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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 |
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Hazel Renewable Energy VCT2 plc
Half-Yearly Report for the six months ended 31 March 2016
Performance summary
31 Mar
2016 30 Sep 2015 31 Mar 2015
Pence Pence Pence
Net asset value per Ordinary Share 116.6 117.3 115.0
Net asset value per 'A' Share 0.1 0.1 0.1
Cumulative dividends per Ordinary Share 29.5 29.5 24.5
Total return per Ordinary Share and 'A'
Share 146.2 146.9 139.6
CHAIRMAN'S STATEMENT
I present the Company's half-yearly report for the six months ended 31
March 2016.
There have been a number of significant developments during the period.
In terms of the portfolio, the Investment Adviser completed a further
major refinancing transaction. There have also been discussions with
some Shareholders and their advisers about the future of the Company, a
Board change, and, consequently, the B Share Offer for Subscription was
withdrawn.
Investments
At the period end, the Company held a portfolio of 15 investments with a
value of GBP30.1 million and which were spread across the ground mounted
solar, roof mounted solar and small wind sectors.
As mentioned above, two ROC-based ground mounted solar projects and a
large number of residential rooftop solar installations were refinanced.
The funds raised under the transaction of GBP6.8 million were partly
used to acquire minority interests in some existing portfolio companies
(GBP1.85 million) and the remainder has remained within the portfolio
companies (Ayshford Solar Holding Limited, Hewas Solar Limited and St
Columb Solar Limited). Some of these funds have since been employed in
new opportunities, including a GBP500,000 investment in Charge Point
Services Limited, which provides services for charging electric
vehicles.
Overall the portfolio companies have continued to perform in line with
expectation and no adjustments have been made to the valuations at the
period end.
Further details on the investments is provided in the Investment
Manager's report on pages 3 to 5.
Net asset value and results
At 31 March 2016, the net asset value ("NAV") per Ordinary Share stood
at 116.6p and the NAV per 'A' Share stood at 0.1p, producing a combined
total of 116.7p. This represents a small decrease of 0.7p (0.6%) since
30 September 2015 and arises as a result of the VCT running costs
exceeding income from the investment portfolio during the period when
solar irradiation is at its lowest in the annual cycle.
Total Return (total NAV plus cumulative dividends paid to date) stands
146.2p for a holding of one Ordinary Share and one 'A' Share, compared
to the cost for subscribers in the original share offer, net of income
tax relief, of 70.0p. This makes the Company, along with its sister
company, the best performing new VCT or VCT share class launched since
the 2008/9 tax year in terms of Total Return.
The loss on ordinary activities after taxation for the period as shown
in the Income Statement was GBP170,000.
Dividends
In line with the Company's policy a dividend of 5.0p per Ordinary Share
will be paid on 16 September 2016 to Shareholders on the register at 19
August 2016.
Share buybacks
The Company operates a policy of buying in its own shares that become
available in the market at approximately a 5% discount to the latest
published NAV (subject to regulatory and liquidity restrictions).
No shares were purchased in the period.
AGM
Prior to the Annual General Meeting that took place on 7 March 2016, the
Company had a number of communications with several Shareholders and
their advisers. These Shareholders were of the view that a detailed
portfolio valuation exercise was required in order to determine the most
appropriate strategy for the future of the Company.
The Company received a significant number of proxy votes against several
AGM resolutions, including the re-election of a majority of the Board.
On legal advice, the Company took steps to ensure that it continued to
have a valid Board composition following the AGM. Accordingly some
resolutions were withdrawn and Alex Hambro and Bozkurt Aydinoglu agreed
to step down as non-executive directors.
I would like to thank both Alex and Bozkurt for the considerable
contributions they have made as a non-executive directors during the
period of their appointments. I look forward to continuing to work with
Bozkurt in his ongoing role as partner of Hazel Capital, the Company's
Investment Adviser.
