standards require the Company to state the fact and disclose the effect of those changes.

The Company's underlying solar investments are valued with reference to the discounted value of future cash flows. The Board reviews, at least quarterly, the valuation inputs and where possible, make use of observable market data to ensure valuations reflect the fair value of the investments.

A broad range of assumptions are used in the valuation models. These assumptions are based on long-term forecasts and are not affected by short term fluctuations in inputs, be it economic or technical.

The significant assumptions used in the fair value measurement categorised within Level 3 of the fair value hierarchy together with a quantitative sensitivity analysis as at 31 March 2021 are set out below and on pages 81 to 83. Please note, this sensitivity analysis only refers to the impact of changes in key inputs and assumptions on the valuation of the UK Solar investments (in the Ordinary Share class) held at fair value only.

The discounted cash flow valuations of the solar assets form the majority of the NAV calculation.

Only changes in those key inputs and assumptions to the discounted cash flow models which would have a significant impact on valuation are discussed in more detail below. The valuation of investments may also be impacted by changes in other inputs to the discounted cash flow models, but these have not been discussed further as they would not have a significant impact on the valuation. The assumption sensitivities are illustrative. The actual change in these assumptions could be more or less than the amount shown.

Foresight Solar & Technology VCT plc Annual report and accounts 31 March 2021
81

15 Financial instrument risk management (continued)

Discount Rate Sensitivities

The range of discount rates used is 5.25%-6.25%. Considering expectations in the Solar Infrastructure sector, a variance of +/- 0.50% is considered reasonable for this fund given the current risk profile.

	-0.50%	-0.25%	Base	+0.25%	+0.50%
Directors DCF Valuation (£m)	26.23	25.68	25.14	24.62	24.12
£26.8m
£26.3m
£25.8m
£25.3m
£24.8m
£24.3m
£23.8m
-0.50%	-0.25%	Base	+0.25%	+0.50%

Energy Yield Sensitivities

Energy Yield is the amount of electricity that is produced and is calculated based on irradiation multiplied by the asset performance ratio and the degradation of the asset.

Irradiation is the amount of solar energy per metre squared of plant, and the asset performance ratio refers to how efficiently a plant converts irradiation into electricity on the grid.

	-10.00%	Base	+10.00%
Directors DCF Valuation (£m)	17.44	25.14	33.27
£34.0m
£32.0m
£30.0m
£28.0m
£26.0m
£24.0m
£22.0m
£20.0m
£18.0m
£16.0m
-10.00%	Base	+10.00%

82
Foresight Solar & Technology VCT plc Annual report and accounts 31 March 2021

Financial Statements

Notes to the Accounts

for the year ended 31 March 2021

15 Financial instrument risk management (continued)

Power Price Sensitivities

The discounted cash flow models assume that power prices are consistent with the Power Price Agreements ("PPA") currently in place.

At the PPA end date the model reverts to market price. The base case power pricing is based on the current forecast power price reference curve provided by external market experts.

	-20.00%	-10.00%	Base	+10.00%	+20.00%
Directors DCF Valuation (£m)	18.62	21.76	25.14	28.76	32.29
£33.0m
£31.0m
£29.0m
£27.0m
£25.0m
£23.0m
£21.0m
£19.0m
-20.00%	-10.00%	Base	+10.00%	+20.00%

Inflation Sensitivities

A variance of $+/- 1.0\%$ is considered reasonable given historic fluctuations. A rate of $3\%$ is assumed in the medium term reducing to $2.25\%$ long term.

	-1.00%	-0.50%	Base	+0.50%	+1.00%
Directors DCF Valuation (£m)	20.25	22.58	25.14	27.85	30.76

Foresight Solar & Technology VCT plc Annual report and accounts 31 March 2021
83

Operating Cost Sensitivities (Investment Level)

Operating costs refers to the cost of running the plants.

	-10.00%	-5.00%	Base	+5.00%	+10.00%
Directors DCF Valuation (£m)	26.66	25.87	25.14	24.44	23.73
£27.0m
£26.5m
£26.0m
£25.5m
£25.0m
£24.5m
£24.0m
£23.5m
£23.0m
-10.00%	-5.00%	Base	+5.00%	+10.00%

Useful Economic Lives Sensitivities

The Useful Economic Lives relates to the number of years a renewable asset will effectively generate power determined by both technical and commercial considerations. The current weighted average UEL in the portfolio is 28.6 years with additional value included in relation to expected future extensions. A range of 28.6 to 40 years is shown here to illustrate the valuation impact if no further lease extensions were successful and on the upside, if all assets were successfully extended to 40 years.

