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| 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 | 0.00% | 48.00 | 45.00 | 51.00 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| Svcs Allied W/exchanges, Nec | -3.84M | -4.56M | -0.1745 | -2.75 | 12.54M |
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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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