B Share Offer
As Shareholders will be aware, the Company launched a new Offer for
Subscription for a new B Share class in February 2016. As with the AGM,
a significant number of Shareholders also submitted proxy forms
indicating that they were not supportive of proceeding with the B Share
offer and the Board therefore decided to withdraw the offer prior to the
General Meeting.
Future Strategy
The Board intends to put a "continuation vote" to Shareholders in the
near future. The discussions described above have made it clear that a
number of Shareholders would like to see a detailed valuation exercise
undertaken that would allow the Company to present a number of clear
options for the future of the Company to Shareholders. These options
might involve the possibility of undertaking a tender offer to buy in a
significant number of shares, a restructuring of the Company, a winding
up of the Company or a combination of these.
The Board has considered these views and has now commenced the process
of seeking to appoint an independent valuer to provide a report that
will allow the Board to present options to Shareholders as described
above.
Outlook
The coming months will be heavily focussed on work that will determine
the future of the Company. We anticipate that the valuation process will
take several months to complete and will culminate in a circular being
sent to Shareholders setting out options and attempting to obtain a
consensus from the whole Shareholder base. The circular will also
include a resolution as to whether the Company should continue as a VCT
in the long term.
Peter Wisher
Chairman
INVESTMENT MANAGER'S REPORT
We are pleased with the overall performance of the portfolio in the half
year ending 31 March 2016. This is despite the portfolio facing the most
challenging weather conditions we have observed so far resulting in
lower than expected energy production across the solar assets which
constitute over 90% of the portfolio in terms of Net Asset Value (NAV)
contribution.
Specifically, energy production was lower year on year by between 4% and
6% with the impact concentrated in October and November 2015 when the
weather was particularly poor. We are relieved by the fact that
production in this period accounts for less than 10% of annual output,
and a good month in the summer season would be sufficient to redress the
effect over the full year. Independent of the weather effects, the
actual operational performance of the entire portfolio has been good and
no major outages have taken place.
A much fretted-over topic in renewable energy at the moment is the low
power price environment. The collapse in commodity prices, increasing
energy efficiency and economic growth that has remained at modest levels
at best has brought electricity prices down by over 40% compared to
three years ago.
The impact of this on the portfolio is limited as over 75% of the NAV is
concentrated in projects remunerated under the Feed-in-Tariff (FIT)
regime where over 90% of revenues are fixed. Furthermore, the larger of
our two solar projects that are remunerated under the Renewable
Obligation Certificate (ROC) regime and therefore have significant
exposure to electricity prices is benefitting from an electricity sale
contract signed at a time when power prices were over eighty percent
higher than today's levels. The higher prices are locked in for another
year and a half.
We had undertaken a number of initiatives to reduce operational costs in
the portfolio last year. We are continuing to reap the rewards of these
initiates with further savings expected in the years ahead due to the
competitive environment in operations and maintenance (O&M) services.
We expect to cut O&M costs by half or more from next year for the FIT -
remunerated ground-mounted sites as these sites come off their five year
contracts.
The most notable development for the portfolio was the successful
completion of Project Surya. The transaction involved the refinancing of
a segment of the portfolio consisting of two ground-mounted solar
projects remunerated under the ROC regime and around 1,200 small scale
solar installations located on the roofs of properties owned by Housing
Associations in Northern England, Wales and Scotland.
The debt was priced on 24 February 2016 at the very attractive rate of
1.54% plus RPI and the deal documentation was signed on 25 February,
with financial close occurring on 2 March. The low rate that has been
achieved, even after taking transaction costs and reserving requirements
into account, is as much a function of competition amongst lenders that
have become comfortable with the risk profile of solar assets as the
historically low risk-free interest rates prevalent in the market.
We view the detailed due diligence that has been carried out by the
advisers to the Lender as a useful technical and legal review process
that shareholders, as owners of the equity, can benefit from, as well as
an opportunity to negotiate better terms with contractors. For example,
the review concluded that the assets were performing well, however
useful technical recommendations were made that will lead to better
performance and reduced outages in the future. Most of these have
already been implemented with the remainder expected to take place over
the summer months.
