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Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
---|---|---|---|---|---|
Hazel Renew 2 | LSE:HR2O | London | Ordinary Share | GB00B43GVJ82 | ORD 0.1P |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 110.00 | 108.00 | 112.00 | 0.00 | 01:00:00 |
Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
---|---|---|---|---|---|
0 | 0 | N/A | 0 |
TIDMHR2O Hazel Renewable Energy VCT2 plc Final results for the year ended 30 September 2015 FINANCIAL HIGHLIGHTS Audited Audited Year End Year End 30 September 30 September 2015 2014 Pence Pence Net asset value per Ordinary Share 117.3 115.0 Net asset value per 'A' Share 0.1 0.1 Cumulative Dividends paid 29.5 24.5 Total return per Ordinary Share and 'A' Share 146.9 139.6 CHAIRMAN'S STATEMENT I am pleased to present the Company's Annual Report for the year ended 30 September 2015. The year has been one of steady progress within the portfolio. Investment activity has been mostly limited to a small number of partial redemptions and winding up of investee companies that are no longer being used. Since the year end the Company is expected to complete another refinancing which has the potential to further increase the yield from the existing portfolio. Investment portfolio At the year end, the Company held a portfolio of 16 investments with a total value of GBP30.7 million. There were five full realisations during the year, primarily from investments that had ceased to undertake any activities and were being wound up. There were also partial loan stock redemptions from four investments. Total proceeds were GBP1.2 million and realised gains on the year were GBP121,000. Within the existing portfolio progress has generally been good, with the Manager achieving administration cost savings on many of the solar projects, while producing reliable energy generation performances. The wind turbine portfolio has not performed so well and has warranted a provision against its carrying value. In reviewing the investment valuations at the year end, the Board has made a number of adjustment resulting in a net unrealised gain of GBP1.5 million. Net asset value and results At 30 September 2015, the Net Asset Value ("NAV") per Ordinary Share stood at 117.3p and the NAV per 'A' Share stood at 0.1p, producing a combined total of 117.4p. This represents an increase of 7.3p (6.3%) over the year (after adjusting for dividends paid during the year of 5.0p per Ordinary share). Total dividends paid to date for a combined holding of one Ordinary Share and one 'A' Share stand at 29.5p. Total Return (NAV plus cumulative dividends paid to date) now stands at 146.9p, compared to the cost to investors in the initial fundraising of GBP1.00 or 70.0p net of income tax relief. The profit on ordinary activities after taxation for the year was GBP1.8 million, comprising a loss of GBP125,000 on the revenue account and surplus of GBP1.9 million on the capital account. Dividends A dividend of 5.0p per Ordinary Share paid was paid on 18 September 2015. In line with the Company's policy, it is intended that the next annual dividend will be paid in September 2016 and will be announced in May 2016. Future strategy Given that the Company's original fundraising was launched slightly over five years ago, the articles specify that a resolution is put to Shareholders at the forthcoming AGM for the Company to continue as a VCT. The Board has spent some time discussing future strategy with the Manager and considered a number of possible options in which the Company could move forward. Options such as winding up, divesting and reinvesting into new assets and changing the structure of the investment vehicle were considered. The process highlighted the fact the Company holds a robust portfolio of renewable energy assets which cannot be rebuilt from scratch and which have a financing structure in place that will allow the payment of gently increasing dividends over a long timeframe. With the incentives schemes for new renewable energy projects now dramatically reduced and such schemes also now effectively prohibited from being held as qualifying investments by VCTs, the Board believes that the existing portfolio offers Shareholders a reliable, tax-free income stream with the possibility of further capital growth and the prospect of steadily increasing dividends. Accordingly the Board plans to operate the existing portfolio in this manner over the next 5-10 years, although will review strategy at regular intervals. The board recognises that a small number of Shareholders may wish to exit once the initial holding period passes and has introduced a share buyback policy of buying in any shares that become available in the market at approximately a 5% discount to the latest published NAV. In future, the Board intends to publish NAVs for each quarter end. Fundraising plans While the opportunity for further investment by VCTs into renewable energy projects benefitting from Government incentives has now passed, the Manager is seeing interesting dealflow in other cleantech opportunities, such as electrical storage solutions both in the UK and overseas. The Manager believes that there is sufficient good quality dealflow to be able to build a new investment portfolio from scratch which can provide an attractive returns in a related but different area to the existing portfolio. Accordingly, proposals are being drawn up for a new fundraising in a new share class. The new funds will be maintained and managed separately from the existing investments but will allow the fixed running costs of the VCT to be spread over a greater asset base, reducing the burden on all shareholders. Corporate broker appointment In order to ensure an orderly market in the Company's shares, the Company has engaged Panmure Gordon UK Limited to act as the Corporate Broker to the Company. Any Shareholders wishing to sell their shares should contact Panmure Gordon whose details are noted on the Shareholder Information page. Annual General Meeting