REG - Gresham HouseRE VCT2 - Full Year Results
30/01/2025 07:00
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RNS Number : 1780V Gresham House Renewable EnergyVCT2 30 January 2025
30 January 2025
Gresham House Renewable Energy VCT 2 PLC
(the "VCT" or the "Company")
Full Year Results
The VCT is pleased to announce its full year results for the year ended 30
September 2024.
The Company's Annual Report and Financial Statements for the year ended 30
September 2024 will be posted to shareholders who have elected to receive hard
copies. In accordance with UK Listing Rule 6.4.1 copies of the document have
been submitted to the UK Listing Authority and will shortly be available to
view on the Company's corporate website at
https://greshamhouse.com/real-assets/new-energy/gresham-house-renewable-energy-vct-2-plc/
(https://greshamhouse.com/real-assets/new-energy/gresham-house-renewable-energy-vct-2-plc/)
and have also been submitted to the UK Listing Authority and will be shortly
available for inspection from the National Storage Mechanism at:
https://data.fca.org.uk/#/nsm/nationalstoragemechanism
(https://data.fca.org.uk/#/nsm/nationalstoragemechanism)
- END -
Gresham House Renewable Energy VCT 2 PLC - LEI: 213800GQ3JQE2M214C75
For further information, please contact:
Renewable Energy
Gresham House Asset Management Renewablevcts@greshamhouse.com (mailto:Renewablevcts@greshamhouse.com)
Investor Relations Tel: 020 3837 6270
JTC (UK) Limited - Company Secretary GreshamVCTs@jtcgroup.com (mailto:GreshamVCTs@jtcgroup.com)
Ruth Wright
Tel: 020 3846 9774
Chairman's Statement
I am pleased to present the Annual Report of Gresham House Renewable Energy
VCT2 plc (VCT) for the year ended 30 September 2024.
Following the results of the continuation vote in July 2021, and therefore the
decision to enter a Managed Wind Down (see Investment Objectives), the Board
together with the Investment Adviser has continued, throughout the year under
review, to work towards realising the Company's portfolio of assets.
Following the sale of two ground mounted solar sites and approximately 1,600
commercial and residential solar installations to Downing Renewables &
Infrastructure Trust plc in April 2023, the Board has continued to seek an
acquirer for the remaining solar assets in the portfolio (Apollo assets), and
a small portfolio of micro wind assets (the Transaction). The Board appointed
Jones Lang LaSalle (JLL) in late 2023 to assist with this phase of the Managed
Wind Down process. The assets continue to be managed by the Investment Adviser
with the focus on delivering the best possible yield whilst minimising costs
ahead of the sale process. The Investment Adviser has also been diligently
supporting the Boards of the VCTs and JLL in progressing the ongoing sale
process.
A number of non-binding offers had been received for the Apollo assets by the
date of signing of the half-yearly report for the six months ended 31 March
2024 at the end of June 2024. JLL, the Boards of both VCTs and the Investment
Adviser have continued to engage with the bidders to clarify certain aspects
of the offers in the second half of the financial year.
As of writing, good progress is being made towards the conclusion of the
transaction but until the sale completes, there is no certainty. The VCT
Boards current view is that the Transaction has a reasonable prospect of
completion by the late spring of this year. The technical performance of the
Apollo portfolio remains positive following maintenance and repowering works
carried out. However, given the age of the portfolio, further technical
maintenance has been necessary during the second half-year which has impacted
generation. Total revenue was also affected by poor irradiation, resulting in
a shortfall for the whole portfolio of 4.5%, 4.14% for the solar assets, to
budget in the six month period ended 30 September 2024.
In determining a fair value for the Company's portfolio of assets, the Board
has considered market conditions and the valuation metrics applied by other
similar listed renewable energy funds when setting the Company's Net Asset
Value (NAV). In respect of the financial year ended 30 September 2024, a firm
offer for the Company's assets was received which is at a price that the Board
believes reflects the best outcome achievable for shareholders. The Company's
NAV has therefore been set at a level consistent with that transaction, albeit
excluding associated sale costs (as required by accounting standards), due to
the continuing poor market conditions for realising this type of mature solar
asset.
At the year end, the Company's NAV per 'pair' of shares (one Ordinary Share
and one 'A' Share) was 38.0p compared to 55.4p at 30 September 2023. This
reduction is due to the payment of dividends totalling 7.5p per Ordinary Share
mainly generated out of the proceeds from the partial sale in April 2023, and
also the current challenging market conditions being considered following the
ongoing sale process.
Investment portfolio
At the year end, the VCT held a portfolio of ten investments, which were
valued at £14.1mn. There have been no follow-on acquisitions. No investments
were disposed of during the financial year, but a loan repayment of £338,000
was made. One of the non-renewable investments, having entered administration
in May 2023, was dissolved mid-September 2024.
The portfolio is analysed (by value) between the different types of assets as
follows:
Ground mounted solar 92.7%
Small wind 7.3%
Non-renewable assets 0.0%
As referred to previously, there has been an ongoing issue in relation to the
connection of the South Marston solar farm to the grid. This arose from the
decision of the off taker (Honda) to cease business at the site and to sell
the site to a third party. It is taking considerable time and effort to
resolve the issue. Whilst the new owner of the site, Panattoni, a developer
and provider of logistic facilities, is cooperating to improve the way South
Marston connects to the grid, it is however a complex and protracted process
to amend the various agreements and gain lender consent. The final solution
involves a new connection to an independent Distribution Network Operator
(iDNO) which is almost agreed and once this is implemented, the issue will be
resolved. iDNOs are similar to DNOs in that they also own, operate and
maintain electricity infrastructure. The networks they adopt are typically new
installed assets, such as connections to new developments, which will connect
back onto the DNO's network. Unlike DNOs, iDNOs do not have a specific
geographic area. Agreeing this is one of the key objectives for the Investment
Adviser in the coming weeks and is necessary before any Transaction can be
completed.
In order to maintain VCT status, the Company needs to ensure that it maintains
certain percentages of qualifying investments within its portfolio. The Board
anticipates that the Company will fall below these required percentages by
September 2025. Therefore, to avoid a breach of VCT status, the Board has been
advised that the Company need to enter a members' voluntary liquidation before
September 2025 which would involve delisting the Company's shares. If the
assets are sold early in 2025, the Board may decide to enter voluntary
liquidation before the required date.
Venture Capital investments
The VCT holds one investment that is not in renewable energy. The company,
bio-bean Limited, went into administration in April 2023 and is in the process
of liquidation. No recovery of any value is expected. The other venture
capital investment, Rezatec Limited, went into administration in May 2023 and
was dissolved on 10 September 2024 without any recovery. The value of both
VCT's venture capital investments was marked down to £nil at 31 March 2023.
Further detail on the investment portfolio is provided in the Investment
Adviser's Report.
Net asset value and results
At 30 September 2024, the NAV per Ordinary Share stood at 37.9p and the NAV
per 'A' Share stood at 0.1p, producing a combined total of 38.0p per 'pair' of
shares. The movement in the NAV per share during the financial year is
detailed in the table below:
Pence per
'pair' of shares
NAV as at 1 October 2023 55.4
Less dividend payments during the year (7.5)
Realised losses on assets still held (7.0)
Valuation decrease on assets still held (6.6)
Income less expenses 3.7
NAV as at 30 September 2024 38.0
The NAV Total Return (NAV plus cumulative dividends) has decreased by 17.9% in
the last financial year and at the year end stands at 121.1p excluding the
initial 30% VCT tax relief, compared to the cost to investors in the initial
fundraising of £1.00 or 70.0p net of income tax relief.
The loss on ordinary activities after taxation for the year was £2.6mn (2023:
£4.6mn loss), comprising a revenue profit of £1.2mn (2023: £411,000) and a
capital loss of £3.8mn (2023: capital loss of £5.0mn) as shown in the
Income Statement.
Dividends
On 21 December 2023, total dividends of 7.5p per Ordinary Share were paid to
Shareholders, comprising of income generation from the portfolio and part also
related to the distribution of the remaining proceeds arising from the part
sale of assets in April 2023. At 30 September 2024, dividends of 83.1p per
'pair' of shares had been paid (2023: 75.6p).
On 2 December 2024, it was announced that the Company would not pay a dividend
in 2024. The board intends to declare and pay a dividend as soon as
practically possible following the sale of the remaining portfolio of assets.
2024 Annual General Meeting (AGM)
The VCT's thirteenth AGM was held on 19 March 2024 at 12:00 p.m. All
resolutions were passed by way of a poll.
2025 Annual General Meeting (AGM)
The VCT's fourteenth AGM will be held at 18th Floor, The Scalpel, 52 Lime
Street, London EC3M 7AF on 18 March 2025 at 4:00 p.m.
Share Buybacks
As noted in previous Reports, the Board has decided that the VCT will not be
buying in shares for the foreseeable future.
Outlook
It is disappointing that despite diligent efforts by the Board, supported by
the Investment Adviser, it has not been possible to progress the sale of the
Company's remaining assets as quickly as Shareholders may have expected, due
to extremely challenging market conditions. Issues with certain assets
(notably South Marston) which needed resolving have not helped. However, it is
pleasing now to be able to report significant progress as detailed above. The
Board continues to ensure that every effort is being made to maximise
Shareholder returns.
In the meantime, the strong cash flows generated by the remaining portfolio
are generating returns for the Company. Despite this, costs throughout the
remaining portfolio continue to rise and, with only the Investment Adviser's
fees linked to the NAV, the Company's costs largely remain at the pre-sale of
assets level. So, the right course of action remains to find an appropriate
and willing purchaser who can achieve economies of scale with the assets the
Company is seeking to sell.
Once again, I would like to thank Shareholders for their patience and
continued interest and support.
Christian Yates
Chairman
29 January 2025
Investment Adviser's Report
Portfolio Highlights
Gresham House Renewable Energy VCT2 plc (VCT) remains invested in the
renewable energy projects that the VCT and Gresham House Renewable Energy VCT1
plc (VCT1) have co-owned for a period of between ten to thirteen years,
depending on the asset. The total generation capacity of assets co-owned by
the VCT is 21.3MWp, made up of 20.3MWp from six ground mounted solar FIT
projects and 1MWp of micro-wind projects spread across approximately 200
sites. At 30 September 2024, the VCT also owned one venture capital investment
which is in the process of liquidation with no recovery expected.
Work is currently underway to sell the remainder of the VCT's assets, with JLL
as the Corporate Finance Adviser who launched a new sale process at the
beginning of the financial year.
The Investment Adviser continues to manage the assets and deliver the best
possible yield from them, whilst also supporting the Boards of the VCTs and
JLL in advancing the sale process.
The Investment Adviser has undertaken a valuation exercise (as of the full
year to 30 September 2024) for the purpose of determining the Net Asset Value
(NAV) and has provided the Directors with several valuation scenarios based on
a range of key assumptions. It is the VCT Directors who have the
responsibility of valuing these assets based on input from the Investment
Adviser. The valuation presented in this Annual Report reflects the Directors'
view of the fair market value of the assets as indicated by the offer received
as part of the ongoing sales process whilst at the same time cognisant of the
Investment Adviser's rolled forward financial model. Whilst the model
incorporates potential future revenues and costs, as well as key assumptions
that determine future operational and financial performance, it does not
reflect the limited market appetite for this type of mature solar assets. The
Board issued an RNS on 2 December 2024 in which it stated that the net sale
proceeds may be 20-25% lower than the last stated NAV in March 2024
During the year the total revenue from renewable energy generation was
£12.2mn (2023: £14.7mn) and of this, £9.5mn was from government incentives
and inflation-linked contracts. The total revenue was 4.9% behind budget due
to a combination of factors including lower than budgeted irradiation, lower
fixed power prices during the 12 month period and output due to some technical
issues.