	28.6 Years	Base	40 Years
Directors DCF Valuation (£m)	23.64	25.14	28.08
£29.0m
£28.0m
£27.0m
£26.0m
£25.0m
£24.0m
£23.0m
28.6 Years	Base	40 Years

84
Foresight Solar & Technology VCT plc Annual report and accounts 31 March 2021

Financial Statements

Notes to the Accounts

for the year ended 31 March 2021

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 continue to provide an adequate return to shareholders by allocating its capital to assets commensurate with the level of risk.

Since the Company is a VCT, at least 80% of the capital of the Company (as measured under the tax legislation) must be invested in the relatively high risk asset class of small UK companies within three years of that capital being subscribed. The Company accordingly has limited scope to manage its capital structure in the light of changes in economic conditions and the risk characteristics of the underlying assets. Subject to this overall constraint upon changing the capital structure, the Company may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares, or sell assets if so required to maintain a level of liquidity to remain a going concern.

It regards the net assets of the Company as the Company's capital, as the level of liabilities 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.

Financial liabilities and borrowing facilities

The Company had no committed borrowing facilities, liabilities or guarantees at 31 March 2021 or 31 March 2020, other than those shown on the balance sheet.

Fair value

The fair value of the Company's financial assets and liabilities at 31 March 2021 or 31 March 2020 are not materially different from their carrying values.

17 Related party transactions

No Director has an interest in any contract to which the Company is a party. Transactions with or on behalf of portfolio companies are disclosed in Note 10. All transactions were on an arms length basis.

18 Transactions with the Investment Manager

Details of arrangements with Foresight Group LLP and Foresight Group CI Limited are given in the Directors' Report and Notes 3 and 13. All arrangements and transactions were on an arms length basis.

Foresight Group CI Limited, which acted as investment manager to the Company until 27 January 2020 when Foresight Group LLP was appointed as Investment Manager, earned fees of £nil (2020: £491,000). Foresight Group LLP, who was appointed as Investment Manager on 27 January 2020 earned fees of £454,000 up to 31 March 2021 (2020: £96,000). No performance fee was paid or accrued for the year (2020: nil).

Foresight Group LLP, to whom the Investment Manager delegated the function of Company Secretary from November 2017, earned fees of £169,000 (2020: £131,000), during the year.

At the balance sheet date there was £nil (2020: £112,000) due from Foresight Group CI Limited and £30,000 (2020: £86,000) due from Foresight Group LLP. No amounts have been written off in the year in respect of debts due to or from related parties.

19 Subsidiaries and related undertakings

The Company has holdings in the following subsidiaries as at the year end:

Name	Address	Principal Activity	Direct/indirect Trading	Class and percentage of shares held
Adriou Limited	The Shard, 32 London Bridge Street, London, SE1 9SG	Finance company	Direct	A Ordinary 100%
Foresight VCT (Lux) 1 S.à r.l.	68-70 Boulevard de la Pétrusse, L-2320 Luxembourg	Investment in solar projects	Direct	Ordinary 100%
Foresight VCT (Lux) 2 S.à r.l.	68-70 Boulevard de la Pétrusse, L-2320 Luxembourg	Investment in solar projects	Indirect	Ordinary 100%
Greenersite Limited	The Shard, 32 London Bridge Street, London, SE1 9SG	Production of electricity	Direct	Ordinary 100%
Shaftesbury Solar I UK Holdings Limited	The Shard, 32 London Bridge Street, London, SE1 9SG	Investment in solar projects	Direct	A Ordinary 100%
Youtan Limited	The Shard, 32 London Bridge Street, London, SE1 9SG	Finance company	Direct	A Ordinary 100%

Foresight Solar & Technology VCT plc Annual report and accounts 31 March 2021

Related undertakings

Under Section 409 of the Companies Act 2006, the Company is required to disclose specified details of its related undertakings, which are undertakings where the Company's holding amounted to 20% or more of the nominal value of any class of shares as at the year end. These are listed below. The percentage holding shown does not reflect the total percentage of all voting rights in the Company as a whole. In respect of those undertakings in which the Company is described as having an indirect holding, the class and percentage of shares held shown refers to the shares in the relevant company which are held by its parent company in which the Company has a direct holding, save where that indirect holding is described as 'Nil' where the shares in the relevant company are held in trust for the Company.