O&M as well as insurance contracts have been updated to reflect current
market standards and renegotiated to incorporate more stringent
requirements on counterparties. The O&M contractor that was engaged to
service the rooftop-based assets in Northern England and Wales was
unable to meet these increased requirements and were replaced, at no
additional cost, by Anesco, with whom we already have a successful
working relationship on other rooftop-based assets on two of the
smallest ground-mounted solar sites in the portfolio.
Investment Strategy and valuations
As a result of the Project Surya transaction, all of the ground-mounted
solar assets in the portfolio as well as around 70% (by capacity) of the
rooftop-based assets have now been refinanced. These account for close
to 90% of the Net Asset Value of the portfolio.
The transaction raised GBP13.6 million of gross proceeds.
Prior to the transaction, the VCT was fully invested, and the primary
motivation for carrying out the transaction was to increase portfolio
returns by redeploying transaction proceeds into new investments
yielding substantially in excess of the interest rate of the debt. At
the same time as we were working on the refinancing transaction we built
a pipeline of new investment opportunities.
The first transaction we implemented was the purchase of the shares the
VCTs did not own (circa 28%) in Ayshford Solar Holdings Limited, which
through its subsidiary owns the 5.5MW Ayshford Court solar project, for
GBP1.2 million. We are particularly pleased with this investment into a
project that we know very well and which has been performing in excess
of expectations.
We also implemented a GBP500,000 investment in Charge Point Services
Limited a provider of software (session management, billing, diagnostics
and monitoring) and services for electrical vehicle charging stations
that was agreed in November pending the closing of the refinancing
transaction.
We also used circa GBP125,000 in a lease prepayment transaction with a
landlord at one of the FIT remunerated sites.
We have since been instructed not to make any further investment
recommendations by the Board pending the outcome of the valuation
process and the review of the future strategy described in the
Chairman's Statement.
Not putting all the financing proceeds to work in the short term will
drag down the incremental cash returns we had modelled from reinvestment
of the refinancing proceeds.
We are of course working to keep certain opportunities alive so that new
investments could be implemented once the outcome of the continuation
vote is known.
The UK government has ended subsidies for all new large solar power
plants that did not have planning permission as of July 2015. These
investments have been progressively disallowed for new VCT investments
in any case. However, the careful structuring we have carried out,
which has kept refinancing proceeds in previously approved project SPVs
would enable us to deploy funds into solar investment opportunities.
Finally, after conducting a review of the portfolio we have recommended
that there are no adjustments to any of the investment valuations at
this time.
We have observed that hurdle rates for renewable generation assets have
broadly remained the same or drifted down slightly depending on the type
of asset since the last year end. However, asset prices have been
impacted by the low electricity price environment that we referred to
earlier. As the portfolio only has limited exposure to electricity
prices we believe the two forces cancel each other out, and it is too
early to measure the impact of the operational improvements that may
yield from the implementation of the recommendations that came from the
refinancing transaction.
We look forward to the next half year and building on the progress we
achieved in the six months ended 31 March 2016.
