Share Name Share Symbol Market Type Share ISIN Share Description
Gresham House Renewable Energy Vct 2 Plc LSE:GV2O 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 0.0% 104.00 102.00 106.00 104.00 104.00 104.00 0.00 00:00:00
Industry Sector Turnover (m) Profit (m) EPS - Basic PE Ratio Market Cap (m)
- - - - 0

Hazel Ren Egy VCT2 Half-Yearly Report

29/05/2019 7:00am

UK Regulatory (RNS & others)


 
TIDMGV2O 
 
   Gresham House Renewable Energy VCT 2 plc 
 
   LEI: 213800GQ3JQE2M214C75 
 
   Half-Yearly Report for the six months ended 31 March 2019 
 
   SHAREHOLDER INFORMATION 
 
   Performance summary 
 
 
 
 
                            24 May    31 Mar  30 Sep  31 Mar 
                             2019      2019    2018    2018 
                                      Pence   Pence   Pence 
Net asset value per 
 Ordinary Share                        114.2   119.1   113.4 
Net asset value per 
 'A' Share                               0.1     0.1     0.1 
Cumulative dividends 
 *                                      45.5    39.5    39.5 
Total Return *                         159.8   158.7   153.0 
                                      ======  ======  ====== 
 
Share Price -- Ordinary     110.0p    110.0p  111.0p  112.0p 
 (GV2O) 
Share Price -- A            5.05p     5.05p   5.05p   5.05p 
 Shares (GV2A) 
 
* for a holding of one Ordinary 
 Share and A Share 
 
 
   CHAIRMAN'S STATEMENT 
 
   I am pleased to present the Half-Yearly Report for Gresham House 
Renewable Energy VCT 2 plc (formerly Hazel Renewable Energy VCT2 plc), 
covering the period ended 31 March 2019. 
 
   As Shareholders will be aware, the Company has undergone some changes 
over the previous 18 months, following the sale of the business of the 
Investment Adviser to Gresham House plc in October 2017. In March 2019, 
the Company changed its name to Gresham House Renewable Energy VCT 2 plc 
to align it with the changes to the investment advisory arrangements. 
The main focus for the Board and Investment Adviser during the period 
under review has been on maximising efficiencies at the operating sites 
owned by the investee companies. In addition, the Investment Adviser has 
been screening new investment opportunities with a view to deploying the 
proceeds from the recent fundraisings. 
 
   Investment portfolio 
 
   At the period end the Company held a portfolio of 15 investments, valued 
at a total of GBP29.6 million. There was one small addition to the 
portfolio during the period, this being a follow-on investment of 
GBP5,000 into ChargePoint Services Limited as part of its recent funding 
round. There were no full disposals during the period, although the loan 
note investment in Lunar 2 Limited was repaid at par. 
 
   The Board has reviewed the investment valuations at the half-year date. 
Valuations are derived from cash flow models and the Board pays 
particular attention to the discount rates used to ensure that these are 
in line with industry standards. Irradiation levels were significantly 
higher than normal during the summer of 2018, resulting in enhanced 
revenue generation from the solar assets, in particular the ground 
mounted solar investments which contributed 86.3% of the portfolio 
revenues generated. These factors, together with the benefit of 
continuing to amortise the long-term debt in the leveraged assets, have 
resulted in a valuation uplift, most notably in Lunar 2 Limited. There 
have also been some smaller valuation reductions across the remainder of 
the portfolio, as assets such as the wind portfolio performed below 
expectations. The adjustments have resulted in a net uplift of 
GBP657,000 or 2.3% in the fair value of the investment portfolio as at 
30 April 2019. 
 
   Further detail on performance of the investment portfolio is provided in 
the Investment Advisor's Report on pages 4 to 11 of the Half-Yearly 
Report. 
 
   Net asset value and results 
 
   At 31 March 2019, the net asset value ("NAV") per Ordinary Share stood 
at 114.2p and the NAV per 'A' Share stood at 0.1p, producing a total, 
per combined Shareholding, of 114.3p. This represents an increase of 
1.1p or 1.1% since 30 September 2018, a after adjusting for the 
dividends paid in December 2018.  The increase in the adjusted NAV per 
Share is attributable to the portfolio valuation adjustments noted above, 
which have offset some of the impact of the dividends paid in December 
2018 and the VCT running costs over the period. 
 