Name	Address	Principal Activity	Direct/indirect holding	Class and percentage of shares held
Altair Solar Limited	The Shard, 32 London Bridge Street, London, SE1 9SG	Production of electricity	Direct	A Ordinary 100%, B Ordinary 100%
Avior Solar Limited	The Shard, 32 London Bridge Street, London, SE1 9SG	Investment in solar projects	Direct	AE Ordinary 100%, AA Ordinary 100%
Canopus Solar Limited	The Shard, 32 London Bridge Street, London, SE1 9SG	Production of electricity	Direct	A Ordinary 100%, B Ordinary 100%
Capella Solar Limited	The Shard, 32 London Bridge Street, London, SE1 9SG	Production of electricity	Direct	A Ordinary 100%, B Ordinary 100%
Foresight Luxembourg Solar 2 S.à r.l.	68-70 Boulevard de la Pétrusse, L-2320 Luxembourg	Investment in solar projects	Direct	Ordinary 28%
Hadar Solar Limited	The Shard, 32 London Bridge Street, London, SE1 9SG	Production of electricity	Direct	A Ordinary 100%, B Ordinary 100%
Laurel Hill Solar Limited	50 Bedford Street, Belfast, BT2 7FW	Reversionary interest in a solar site	Indirect	Ordinary 100%
Marchington Solar Limited	The Shard, 32 London Bridge Street, London, SE1 9SG	Production of electricity	Indirect	Ordinary 100%
New Kaine Solar Limited	The Shard, 32 London Bridge Street, London, SE1 9SG	Production of electricity	Indirect	Ordinary 100%
Ponca Limited	The Shard, 32 London Bridge Street, London, SE1 9SG	Finance company	Indirect	Ordinary 100%
Rigel Solar Limited	The Shard, 32 London Bridge Street, London, SE1 9SG	Production of electricity	Direct	A Ordinary 100%, B Ordinary 100%
Saron Solar Limited	The Shard, 32 London Bridge Street, London, SE1 9SG	Production of electricity	Indirect	Ordinary 100%
Scorpii Solar Limited	The Shard, 32 London Bridge Street, London, SE1 9SG	Investment in solar projects	Direct	AS Ordinary 100%, AG Ordinary 100%
Sious Limited	The Shard, 32 London Bridge Street, London, SE1 9SG	Investment in solar projects	Direct	A Ordinary 100%,
Solektra Solar Limited	The Shard, 32 London Bridge Street, London, SE1 9SG	Investment in solar projects	Direct	A Ordinary 100%, C Ordinary 100%, D Ordinary 100%
Turweston Solar Farm Limited	The Shard, 32 London Bridge Street, London, SE1 9SG	Reversionary interest in a solar site	Indirect	Nil
Turweston Solar Parent Limited	The Shard, 32 London Bridge Street, London, SE1 9SG	Reversionary interest in a solar site	Indirect	Nil
Vega Solar Limited	The Shard, 32 London Bridge Street, London, SE1 9SG	Production of electricity	Direct	A Ordinary 100%, B Ordinary 100%

20 Post balance sheet events

Between the year end and the date of this report, under the offer for subscription to raise up to £20 million FWT shares (with an overallotment facility to raise up to a further £10 million), the Company issued a total of 2,536,796 shares based on price of 100.0p.

Between the year end and the date of this report, the FWT shares invested a total of £3.6m across seven investee companies.

Notice of Annual General Meeting

23 September 2021

Notice is hereby given that the Annual General Meeting of Foresight Solar & Technology VCT plc (“the Company”) will be held on 23 September 2021 at 12.30 pm at the offices of Foresight Group, 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, 10 and 11 will be proposed as special resolutions.

If you intend to attend the AGM, please also notify us by email at [email protected] in case there are any changes to arrangements that need to be communicated at short notice.

Resolution 1 To receive the Report and Accounts for the year ended 31 March 2021.
Resolution 2 To approve the Directors' Remuneration Policy.
Resolution 3 To approve the Directors' Remuneration Report.
Resolution 4 To re-elect Ernie Richardson as a Director.
Resolution 5 To re-elect Tim Dowlen as a Director.
Resolution 6 To elect Carol Thompson as a Director.
Resolution 7 To appoint Deloitte LLP as auditor and to authorise the directors to fix the auditor's remuneration.
Resolution 8 That, in addition to all existing authorities, the directors be and they are authorised to allot relevant securities generally, in accordance with Section 551 of the Companies Act 2006, up to a nominal amount of £300,000 (representing approximately 63% of the current issued ordinary share capital) provided that the authority and power conferred by this Resolution 8 will expire on the fifth anniversary of the passing of this resolution.
Resolution 9 That, in addition to 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) pursuant to the authority conferred by Resolution 8 as if section 561(1) of that Act did not apply to any such allotment, provided that this power shall be limited to:

(i) the allotment of equity securities with an aggregate nominal value of up to £300,000 by way of issue of ordinary shares of 1p each (“Ordinary Shares”) and/or £300,000 by way of issues of Foresight Williams Technology shares (“FWT Shares”), in each case pursuant to offer(s) for subscription.
(ii) the allotment of equity securities with an aggregate nominal value of up to 10% of the issued share capital of the Company by way of an issue of Ordinary Shares and/or FWT Shares pursuant to the performance incentive arrangements with Foresight Group LLP; and
(iii) the allotment of equity securities with an aggregate nominal value of an amount up to or equal to 10% of the issued Ordinary Share capital of the Company and/or 10% of the issued FWT Share capital of the Company from time to time,

in each case where the proceeds of such issue may in whole or part be used to purchase the Company's shares. This authority will expire at the conclusion of the Annual General Meeting to be held in 2022.

Foresight Solar & Technology VCT plc Annual report and accounts 31 March 2021

Resolution 10
That, in addition to 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 provided that:

(i) the aggregate number of shares to be purchased shall not exceed 5,262,844 Ordinary Shares and 1,882,475 FWT Shares or, if lower such number of shares rounded down to the nearest whole share as shall equal 14.99% of the Company's Ordinary Shares and FWT Shares in issue at the date of passing this resolution;

(ii) the minimum price which may be paid for a share is 1 pence (the nominal value thereof);

(iii) the maximum price which may be paid for shares is the higher of (1) an amount equal to 105% of the average of the middle market quotation for shares 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

(iv) the authority conferred by this resolution shall expire on the conclusion of the Annual General Meeting of the Company to be held in the year 2022 unless such authority is renewed prior to such time; 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.

Resolution 11
That the articles of association produced to the meeting and initialled by the chairman of the meeting for the purpose of identification be adopted as the new articles of association of the Company in substitution for, and to the exclusion of, the existing articles of association.

By order of the Board

Foresight Group LLP
Company Secretary
27 August 2021

The Shard
32 London Bridge Street
London
SE1 9SG

Notice of Annual General Meeting (continued)

Notes:

A copy of the proposed New Articles (tracked showing the changes) will be available for inspection during normal business hours (excluding Saturdays, Sundays and public holidays) at the registered office of the Company and online at https://www.foresightgroup.eu/retail-investors/vct/foresight-solar-technology-vct-plc/reports-and-accounts/ until the close of the meeting. Copies will also be available at the location of the Annual General Meeting (for 15 minutes prior to the meeting and during the meeting).
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.
To be entitled to attend and vote at the meeting (and for the purposes of the determination by the Company of the votes they may cast), members must be registered in the Register of Members of the Company at 10.00 pm on 21 September 2021 (or, in the event of any adjournment, 10.00 pm on the date which is two (excluding non-business days) days before the time of the 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.
A member entitled to attend and vote at the meeting is entitled to appoint a proxy or proxies to attend, speak and vote on his or her behalf. A proxy need not also be a member but must attend the meeting to represent you. Details of how to appoint the chairman 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 chairman) and give your instructions directly to them.
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 707 4017. 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.
As at the publication of this notice, the Company's issued share capital was 35,109,032 Ordinary Shares and 12,558,204 FWT Shares, carrying one vote each. Therefore, the total voting rights in the Company as at the date of this notice is 47,667,236.
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 him/her and the member by whom he/she was 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, he/she may, under any such agreement, have a right to give instructions to the shareholder as to the exercise of voting rights.
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.
Appointment of a proxy will not preclude a member from subsequently attending and voting at the meeting should he or she 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.
The Register of Directors' Interests will be available for inspection at the meeting.
Information regarding the meeting, including the information required by Section 311A of the Companies Act 2006, is available from www.foresightgroup.eu.
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

Foresight Solar & Technology VCT plc Annual report and accounts 31 March 2021

vote or abstain from voting at his or her discretion. Your proxy will vote (or abstain from voting) as he or she thinks fit in relation to any other matter which is put before the meeting.

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, Bridgewater 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 working 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 & Ireland 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 3RASO) 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 him 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 his 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.

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.
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 auditors 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.