The vast majority of the assets held by the VCT produces solar power. The
solar portfolio is older than over 90% of the total installed solar capacity
in the UK, but positively this means that the VCT's solar assets benefit from
higher government- backed incentives than most other solar installations.
The downside of the age of the VCT's solar assets is the additional
maintenance required to keep them operating effectively. Maintenance
programmes to repair or replace certain components across the three worse
performing assets have been successful in improving performance. Performance
generally remains fair, although Kingston Farm and Lake Farm have suffered
from faults due to deterioration of some of their solar panels, for which
warranty claims are in progress, with one of the manufacturers having offered
compensation. Additionally, the inverters at Wychwood and Parsonage are
starting to fail. A replacement programme is in progress at Wychwood, the
larger of the two sites, after which its old inverters (that currently still
work) will then be used as spares for Parsonage.
In terms of output, solar irradiation was 6% below budget during the year. The
poor weather (low irradiance) across the year significantly impacted the solar
assets' output. This, combined with some technical issues (described in more
detail later) resulted in 8% lower generation than budget. These issues are
being addressed through warranty claims and replacement works.
· power prices continued to be volatile during the year 2023/24. Although they
have dropped substantially following the spike that resulted largely from
Russia's invasion of Ukraine in 2022, prices remain at elevated levels
compared to the long-term average before the conflict. The most recent
independent long-term power price curve forecast was higher than the last
quarter's curve.
Mitie Power Prices - 1 October 2023 to 30 September 2024
· As fixed price power contracts for the solar sites have expired and been
renewed, only one site, Lake Farm, remained on a high price (£380/MWh),
although this also ended in December 2024. Fixed prices at the remaining sites
are between £65/MWh and £105/MWh which continues to be above the historic
long-term norm of £50-60/MWh, which bodes well for the future cash flows.
· Fixing power prices under the PPAs provides a good degree of security over
future revenues, subject to output being on budget. Where prices have been on
the higher end of the scale, the Investment Adviser took the opportunity to
fix for longer, 2-year terms. Conversely, when the prices have been lower,
they were only fixed for a year.
· with a high degree of the portfolio's revenue being inflation linked, higher
and more sustained inflation increases the revenues from the assets. The
impact of high inflation on revenues is offset partially by the operating
costs and the debt also being inflation-linked. During the period, inflation
reduced significantly to more normal levels, to 1.7% at 30 September 2024, and
is expected to remain at these more normal levels.
· interest rates have decreased slightly during the period as the Bank of
England (BoE) cut interest rates to try and stimulate growth given inflation
had reduced substantially. Base Rates have decreased during the financial year
from 5.25% to 5.0% on 1 August 2024 and post period to 4.75% on 7 November
2024. This makes debt less expensive.
Portfolio Composition
Portfolio Composition by Asset Type and Impact on VCT2 Net Asset Value (NAV)
30 September 2024 30 September 2023
Asset Type kWp VCT2 Value** % of Portfolio VCT2 Value % of Portfolio
('000) value ('000) value
Ground mounted solar (FiT)* 20,292 £13,040 92.7 % £15,395 85.7%
Wind assets (FiT)* 995 £1,033 7.3% £2,568 14.3%
Venture Capital investments N.A. £0 0% £0 0.0%
TOTAL 21,287 £14,073 100.0% £17,963 100.0%
* Feed in Tariff (FiT)
** The investment values above are gross and include loans owed by the VCT to
the investment portfolio companies of £4.3mn at 30 September 2024
(2023:£3.7mn) as reflected in the net assets on the VCT's balance sheet.
The above table shows the details of the assets held as at 30 September 2024
and the assets held as at the prior year end 30 September 2023. The renewable
energy assets in the portfolio (wind and solar) of the VCT and VCT1, generated
18,993MWhs of electricity over the financial year, sufficient to meet the
annual electricity consumption of c.7,035 homes. The Investment Adviser
estimates that the carbon dioxide savings achieved by generating this output
from renewable energy sources versus gas-fired power stations, are equivalent
to 8,300 tonnes of carbon dioxide emissions saved.
Portfolio Summary
Portfolio revenues for the full year 1 October 2023 to 30 September 2024
Renewable Energy VCT Portfolio - Revenue
Ground mounted Solar (FiT) 96.8%
Wind Assets 3.2%
The performance against budget is shown below:
1 October 2023 - 30 September 2024 1 October 2022 - 30 September 2023
Asset type Budgeted Actual Revenue Budgeted Actual Revenue
revenue revenue performance revenue revenue performance
(£) (£) (%) (£) (£) (%)
Ground mounted solar (FiT) 12,409,444 11,849,241 95.5% 13,868,813 13,018,388 93.9%
Wind assets (FiT) 470,495 394,132 83.8% 417,653 303,517 72.7%
TOTAL 12,879,939 12,243,373 95.1% 14,286,466 13,321,905 93.3%
The revenue is affected by:
· renewable energy resources (solar irradiation or wind speed);
· the performance of the assets in converting the sun and wind into revenue; and
· the revenue paid per unit of energy generated and sold.
The ground mounted solar farms benefitted from attractive power prices and
lower but still above BoE long-term inflation-linked increases to subsidies
(5.5% as of 1 April 2024), but technical problems and poor climatic conditions
reduced output which offset these increases, such that actual revenue was
below budget. The chart contained in the Annual Report provides a breakdown
for the ground mounted solar assets only as these provide c.97% of
the revenue.
Ground mounted solar portfolio output analysis 1 October 2023 to 30 September 2024
Renewable energy resources
During the year the assets suffered from lower solar irradiance than budgeted,
with solar irradiation being 6% behind for the year which significantly
impacted overall performance.
The replacement of faulty or failing equipment, (panels, inverters,
transformers) that previously caused the reduction in output, plus the
successful warranty claims against Jinko Solar (who supplied Beechgrove and
South Marston) continue to bear fruit with improved performance. However,
Kingston and Lake Farm are suffering from their solar panels degrading, so the
Investment Adviser is pursuing a warranty claim against the solar panel
manufacturers (Canadian Solar and Trina). Both manufacturers are engaging with
the process and the gathering of evidence to support the claims is in
progress, in particular Canadian Solar who have made an offer of compensation
for their deteriorating solar panels. The inverters at Wychwood and Parsonage
are starting to fail, so the Investment Adviser following approval by the
Board has initiated a full replacement program at Wychwood. Once all its
inverters have been replaced, those that still work will be used as spares for
Parsonage as both sites use the same technology.
Technical performance
The table below shows the technical performance for each of the groups of
assets during this and prior financial year:
1 October 2023 - 30 September 2024 1 October 2022 - 30 September 2023
Asset Type Budgeted Actual Technical Actual
output output performance output
(kWh) (kWh) (%)* (kWh)
Ground mounted solar (FiT) 19,721,448 18,117,821 91.9% 19,417,739
Wind assets (FiT) 1,045,301 875,646 83.8% 759,642
TOTAL 20,766,749 18,993,467 91.5% 20,177,381
* Technical performance is a measure of the percentage of actual output
over budgeted output.
Micro wind performance:
The micro wind portfolio performed around 16% lower than budget but was an
improvement on the financial year ended 30 September 2023. Micro wind accounts
for only 4.8% of the portfolio in terms of capacity and even less in terms of
revenue. The entire portfolio is comprised of approximately two hundred R9000
wind turbines, which have the support of an experienced O&M contractor
with access to spare parts and maintenance crews.
South Marston update
South Marston has historically sold all its power to the Honda production
plant adjacent to the solar site at Swindon. Honda closed down this facility
in July 2021 when production stopped and now Honda has sold the site to a
commercial real estate developer called Panattoni. The Investment Adviser is
working with Panattoni and various advisers to ensure that the export of power
from the solar farm is maintained, plus ensure the existing contractual
arrangements and protections are preserved with the new owners.
Panattoni is keen to make the solar power available to its future tenants when
they move into the facility. Panattoni will construct on the site and has
maintained in its planning application all the existing infrastructure
including the substation through which South Marston connects to the grid.
Both Honda and Panattoni have been supportive of South Marston during this
period of uncertainty, agreeing to new switching arrangements to allow South
Marston to export directly to the electricity network, whilst there is no
demand at the old Honda site as it is closed. Ultimately Panattoni are looking
to implement an iDNO solution such that each of their new tenants and South
Marston Renewables Ltd as generator with have their own metering and
connection arrangements. This is positive for the project as it separates the
connection arrangements thus simplifying them and avoids SMRL's reliance on
Panattoni in the future.
The Investment Adviser continues to work with all parties to improve South
Marston's contractual rights which will be needed to satisfy any potential
buyer of the VCT's assets and expects to sign an amended Cable Easement
agreement and a new connection agreement with the iDNO (amongst others) which
gives South Marston certain new and improved rights.
Revenue split for the year 2023/24
Ground mounted FiT 74.4%
Wind
FiT
2.8%
Ground mounted export 21.2%
Wind export
0.4%
Ground mounted private wire 0.2%
Other
1.0%
Ground mounted FiT solar portfolio, revenue split for the year 2023/24
Ground mounted FiT 76.7%
Ground mounted export 22.0%
Ground mounted private wire 0.2%
Other
1.1%
Of total revenues generated from solar assets in the year, c. 77% was earned
from government backed incentives for generating renewable electricity.
The high proportion of income that is fixed by the FiT scheme is RPI linked
and not exposed to wholesale power prices and is a significant driver of value
in this portfolio. This enables the portfolio to be insulated from any
significant reductions in the wholesale price of electricity whilst allowing
it to benefit from increases such as those experienced in 2022.
Total revenues (power price and subsidies) per MWh generated by the solar
assets were £654/MWh for the year ended 30 September 2024.
Operating costs
The majority of the cost base is fixed and or contracted under long-term
agreements and includes rent, business rates, and regular O&M costs. Many
of these costs have also risen in line with inflation.
The main variable cost item each year is the repair and maintenance cost.
Repair and maintenance expenditure involving solar panels, the key component
of a solar project, is covered by cash held in the maintenance reserve account
as part of the debt facility. The maintenance reserve account has been used
for maintenance programmes to repair or replace certain components across
three performing assets. At the end of the financial year a reserve totalling
£448k was in place for the remaining ground mounted solar assets.
Venture Capital investments
bio-bean went into administration in April 2023 and is in the process of
liquidation. No recovery of any value is expected. Rezatec also went into
administration, in May 2023, and was dissolved on 10 September 2024 without
any recovery. The value of the two VCT's venture capital investments was
marked down to £nil at 31 March 2023.
Outlook
The Investment Adviser's continued focus is to ensure that the assets operate
at or above budget whilst it supports the Directors' efforts to maximise exit
value for Shareholders.
The Investment Adviser is working alongside JLL to facilitate the due
diligence process currently underway with the buyer. The buyer's technical
adviser has visited all the site and conducted site assessments. These visits
went well. The VCT Boards current view is that the Transaction has a
reasonable prospect of completion by the late spring of this year.
Addressing the contractual status of the grid connection arrangement at South
Marston with the new landowners remains a key priority.
The historical repairs and warranty claims of the underperforming assets that
were completed have been successful and have provided greater visibility and
reliability of revenues. Addressing the issues with the deteriorating solar
panels at Kingston Farm and Lake Farm and replacing the failing inverters at
Wychwood and Parsonage will bring further improvements to output and
monitoring.
The Investment Adviser remains vigilant for spotting any signs of degradation
early so that the impact on availability can be managed and reduced.