 
 
 
                                               Per Shareholding 
                                                   of 1 Ord 
Analysis of movements in Net Assets                and 1 'A' 
 over the period                       Total         Share 
                                        GBP         Pence 
As at 30 September 2018                30,680            119.20 
Net investment valuation uplift 
 in the period                            657              2.70 
VCT running costs for the period        (263)            (1.10) 
Impact of fundraising and share 
 buybacks                                 479            (0.25) 
Dividends paid to Shareholders in 
 December 2018                        (1,601)            (6.00) 
Management A Share dividends             (67)            (0.25) 
As at 31 March 2019                    29,885            114.30 
                                      =======  ================ 
 
 
   Total Return (total NAV plus cumulative dividends paid to date) stands 
at 159.8p 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 represents an annualised tax-free 
return ("IRR") of 7.1%, or 13.0% when taking into account the initial 
tax relief of 30%. 
 
   Fundraising 
 
   As reported previously, following the successful fundraising in March 
2018, the Company launched a further Top-up Offer in September 2018. The 
Offer raised GBP4.1 million for the Company, alongside GBP3.2 million 
for VCT 1. The Board has set aside the major proportion of the funds 
raised for new VCT Qualifying investments. This will help to ensure that 
the Company can continue to comfortably maintain its VCT qualifying 
status as the increased threshold of 80% comes into effect. 
 
   Share Buybacks 
 
   The Company will not be buying in Shares for the foreseeable future as 
it seeks to make new VCT Qualifying investments, so as to maintain its 
qualifying status under the new more stringent rules introduced in 
November 2017. The Board will keep the situation under review and, as 
and when liquidity and VCT Qualification permit, reconsider reopening 
Share Buybacks. Meanwhile, the Board will endeavour to encourage the 
development of the secondary market in the Company's Shares. 
 
   During the period, the Company purchased a total of 552,738 Ordinary 
Shares at an average price of 110.6p per Share, and a total of 552,738 
'A' Shares at an average price of 0.1p. 
 
   Contact details for Shareholders considering selling Shares are shown on 
the Shareholder Information page of the Half-Yearly Report. 
 
   Dividends 
 
   As previously announced the Company expects to pay its annual dividend 
in December as this is well aligned with receipt of summer power 
generation revenues by many of the investee companies. The Board expects 
to announce the annual dividend for 2019 in November. The quantum of the 
dividend will depend on the levels of income generated over the year and 
particularly the forthcoming summer. The Company continues to target a 
dividend of at least 5.0p per annum. 
 
   Outlook 
 
   Now that the Hazel Capital team is fully integrated into the Gresham 
House organisation, the Company is able to benefit from the greater 
resources that are now available to it. We expect this to deliver 
rewards by continuing to improve efficiencies within the existing 
portfolio, as well as providing a small number of attractive new 
additions. 
 
   I expect to be in touch with Shareholders in November when the annual 
dividend is announced and then in the Annual Report which we expect to 
publish in January 2020. 
 
   Christian Yates 
 
   Chairman 
 
   INVESTMENT ADVISER'S REPORT 
 
   About the Investment Adviser 
 
   Gresham House Asset Management Limited ("GHAM") is the Investment 
Adviser to Gresham House Renewable Energy VCT2 plc (the "Company", 
formerly Hazel Renewable Energy VCT2 plc) and Gresham House Renewable 
VCT1 plc ("VCT1", formerly Hazel Renewable Energy VCT1 plc, and together 
the "Companies"). GHAM is owned by Gresham House plc, an AIM quoted 
specialist alternative asset manager providing funds, direct investments 
and tailored investment solutions, including co-investment across a 
range of highly differentiated alternative investment strategies. GHAM's 
expertise includes strategic public equity and private assets, forestry, 
renewable energy, housing and infrastructure. 
 
   Gresham House plc acquired the business of Hazel Capital LLP on 31 
October 2017. As part of new arrangements within GHAM, the Companies sit 
within the Gresham House New Energy division, benefitting from 
continuity of key investment executives (strengthened by the addition of 
Ed Simpson, formerly Partner at Downing in February 2019). In addition, 
the Renewable Energy VCTs benefit from the experience of managing VCTs 
that the recent acquisition of the Livingbridge Baronsmead VCTs by 
Gresham House brings. 
 
   Portfolio Highlights 
 
   The Investment Adviser is pleased to report that the portfolio of assets 
owned by Gresham House Renewable Energy VCT2 plc performed above 
expectations in the half year ending 31 March 2019. There were no 
acquisitions or disposals to report in the period, with the exception of 
a GBP5,000 incremental investment in ChargePoint Services, a provider of 
electric vehicle charging infrastructure. 
 
   The Companies remain principally invested in a diversified portfolio of 
well-constructed renewable energy projects that access long-term UK 
government-backed Feed-in-Tariff (FiT) and Renewable Obligation 
Certificate (ROC) support mechanisms which provide revenues which are 
predominantly linked to the Retail Price Index (RPI). 
 