The Company's fifth AGM will be held at 2(nd) Floor, 227 Shepherds Bush Road, London W6 7AS at 2.05 p.m. on 7 March 2016. Two items of special business will be proposed at the AGM; a resolution seeking approval for the Company to be able to buy its own shares as described above and one to amend the Articles of Association as described below. In view of the future strategy and planned fundraising, the Board has decided to seek Shareholder approval by resolution 9 at the forthcoming AGM to amend the Articles of Association to remove the requirement for a regular continuation vote to be put to Shareholders in future. The Board believes this gives more flexibility in implementing future plans and will avoid potential issues in fundraising where no guarantee can be given that Shareholders will be able to hold their shares for the minimum holding period. Notice of the meeting is at the end of this document. Outlook The Board is very satisfied with the performance of the Company to date and believes it is well placed to continue to deliver solid results to Shareholders for years to come. The second major refinancing which is expected to complete shortly should improve the prospects for an increasing yield from the current portfolio. The proposals for the new fundraising in a new share class will have a relatively small impact on existing Shareholdings other than in reducing running costs, although there could be possible benefits in co-investing with the new share pool if suitable and attractive opportunities arise and surplus funds are available. The new fundraising will also, of course, provide an opportunity for existing Shareholders to make a new VCT investment with a team that has delivered excellent results since first entering this market some five years ago. I look forward to reporting on developments in my statement with the half year report to 31 March 2016. Peter Wisher Chairman INVESTMENT MANAGER'S REPORT Introduction The year ended 30 September 2015 has been another good year for Hazel Renewable Energy VCT2 plc (the Company). As the portfolio was fully invested at the beginning of this financial year, the focus has been on further improving the operational and financial performance of the asset base as well as exploring and initiating new avenues for augmenting the return of the portfolio. The improvement in operational performance is a process that was initiated in the previous financial year, starting with the small-wind portfolio. This was extended this year to cover other areas of the portfolio such as the roof-mounted solar assets. In terms of financial performance, we have sought to extend the benefits gained from the previous financial year's refinancing and concurrent acquisition of the entire share capital of the six ground-mounted solar assets commissioned in 2011 and 2012. We have done this by pooling together an additional group of the portfolio's solar assets in order to refinance them with low cost debt and to use the proceeds to invest in projects offering a substantially higher return. This transaction commenced at the beginning of September and is expected to complete shortly. Separately, across the board, there was also a successful effort to reduce non-core costs across the portfolio such as audit and bookkeeping costs. Overall Portfolio and Operational Review At the end of the year, as at the end of the previous year, the portfolio consisted for the most part of 16 underlying projects held through 13 portfolio companies which are all either entirely or majority-owned by the VCTs. The dormant companies that featured in last year's report were all closed down.
January 29, 2016 08:02 ET (13:02 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.Company invests. The principal financial risks arising from the Company's operations are: *Investment risks; *Credit risk; and *Liquidity risk. The Board regularly reviews these risks and the policies in place for managing them. There have been no significant changes to the nature of the risks that the Company was expected to be exposed to over the year and there have also been no significant changes to the policies for managing those risks during the year. The risk management policies used by the Company in respect of the principal financial risks and a review of the financial instruments held at the year end are provided below: Investment risks As a VCT, the Company is exposed to investment risks in the form of potential losses and gains that may arise on the investments it holds in accordance with its investment policy. The management of these investment risks is a fundamental part of investment activities undertaken by the Investment Manager and overseen by the Board. The Manager monitors investments through regular contact with management of investee companies, regular review of management accounts and other financial information and attendance at investee company board meetings. This enables the Manager to manage the investment risk in respect of individual investments. Investment risk is also mitigated by holding a diversified portfolio spread across various business sectors and asset classes. The key investment risks to which the Company is exposed are: *Investment price risk *Interest rate risk Investment price risk The Company's investments which comprise of both equity and debt financial instruments in unquoted investments are all in renewable energy projects with predetermined expected returns. Consequently, the investment price risk arises from uncertainty about the future prices and valuations of financial instruments held in accordance with the Company's investment objectives. It represents the potential loss that the Company might suffer through changes in the fair value of unquoted investments that it holds. Interest rate risk The Company accepts exposure to interest rate risk on floating-rate financial assets through the effect of changes in prevailing interest rates. The Company receives interest on its cash deposits at a rate agreed with its