Foresight Solar & Technology VCT plc Annual report and accounts 31 March 2021

Glossary of Terms

Average Discount on Buybacks

The average of the discount applied to the price of a share buyback against the Net Asset Value per share.

DCF

Discounted Cash Flows

Dividend Yield

The sum of dividends paid during the year of 2.0p in the Ordinary Shares (2020: 6.0p) expressed as a percentage of the share price of the Ordinary Shares of 68.5p (2020: 80.5p) at the year-end date. This gives a dividend yield of the Ordinary Shares of 2.9% (2020: 7.5%). Dividend yield for the FWT Shares was nil (2020: nil).

EBITDA

Earnings before Interest, Taxation, Depreciation and Amortisation

FiT

Feed-in Tariff

FWT

Foresight Williams Technology

Manager/Investment Manager

Foresight Group LLP is the Investment Manager of the Company.

References to the "Investment Manager" or the "Manager" throughout this report refer to the activities of Foresight Group LLP and, in relation to activities prior to 27 January 2020 when the investment management and administration arrangements were novated from Foresight Group CI Limited to the Investment Manager, include the activities of Foresight Group CI Limited when acting as the Company's previous manager.

Net Asset Value (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.

NAV Total Return

The sum of the published NAV per share plus all dividends paid per share (for the relevant share class) over the lifetime of the Company.

For the Ordinary Share class, the published NAV per share was 68.9p (2020: 72.7p) and the dividends per Ordinary Share since inception was 46.0p (2020: 44.0p), thereby giving a NAV total return per Ordinary Share of 114.9p (2020: 116.7p).

For the FWT Share class, the published NAV per share was 98.0p (2020: 99.1p) and the dividends per FWT share since launch was nil (2020: nil), thereby giving a NAV total return per FWT Share of 98.0p (2020: 99.1p).

Ongoing Charges Ratio

The annualised sum of expenditure incurred in the ordinary course of business being £0.9m (2020: £1.0m) expressed as a percentage of the average Company Net Asset Value of £30.2m (2020: £35.5m).

Foresight Solar & Technology VCT plc Annual report and accounts 31 March 2021

PPA

Power Price Agreement

Qualifying Company or Qualifying Holding

A Qualifying Holding consists of shares or securities first issued to the VCT (and held by it ever since) by a company satisfying certain conditions. The conditions are detailed but include that the company must be a Qualifying Company, under the VCT Rules which requires, amongst other things, that it has gross assets not exceeding £15 million immediately before and £16 million immediately after the investment, employ the money raised for the purposes of a qualifying trade within a certain time period and not be controlled by another company. Additionally, in any twelve month period the company can receive no more than £5 million from VCT funds and Enterprise Investment Schemes, and any other European State-aided risk capital source. The company must have fewer than 250 full time (or equivalent) employees at the time of making the investment. VCT funds raised after 5 April 2012 cannot be used by a Qualifying Company to fund the purchase of shares in another company. Funds raised after 5th April 2017 cannot be invested in companies which generate or export electricity, heat or energy and, after the date of Royal Assent to Finance Act 2017-18, may only be invested in companies which satisfy a new risk-to-capital condition which requires that at the time of investment it is reasonable to conclude there is a significant risk that there will be a loss of capital of an amount greater than the net investment return.

ROC

Renewable Obligation Certificate

Share Price Total Return

The sum of the current share price plus all dividends paid per share. This allows performance comparisons to be made between VCTs.

For the Ordinary Share class, the share price at year end was 68.5p (2020: 80.5p) and the dividends per Ordinary Share since inception was 46.0p (2020: 44.0p), thereby giving a share price total return per Ordinary Share of 114.5p (2020: 124.5p).

For the FWT Share class, the share price at year end was 100.0p (2020: 100.0p) and the dividends per FWT share since launch was nil (2020: nil), thereby giving a share price total return per FWT Share of 100.0p (2020: 100.0p).

Share Price (Discount)/Premium to NAV

A (discount)/premium to NAV is the percentage by which the mid-market share price of the Company is (lower than)/higher than the net asset value per share.

For the Ordinary Shares, the share price at the year end date was 68.5p (2020: 80.5p) compared to the NAV of 68.9p (2020: 72.7p), giving a discount of 0.6% (2020: premium of 10.7%).

For the FWT Shares, the share price at the year end date was 100.0p (2020: 100.0p) compared to the NAV of 98.0p (2020: 99.1p), giving a premium of 2.0% (2020: 0.9%).

VCT

A Venture Capital Trust as defined in the Income Tax Act 2007.