   The total generation capacity of assets owned by the Companies is 
34.88MWp (see table on page 5 of the Half-Yearly Report), with the 
Company having a 50% equity interest in the SPVs that own the assets. 
 
   During the period from 1 October 2018 to 31 March 2019, the Company's 
Net Asset Value per share, after adjusting for the payment of the annual 
dividend of 6.0p (5.50p per Ordinary Share and 0.505p per A Share) on 14 
December 2018, increased by 1.1p to 120.3p. 
 
   Portfolio revenues were 2.21% ahead of forecast for the period (0.18% 
ahead of forecast in the year ending 30 September 2018). Performance 
varied significantly across major segments of the portfolio with 
ground-mounted solar assets, that account for 71.4% of the portfolio 
valuation, earning 6.22% ahead of forecast on one end, and the small 
wind turbine fleet, that accounts for 5.0% of the portfolio valuation, 
delivering 32.64% below forecast at the other end. 
 
   The performance in generation terms was 1.05% ahead of forecast in the 
period (0.08% below forecast in the year ending 30 September 2018). 
 
   The Investment Adviser has been actively evaluating new investment 
opportunities in the clean technology space to deploy the GBP5.7m of 
additional funds were raised in 2018 via two Top-Up Offers launched in 
February and September 2018. GBP1.6m and GBP4.0m were raised for the 
Company respectively.  The Investment Adviser is in due diligence phase 
for three opportunities in the clean technology sector and expects to be 
able to report on the successful conclusion of at least one new 
investment in the annual report for the year ending 30 September 2019. 
 
   The composition of the Companies' portfolio is set out in the table in 
the Half-Yearly Report. 
 
   Portfolio Performance 
 
   The 34.88MWp renewable energy projects in the portfolio generated 10,056 
Megawatt-hours (MWh) of electricity over the half-year, sufficient to 
meet the annual electricity consumption of c.2,905 homes. 
 
   The solar projects within the portfolio (ground and roof-mounted 
installations) which comprise 33.41MWp, accounted for 95.3% of the 
generation output performance. These assets earned revenues ahead of 
expectations (4.9% ahead) during the period (0.08% below in the year 
ending 30 September 2018). They accounted for 93.2% of the portfolio 
valuation as at 31 March 2019. 
 
   While overall output performance was above expectations, generation 
versus forecast levels varied significantly over the 6-month period. The 
period started very well with October turning out to be a very sunny 
month. Irradiation fell short of expectations in the November to January 
period, only to recover substantially in February and March. 
 
   The eight ground-mounted solar installations, which have a total 
generation capacity of 29.0MW, accounted for 85.9% of the electricity 
generated and this was 5.02% above forecasts (0.33% above in the year 
ending 30 September 2018). This segment accounts for 82.3% of the 
portfolio. 
 
   The roof-mounted solar asset portfolio which has capacity of 4.42MW, 
accounted for 10.9% of the portfolio and 9.4% of the total electricity 
generated. This was 7.89% below expectations (3.4% below in the year 
ending 30 September 2018). 
 
   The small wind turbines, which have total generation capacity of 1.47MW, 
accounted for 5.0% of the portfolio and 4.7% of the total electricity 
generated. Performance continued to be below expectations, at 67.54% of 
forecasts. This number may be revised up to an estimated 72% of 
expectations once reliable data for the HY-5 fleet which is undergoing a 
repair programme is obtained. 
 
   In revenue terms, the electricity generated by the entire asset base 
earned GBP3.36 million in the period was 2.21% ahead of forecast. 
GBP2.90m of this amount was generated by the ground-mounted solar assets, 
GBP0.29m by the rooftop assets and the remainder by the small wind 
turbine portfolio. 
 
   The ground-mounted solar portfolio benefited from the rare, simultaneous 
occurrence of several positive factors - higher than forecast inflation, 
power prices, and irradiation, as well as better-than-expected 
asset-level technical performance. 
 
   By asset type, 87.6% of revenues (being 78.1% FiT, 6.6% ROC, 1.7% Export 
Fixed and 1.2% Other) were RPI-linked while 9.8% came from the sale of 
power (Export Variable), of which 3.8% in absolute terms is under 
fixed-price contracts running until October 2019. 
 
   The FiT-remunerated ground-mounted solar assets that earn FiTs as well 
as income from the sale of power in the wholesale market, accounted for 
75.0% of the portfolio level income, whereas the ROC-remunerated 
ground-mounted solar assets, that earn ROCs and variable export revenues, 
accounted for 11.3%, and the roof-mounted solar assets that earn FiTs 
and fixed export tariffs accounted for 8.6%. 
 