All ground mounted solar assets had fixed price PPAs during the financial
year, which gave some certainty to revenue. The Investment Adviser is pleased
to have secured new fixed price PPAs for one to two years to further de-risk
near term future cash flows from these assets.
The combined effect of inflation and power prices locked in at good levels
should translate into attractive, stable revenue and cash flow.
Gresham House Asset Management Limited
29 January 2025
Review of Investments
Portfolio of investments
The following investments were held at 30 September 2024:
Qualifying and part-qualifying investments Operating sites Sector Cost Valuation Valuation % of
£'000 £'000 movement portfolio
in year
£'000
Lunar 2 Limited(1,4) South Marston, Beechgrove Ground solar 1,330 11,502 401 81.7%
Lunar 1 Limited(1,4) Kingston Farm, Lake Farm Ground solar 124 647 (1,278) 4.6%
HRE Willow Limited(3) HRE Willow Small wind 875 482 (140) 3.4%
New Energy Era Limited(4) Wychwood Solar Farm Ground solar 884 470 (850) 3.4%
Vicarage Solar Limited(4) Parsonage Farm Ground solar 871 422 (627) 3.0%
Tumblewind Limited(3) Tumblewind Small wind 850 214 (1,005) 1.5%
Minsmere Power Limited(3) Minsmere Small wind 975 197 (84) 1.4%
Small Wind Generation Limited(3) Small Wind Generation Small wind 975 140 31 1.0%
bio-bean Limited(2) Cambridgeshire Clean energy 695 - - 0.0%
Lunar 3 Limited(1,4) Ground solar 1 - - 0.0%
Total investments 7,580 14,074 (3,552) 100.0%
Cash at bank and in hand 1 0.0%
Total investments including cash 14,075 100.0%
1 Partially qualifying investment
2 bio-bean Limited was permanently impaired as at 31 March 2023.
bio-bean's liquidation is ongoing.
3 £1.8mn of the valuation movement has been recognised as a realised loss
at financial year ended 30 September 2024.
4 The individual portfolio company valuations are based on the estimated
realisation proceeds from the ongoing sales process allocated by MWh per solar
investment and number of turbines per wind investment. Lunar 2 Limited has
increased in value relative to the other solar investments as it holds a
higher beneficial interest in other solar companies within the group structure
resulting in a higher allocated proportion of the estimated realisation
proceeds.
All venture capital investments are incorporated in England and Wales.
Gresham House Renewable Energy VCT1 plc, of which Gresham House is the
Investment Adviser, holds the same investments as above.
Investment movements for the year ended 30 September 2024
Disposals
Qualifying and partially qualifying investments Cost at Valuation at Redemption Profit vs costs Realised
30 September 30 September of loan notes in year gain/(loss)
2023 2023 in year £'000 in year
£'000 £'000 £'000 £'000
Tumblewind Limited 338 338 338 - -
Rezatec Limited - Dissolved on 1,000 - - - -
10 September 2024*
* The investment was permanently impaired as at 31 March 2023.
The basis of valuation for the largest investments is set out below.
Further details of the remaining investments (by value):
Lunar 2 Limited
Lunar 2 Limited is a holding company of FiT remunerated ground mounted solar
farms of 5MW (Wiltshire), 4MW (near Hawkchurch) and 0.6MW (Ilminster,
Somerset).
Cost at 30/09/24: £1,330,000
Cost at 30/09/23: £1,330,000
Date of first investment: December 2013
Valuation at 30/09/24: £11,502,000
Valuation at 30/09/23: £11,101,000
Valuation method: Estimated realisation proceeds
Investment comprises:
Ordinary shares: £1,330,000
Proportion of equity held: 50%
Summary financial information from statutory accounts 31 March 2024
(non-consolidated):
Turnover: *
Operating profit/(loss): *
Net assets: £2,447,000
* Lunar 2 Limited non-consolidated P&L is not publicly available.
Lunar 1 Limited
Lunar 1 Limited is a holding company of FiT remunerated ground mounted solar
farms of two 5MW (Wiltshire) and one 0.7MW (Oxfordshire).
Cost at 30/09/24: £125,000
Cost at 30/09/23: £125,000
Date of first investment: December 2013
Valuation at 30/09/24: £647,000
Valuation at 30/09/23: £1,925,000
Valuation method: Estimated realisation proceeds
Investment comprises:
Ordinary shares: £125,000
Proportion of equity held: 5%
Summary financial information from statutory accounts: 31 March 2024
Turnover: £nil
Operating loss: £(11,000)
Net assets: £728,000
HRE Willow Limited
HRE Willow Limited owns a portfolio of FiT remunerated wind turbines on
largely farmer-owned sites located throughout East Anglia. The total capacity
of the wind assets owned by HRE Willow Limited is 430kW.
Cost at 30/09/24: £875,000
Cost at 30/09/23: £875,000
Date of first investment: June 2011
Valuation at 30/09/24: £482,000
Valuation at 30/09/23: £622,000
Valuation method: Estimated realisation proceeds
Investment comprises:
Ordinary shares: £875,000
Proportion of equity held: 44%
Summary financial information from statutory accounts: 31 March 2024
Turnover: £177,000
Operating profit: £48,000
Net assets: £1,286,000
New Energy Era Limited
New Energy Era Limited owns a FiT remunerated solar farm of 0.7MW near
Shipton-under- Wychwood, Oxfordshire.
Cost at 30/09/24: £884,000
Cost at 30/09/23: £884,000
Date of first investment: November 2011
Valuation at 30/09/24: £470,000
Valuation at 30/09/23: £1,320,000
Valuation method: Estimated realisation proceeds
Investment comprises:
Ordinary shares: £884,000
Proportion of equity held: 45%
Summary financial information from statutory accounts: 31 March 2024
Turnover: £363,000
Operating profit: £203,000
Net assets: £2,088,000
Vicarage Solar Limited
Vicarage Solar Limited is the holding company of a FiT remunerated solar farm
of 0.7MW near Ilminster, Somerset.
Cost at 30/09/24: £871,000
Cost at 30/09/23: £871,000
Date of first investment: March 2012
Valuation at 30/09/24: £422,000
Valuation at 30/09/23: £1,049,000
Valuation method: Estimated realisation proceeds
Investment comprises:
Ordinary shares: £871,000
Proportion of equity held: 45%
Summary financial information from statutory accounts 31 March 2024
(non-consolidated):
Turnover: *
Operating profit(loss): *
Net assets: £1,944,000
* This information is not publicly available
Tumblewind Limited
Tumblewind Limited owns a portfolio of FiT remunerated wind turbines on
largely farmer owned sites located throughout East Anglia. The total capacity
of the wind assets owned by Tumblewind Limited is 180kW. Tumblewind sold
Priory Farm Solar Farm Limited, which owns a ROC remunerated solar farm of
3.2MW near Lowestoft, in April 2023.
Cost at 30/09/24: £850,000
Cost at 30/09/23: £1,188,000
Date of first investment: November 2011
Valuation at 30/09/24: £214,000
Valuation at 30/09/23: £1,557,000
Valuation method: Estimated realisation proceeds
Investment comprises:
Ordinary shares: £79
Loan stock: £60,000
Proportion of equity held: 50%
Proportion of loan stock held: 50%
Summary financial information from statutory accounts: 31 March 2024
Turnover: £66,000
Operating profit: £21,000
Net assets: £161,000
Minsmere Power Limited
Minsmere Power Limited owns a portfolio of FiT remunerated wind turbines on
largely farmer owned sites located throughout East Anglia. The total capacity
of the wind assets owned by Minsmere Power Limited is 230kW.
Cost at 30/09/24: £975,000
Cost at 30/09/23: £975,000
Date of first investment: November 2011
Valuation at 30/09/24: £197,000
Valuation at 30/09/23: £281,000
Valuation method: Estimated realisation proceeds
Investment comprises:
Ordinary shares: £400,000
Proportion of equity held: 50%
Summary financial information from statutory accounts: 31 March 2024
Turnover: £91,000
Operating profit: £34,000
Net assets: £112,000
Small Wind Generation Limited
Small Wind Generation Limited owns a portfolio of FiT remunerated wind
turbines on largely farmer owned sites located throughout East Anglia. The
total capacity of the wind assets owned by Small Wind Generation Limited is
190kW.
Cost at 30/09/24: £168,000
Cost at 30/09/23: £168,000
Date of first investment: November 2011
Valuation at 30/09/24: £140,000
Valuation at 30/09/23: £109,000
Valuation method: Estimated realisation proceeds
Investment comprises:
Ordinary shares: £1,680,000
Proportion of equity held: 50%
Summary financial information from statutory accounts: 31 March 2024
Turnover: £73,000
Operating loss: £50,000
Net assets: £(389,000)
Lunar 3 Limited
Lunar 3 Limited was incorporated at end of 2013 as part of the refinancing of
the ground mounted solar assets owned by Lunar 1 Limited and Lunar 2 Limited.
Lunar 3 Limited is a dormant company and does not own any assets.
Cost at 30/09/24: £100
Cost at 30/09/23: £100
Date of first investment: December 2013
Valuation at 30/09/24: £0
Valuation at 30/09/23: £0
Valuation method: n/a
Investment comprises:
Ordinary shares: £200
Proportion of equity held: 50%
Summary financial information from statutory accounts: 31 March 2024
Turnover: *
Operating profit/(loss): *
Net assets: £200
* This information is not publicly available
Explanatory notes
The summary financial information has been sourced from the statutory accounts
of the underlying investee companies. The net asset/liability figures
presented therefore do not approximate a valuation.
The proportion of equity held in each investment also represents the level of
voting rights held by the VCT in respect of the investment.
Summary of loan stock interest income
Year ended Year ended
30 September 30 September
2024 2023
£'000 £'000
Loan stock interest income in the period
Tumblewind Limited 12 15
Minsmere Power Limited 11 11
Small Wind Generation Limited 5 11
Total 28 37
Analysis of investments by commercial sector
The split of the investment portfolio by sector (by cost and by value at 30
September 2024) is as follows:
Spread of investment by sector (cost)
Ground-mounted solar 53%
Small wind 47%
Spread of investment by sector (value)
Ground-mounted solar 93%
Small wind 7%
Strategic Report
The Directors present the Strategic Report for the year ended 30 September
2024. The Board has prepared this report in accordance with the Companies Act
2006.
Business model
The VCT acts as an investment company, investing in a portfolio of businesses
within the renewable and clean energy sectors and operating as a VCT to ensure
that its Shareholders can benefit from the tax reliefs available.
Business review and developments
The VCT's business review and developments during the year, including updates
on the Managed Wind Down process for the VCT and the ongoing sale of the
portfolio, are set out in the Chairman's Statement and Investment Adviser's
Report.
During the year to 30 September 2024, the renewable investments held decreased
in value by £3,552,000. The value of the non-renewable investment bio-bean
Limited remained at £nil during the reporting period having entered
administration in April 2023. Rezatec Limited, having entered administration
in May 2023, was dissolved on 10 September 2024. Both non-renewable
investments were fully impaired at 31 March 2023.
Income over expenditure for the year resulted in a net loss, after accounting
for capital expenses, of £2.6mn (2023: £4.6mn loss).
The total loss for the year was £2.6mn and net assets at the year-end were
£9.9mn (2023: £14.5mn). An interim dividend of 7.5p per Ordinary Share was
announced on 22 November 2023 and was paid on 21 December 2023. On 2 December
2024, it was announced that the Company would not pay a dividend in 2024. The
Board intends to declare and pay a dividend as soon as practically possible
following the sale of the remaining portfolio of assets.