Ben Guest
Chief Investment Officer
Hazel Capital LLP
UNAUDITED SUMMARISED BALANCE SHEET
as at 31 March 2016
31 Mar 31 Mar 30 Sep
2016 2015 2015
GBP'000 GBP'000 GBP'000
Fixed assets
Investments 30,071 29,958 30,656
Current assets
Debtors (including accrued income) 452 394 362
Cash at bank and in hand 21 46 16
473 440 378
Creditors: amounts falling due
within one year (96) (654) (624)
Net current assets/(liabilities) 377 (214) (246)
Total Assets less net current
assets/(liabilities) 30,448 29,744 30,410
Creditors: amounts falling due
after more than one year (1,730) (1,412) (1,522)
Net assets 28,718 28,332 28,888
Capital and reserves
Called up share capital 62 62 62
Share premium 3,985 3,985 3,985
Special reserve 12,402 13,632 12,402
Revaluation reserve 14,096 12,427 14,090
Capital reserve - realised (913) (865) (841)
Revenue reserve (914) (909) (810)
Equity shareholders' funds 28,718 28,332 28,888
Net asset value per Ordinary Share 116.6p 115.0p 117.3p
Net asset value per 'A' Share 0.1p 0.1p 0.1p
116.7p 115.1p 117.4p
STATEMENT OF CHANGES IN EQUITY
for the six months ended 31 March 2016
Called up Share Capital
share premium Special Revaluation reserve Revenue
capital account reserve reserve - realised Reserve Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Six months ended 31 Mar 2015
At 30 September
2014 62 3,985 13,632 12,127 (794) (685) 28,327
Gains on
investments - - - 300 - - 300
Expenses
capitalised - - - - (71) - (71)
Retained revenue - - - - - (224) (224)
At 31 March
2015 62 3,985 13,632 12,427 (865) (909) 28,332
Year ended 30 Sept 2015
At 30 September
2014 62 3,985 13,632 12,127 (794) (685) 28,327
Gains on
investments - - - 1,936 121 - 2,057
Expenses
capitalised - - - (141) - (141)
Retained revenue - - - - (125) (125)
Transfer between
reserves - - 27 (27) - -
Dividend paid - - (1,230) - - - (1,230)
At 31 September
2015 62 3,985 12,402 14,090 (841) (810) 28,888
Six months ended 31 Mar 2016
At 30 September
2015 62 3,985 12,402 14,090 (841) (810) 28,888
Gains on
investments - - - 6 - - 6
Expenses
capitalised - - - - (72) - (72)
Retained revenue - - - - - (104) (104)
At 31 March
2016 62 3,985 12,402 14,096 (913) (914) 28,718
UNAUDITED INCOME STATEMENT
for the six months ended 31 March 2016
Year
ended
Six months ended Six months ended 30 Sep
31 Mar 2016 31 Mar 2015 2015
Revenue Capital Total Revenue Capital Total Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Income 267 - 267 126 - 126 580
Gains on investments - 6 6 - 300 300 2,057
267 6 273 126 300 426 2,637
Investment management
fees (216) (72) (288) (212) (71) (283) (565)
Other expenses (155) - (155) (138) - (138) (281)
Return on ordinary activities
before
taxation (104) (66) (170) (224) 229 5 1,791
Tax on total
comprehensive income
and ordinary activities - - - - - - -
Return attributable to
equity shareholders (104) (66) (170) (224) 229 5 1,791
Return per Ordinary Share (0.4p) (0.3p) (0.7p) (0.9p) 0.9p 0.0p 7.3p
Return per 'A' Share - - - - - - -
The total column within the Income Statement represents the Statement of
Total Comprehensive Income of the Company prepared in accordance with
Financial Reporting Standards ("FRS102"). The supplementary revenue and
capital return columns are prepared in accordance with the Statement of
Recommended Practice issued in November 2014 by the Association of
Investment Companies ("AIC SORP").
A Statement of Total Recognised Gains and Losses has not been prepared
as all gains and losses are recognised in the Income Statement as noted
above.