   Overall Portfolio and Operational Review 
 
   The analysis of performance is based on three pillars. The first covers 
macro factors including inflation, power prices, variable components of 
subsidies and climactic conditions. The second category covers technical 
performance, and the third category covers costs. 
 
   Macro 
 
   Solar irradiation was 4.7% ahead of forecasts on a capacity-weighted 
basis, extending the period of good sunshine that commenced in May 2018. 
Project by project, measurements varied between 97.3% and 116.3% of 
forecast levels for the eight ground-mounted solar projects in the 
portfolio. Each 1% change, in absolute terms, in irradiation for this 
portfolio results in a GBP107,000 movement in annual revenues. 
 
   The portfolio's revenues were helped by inflation as both FiT and ROC 
payments are index-linked to the RPI. FiTs and ROCs increased in price 
by 4.1% on 1 April 2018. The RPI has drifted down from these levels in 
the last year, and has fallen to 2.7% for the purposes of the annual 
tariff adjustments from 1 April 2019, below the 3% level used in 
long-term forecasts. For every 1% increase, in absolute terms, in 
inflation, annual portfolio revenues rise by GBP96,000. 
 
   Technical Performance 
 
   The ground-mounted solar asset base exceeded its target level of 
generation. The ground-mounted solar benefited from strong solar 
irradiation at the beginning and end of the half-year period, and also 
performed better than expectations, when adjusted for irradiation. This 
was due to low panel surface temperatures during this period of the 
year. 
 
   However, the rooftop solar portfolio fell 7.89% short of its target 
level of generation. This portfolio, for which solar irradiation cannot 
be measured, tends to underperform in winter months due to a 
geographical effect, as it is located across mid and northern parts of 
England as well as Scotland, where daylight hours are significantly 
shorter in winter. Another contributing factor was the impact of 
upgrading meter modems for part of the portfolio on meter readings. The 
upgrade programme resulted in generation not being reported. The 
resulting unrecorded revenue is expected to be recovered in future 
periods. 
 
   A comprehensive technical review was undertaken in the year ending 30 
September 2018 and a decision was taken to accelerate the replacement of 
inverters (which would typically be replaced after 10 years), on the 
basis that this would yield an attractive payback profile, and would use 
cash already reserved for this purpose under the debt facility reserves. 
The Investment Adviser is currently selecting a suitable engineering 
firm to carry out the work within the budget allocated and in compliance 
with strict requirements in relation to minimising downtime. 
 
   The programme of repair that was initiated in the spring of 2018 for the 
Huaying HY-5 installations is progressing well. It had been decided that 
only the installations where the incremental sum invested would generate 
a payback period of less than or equal to six years, would be repaired. 
This amounted to 67 of the 92, however the number has come down to 65 
after a closer inspection revealed more significant problems with two 
installations. At the time of writing, 58% of the turbines had been 
repaired with the work expected to be completed in the third quarter of 
the financial year. 
 
   Operating Costs 
 
   The third factor that determines performance is costs. The vast majority 
of the cost base is fixed and/or contracted and includes rent, business 
rates, and regular operations and maintenance (O&M) costs as the major 
categories. 
 
   The cost base is substantially inflation-linked (RPI) and will benefit 
from RPI coming in at 30 basis points lower, offsetting the effect of a 
reduction in revenues. For every 1% increase, in absolute terms, in 
inflation, portfolio costs, except depreciation, rise by GBP22,000. 
 
   The main cost item that shows variability from year-to-year is repair 
and maintenance costs. These are closely monitored and compared with a 
budget that is set every year. Repair and maintenance spend, if it 
involves replacing or repairing solar panels and inverters, the key 
components of a solar project, is covered by the maintenance reserves 
totalling GBP2.9m that are in place for all the ground-mounted solar 
assets and for most of the roof-mounted solar assets. 
 
   In addition, there are some one-off costs that were not covered by 
reserves such as meter and SIM card replacements, and pigeon-proofing 
for the roof-mounted solar assets; and cable replacement for the 
ground-mounted assets. This total cost in the half year was GBP121,700 
in the context of a GBP190,000 budget set for the year. Close to half of 
the expenditure related to the replacements of meters, work that is 
expected to be a one-off. This cost item tends to be higher in winter 
months for solar installations due to the Investment Adviser's policy of 
scheduling these works in months where solar generation is low. 
 
   There was a further GBP49,500 of expenditure on repairing the Huaying 
HY-5 small wind turbine installations which the Investment Adviser 
commissioned under a separate budget allocation. 
 