The Directors initially obtained provisional approval for the VCT to act as a
Venture Capital Trust from HM Revenue & Customs. The Directors consider
that the VCT has continued to conduct its affairs in a manner such that it
complies with Part 6 of the Income Tax Act 2007.
Investment advisory and administration fees
Gresham House Asset Management Limited (Gresham House) provides investment
advisory services to the VCT, at a fee equivalent to 1.15% of net assets. The
annual advisory fee is a NAV based fee and was, up to an Investment Advisory
Agreement (IAA) amendment announced on 25 June 2024, subject to a clawback
depending on whether the Company's annual running costs exceed 3% of NAV. The
agreement is for a minimum term of two years, effective from 7 November 2017,
with a nine month notice period on either side thereafter.
Following the sale of some assets in April 2023 and subsequent dividend paid
as a result of the 13 July 2021 shareholder vote to wind-down the Company, the
Company's net assets have reduced significantly to a level not anticipated
when the IAA was agreed and signed. Due to this significant reduction in the
NAV as a result of the Managed Wind Down process, the annual running costs for
the financial year ending 30 September 2024 were forecasted to be around 4% of
NAV. This would mean that running costs, many of which are largely fixed,
would now exceed the initial 3% cap and the Investment Adviser's annual
advisory fee would therefore be subject to the clawback (on top of an already
reduced annual advisory fee due to a lower NAV following asset sales). To
rectify this unintended consequence of the new investment policy, the IAA
amendment seeks to minimise the effect of the clawback by raising the cap to
5% of NAV or £625,000, whichever is lower.
The Board has reviewed the services to be provided by Gresham House and has
concluded that it is satisfied with the strategy, approach and procedures
which are to be implemented in providing investment advisory services to the
VCT. The Board is also of the opinion that the allocation of the investment
advisory fee between capital and revenue of the VCT, as described in Note 4 to
the financial statements, is still appropriate.
JTC (UK) Limited (JTC) acts as Administrator and Company Secretary. JTC
provides administration and accounting services to the VCT for a fee of
£45,400 (plus VAT, if applicable) per annum. It also provides company
secretarial services for a base fee of £45,400 (plus VAT, if applicable) per
annum and during the financial year as an agreed standard cost for further
company secretarial support has charged a fee of £1,250 (plus VAT, if
applicable) for each additional meeting of the Board convened to discuss the
Managed Wind Down of the Company. The agreement shall continue in force until
determined by either party, with a six month notice period on either side.
Investment policy
General
At the General Meeting held on 13 July 2021, 99.59% of the shareholders
resolved to approve the New Investment Policy of the Company to reflect a
realisation strategy and the Company ceasing to make any new investments. The
new Investment Policy replaced the previous Investment Policy in its entirety.
The Directors believed that being prescriptive as regards the timeframe for
realising the Company's investments could prove detrimental to the value
achieved on realisation. Therefore, it was the Board's view that the strategy
for the realisation of the Company's investments would need to be flexible and
may need to be altered to reflect changes in the circumstances of a particular
investment or in the prevailing market conditions.
Once all, or substantially all, of the Company's investments have been
realised and an initial distribution in respect thereof made, the Company
will, at an appropriate time, seek Shareholders' approval for it to be placed
into members' voluntary liquidation.
Since inception to 13 July 2021
Up to 13 July 2021, the VCT's objectives were to maximise tax free capital
gains and income to Shareholders from dividends and capital distributions by
investing the VCT's funds in:
· a portfolio of clean technology and environmentally sustainable investments,
primarily being in the UK and the EU, that have attractive income and growth
characteristics, with investments in existing asset-backed renewable
generation projects as the core of the portfolio; and
· a range of non-qualifying investments, comprised from a selection of cash
deposits, fixed income funds, securities and secured loans and which will have
credit ratings of not less than A minus (Standard & Poor's rated)/A3
(Moody's rated). In addition, as the portfolio of VCT qualifying investments
will involve smaller start-up companies, non-qualifying loans could be made to
these companies to negate the need to borrow from banks and, therefore,
undermine the companies' security within the conditions imposed on all VCTs
under current and future VCT legislation applicable to the VCT.
13 July 2021 to 30 September 2024
Following shareholder approval at the General Meeting on 13 July 2021, the New
Investment Policy of the VCT is that the Company will be managed with the
intention of realising all remaining assets in the portfolio in a prudent
manner consistent with the principles of good investment management and with a
view to returning cash to Shareholders in an orderly manner, whilst protecting
the tax position of Shareholders.
The Company will pursue its investment objective by effecting an orderly
realisation of its assets in a manner that seeks to achieve a balance between
maximising the value received from those assets and making timely returns of
capital to Shareholders. This process might include sales of individual assets
or running off the portfolio in accordance with the existing terms of the
assets, or a combination of both. Pursuant to its investment objective, the
Company successfully completed the sale of a portion of its solar assets in
April 2023.
The Company will cease to make any new investments or to undertake capital
expenditure except where, in the opinion of both the Board and the Investment
Adviser (or, where relevant, the Investment Adviser's successors):
· the investment is a follow-on investment made in connection with an existing
asset in order to comply with the Company's pre-existing obligations; or
· failure to make the follow-on investment may result in a breach of contract or
applicable law or regulation by the Company; or
· the investment is considered necessary to protect or enhance the value of any
existing investments or to facilitate orderly disposals.
Any cash received by the Company as part of the realisation process prior to
its distribution to Shareholders will be held by the Company as cash on
deposit and/or as cash equivalents.
Investment strategy
Investee companies generally reflect the following criteria:
· a well-defined business plan and ability to demonstrate strong demand for its
products and services;
· products or services which are cash generative;
· objectives of management and Shareholders which are similarly aligned;
· adequate capital resources or access to further resources to achieve the
targets set out in its business plan;
· high calibre management teams;
· companies where the Investment Adviser believes there are reasonable prospects
of an exit, either through a trade sale or flotation in the medium-term; and
· a focus on small and long-term renewable energy projects that utilise proven
technology
The new Investment Policy was adopted at the General Meeting held on 13 July
2021 to reflect a realisation strategy and the Company ceasing to make any new
investments.
Asset allocation
Throughout the year under review and to date, the Company continued to hold
80% of its funds in VCT qualifying investments in order to retain its status
as an approved Venture Capital Trust. The 80% qualifying holdings requirement
narrowed in the course of the financial year and is being monitored closely to
ensure compliance is maintained.
The Company's qualifying ratio is expected to fall below 80% before September
2025 by which the Company will enter voluntary liquidation to ensure
compliance with VCT rules.
Prior to the Company's entry into the Managed Wind Down, the VCT sought to
invest in at least eight investments to reduce the potential impact of poor
performance by any individual investment. During the Managed Wind Down the
number of investments has decreased to ten investments.
Risk Management
During the year, the VCT's assets have been managed to reduce risk as far as
possible in anticipation of the conclusion of the Managed Wind Down.
The main risk management features include:
· monitoring of investee companies - the Investment Adviser will closely monitor
the performance of all the investments made by the VCT in order to identify
any issues and to enable necessary corrective action to be taken; and
· the VCT will ensure that it has sufficient influence over the management of
the business of the investee companies, in particular, through rights
contained in the relevant investment agreements and other
shareholder/constitutional documents.
The VCT has followed the above risk diversification strategy with regard to
the Lunar 1 Limited and Lunar 2 Limited investments in AEE Renewables UK 3
Limited, AEE Renewables UK 26 Limited, South Marston Solar Limited, Beechgrove
Solar Limited, New Energy Era Limited and Vicarage Solar Limited.
Gearing
The creditors shown on the Balance Sheet, which are short-term, include
amounts owed to investee companies, which the Board expect to be repaid in the
future by way of dividends from, or the sale of, these companies.
As at 30 September 2024, the VCT had the ability to borrow £4.5mn in
accordance with the articles and had actual borrowings of £nil.
The VCT has no intention to borrow any funding in the foreseeable future.
UK Listing rules
In accordance with the UK Listing Rules:
(i) the VCT may not invest more than 10%, in aggregate, of the value of the total
assets of the VCT at the time an investment is made in other listed
closed-ended investment funds except listed closed-ended investment funds
which have published investment policies which permit them to invest no more
than 15% of their total assets in other listed closed-ended investment funds;
(ii) the VCT must not conduct any trading activity which is significant in the
context of the VCT; and
(iii) the VCT must, at all times, invest and manage its assets in a way which is
consistent with its objective of spreading investment risk and in accordance
with its published investment policy set out in this document. This investment
policy is in line with Chapter 15 of the UK Listing Rules and Part 6 of the
Income Tax Act.
The UK Listing Rules have been complied with for the year ended 30 September
2024.
Directors and senior management
The VCT has three Non-Executive Directors, all males. The VCT has no
employees.
Key performance indicators
At each Board meeting, the Directors consider a number of performance measures
to assess the VCT's success in meeting its objectives. The Board has
identified the VCT's key performance indicators as NAV Total Return and
dividends paid per share, the performance of which during the year are in the
table below:
Key performance indicators per financial year: Year ended Year ended
30 September 30 September
2024 20 23
Net Asset Value Total Return (% p.a.) (7.6)% (11.7)%
Dividends paid per share (p)* 0.0p 24.0p
* Dividend paid per Ordinary Share year ended 30 September 2023: 24.0p. No
dividend was paid in respect of the 'A' shares.
See the Chairman's Statement for details on the EGL. On the basis of the scope
to which this levy applies, there is no impact on the current or future
revenues received by the VCT, however the fair value of the portfolio
incorporates the potential additional costs a purchaser may incur.
These are defined as follows:
· Net Asset Value Total Return: the sum of NAV per Ordinary Share, NAV per 'A'
Share and cumulative dividends paid.
· Net Asset Value per Ordinary Share: The closing total net asset position of
the VCT as at the reporting date less the total par value of all 'A' Shares in
issue at the reporting date divided by the total number of Ordinary Shares in
issue at the reporting date.
· Net Asset Value per 'A' Share: Par value per 'A' Share
· Cumulative dividends paid: The gross total of all dividends paid for both
Ordinary and 'A' Shares from inception up to the reporting date.
The total net asset position of the VCT as at the reporting date is as per the
Balance Sheet, while the total number of shares in issue for both Ordinary and
'A' Shares is disclosed in Note 15.
In addition, the Board considers the VCT's performance in relation to other
VCTs.
The position of the VCT's NAV Total Return as at 30 September 2024 and a
summary of dividends paid per share are as indicated in the table below. The
VCT had an objective of paying dividends of 5p per share per annum. Under the
New Investment policy, the quantum and timing of any dividends paid during the
Managed Wind Down process is at the sole discretion of the board, and depends
on the sale of the assets, ongoing income streams generated by the assets held
and the Company's ongoing cash requirements. As part of the Managed Wind Down,
once the majority of the assets have been sold, the intention is to return all
sale proceeds to shareholders through dividend distributions or, if the VCT
has since entered voluntary liquidation, via capital distributions.
Principal risks and uncertainties
Schedule of principal risks
The other principal risks faced by the VCT, along with the steps taken to
mitigate these risks, are shown in the table below. The risks have not
materially changed from the previous year, however changes in the factors
impacting the risks attributable are discussed below. These principally apply
during the period until the underlying assets are sold during the Managed Wind
Down process.
Principal Risk Context Specific risks Possible impact Mitigation
Investment Performance The VCT holds investments in unquoted UK businesses in the renewable energy Poor investment decisions or strategy or poor monitoring, management and Reduction in the NAV of the VCT and the inability of the VCT to pay dividends. The Investment Adviser has significant experience in the renewable energy
sector. realisation of investments. sector. The Investment Adviser also actively manages the portfolio, engaging
reputable and experienced Operations and Maintenance (O&M) contractors.