VCT Rules

The provisions of Part 6 of the Income Tax Act 2007, statutory instruments made thereunder and prevailing guidelines, custom and practise of HMRC all of which are subject to change from time to time.

Financial Conduct Authority

FCA
FINANCIAL CONDUCT AUTHORITY

Beware of share fraud

Fraudsters use persuasive and high-pressure tactics to lure investors into scams.

They may offer to sell shares that turn out to be worthless or non-existent, or to buy shares at an inflated price in return for an upfront payment.

While high profits 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 firms authorised by the FCA are unlikely to contact you out of the blue with an offer to buy or sell shares.
Do not get into a conversation, note the name of the person and firm contacting you and then end the call.
Check the Financial Services Register from www.fca.org.uk to see if the person and firm contacting you is authorised by the FCA.
Beware of fraudsters claiming to be from an authorised firm, copying its website or giving you false contact details.
Use the firm's contact details listed on the Register if you want to call it back.
Call the FCA on 0800 111 6768 if the firm does not have contact details on the Register or you are told they are out of date.
Search the list of unauthorised firms to avoid at www.fca.org.uk/scams.
Consider that if you buy or sell shares from an unauthorised firm you will not have access to the Financial Ombudsman Service or Financial Services Compensation Scheme.
Think about getting independent financial and professional advice before you hand over any money.
Remember: if it sounds too good to be true, it probably is!

5,000 people contact the Financial Conduct Authority about share fraud each year, with victims losing an average of £20,000

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 find 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:

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Foresight Solar & Technology VCT plc Annual report and accounts 31 March 2021
icsa.
Registrars
Group

Corporate Information

Registered Number
07289280

Directors
Ernie Richardson (Chairman)
Tim Dowlen
Carol Thompson

Company Secretary
Foresight Group LLP
The Shard
32 London Bridge Street
London
SE1 9SG

Investment Manager & Administration providers
Foresight Group LLP
The Shard
32 London Bridge Street
London
SE1 9SG

Auditor
Deloitte LLP (appointed 8 January 2021)
20 Castle Terrace
Edinburgh
EH1 2DB

Tax Advisers
Blick Rothenberg Limited
16 Great Queen Street
Covent Garden
London
WC2B 5AH

Solicitors and VCT Status Advisers
RW Blears LLP
70 Colombo Street
South Bank
London
SE1 8PB

Registrar
Computershare Investor Services plc
The Pavilions
Bridgwater Road
Bristol
BS99 6ZY

Market Maker
Panmure Gordon & Co
One New Change
London
EC4M 9AF

Important information:

The Company currently conducts its affairs so that the shares issued by Foresight Solar & Technology VCT plc 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.

Foresight Solar & Technology VCT plc Annual report and accounts 31 March 2021
93

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Foresight Solar & Technology VCT plc
The Shard
32 London Bridge Street
London
SE1 9SG

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FORESIGHT SOLAR & TECHNOLOGY VCT PLC — Annual Report 2021

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Foresight

FORESIGHT SOLAR & TECHNOLOGY

Shareholder Information

Contact us

Key Dates

Dividends

Share price

www.investorcentre.co.uk

Trading shares

Highlights

Chairman's Statement

Investment Manager's Review

Strategic Report

Governance

Independent Auditor's Report to the members of Foresight Solar & Technology VCT Plc

Financial Statements

Notice of Annual General Meeting

Glossary of Terms

FCA Notice

Corporate Information

Ordinary Shares Fund

Foresight Williams Technology Shares Fund

Chairman's Statement

Ernie Richardson

ORDINARY SHARES

Performance and portfolio activity

Cash and working capital

Dividends and share buybacks

Management fees

Green Economy Mark

FWT SHARES

Fundraising and share issues

Portfolio and deal activity

Management fees

Chairman's Statement

COMPANY

Auditor

Board composition

Listing of Investment Manager

Annual General Meeting

Outlook

Investment Manager's Review

Portfolio summary and performance

Disposals

Market update

COVID-19

Green Investment

Brexit

Investment Manager's Review

Revenues

Sustainable Investing

Investment Manager's Review

Land Management

Social and Community Engagement

Investment Manager's Review

Health and Safety

Outlook

Investment Manager's Review

Portfolio Overview

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Investment Manager's Review

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Foresight Williams Technology Share class

Engineering and Technology Adviser

Sectors and competencies

Technology and engineering innovation at its core

FORESIGHT SOLAR & TECHNOLOGY VCT PLC Annual Report 2021