   Valuation 
 
   After adjusting for the effect of the small investment in ChargePoint 
and the loan note redemption in respect of Lunar 2 Limited, the total 
portfolio valuation increased by GBP657,000 during the period. The Total 
Return to Shareholders also increased from 158.7p to 159.8p. 
 
   The decrease, over the period, in the NAV principally resulted from the 
payment of a dividends totalling a net 6.0p per share on 14 December 
2018. 
 
   There were no changes to any of the assumptions, including discount 
rates, used to value the assets over the half year period. 
 
   The upward movement in the NAV of 1.1p per share, when adjusted for the 
6p dividend, can be attributed to the impact (0.7p) on the working 
capital position of higher than forecast revenues over the very sunny 
summer months in 2018, as well as the positive effect (0.5p) of bringing 
periods of higher positive cashflows one half year forward, to reflect 
the fact that the modelled asset life is now six months less, in the 
discounted cash flow model used to value the portfolio. Less significant, 
positive adjustments (0.1p) resulted from issuing Top-Up shares at a 
premium to the NAV and the Company purchasing its own shares at a 
discount to NAV. The payment of the performance incentive to the 
Investment Adviser had a negative contribution of 0.2p. 
 
   The Investment Adviser believes that the discount rates used for all the 
assets are consistent with what other owners of solar assets use while 
valuing their own portfolios, and its experience gained from selling 
similar assets in other areas of its business. The rates used were 6.5% 
on a levered basis for the FiT remunerated ground-mounted solar assets, 
6.75% on a levered basis for the ROC-remunerated ground-mounted solar 
projects and rooftop solar projects, and 7.5% for the wind turbine 
assets. 
 
   In the longer term, the potential to create additional value through the 
extension of land leases beyond their current 25-year term and through 
upgrading the equipment using improved technology with much better 
yields may arise. The Investment Adviser is actively exploring these 
opportunities, however the additional value is not reflected in the 
current valuation. 
 
   Outlook 
 
   The Investment Adviser closely monitors the portfolio of renewable 
energy generation assets and continues to target improvements in yield 
and reductions in risk across the portfolio, and to evaluate incremental 
maintenance capital expenditure and replacement decisions where these 
can be justified in economic terms. 
 
   The Investment Adviser is also focused on enhancing value through 
non-technical means such as extensions of leases for the ground-mounted 
solar sites, and the further reduction of operating costs. 
 
   A key current focus is the deployment of funds raised in the Top-Up. As 
stated in the Top-Up prospectus, asset-backed renewable energy 
generation investments are no longer qualifying under current VCT rules. 
 
   The Investment Adviser has screened over 200 opportunities in order to 
identify investments in line with the Company's mandate and the 
Investment Adviser's expertise and track record; and specific investment 
criteria designed to eliminate opportunities that are at the higher end 
of the risk spectrum for small companies. 
 
   The Investment Adviser has decided to progress into active due diligence 
phase three opportunities it has identified in the sustainable housing, 
asset optimisation software and waste management/recycling sectors. The 
Investment Adviser expects to have completed at least one of these 
investments by the end of the financial year on 30 September 2019. 
 
   The investment identification and evaluation process has been enhanced 
by the acquisition by Gresham House Plc of the fund and investment 
management business of Livingbridge VC LLP which includes the two 
Baronsmead VCTs. The addition of eight specialist investment and 
research professionals covering both public and private market 
opportunities will provide broader coverage and increased deal flow when 
investing the top-up funds. 
 
   Gresham House Asset Management Limited 
 
   UNAUDITED BALANCE SHEET 
 
   as at 31 March 2019 
 
 
 
 
                                31 Mar   31 Mar   30 Sep 
                                  2019     2018     2018 
                                GBP'000  GBP'000  GBP'000 
 
Fixed assets 
Investments                      29,605   30,096   30,588 
 
Current assets 
Debtors                             275      415      274 
Cash at bank and in hand          1,066    1,600    3,038 
                                  1,341    1,991    3,312 
 
Creditors: amounts falling 
 due within one year              (101)    (294)    (113) 
 
Net current assets                1,242    1,697    3,199 
 
Creditors: amounts falling 
 due after more than one year     (960)  (5,185)  (3,107) 
 
Net assets                       29,885   26,632   30,680 
                                                  ======= 
 
Capital and reserves 
Called up share capital              72       62       68 
Share premium                     9,732    3,985    7,531 
Funds held in respect of 
 shares not yet allotted              -    1,598    1,035 
Treasury Shares                 (2,792)  (2,792)  (2,792) 
Capital redemption reserve            1        -        - 
Special reserve                   7,364    9,840    9,724 
Revaluation reserve              16,914   14,865   16,257 
Capital reserve - realised      (1,307)  (1,241)  (1,261) 
Revenue reserve                    (99)      315      118 
 