Adverse weather conditions, low inflation rates and/or low power prices The assets have limited exposure to power prices, due to the use of the Feed
resulting in below forecast investment returns. in Tariff (FiT) regime.
The Board regularly reviews the performance of the portfolio, alongside the
Board of the sister company.
Inflation has fallen considerably since its double digit highs in 2022. It has
stabilised and was at 1.7% at 30 September 2024, just below the long-term BoE
target of 2%.
Higher inflation, whilst of concern from the point of view of the wider UK and
global economy, is positive for the owners of subsidised UK renewable assets.
Although most costs also rise in line with inflation, as does the cost of
servicing the debt facility, the net benefit of increased inflation is
positive since it increases the inflation linked revenues more than it
increases the costs.
Loss of The VCT must maintain continued compliance with the VCT Regulations, which Breach of any of the rules could result in the loss of VCT status. The loss of VCT status would result in dividends becoming taxable and new The VCT Qualification is actively monitored by the Investment Adviser and the
VCT status prescribe a number of tests and conditions. Shareholders losing their initial tax relief. Administrator, who liaise with the designated VCT Status Adviser. The VCT
Status Adviser also produces twice yearly reports for the Board. With no new
or follow-on investments anticipated, the Company's qualifying ratio is
expected to fall below 80% before September 2025 by which the Company will
enter voluntary liquidation to ensure compliance with VCT rules.
The Investment Adviser is aware of the dates of the latest fundraisings, and
that the five-year minimum holding period finished in October 2023.
The Investment Adviser has also prepared detailed forecasts relating to the
wind up of the VCTs, which takes this into account.
Legislative In recent years, the changes to VCT Regulations have narrowed the breadth of A change in government policy could result in a cessation of tax reliefs or The loss of VCT status would result in dividends becoming taxable and new Both the Investment Adviser and the Administrator closely monitor developments
permitted investments. reduction of the amount of tax relief available to investors which would make Shareholders losing their initial tax relief. and attend AIC conferences.
them less attractive to investors.
VCTs were established to encourage private individuals to invest in early- The VCT Status Adviser also has significant experience in this field and works
stage companies that are considered to be risky and have limited funding closely with HMRC.
options. The state provides these investors with tax relief.
Further commentary on VCT Status is provided within the Annual Report.
The Investment Adviser engages with HMT and industry representative bodies to
demonstrate the cost benefit of VCTs to the economy in terms of employment
generation and taxation revenue.
Regulatory and compliance As a listed entity, the VCT is subject to the UK Listing Rules and related Any breaches of relevant regulations could result in suspension of trading in Reduction in the NAV of the VCT due to financial penalties and a suspension of The VCT Secretary and Administrator have a long history of acting for VCTs.
regulations. the VCT's shares or financial penalties. trading in its shares, also leading to loss of VCT status. The Board, Investment Adviser and Administrator also employ the services of
reputable lawyers, auditors, and other advisers to ensure continued compliance
with its regulatory obligations.
Operational - VCT level The VCT relies on the Investment Adviser, Administrator and other third Inferior provision of these services thereby leading to inadequate systems and Errors in Shareholder records, incorrect mailings, misuse of data, The VCT, the Investment Adviser and the Administrator engage experienced and
parties to provide many of its services at the VCT level. controls or inefficient management of the VCT's assets and its reporting non-compliance with key legislation, loss of assets, breach of legal duties reputable service providers, the performance of which is reviewed on an annual
requirements. Service providers, predominantly the Registrar, hold and inadequate financial reporting. basis.
Shareholders' personal data and there is a risk of an external shock (natural
disaster or terrorist attack) or a cyber-attack on a provider. The Directors and the Investment Adviser regularly review the service
providers, including their internal controls and the procedures and policies
they have in place for preventing cyber attacks.
Operational - portfolio level At the portfolio level, the VCT uses third party O&M contractors managing Inferior provision of these services, thereby leading to inadequate systems Poor investment performance due to assets being offline and non-revenue The VCT, the Investment Adviser and the Administrator engage experienced and
the various sites. and controls or inefficient management of the VCT's assets. generating. reputable service providers, the performance of which is reviewed on an
ongoing basis. At the portfolio level, technical reviews and studies are
Maintenance and repairs not carried out in a timely manner. conducted on the assets as appropriate.
Repair and reconfiguration work is carried out and O&M procedures are
revised to reduce dependence on overseas contractors and specialists.
Economic, political and other external factors The VCT's investments are heavily exposed to the Feed in Tariff (FiT) regime. Retrospective changes to the regimes. Changes in energy prices and inflation. A significant negative impact on performance in respect of regime changes, low The Investment Adviser and Board members closely monitor policy and
Events such as the Russian Federation's invasion of Ukraine, conflict in the An increase in inflation results in higher interest charges for the debt inflation and energy prices can reduce portfolio revenue. geo-political developments. However, the UK Government has a general policy of
Middle East, economic recession, increasing interest rates and inflation. facility. not introducing retrospective legislation. The Investment Adviser and Board
regularly review the valuation model and its inputs.
Inflation has fallen considerably since its double-digit highs in 2022. It has
stabilised, and was at 1.7% at 30 September 2024 just below the long-term BoE
target of 2%.
Lower inflation reduces the increase of interest charges for the debt
facility.
Lower energy prices and lower inflation reduces portfolio performance as
returns are directly linked to both factors.
(Retroactive) change to Energy Market regulation and policies The VCT operates within the UK Energy market which is governed by UK The current or future UK Government may decide that subsidies provided to A significant negative impact of the renewable energy generation assets The Investment Adviser continuously monitors the regulatory landscape in the
regulation and could be subject to change. renewable energy generation assets in the form of feed-in-tariffs (FiTs) pose revenue reducing the cash availability of the VCT. The EGL was introduced from UK. If an action that retroactively targets these subsides it would join
too big a burden on electricity consumers and reduce or even eliminate them 1 January 2023 and legislated for in Part 5 of Finance Act (Number 2) 2023. forces with other owners of these assets and vigorously challenge such
retroactively. Similarly, other measures that achieve a similar effect such as The levy is legislated to remain in force until 31 March 2028. retroactive law changes in the courts. All of the sites owned by the VCTs are
special taxes, a cap on applicable inflation rates, limits on generated KWhs fully-accredited which means that there is no risk of an individual asset
that earn FiTs. losing its subsidy.
The previous government introduced the EGL from 1 January 2023 to tax
exceptional profits up to 31 March 2028. The EGL does not impact the VCT's
portfolio given its smaller size, but any potential acquirer may subsequently
incur this levy.
Changes in regulation and policies are more likely with a new UK government in
place since July 2024.
Principal risks since inception to 13 July 2021
The principal financial risks faced by the VCT, which include interest rate,
market price, investment valuation, credit and liquidity risks, are summarised
within Note 1 to the financial statements.
Note 18 includes an analysis of the sensitivity of valuation of the portfolio
to changes in each of the key inputs to the valuation model.
Other principal risks faced by the VCT have been assessed by the Board and
grouped into the key categories outlined below:
· underperformance;
· loss of VCT status;
· VCT Regulations;
· regulatory and compliance;
· operational;
· economic, political and other external factors; and
· government intervention in the renewables market.
Principal risks 13 July 2021 to 30 September 2024
In approving a new Investment Policy for the Company, a number of risks which
are material and currently known to the Company have been disclosed.
Additional risks and uncertainties not currently known to the Company, or that
the Company deems immaterial, may also have an adverse effect on the Company.
The main risks identified as part of the new Investment Policy of the Company
are:
Risk identified Context Mitigation
Asset diversification In a Managed Wind Down, the investment portfolio will be reduced as None identified.
investments are realised and concentrated in fewer holdings, and the mix of
asset exposure will be affected accordingly.
Ownership All of the VCT's main solar assets are owned 50:50 between the VCT and VCT1 The VCTs will sell their shares in each asset simultaneously, so that no VCT
and there are no rights attached to such ownership that would allow one holds more than 50% of the underlying assets.
company to force the other to sell its share in each asset.
Volatility in NAV and/or share price The VCT might experience increased volatility in its Net Asset Value and/or None identified.
its share price as a result of possible changes to the Portfolio structure
following the adoption of the new Investment Policy.
Sale of assets The VCT's assets may not be realised at their carrying value, and it is The Board has engaged several experts in this field to ensure an appropriate
possible that the VCT may not be able to realise some assets at any value. The sale price is reached. The Directors will ensure that the sale price reflects
VCT's assets' fair value is linked to estimates and assumptions about a the best available offer for the Company's assets taking into account future
variety of matters, including macroeconomic considerations, which assumptions income generation by the portfolio and the age and condition of the assets.
may prove to be incorrect and which are subject to change. A material change
of governmental, economic, fiscal, monetary or political policy, may result in
a reduction in the value of the VCT's assets on sale.
Sale of assets Sales commissions, liquidation costs, taxes and other costs associated with The Investment Adviser prepares detailed cash flow forecasts which are
the realisation of the VCT's assets together with the usual operating costs of presented to the Board quarterly. The forecasts include the additional costs
the VCT will reduce the cash available for distribution to the Shareholders. expected to be incurred during the Managed Wind Down of the VCT.
Sale of assets A sale of the VCT's assets may prove materially more complex than anticipated, The Board has engaged several experts in this field, to ensure against an
and the distribution of proceeds to Shareholders may be delayed by a number of extended handover period. If an extended handover period occurs then it is the
factors, including, without limitation, the ability of a liquidator to make Directors intention to ensure that the sale value obtained will ultimately be
distributions to Shareholders. in Shareholders' interests.
Viability statement
In accordance with Provisions 33 and 36 of the 2019 AIC Code of Corporate
Governance, the Directors have conducted a robust assessment of the potential
strategic decisions facing the VCTs that would threaten their future solvency
or liquidity, how these strategic decisions are being managed and how they are
being mitigated.
Following the results of the continuation vote at the 2021 AGM and with the
shareholders' subsequent approval of the Managed Wind Down of the Company at
the 2021 General Meeting (13 July 2021), the VCTs commenced the sale of assets
process, with a sale completion in April 2023, and the sale of the remaining
assets ongoing at the date of this statement. Both the Managed Wind Down and
the ongoing sales of assets were considered by the board as part of their
assessment.
Following the dissolution of Rezatec in September 2024, and without a sale of
the remaining assets in the 12 months to follow, the Company's qualifying
ratio is expected to fall below 80% before September 2025 when the 12 month
disregard lapses by which date the Company will need to have entered voluntary
liquidation to ensure compliance with VCT rules. In case the ongoing sale
process leads to a successful sale during the indicated 12 month period, the
VCTs will consider entering voluntary liquidation sooner.
The Board considers that the VCT remains viable up until the point at which
the voluntary liquidation will complete.
In making this assessment, the Boards have taken the following scenarios into
consideration:
· scenario 1: Sale of all VCTs investments followed by VCTs entering voluntary
liquidation by September 2025;
· scenario 2: No sale of VCTs investments and the VCTs entering voluntary
liquidation by September 2025;
· scenario 3: No sale of VCTs investments and the VCTs not entering voluntary
liquidation before the date the 80% qualifying holding test falls below the
80% following the lapse of Rezatec 12 month disregard breaching VCTs rules and
losing VCTs status.
For each scenario mitigating factors are in place.
The Board noted that the SPVs have good debt cover and that there are
sufficient cash reserves at the SPV level at the date of this statement,
available to be paid up to the VCT through dividends, reverse loans, interest
payments or the repayment of existing shareholder loans, to cover debt and
running & sale of assets costs up to the VCTs entering voluntary
liquidation.