bankers. Investments in loan stock attract interest predominately at fixed rates. A summary of the interest rate profile of the Company's investments is shown below. There are four categories in respect of interest which are attributable to the financial instruments held by the Company as follows: *"Fixed rate" assets represent investments with predetermined yield targets and comprise certain loan note investments and preference shares; *"Variable rate" assets represent investments with predetermined interest rates that vary at set dates in accordance with loan note agreements; *"Floating rate" assets predominantly bear interest at rates linked to The Bank of England base rate or LIBOR and comprise cash at bank; and *"No interest rate" assets do not attract interest and comprise equity investments, certain loan note investments, loans and receivables and other financial liabilities. The Company monitors the level of income received from fixed and floating or variable rate assets and, if appropriate, may make adjustments to the allocation between the categories, in particular, should this be required to ensure compliance with the VCT regulations. Credit risk Credit risk is the risk that a counterparty to a financial instrument is unable to discharge a commitment to the Company made under that instrument. The Company is exposed to credit risk through its holdings of loan stock in investee companies, cash deposits and debtors. Credit risk relating to loan stock investee companies is considered to be part of market risk. The Manager manages credit risk in respect of loan stock with a similar approach as described under "Investment risks" above. Similarly the management of credit risk associated interest, dividends and other receivables is covered within the investment management procedures. The level of security is a key means of managing credit risk. Additionally, the risk is mitigated by the security of the assets in the underlying investee companies. Cash is held by the Royal Bank of Scotland plc which is an A-rated financial institution and also ultimately part-owned by the UK Government. Consequently, the Directors consider that the credit risk associated with cash deposits is low. There have been no changes in fair value during the year that are directly attributable to changes in credit risk. Liquidity risk Liquidity risk is the risk that the Company encounters difficulties in meeting obligations associated with its financial liabilities. Liquidity risk may also arise from either the inability to sell financial instruments when required at their fair values or from the inability to generate cash inflows as required. As the Company has a relatively low level of creditors being GBP160,000 (2014: GBP158,000) and has low loans from investee companies being GBP1,986,000 (2014: GBP1,624,000) the Board believes that the Company's exposure to liquidity risk is low. The Company always holds sufficient levels of funds as cash in order to meet expenses and other cash outflows as they arise. For these reasons the Board believes that the Company's exposure to liquidity risk is minimal. The Company's liquidity risk is managed by the Investment Manager in line with guidance agreed with the Board and is reviewed by the Board at regular intervals. 6. Related party transactions In the opinion of the Directors there is no immediate or ultimate controlling party. Hazel Capital LLP is regarded as a related party as Bozkurt Aydinoglu is a director of the VCT and a controlling partner in Hazel Capital LLP. Hazel Capital LLP also provides investment management services to the Company. During the year ended 30 September 2015, GBP565,000 (2014: GBP517,000) was payable to Hazel Capital LLP in respect of these services. At the year end there was no balance owing to Hazel Capital LLP (2014: nil). In accordance with the prospectus and the Investment Management agreement, Hazel Capital LLP receives trail commission of 0.4% of the net assets of the Company at the year end, out of which it pays trail commission to financial intermediaries. As at 30 September 2015, this amounted to GBP114,000 (2014: GBP113,000), all of which is outstanding and included in accruals and deferred income under Creditors. ANNOUNCEMENT BASED ON AUDITED ACCOUNTS The financial information set out in this announcement does not constitute the Company's statutory financial statements in accordance with section 434 Companies Act 2006 for the year ended 30 September 2015, but has been extracted from the statutory financial statements for the year ended 30 September 2015, which were approved by the Board of Directors on 28 January 2015 and will be delivered to the Registrar of Companies following the Company's Annual General Meeting. The Independent Auditor's Report on those financial statements was unqualified and did not contain any emphasis of matter nor statements under s498(2) and (3) of the Companies Act 2006. The statutory accounts for the year ended 30 September 2014 have been delivered to the Registrar of Companies and received an Independent Auditor's Report which was unqualified and did not contain any emphasis of matter nor statements under s498(2) and (3) of the Companies Act 2006. A copy of the full annual report and financial statements for the year ended 30 September 2015 will be printed and posted to shareholders shortly. Copies will also be available to the public at the registered office of the Company at Ergon House, Horseferry Road, London SW1P 2AL and will be available for download from www.downing.co.uk. This announcement is distributed by NASDAQ OMX Corporate Solutions on behalf of NASDAQ OMX Corporate Solutions clients. The issuer of this announcement warrants that they are solely responsible for the content, accuracy and originality of the information contained therein. Source: Hazel Renewable Energy VCT 2 plc via Globenewswire HUG#1982277 http://www.hazelcapital.com
(END) Dow Jones Newswires
January 29, 2016 08:02 ET (13:02 GMT)
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