UNAUDITED CASH FLOW STATEMENT
for the six months ended 31 March 2016
31 Mar 31 Mar 30 Sep
2016 2015 2015
Note GBP'000 GBP'000 GBP'000
Net cash outflow from
operating activities 1 (328) (613) (482)
Cash flows from investing activities
Purchase of investments (558) - -
Sale of investments 1,148 145 1,203
Net cash inflow from investing
activities 590 145 1,203
Net cash inflow/(outflow) before
financing activities 262 (468) 721
Cash flows from financing activities
Equity dividends paid - - (1,230)
Long term loans (257) 351 362
Net cash (outflow)/inflow from
financing activities (257) 351 (868)
Increase/(decrease) in cash 2 5 (117) (147)
Notes to the cash flow statement:
1 Cash (outflow)/inflow from operating activities
(Loss)/return on ordinary activities before
taxation (170) 5 1,791
Gains on investments (6) (300) (2,057)
Increase in other debtors (90) (250) (218)
(Decrease)/Increase in other creditors (62) (68) 2
Net cash outflow from operating activities (328) (613) (482)
2 Analysis of net funds
Beginning of period 16 163 163
Net cash (outflow)/inflow 5 (117) (147)
End of period 21 46 16
SUMMARY OF INVESTMENT PORTFOLIO
as at 31 March 2016
Unrealised % of
gain in portfolio
Cost Valuation period by value
GBP'000 GBP'000 GBP'000
Qualifying and partially
qualifying investments
Lunar 2 Limited* 2,976 12,202 - 40.5%
Ayshford Solar (Holding) Limited* 2,480 3,571 - 11.9%
Lunar 1 Limited* 124 2,076 - 6.9%
Hewas Solar Limited 1,000 1,748 - 5.8%
New Energy Era Limited 884 1,369 - 4.5%
St Columb Solar Limited 650 1,361 - 4.5%
Vicarage Solar Limited 871 1,181 - 3.9%
Tumblewind Limited 1,438 1,165 - 3.9%
Penhale Solar Limited 825 1,075 - 3.6%
Gloucester Wind Limited 1,000 1,041 - 3.5%
Minsmere Power Limited 975 920 - 3.0%
HRE Willow Limited 875 780 - 2.6%
Small Wind Generation Limited 975 682 - 2.3%
Sunhazel UK Limited 1 - - 0.0%
15,074 29,171 - 96.9%
Non qualifying investments
AEE Renewables UK 3 Limited 900 900 - 3.0%
900 900 - 3.0%
15,974 30,071 - 99.9%
Cash at bank and in hand 21 0.1%
Total investments 30,092 100.0%
* Part-qualifying investment
SUMMARY OF INVESTMENT MOVEMENTS
as at 31 March 2016
Additions
Cost
GBP'000
Qualifying investments
Ayshford Solar (Holding) Limited 558
Disposals
MV at Total gain Realised
30 Sept Disposal against gain
Cost 2015 proceeds cost in period
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Qualifying and partially
Qualifying investments
Tumblewind Limited 1,010 1,010 1,010 - -
Ayshford Solar (Holding)
Limited* 65 59 65 - 6
St Columb Solar Limited 58 58 58 - -
1,133 1,127 1,133 - 6
Non-qualifying
investments
ZW Parsonage Limited 15 15 15 - -
15 15 15 - -
1,148 1,142 1,148 - 6
* Part-qualifying
investment
NOTES TO THE UNAUDITED FINANCIAL STATEMENTS
1. General information
Hazel Renewable Energy VCT2 plc ("The Company") is a venture capital
trust established under the legislation introduced in the Finance Act
1995 and is domiciled in the United Kingdom and incorporated in England
and Wales.
2. Accounting policies - Basis of accounting
The Company has prepared its financial statements under FRS 102 'The
Financial Reporting Standard applicable in the UK and Republic of
Ireland' and in accordance with the Statement of Recommended Practice
("SORP") "Financial Statements of Investment Trust Companies and Venture
Capital Trusts" issued by the Association of Investment Companies
("AIC") revised November 2014.
The Company implements new Financial Reporting Standards ("FRS") issued
by the Financial Reporting Council when required.
This is the first year in which the Financial Statements have been
prepared under FRS 102, however it has not been necessary to restate
comparatives as the treatment previously applied aligns with the
requirements of FRS 102. As a result, there are no reconciling
differences between the previous financial reporting framework and the
current financial reporting framework and the comparative figures
represent the position under both current and previous financial
reporting frameworks.
The financial statements are presented in Sterling (GBP).