The Board have assessed the VCT's ability to cover its annual running costs
under several stress scenarios evaluating the impact of higher VCT running
costs. The SPVs cash balances at the date of this statement were used as VCTs
income. No stress testing was applied to the SPVs cash at bank. The Board
noted that even under the most extreme reasonable assumptions increasing the
VCTs expenses by 20%, that the VCTs were able to cover its costs.
The Directors have been advised to start the process of a members' voluntary
liquidation timely to avoid scenario 3 to occur.
The Directors believe that the VCT is well placed to manage its potential
strategic decisions successfully. Based on the results, the Board confirms
that, taking into account the VCT's current position and subject to the
potential strategic decisions faced by the business, the VCT will be able to
meet its liabilities under the scenarios presented as they fall due until the
point at which the voluntary liquidation completes.
Directors' remuneration
It is a requirement under the Companies Act 2006 for Shareholders to vote on
the Directors' remuneration every three years, or sooner if the VCT wants to
make changes to the policy. The Directors' remuneration policy for the
three-year period from 27 April 2023 is set out in the Directors' Remuneration
Report.
Annual running costs cap
Following the IAA amendment on 25 June 2024, the annual running costs for the
year, initially capped at 3.0% of net assets, are now capped at 5.0% of net
assets or £625,000, whichever is lower; any excess will either be paid by the
Investment Adviser or refunded by way of a reduction of the Investment
Adviser's fees. Annual Running Costs for the year to 30 September 2024 were
£502,000 (2023: 2.8% of the cap of 3.0% of the net assets to the VCT) less
than the cap of £625,000, therefore the cap has not been breached.
Performance Incentive
The structure of the 'A' Shares, whereby Management owns one third of the 'A'
Shares in issue (known as the "Management 'A' Shares"), acts as a Performance
Incentive mechanism. The allocation to the 'A' shares of any revenue or
capital dividends declared by the VCT, will be increased if, at the end of
each year, the hurdle is met, which is illustrated below:
(i) Shareholders who invested under the offer for subscription receive dividends
in excess of 5.0p per Ordinary Share in any one financial period; and
(ii) one Ordinary Share and one 'A' Share has a combined net asset value of at
least 100.0p.
The Performance Incentive is calculated each year and is not based on
cumulative dividends paid.
A summary of how proceeds are allocated between Shareholders and Management,
before and after the hurdle is met, and as dividends per Ordinary Share
increase is as follows:
Hurdle criteria:
Annual dividend per Ordinary Share 0-5p 5-10p >10p
Combined NAV Hurdle N/A >100p >100p
Allocation:
Shareholders 99.97% 80% 70%
Management 0.03% 20% 30%
As the NAV as at 30 September 2024 was below 100p, the NAV hurdle for the year
was not met and no dividend in respect of the 'A' Shares was paid during the
year, therefore there was no Performance Incentive paid.
VCT status
The VCT has reappointed Philip Hare & Associates LLP (Philip Hare) to
advise it on compliance with VCT requirements, including evaluation of
investment opportunities as appropriate and regular review of the portfolio.
Although Philip Hare works closely with the Investment Adviser, they report
directly to the Board.
Compliance with the VCT regulations for the year under review is summarised as
follows:
Position at the
year ended
30 September
2024
1. To ensure that the VCT's income in the period has been derived wholly or 100.0%
mainly (70% plus) from shares or securities;
2. To ensure that the VCT has not retained more than 15% of its income from 1.6%
shares and securities; - see note below
3. To ensure that the VCT has not made a prohibited payment to shareholders 0.0%
derived from an issue of shares since 6 April 2014;
4. To ensure that at least 80% by value of the VCT's investments has been 81.7%
represented throughout the period by shares or securities comprised in
qualifying holdings of the VCT;
5 To ensure that at least 70% by value of the VCT's qualifying holdings has been 94.0%
represented throughout the period by holdings of eligible shares (disregarding
investments made prior to 6 April 2018 from funds raised before 6 April 2011);
6. To ensure that, of funds raised on or after 1 October 2018, at least 30% has Complied
been invested in qualifying holdings by the anniversary of the end of the
accounting period in which the shares were issued;
7. To ensure that no holding in any company has at any time in the period Complied
represented more than 15% by value of the VCT's investments at the time of
investment;
8. To ensure that the VCT's ordinary capital has throughout the period been Complied
listed on a regulated market;
9. To ensure that the VCT has not made an investment in a company which causes it Complied
to receive more than the permitted investment from State Aid sources;
10. To ensure that since 17 November 2015, the VCT has not made an investment in a Complied
company which exceeds the maximum permitted age requirement;
11. To ensure that since 17 November 2015, funds invested by the VCT in another Complied
company have not been used to make a prohibited acquisition; and
12. To ensure that since 6 April 2016, the VCT has not made a prohibited Complied
non-qualifying investment.
The Directors, with the help of the Investment Adviser, monitor and ensure the
investee companies have less than £5mn state backed financing in a 12-month
period listed in order to remain compliant with the VCT regulations.
Share Buybacks
The Board has decided that the VCT will not be buying in Shares for the
foreseeable future as highlighted in the Interim Results, as the VCT needs to
conserve such cash as it generates for the Managed Wind Down of the VCT and
the payment of dividends.
Future prospects
The Board's assessment of the outlook and future strategy of the VCT are set
out in the Chairman's Statement and Investment Adviser's Report.
Sustainable Investing
The Sustainable Investing report forms part of the Strategic Report.
The VCT seeks to conduct its affairs responsibly and Gresham House, the
Investment Adviser, is encouraged to consider environmental, social and
community issues, where appropriate, and the Board will continue to monitor
the Investment Adviser's progress in these areas.
The Board is conscious of its potential impact on the environment as well as
its social and corporate governance responsibilities. The Investment Adviser
has presented its Environmental, Social and Governance (ESG) strategy to the
Board.
The VCT, whilst not having an explicit sustainable investment objective,
demonstrates clear consideration of environmental characteristics by investing
in technologies that contribute to climate change mitigation by supporting a
decarbonisation of the energy system in the UK and a net zero economy
underpinned by cheap clean electricity.
Sustainable Investing at Gresham House
The Investment Adviser is committed to sustainable investment as an integral
part of its business strategy. Since 2021, Gresham House has enhanced its
approach to sustainability by setting an ambition to "be the manager of choice
for sustainable investment client solutions" outlined in the company wide GH30
targets and as set in Gresham House's Corporate Sustainability Strategy (CSS).
The CSS details objectives and actions to ensure its progresses against its
ambition to be a leader in sustainable investment including integrating
sustainability and stewardship responsibilities into the management of each
asset division. More information on Gresham House's sustainability approach
and CSS can be found in its Sustainable Investment Report:
https://greshamhouse. com/sustainable-investment-report/
Policies and processes
Gresham House publishes a Sustainable Investing Policy along with asset
specific policies, including the New Energy Sustainable Investment Policy,
which covers Gresham House's sustainable investment commitments, how the
investment processes meet these commitments and the application of the
Sustainable Investment Framework.
The Sustainable Investment Team assesses adherence to the commitments in the
Sustainable Investment Policies on an annual basis and provides updates on the
findings of these assessments to the Sustainability Executive Committee.
Sustainability Executive Committee
The Investment Adviser's Sustainability Executive Committee (Sustainability
ExCo) was established in 2021. The Sustainability ExCo is chaired by the
Director of Sustainable Investment and requires representation from across the
business including from the Group Management Committee, Divisional heads and
Heads of operational teams. The Sustainability ExCo sets and oversees the
Gresham House Corporate Sustainability Strategy and ensures priority areas of
sustainability related risks and opportunities are proactively identified and
debated.
New Energy Sustainable Investment Committee
The VCTs investment advisers' services are provided by Gresham House New
Energy division. The division established the New Energy Sustainable
Investment Committee (NESIC) in 2022 with a purpose to provide leadership,
strategic direction and implement processes to enhance the integration of
sustainability across the New Energy division, supporting the achievement of
fund-specific objectives and the CSS. The committee supports the division to
improve sustainability governance and stewardship of assets.
The core objectives of the NESIC include:
· to become the experts in sustainability within the New Energy division and
apply their knowledge to their areas of business.
· to be advocates for sustainable investment and innovation for the division.
· to set and oversee the New Energy sustainability objectives and targets at
fund and divisional level, aligned to Gresham House Corporate Sustainability
Strategy.
· to ensure key sustainability related risks and opportunities are proactively
identified and managed by the division.
· to ensure that New Energy Sustainable Investment (SI)-related tools,
processes, frameworks and data remain relevant and meet commitments made in
the New Energy Sustainable Investment Policy to ensure the division is able to
evidence SI contribution and progress to external parties.
New Energy Sustainability Objectives
The NESIC developed and agreed a set of sustainability objectives for the
division applicable to all assets under management including these VCTs solar
and wind assets. The objectives were determined by identifying the ESG topics
deemed most material to the assets. They were also selected to align with the
core topics and objectives in the Investment Adviser's 2025 Corporate
Sustainability Strategy.
NESIC set of sustainability objectives relevant to the VCTs below:
Table 1: New Energy Sustainability Objectives
Topic 2025 Objective
G: Risk and Compliance Become a leader in the measurement and disclosure of ESG risks and outcomes.
Have a comprehensive set of ESG KPIs to support investment and asset
management decisions and regularly report these to stakeholders.
G: Marketplace Responsibility Have market-leading Sustainable Investment policies and processes and ensure
all investment activities meet commitments at a high-quality level.
G: Governance & Ethics Engage with key counterparties to increase capacity of renewable energy or
battery storage and the contribution of these assets to a low carbon economy.
E: Climate Change & Pollution Demonstrate the role of New Energy in the energy transition and understand the
carbon footprint of the full lifecycle of assets.
E: Natural Capital Fully understand natural capital impacts and dependencies and aim to
demonstrate enhancement of biodiversity for all sites.
S: Supply Chain Management Determine best-in-class suppliers to work with long-term, and encourage more
responsible supplier practices, reducing supply chain sustainability risks.
E: Waste Management Incorporate full lifecycle analysis into investment and supplier decision
making (product design, construction, operation and end-of-life use) to reduce
negative environmental and social impacts of assets.
Develop a market-leading approach to end-of-life use.
These objectives have and will continue to focus current and future
sustainability-related activities for the division to 2025 as described
throughout this report. A review will take place in 2024 to determine progress
made against the targets and outstanding actions required to achieve each
objective by the targeted deadline of 2025.
Risk and Compliance: Embedding ESG factors
As the assets within the VCTs are all well-established, the assessment of ESG
is applied as part of our asset management activities. All Operations &
Maintenance providers are required to report on various ESG factors, including
Health & Safety and Environmental risks or incidents. Any significant
incidents must be reported to us within 24 hours. Furthermore, they are also
expected to be proactive and to make recommendations for improvements.
The team continues to work to expand the ESG key performance indicators (KPIs)
measured, reported, and monitored by the New Energy division for all assets
under management, including the VCTs. This reflects increased investor and
regulatory demand for ESG data and the Investment Adviser's ambitions to
enhance ESG data and transparency. It is anticipated that the expanded ESG
data will be used by investment teams and asset management teams to increase
their understanding of the operational ESG performance of assets under
management and to identify any material ESG risks. It is expected that the
asset management team will aim to improve ESG metrics over time, as feasible
within the context of the existing fund mandate.