Equity shareholders' funds       29,885   26,632   30,680 
                                                  ======= 
 
Net asset value per Ordinary    114.2p   113.4p   119.1p 
 Share 
Net asset value per 'A' Share      0.1p     0.1p     0.1p 
                                 114.3p   113.5p   119.2p 
 
   STATEMENT OF CHANGES IN EQUITY 
 
   for the six months ended 31 March 2019 
 
 
 
 
                       Called              Shares 
                         up      Share       not       Capital                                      Capital 
                        Share    Premium     yet      redemption  Treasury  Special   Revaluation    Reserve   Revenue 
                       capital   account   allotted    reserve     Shares    reserve    reserve     -realised   reserve   Total 
                      GBP'000   GBP'000    GBP'000     GBP'000    GBP'000   GBP'000     GBP'000     GBP'000    GBP'000   GBP'000 
As at 30 September 
 2017                       62     3,985          -            -         -     9,840       15,504     (1,200)         6   28,197 
Total comprehensive 
 income                      -         -          -            -         -         -          753        (61)       112      804 
Transactions 
 with owners 
Repurchase 
 of Shares                   -         -          -            -   (2,792)         -            -           -         -  (2,792) 
Issue of Shares              6     3,546          -            -         -     (116)            -           -         -    3,436 
Unallotted 
 Shares                      -         -      1,035            -         -         -            -           -         -    1,035 
As at 30 September 
 2018                       68     7,531      1,035            -   (2,792)     9,724       16,257     (1,261)       118   30,680 
Total comprehensive 
 income                      -         -          -            -         -         -          657        (46)     (217)      394 
Transactions 
 with owners 
Dividend paid                -         -          -            -         -   (1,668)            -           -         -  (1,668) 
Repurchase 
 of shares                   -         -          -            1         -     (612)            -           -         -    (611) 
Issue of Shares              4     2,201    (1,035)            -         -      (80)            -           -         -    1,090 
As at 31 March 
 2019                       72     9,732          -            1   (2,792)     7,364       16,914     (1,307)      (99)   29,885 
                      ========  ========  =========  ===========  ========  ========  ===========  ==========  ========  ======= 
 
   UNAUDITED INCOME STATEMENT 
 
   for the six months ended 31 March 2019 
 
 
 
 
                                                                                              Year 
                                                                                               ended 
                                     Six months ended                 Six months ended         30 Sep 
                                        31 Mar 2019                     31 Mar 2018            2018 
                               Revenue    Capital     Total     Revenue  Capital      Total      Total 
                               GBP'000    GBP'000    GBP'000    GBP'000  GBP'000     GBP'000    GBP'000 
 
Income                              52          -         52        701         -        701        771 
 
Gains/(losses) 
 on investments 
   Unrealised                        -        657        657          -     (639)      (639)        786 
   Realised                          -          -          -          -         5          5          - 
                                    52        657        709        701     (634)         67      1,557 
 
Investment management 
 fees                            (136)       (46)      (182)      (139)      (46)      (185)      (377) 
Other expenses                   (133)          -      (133)      (253)         -      (253)      (376) 
 
(Loss)/return on 
 ordinary 
 activities before 
 taxation                        (217)        611        394        309     (680)      (371)        804 
 
Tax on total comprehensive 
 income and ordinary 
 activities                          -          -          -          -         -          -          - 
 
(Loss)/return attributable 
 to 
 equity Shareholders             (217)        611        394        309     (680)      (371)        804 
                             =========  =========  =========  =========  ========  =========  ========= 
 
(Loss)/return per 
 Ordinary Share                 (0.9p)       2.5p       1.6p       1.3p    (2.8p)     (1.5p)       3.4p 
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 ("FRS 102"). The supplementary revenue and 
capital return columns are prepared in accordance with the Statement of 
Recommended Practice issued in November 2014 (updated in February 2018) 
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 STATEMENT OF CASH FLOWS 
 
   for the six months ended 31 March 2019 
 
 
 
 
                                   31 Mar   31 Mar   30 Sep 
                                     2019     2018     2018 
                                   GBP'000  GBP'000  GBP'000 
Cash flows from operating 
 activities 
Return/(loss) on ordinary 
 activities before taxation            394    (371)      804 
(Gains)/losses on investments        (657)      634    (786) 
(Increase)/decrease in 
 other debtors                         (1)       32      174 
Increase/(decrease) in 
 other creditors                        24     (26)     (16) 
Net cash (outflow)/inflow 
 from operating activities           (240)      269    (176) 
 