Presentation of income statement
In order to better reflect the activities of a venture capital trust and
in accordance with the SORP, supplementary information which analyses
the Income Statement between items of a revenue and capital nature has
been presented alongside the Income Statement. The return on ordinary
activities is the measure the Directors believe appropriate in assessing
the Company's compliance with certain requirements set out in Part 6 of
the Income Tax Act 2007.
Investments
All investments are designated as "fair value through profit or loss"
assets due to investments being managed and performance evaluated on a
fair value basis. A financial asset is designated within this category
if it is both acquired and managed on a fair value basis, with a view to
selling after a period of time, in accordance with the Company's
documented investment policy. The fair value of an investment upon
acquisition is deemed to be cost. Thereafter investments are measured at
fair value in accordance with the International Private Equity and
Venture Capital Valuation Guidelines ("IPEV") together with FRS 102
sections 11 and 12.
For unquoted investments, fair value is established by using the IPEV
guidelines. The valuation methodologies for unquoted entities used by
the IPEV to ascertain the fair value of an investment are as follows:
- Price of recent investment;
- Multiples;
- Net assets;
- Discounted cash flows or earnings (of underlying business);
- Discounted cash flows (from the investment); and
- Industry valuation benchmarks.
The methodology applied takes account of the nature, facts and
circumstances of the individual investment and uses reasonable data,
market inputs, assumptions and estimates in order to ascertain fair
value.
Gains and losses arising from changes in fair value are included in the
Income Statement for the year as a capital item and transaction costs on
acquisition or disposal of the investment are expensed. Where an
investee company has gone into receivership or liquidation, or
administration (where there is little likelihood of recovery), the loss
on the investment, although not physically disposed of, is treated as
being realised.
It is not the Company's policy to exercise controlling influence over
investee companies. Therefore, the results of these companies are not
incorporated into the Income Statement except to the extent of any
income accrued. This is in accordance with the SORP and FRS 102 sections
14 and 15 that does not require portfolio investments, where the
interest held is greater than 20%, to be accounted for using the equity
method of accounting.
Income
Dividend income from investments is recognised when the Shareholders'
rights to receive payment have been established, normally the
ex-dividend date.
Interest income is accrued on a time apportionment basis, by reference
to the principal sum outstanding and at the effective interest rate
applicable and only where there is reasonable certainty of collection in
the foreseeable future.
Expenses
All expenses are accounted for on an accruals basis. In respect of the
analysis between revenue and capital items presented within the Income
Statement, all expenses have been presented as revenue items except as
follows:
- Expenses which are incidental to the disposal of an investment are
deducted from the disposal proceeds of the investment; and
- Expenses are split and presented partly as capital items where a
connection with the maintenance or enhancement of the value of the
investments held can be demonstrated. The Company has adopted a policy
of charging 75% of the investment management fees to the revenue account
and 25% to the capital account to reflect the Board's estimated split of
investment returns which will be achieved by the Company over the long
term.
Taxation
The tax effects on different items in the Income Statement are allocated
between capital and revenue on the same basis as the particular item to
which they relate, using the Company's effective rate of tax for the
accounting period.
Due to the Company's status as a VCT 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 arises.
Deferred taxation, which is not discounted, is provided in full on
timing differences that result in an obligation at the balance sheet
date to pay more tax, or a right to pay less tax, at a future date, at
rates expected to apply when they crystallise based on current tax rates
and law. Timing differences arise from the inclusion of items of income
and expenditure in taxation computations in periods different from those
in which they are included in the accounts.
Other debtors, other creditors and loan notes
Other debtors (including accrued income), other creditors and loan notes
(other than those held as part of the investment portfolio) are included
within the accounts at amortised cost.
Issue costs
Issue costs in relation to the shares issued for each share class have
been deducted from the share premium account.
3. All revenue and capital items in the Income Statement derive from
continuing operations.
4. The Company has only one class of business and derives its income
from investments made in shares, securities and bank deposits.
5. Net asset value per share at the period end has been calculated on
24,603,158 Ordinary Shares and 36,904,733 'A' Shares, being the number
of shares in issue at the period end.