In 2023, the Construction and Asset Management team integrated ESG data
requests into Engineering, Procurement and Construction (EPC) and supplier
contracts. As a result of this integration, fund level reporting is now
available across a range of ESG KPIs. Work is in progress to produce a gap
analysis of remaining ESG KPIs, and a feasibility assessment will be carried
out to inform a project plan for further ESG data collection.
Supply Chain Management
The Investment Adviser has had a Supply Chain Policy in place since 2020. The
Supply Chain Policy covers material ESG topics and places obligations on
suppliers (including contractors) to ensure their own compliance, as well as
the compliance of their subcontractors, with the Policy. It also requires
suppliers to monitor and report any non-compliance to the Investment Adviser.
Since July 2021, all new supplier contracts have been updated to include
clauses specifically mandating suppliers to declare that they have not been
involved in any practices linked to modern slavery and that they will permit
on-site audits at any time should we have reason to suspect instances of
slavery and human trafficking. Any VCT suppliers with contracts due for
renewal will be obliged to update clauses relating to modern slavery within
their contract terms. Gresham House is in the process of reviewing existing
sustainability related policies and procedures including those related to
human rights, modern slavery and supply chain management to meet and surpass
new regulatory requirements and achieve our New Energy sustainability
objective.
Operators of Gresham House managed renewables projects are asked to complete
an annual questionnaire relating to both their own labour practices and supply
chain management regarding material sourcing from China. To mitigate the risk
of low response rates, completion of the questionnaire is now mandated as part
of pre-qualification for new suppliers.
Gresham House recognizes that challenges relating to modern slavery in the
solar module supply chain are a systemic issue that can be hard to influence
as a relatively small player in the renewables industry. Therefore, Gresham
House became a member of the Solar Energy UK Responsible Sourcing Steering
Group in Q2 2023. The Investment Adviser believes this is a key mechanism
through which it can better understand risks relating to modern slavery in the
supply chain and encourage regulatory and long-term solutions for a more
diversified, modern slavery free supply chain.
Climate Change & Pollution
The VCTs' investment strategy materially contributes to the UK's net-zero
Strategy and ambition to decarbonise the energy system. Based on the
18,993,000kWh electricity generated by the renewable assets in the portfolio
of the VCT and VCT1, it is estimated that the fund avoided 8,300 tonnes of
CO(2)(1) and powered c. 7,035 homes(2) during the reporting period.
Greenhouse Gas (GHG) Emissions. Emissions can be broken down into three
categories by the Greenhouse Gas Protocol:
· Scope 1: all direct emissions from the activities of the VCT or under its
control.
· Scope 2: indirect emissions from electricity purchased and used by the VCT
· Scope 3: all other indirect emissions from activities of the VCT. This
includes water consumption, waste disposal, and third-party fuel use.
The Investment Adviser updated its methodology to measuring the carbon
emissions of the VCT and VCT1 in 2023 to enhance the reporting of the VCTs
emissions. The operational activities at each site, such as water consumption
and vehicle fuel consumption, were recorded throughout the year and converted
to tCO(2)e using UK government conversion factors. This new methodology
acknowledges the lifecycle emissions associated with renewable energy sources
and although these assets are lower carbon emitters, they still have a carbon
footprint.
Table 2: Carbon footprint of each VCT in 2023.
VCT1 Plc VCT2 Plc
Scope 1 (tCO(2)e) 17.2 17.2
Scope 2 (tCO(2)e) 0.0 0.00
Scope 3 (tCO(2)e) 2.0 2.0
Revenue Carbon Intensity (Scope 1 + 2) tCO(2)e/£m 16.6 16.3
Gresham House conducted its carbon foot printing for the calendar year (1
January 2023 - 31 December 2023) so the value reported corresponds to the
emissions produced in this period, rather than the reporting period of the
VCTs. As a result, this value includes the emissions of two assets that were
sold in the previous reporting period.
In previous years, the VCTs emissions were reported as 0 tCO(2)e in line with
guidance by an external consultant that supported the Investment Adviser in
the carbon footprint measurement for all Gresham House financed emissions.
The Investment Adviser will continue to seek best practice and enhance
reporting where possible by considering further ways to monitor and measure
the embodied carbon emissions related to the VCT.
Natural Capital
The Investment Adviser continues to manage all assets in line with the
biodiversity commitments and habitat management plans instigated as part of
project development and approvals.
Director's Duties
Directors must consider the long-term consequences of any decision they make.
They must also consider the interests of the various stakeholders of the VCT,
the impact the VCT has on the environment and community and operate in a
manner which maintains the VCT's reputation for having high standards of
business conduct and fair treatment between Shareholders.
Fulfilling this duty naturally supports the VCT in its Investment Objective to
maximise tax-free capital gains and income to Shareholders and helps ensure
that all decisions are made in a responsible and sustainable way. In
accordance with the requirements of the Companies (Miscellaneous Reporting)
Regulations 2018, and the AIC Code, the information overleaf explains how the
Directors have individually and collectively discharged their duties under
section 172 of the Companies Act 2006.
1 Assuming an "all non-renewable fuels" emissions statistic of
437tCO(2)/GWh of electricity supplied, BEIS statistics July 2024, Digest of UK
Energy Statistics, Table 5.14 ("Estimated carbon dioxide emissions from
electricity supplied"). "Carbon avoided" calculated using Renewable UK
methodology: Carbon reduction is calculated by multiplying the total amount of
electricity generated by solar and wind per year by the number of tonnes of
carbon which fossil fuels would have produced to generate the same amount of
electricity.
2 Assuming an average annual electricity usage per household of 2.7MWh, as
quoted by OFGEM May 2023. "Homes powered" calculated using Renewable UK
methodology: MWh divided by average annual domestic electricity consumption.
Household power consumption dropped in 2023 due to high power prices.
Section 172
The Section 172 statement forms part of the Strategic Report.
The Directors consider that in conducting the business of the VCT over the
course of the year they have complied with Section 172(1) of the Companies Act
2006 (the Act) by fulfilling their duty to promote the success of the VCT and
to act in the way they consider, in good faith, would be most likely to
promote the success of the VCT for the benefit of its members as a whole,
whilst also considering the broad range of stakeholders who interact with and
are impacted by the VCT's business, especially with regard to major decisions.
Role of the Board
The Board, which comprised of three Non-Executive Directors during the
financial year with a broad range of skills and experience, retains
responsibility for taking all decisions relating to the VCT's principal
objectives, corporate governance and strategy, and for monitoring the
performance of the VCT's service providers.
The Board aims to ensure that the VCT operates in a transparent culture where
all parties are able to contribute to the decisions made and challenge where
necessary with the overall aim of achieving the expectations of shareholders
and other stakeholders alike.
In discharging their section 172 duties the Directors have regard to the
likely consequences of any decisions during the Managed Wind Down process; the
need to foster the VCT's business relationships with suppliers, customers and
others; the impact of the VCT's operations on the community and environment;
the desirability of the VCT maintaining a reputation for high standards of
business conduct and the need to act fairly as between members of the VCT.
The Board works very closely with the Investment Adviser and Company Secretary
to ensure there is visibility and openness in how the affairs of the VCT are
being conducted. The VCT co-owns all its assets with Gresham House Renewable
Energy VCT1 plc (VCT1).
The VCT is an investment vehicle, externally managed, has no employees, and is
overseen by a Non-Executive board of Directors. As such the Board considers
its stakeholders to be the shareholders, the service providers, including the
Investment Adviser, and regulatory bodies.
Following the adoption of the new Investment Policy from 13 July 2021, the
VCT's principal objective is to manage the Company with the intention of
realising all remaining assets in the portfolio in a prudent manner consistent
with the principles of good investment management and with a view to returning
cash to Shareholders in an orderly manner.
Key Stakeholders
Shareholders
The Board engages with the VCT's shareholders in a variety of ways, including
annual and half-yearly reports and accounts, an AGM and information provided
on the Investment Adviser's website as well as ad hoc communications with
shareholders.
The Registrar is available to help shareholders to manage their shareholding.
The VCT welcomes and encourages attendance and participation from shareholders
at the AGM and values any feedback and questions it may receive from
shareholders ahead of and during the AGM.
The Board communicates with its shareholders through the publication of Annual
and Half-Year reports which are available on the VCT's website
(https://greshamhouse.com/real-assets) and sent to Shareholders.
The Board is also happy to respond to any written queries made by shareholders
during the course of the period, or to meet with major shareholders if so
requested. In addition to the formal business of the AGM, representatives of
the Investment Adviser and the Board are available to answer any questions a
Shareholder may have. During the period the Board engaged with shareholders on
multiple matters, including updates on continuing discussions with potential
purchasers of the remaining solar and wind assets and the amendment to the
investment advisory agreement between the VCT and Gresham House in June 2024.
Details of these matters are included in the Chairman's Statement.
Investment Adviser
The Board has delegated authority for day-to-day management of the VCT to the
Investment Adviser. The Board then engages with the Investment Adviser in
setting, approving and overseeing the execution of the business strategy and
related policies. The Investment Adviser attends Valuation Forums, Board
meetings and Audit Committee meetings to update the Directors on the
performance of the portfolio. At every quarterly Board meeting a review of
financial and operational performance, as well as legal and regulatory
compliance, is undertaken. Since the General Meeting held on 13 July 2021, the
Managed Wind Down of the Company has been reviewed at each quarterly Board
meeting and at ad hoc board meetings being held as and when required.
The Board also reviews other areas over the course of the financial year
including the VCT's business strategy, key risks, stakeholder-related matters,
diversity and inclusion, environmental matters, corporate responsibility and
governance, compliance and legal matters.
The Investment Adviser's performance is critical for the VCT to successfully
deliver its investment strategy and meet its objectives.
Service Providers
The VCT has a limited pool of service providers which include the Investment
Adviser, the Administrator, the Registrar, the Legal Advisers, the Auditor,
the Tax Adviser and the VCT Status Advisers.
These service providers are fundamental to ensuring that as a business the VCT
meets the high standards of conduct that the Board sets. The Board meets at
least annually to review the performance of the key service providers and
receives reports from them at Board and Committee meetings.
The Board has regular contact with the two main service providers (the
Investment Adviser and Administrator) through quarterly board meetings, with
the Chairman and Audit Chairman meeting these providers more regularly. The
Audit Committee also reviews the controls of the VCT's service providers on an
annual basis to ensure that they are performing their responsibilities in line
with Board expectations and providing value for money.
Regulators/Government
The Board regularly considers how it meets regulatory and statutory
obligations and follows voluntary and best-practice guidance, including how
any governance decisions it makes impact its stakeholders both in the shorter
and in the longer-term.
The VCT engages an external adviser to report half-yearly on its compliance
with the VCT rules and a Company Secretary report is tabled quarterly at board
meetings.
ESG
Details on ESG are included in the Sustainable Investing section within the
Annual Report.
Key Board decisions and specific examples of Stakeholder consideration during the year
The Board is fully engaged in both oversight and the general strategic
direction of the VCT. During the year, the Board's main strategic discussions
focused around the below items.
Managed Wind Down process
Following the General Meeting held on 13 July 2021, the shareholders resolved
to approve the Managed Wind Down of the Company and associated amendments to
the Company's Investment Policy. Under the Managed Wind Down process, the
Company has continued to be managed with the intention of realising all assets
in its Portfolio in a prudent manner consistent with the principles of good
investment management and with a view achieving fair value for the Company's
assets and subsequently returning cash to shareholders in an orderly manner.
To that effect, the Board's strategic discussions have centred on the sale of
the full remaining portfolio of solar and wind assets. Particular oversight
and direction from the Board has been provided with regard to ongoing
discussions with potential purchasers of the solar and wind assets as well as
the continued resolution of the ongoing grid connection issue at the site in
South Marston. On 27 September 2024, the Company confirmed that it had chosen
Downing LLP's offer to commence the due diligence process to complete the sale
of the remaining assets.