Cash flows from investing 
 activities 
Purchase of investments                (5)        -        - 
Sale of investments/loan 
 note redemptions                    1,645      660      688 
Net cash inflow from 
 investing activities                1,640      660      688 
 
Net cash inflow before 
 financing activities                1,400      929      864 
 
Cash flows from financing 
 activities 
Equity dividends paid              (1,668)        -        - 
Fundraising proceeds                     -    1,598        - 
Long term loans                    (2,147)    1,526      347 
Purchase of own shares               (612)  (2,541)  (2,792) 
Issue of Shares                      2,205        -    3,496 
Share issue costs                    (115)        -        - 
Funds held in respect 
 of Shares not yet allotted        (1,035)        -    1,035 
Net cash (outflow)/inflow 
 from financing activities         (3,372)      583    2,086 
                                   -------  ------- 
 
Net (decrease)/increase 
 in cash                           (1,972)    1,512    2,950 
Cash and cash equivalents 
 at start of period                  3,038       88       88 
Cash and cash equivalents 
 at end of period                    1,066    1,600    3,038 
 
Cash and cash equivalents 
 comprise: 
Cash at bank in hand                 1,066    1,600    3,038 
Total cash and cash equivalents      1,066    1,600    3,038 
 
 
   SUMMARY OF INVESTMENT PORTFOLIO AND MOVEMENTS 
 
   for the Period ended 31 March 2019 
 
 
 
 
Investment Portfolio as 
 at 31 March 2019                                                              Unrealised      % of 
 Qualifying and partially                                                      gain/(loss)   portfolio 
 qualifying investments     Operating sites  Sector        Cost    Valuation    in period    by value 
                                                          GBP'000   GBP'000     GBP'000 
                            South Marston,   Ground 
Lunar 2 Limited*             Beechgrove       Solar         1,331     15,347         1,055       50.0% 
                            Kingston 
                             Farm, Lake      Ground 
Lunar 1 Limited*             Farm             Solar           125      2,617            12        8.5% 
Ayshford 
 Solar (Holding)                             Ground 
 Limited*                   Ayshford          Solar         1,348      2,200            32        7.2% 
New Energy                  Wychwood         Ground 
 Era Limited                 Solar Farm       Solar           884      1,750            37        5.6% 
Vicarage                    Parsonage        Ground 
 Solar Limited               Farm             Solar           871      1,426           (5)        4.6% 
Hewas Solar 
 Limited                    Hewas            Roof Solar     1,000      1,168          (49)        3.8% 
Gloucester 
 Wind Limited               Gloucester       Roof Solar     1,000      1,060            13        3.5% 
Tumblewind                                   Small 
 Limited*                   Priory Farm       Wind/Solar    1,326      1,031          (76)        3.4% 
HRE Willow 
 Limited                    HRE Willow       Small Wind       875        763         (111)        2.5% 
St Columb 
 Solar Limited              St Columb        Roof Solar       650        605            11        2.0% 
Chargepoint 
 Services                                     Vehicle 
 Limited                                       charging       505        538            33        1.8% 
Minsmere                                     Small 
 Power Limited              Minsmere          Wind/Solar      975        468          (63)        1.5% 
Penhale Solar 
 Limited                    Penhale          Roof Solar       825        376         (154)        1.2% 
Small Wind 
 Generation                 Small Wind 
 Limited                     Generation      Small Wind       975        256          (78)        0.8% 
Sunhazel 
 UK Limited                                   Roof Solar        1          -             -        0.0% 
                                                           12,691     29,605           657       96.4% 
Cash                                                                   1,066                      3.6% 
Total investments                                                     30,671                    100.0% 
 
 
   Investment Disposals 
 
 
 
 
                                      Valuation 30 September             Profit    Realised 
Qualifying investments        Cost             2018           Proceeds   vs. cost    gain 
                             GBP'000         GBP'000          GBP'000    GBP'000   GBP'000 
Lunar 2 Limited (repayment 
 of Qualifying loan notes)     1,645                   1,645     1,645          -         - 
                               1,645                   1,645     1,645          -         - 
 
 
   *Partially qualifying investment 
 
   NOTES TO THE UNAUDITED FINANCIAL STATEMENTS 
 
   General information 
 
   Gresham House Renewable Energy VCT 2 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. 
 
   Accounting policies - Basis of accounting 
 
   The unaudited half-yearly results cover the six months to 31 March 2018 
and have been prepared in accordance with the accounting policies set 
out in the annual accounts for the year ended 30 September 2018 which 
were prepared 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 February 2018. 
 