6. Return per share for the period has been calculated on 24,603,158
Ordinary Shares and 36,904,733 'A' Shares, being the weighted average
number of shares in issue during the period.
7. Dividends
Period ended Year ended
31 Mar 2016 30 Sep 2015
Revenue Capital Total Total
GBP'000 GBP'000 GBP'000 GBP'000
Paid in period
2015 Interim Ordinary - 5.0p - - - 1,230
- - - 1,230
Forthcoming dividends
2015 Final Ordinary - 5.0p - 1,230 1,230 -
- 1,230 1,230 -
8. Reserves
Period ended Year ended
31 Mar 30 Sept
2016 2015
GBP'000 GBP'000
Share premium reserve 3,985 3,985
Special reserve 12,402 12,402
Revaluation reserve 14,096 14,090
Capital reserve-realised (913) (841)
Revenue reserve (914) (810)
28,656 28,826
The Revenue reserve, Capital reserve - realised and Special reserve are
distributable reserves. The distributable reserve is reduced by
unrealised holding losses of GBP814,000 which are included in the
Revaluation reserve. Distributable reserves at 31 March 2016 were
GBP9,761,000.
9. Risks and uncertainties
Under the Disclosure and Transparency Directive, the Board is required
in the Company's half-year results to report on principal risks and
uncertainties facing the Company over the remainder of the financial
year.
The Board has concluded that the key risks facing the Company over the
remainder of the financial period are as follows:
(i) investment risk associated with investing in small and immature
businesses;
(ii) market risk in respect of the various assets held by the investee
companies; and
(iii) failure to maintain approval as a VCT.
In order to make VCT qualifying investments, the Company has to invest
in small businesses which are often immature. The Investment Manager
follows a rigorous process in vetting and careful structuring of new
investments and, after an investment is made, close monitoring of the
business. The Manager also seeks to diversify the portfolio to some
extent by holding investments which operate in various sectors. The
Board is satisfied with this approach.
The Company's compliance with the VCT regulations is continually
monitored by the Administration Manager, who reports regularly to the
Board on the current position. The Company has appointed Philip Hare &
Associates LLP, who will work closely with the Investment Manager and
provide regular reviews and advice in this area. The Board considers
that this approach reduces the risk of a breach of the VCT regulations
to a minimal level.
10. Going concern
The Directors have reviewed the Company's financial resources at the
period end and conclude that the Company is well placed to manage its
business risks.
The Board confirms that it is satisfied that the Company has adequate
resources to continue in business for the foreseeable future. For this
reason, the Board believes that the Company continues to be a going
concern and that it is appropriate to apply the going concern basis in
preparing the financial statements.
11. The unaudited financial statements set out herein do not constitute
statutory accounts within the meaning of Section 434 of the Companies
Act 2006 and have not been delivered to the Registrar of Companies.
12. The Directors confirm that, to the best of their knowledge, the
half-yearly financial statements have been prepared in accordance with
the "Statement: Half-Yearly Financial Reports" issued by the UK
Accounting Standards Board and the half-yearly financial report includes
a fair review of the information required by:
a) DTR 4.2.7R of the Disclosure and Transparency Rules, being an
indication of important events that have occurred during the first six
months of the financial year and their impact on the condensed set of
financial statements, and a description of the principal risks and
uncertainties for the remaining six months of the year; and
b) DTR 4.2.8R of the Disclosure and Transparency Rules, being related
party transactions that have taken place in the first six months of the
current financial year and that have materially affected the financial
position or performance of the entity during that period, and any
changes in the related party transactions described in the last annual
report that could do so.
13. Copies of the Half-Yearly Report will be sent to Shareholders
shortly. Further copies can be obtained from the Company's registered
office or can be downloaded 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#2017228
http://www.hazelcapital.com
(END) Dow Jones Newswires
June 01, 2016 10:11 ET (14:11 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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