   All revenue and capital items in the Income Statement derive from 
continuing operations. 
 
   The Company has only one class of business and derives its income from 
investments made in shares, securities and bank deposits. 
 
   Net asset value per share at the period end has been calculated on 
26,133,036 Ordinary Shares and 39,463,845 'A' Shares, being the number 
of shares in issue at the period end, excluding Treasury Shares. 
 
   Return per share for the period has been calculated on 24,098,052 
Ordinary Shares and 36,391,846 'A' Shares, being the weighted average 
number of shares in issue during the period, excluding Treasury Shares. 
 
   Dividends 
 
 
 
 
                                                      Year ended 
                                 Period ended          30 Sep 
                                  31 Mar 2019          2018 
                           Revenue  Capital   Total     Total 
                           GBP'000  GBP'000  GBP'000   GBP'000 
   Payable 
   2018 Interim Ordinary 
    -- 5.4958p                  99    1,367    1,466           - 
   2018 Interim A -- 
    0.5042p                      -      202      202           - 
                                99    1,569    1,668           - 
                           =======  =======  =======  ========== 
 
 
   Reserves 
 
 
 
 
                                           Year ended 
                             Period ended    30 Sept 
                              31 Mar 2019     2018 
                               GBP'000      GBP'000 
 
Capital redemption reserve              1           - 
Share premium reserve               9,732       7,531 
Special reserve                     7,364       9,724 
Revaluation reserve                16,914      16,257 
Funds held in respect of 
 shares not yet allotted                -       1,035 
Treasury Shares                   (2,792)     (2,792) 
Capital reserve-realised          (1,307)     (1,261) 
Revenue reserve                      (99)         118 
                                   29,813      30,612 
 
 
   The Revenue reserve, Capital reserve - realised and Special reserve are 
distributable reserves. Distributable reserves are reduced by unrealised 
holding losses of GBP1,738,000, which are included in the Revaluation 
reserve. Distributable reserves at 31 March 2019 were GBP4,223,000. 
 
   Investments 
 
   The fair value of investments is determined using the detailed 
accounting policies as referred to in note 2 of the Half-Yearly Report. 
 
   The Company has categorised its financial instruments using the fair 
value hierarchy as follows: 
 
   Level 1 - Reflects financial instruments quoted in an active market; 
 
   Level 2 - Reflects financial instruments that have prices that are 
observable either directly or indirectly; and 
 
   Level 3 - Reflects financial instruments that use valuation techniques 
that are not based on observable market data (unquoted equity 
investments and loan note investments). 
 
 
 
 
            Level    Level    Level   31 Mar    Level    Level    Level   30 Sep 
              1        2        3       2019      1        2        3       2018 
           GBP'000  GBP'000  GBP'000  GBP'000  GBP'000  GBP'000  GBP'000  GBP'000 
 
Loan 
 notes           -        -    1,111    1,111        -        -    2,756    2,756 
Unquoted 
 equity          -        -   28,494   28,494        -        -   27,832   27,832 
                 -        -   29,605   29,605        -        -   30,588   30,588 
 
 
   The fair value of investments is determined using the detailed 
accounting policies as referred to in note 2 of the Half-Yearly Report. 
 
   Reconciliation of fair value for Level 3 financial instruments held at 
the period end: 
 
 
 
 
                             Unquoted    Unquoted 
                             loan notes   equity    Total 
                              GBP'000    GBP'000   GBP'000 
 
Balance at 30 September 
 2018                             2,756    27,832   30,588 
 
Movements in the income 
 statement: 
Unrealised gains in 
 the income statement                 -       657      657 
Realised gains in the 
 income statement                     -         -        - 
                                      -       657      657 
 
Purchased at cost                     -         5        5 
Sales proceeds/redemption 
 of loan notes                  (1,645)         -  (1,645) 
Balance at 31 March 
 2019                             1,111    28,494   29,605 
                            ===========  ========  ======= 
 
   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: 
 
   -investment risk associated with investing in small and immature 
businesses; 
 
   -market risk in respect of the various assets held by the investee 
companies; and 
 
   -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 Adviser 
follows a rigorous process in vetting and careful structuring of new 
investments and, after an investment is made, close monitoring of the 
business is conducted. 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 reappointed Philip Hare & 
Associates LLP, who will work closely with the Investment Adviser 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. 
 
   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. 
 
   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. 
 
   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 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. 
 
   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 
https://newenergy.greshamhouse.com/investor-relations-vct2/. 
 
 
 
 
 
 

(END) Dow Jones Newswires

May 29, 2019 02:00 ET (06:00 GMT)

Copyright (c) 2019 Dow Jones & Company, Inc.

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