Time has also been spent by the Board in considering the impact of both the
portfolio sale and the dissolution of Rezatec and bio-bean on compliance with
the 80% qualifying holdings requirement that applies to the Company as a VCT.
With no new or further investments anticipated, the Company's qualifying ratio
is expected to fall below 80% before September 2025 and, as a result, the
Board with the Investment Adviser and other service providers have commenced
the planning of the Company's eventual voluntary liquidation. The Board has
held discussions with potential liquidators with a view to an appointment to
oversee the process. Once the VCT's assets are sold, the voluntary liquidation
process can be initiated.
Throughout the year, the Board has also considered how to maximise dividend
returns to shareholders whilst taking into account the Company's expected cash
requirements and the potential timeline for and impact of the sale of
investment assets in accordance with shareholder wishes. To that effect, the
Company declared a 7.5p per Ordinary Share interim dividend that was paid on
21 December 2023. The 7.5p interim dividend related to income generation from
the portfolio, but in part also related to the distribution of the remaining
proceeds arising from the part sale of the Company's assets in April 2023. On
2 December 2024, it was announced that the Company would not pay a dividend
in 2024. The Board intends to declare and pay a dividend as soon as
practically possible following the sale of the remaining portfolio of assets.
The Board takes seriously its responsibilities to uphold the highest standards
of corporate governance and is open to constructive dialogue with shareholders
and shareholder bodies.
By order of the Board
Christian Yates
Chairman
29 January 2025
Report of the Directors
The Directors present the fourteenth Annual Report and Accounts of the VCT for
the year ended 30 September 2024.
The Corporate Governance Report forms part of this report.
Share capital
At the year end, the VCT had in issue 26,133,036 Ordinary Shares and
39,463,845 'A' Shares. There are no other share classes in issue.
All shares have voting rights; each Ordinary Share has 1,000 votes and each
'A' Share has one vote. Where there is a resolution in respect of a variation
of the rights of 'A' Shareholders or a Takeover Offer, the voting rights of
the 'A' Shares rank pari-passu with those of Ordinary Shares.
Pursuant to the articles and subject to a special resolution, the VCT is able
to make market purchases of its own shares, up to a maximum number of shares
equivalent to a set percentage of the total number of each class of issued
shares from time to time. No such resolution was passed at the Company's 2024
Annual General Meeting.
Substantial interests
As at 30 September 2024, and the date of this report, the VCT had not been
notified of any beneficial interest exceeding 3% of the issued share capital.
Results and dividends
Year ended 30 September 2024 £'000 Pence Pence
per Ord per 'A'
Share Share
Loss for the year 2,584 9.9 -
Dividend 21 December 2023 1,960 7.5 -
Directors
The Directors of the VCT during the year and their beneficial interests in the
issued Ordinary Shares and 'A' Shares at 30 September 2024 and at the date of
this report are detailed in the Remuneration Report.
Biographical details of the Directors, all of whom are Non-Executive, can be
found within the Annual Report.
It is the Board's policy that Directors do not have service contracts, but
each Director is provided with a letter of appointment. The Directors' letters
of appointment are terminable on three months' notice by either side. They are
available on request at the Company's registered office during business hours
and will be available for 15 minutes prior to and during the forthcoming AGM.
The Articles of Association require that each Director retires by rotation
every three years and being eligible, offer themselves for re-election.
Accordingly, Matthew Evans stood for re-election in 2023 and Christian Yates
and Andrew Donovan stood for re-election in 2024.
The Directors' appointment dates and the date of their last election are shown
below:
Director Date of Most recent
original date of
appointment re-election
and election*
Christian Yates (Chairman) 28/09/2010 19/03/2024
Matthew Evans 31/01/2017 27/04/2023
Andrew Donovan 07/12/2020 19/03/2024
The Directors believe that the Board has an appropriate balance of skills,
experience, independence and knowledge of the Company and the sector in which
it operates to enable it to provide effective strategic leadership and proper
guidance of the Company.
The Board confirms that, following the evaluation process set out in the
Corporate Governance Statement, the performance of the Directors is, and
continues to be, effective and demonstrates commitment to the role.
Each Director is required to devote such time to the affairs of the VCT as the
Board reasonably requires.
Annual General Meeting
The VCT's fourteenth Annual General Meeting (AGM) will be held at The Scalpel,
18th Floor, 52 Lime Street, London EC3M 7AF at 4:00pm on 18 March 2025. The
Notice of the Annual General Meeting and Form of Proxy will be circulated
separately following the publication of this Annual Report.
Any change of format will be notified via the Company's website and Regulatory
Information Service.
Auditor
The Independent Auditor's Report can be found within the Annual Report. At the
2024 AGM, the shareholders approved the re-appointment of BDO LLP as the
auditor. Separate resolutions are due to be proposed at the 2025 AGM to
re-appoint BDO LLP and to authorise the Directors to determine their
remuneration.
Directors' responsibilities
The Directors are responsible for preparing the Strategic Report, the Report
of the Directors, the Directors' Remuneration Report and the financial
statements in accordance with applicable law and regulations. They are also
responsible for ensuring that the Annual Report includes information required
by the UK Listing Rules of the Financial Conduct Authority.
Company law requires the Directors to prepare financial statements for each
financial year. Under that law the Directors have elected to prepare the
financial statements in accordance with United Kingdom Generally Accepted
Accounting Practice (United Kingdom accounting standards and applicable law),
including Financial Reporting Standard 102, the financial reporting standard
applicable in the UK and Republic of Ireland (FRS 102). Under company law, the
Directors must not approve the financial statements unless they are satisfied
that they give a true and fair view of the state of affairs of the VCT and of
the profit or loss of the VCT for that period.
In preparing these financial statements the Directors are required to:
· select suitable accounting policies and then apply them consistently;
· make judgments and accounting estimates that are reasonable and prudent;
· state whether applicable UK accounting standards have been followed, subject
to any material departures disclosed and explained in the financial
statements; and
· prepare the financial statements on the going concern basis unless it is
inappropriate to presume that the VCT will continue in business. As stated in
Note 1, the Directors do not consider the VCT to be a going concern and have
prepared the financial statements on a basis other than that of a going
concern since 30 September 2021.
The Directors are responsible for keeping adequate accounting records that are
sufficient to show and explain the VCT's transactions, to disclose with
reasonable accuracy at any time the financial position of the VCT and to
enable them to ensure that the financial statements comply with the Companies
Act 2006. They are also responsible for safeguarding the assets of the VCT and
hence for taking reasonable steps for the prevention and detection of fraud
and other irregularities.
In addition, each of the Directors considers that the Annual Report, taken as
a whole, is fair, balanced and understandable and provides the information
necessary for Shareholders to assess the VCT's position and performance,
business model and strategy.
Directors' statement pursuant to the disclosure and transparency rules
Each of the Directors, whose names and functions are listed within the Annual
Report, confirms that, to the best of each person's knowledge:
· the financial statements, which have been prepared in accordance with UK
Generally Accepted Accounting Practice and the 2014 Statement of Recommended
Practice (updated in July 2022 (SORP)), 'Financial Statements of Investment
Trust Companies and Venture Capital Trusts' give a true and fair view of the
assets, liabilities, financial position and profit or loss of the VCT; and
· that the management report, comprising the Chairman's Statement, Investment
Adviser's Report, Review of Investments, Strategic Report, and Report of the
Directors includes a fair review of the development and performance of the
business and the position of the VCT together with a description of the
principal risks and uncertainties that it faces.
Insurance cover
Directors' and Officers' liability insurance cover is held by the VCT in
respect of the Directors.
Website publication
The Directors are responsible for ensuring the Annual Report and the Financial
Statements are made available on a website. Financial statements are published
on the website of the Investment Adviser
(https://greshamhouse.com/real-assets) in accordance with legislation in the
United Kingdom governing the preparation and dissemination of financial
statements, which may vary from legislation in other jurisdictions. The
Directors' responsibility also extends to the on-going integrity of the
financial statements contained therein.
Corporate governance
The VCT's Corporate Governance statement and compliance with, and departures
from the 2019 AIC Code of Corporate Governance which has been endorsed by the
Financial Reporting Council (www.frc.org.uk.
Other matters
The likely future developments in the business of the Company including the
Managed Wind Down and ongoing sale of assets process are set out in the
Chairman's Statement and in the Investment Adviser's Report.
Information in respect of risk management has been disclosed within the
Strategic Report.
Information in respect of greenhouse emissions which is normally disclosed
within the Report of the Directors has been disclosed within the Sustainable
Investing report part of the Strategic Report.
During the year, the VCT did not have any employees (2023: nil) and therefore
there is no comparison data available for the change in Directors'
remuneration to average change in employee remuneration.
Events after the end of the Reporting Period
The VCT has not paid a dividend between the year end and 28 January 2025. The
Company announced on 2 December 2024 that it intends on declaring and paying a
dividend as soon as practically possible following the sale of its remaining
portfolio of assets.
Statement as to disclosure of information to the auditor
The Directors in office at the date of the report have confirmed, as far as
they are aware, that there is no relevant audit information of which the
Auditor is unaware. Each of the Directors has confirmed that they have taken
all the steps that they ought to have taken as Directors in order to make
themselves aware of any relevant audit information and to establish that it
has been communicated to the Auditor.
For and on behalf of the Board
Christian Yates
Chairman
29 January 2025
Directors' Remuneration Report
Annual statement of the Remuneration Committee
The Remuneration Committee consists of each of the VCT Directors. The
Remuneration Committee assists the Board to fulfil its responsibility to
shareholders to ensure that the remuneration policy and practices of the VCT
reward the Directors fairly and responsibly, with a clear link to corporate
and individual performance and having regard to statutory and regulatory
requirements. The Remuneration Committee meets as and when required to review
the levels of Directors' remuneration. The Committee is also responsible for
considering the need to appoint external remuneration consultants.
Following a review of the remuneration during the financial year 2023/24 by
the Remuneration Committee, the Board approved a 6% increase in the directors'
remuneration. These increases took effect from 1 October 2024. The changes to
the Directors' remuneration are outlined in this report.
Details of the specific levels of remuneration to each Director as well as the
fee increases are outlined in the report.
Report on Remuneration Policy
Below is the VCT's remuneration policy. This policy applies from 27 April
2023. Shareholders must vote on the remuneration policy every three years, or
sooner, if the VCT wants to make changes to the policy. The policy was last
approved by Shareholders at the 2023 AGM and, if the Managed Wind Down of the
Company was still to be completed, will be presented to Shareholders for
approval at the 2026 AGM. There are currently no planned changes to the
remuneration policy.
The VCT's policy on Directors' remuneration is to seek to remunerate Board
members at a level appropriate for the time commitment required and degree of
responsibility involved and to ensure that such remuneration is in line with
general market rates. Non-Executive Directors will not be entitled to any
performance related pay or incentive.
Directors' remuneration is also subject to the VCT's Articles of Association
which provide that:
(i) The aggregate fees will not exceed £100,000 per annum (excluding any
Performance Incentive fees to which the Directors may be entitled from time to
time)*; and
(ii) The Directors shall be entitled to be repaid all reasonable travelling, hotel
and other expenses incurred by them respectively in or about the performance
of their duties as Directors.
* As highlighted above, the Non-Executive Directors are not currently
entitled to any performance related pay or incentives under the Company's
adopted remuneration policy.
Agreement for services
Information in respect of the Directors' agreements has been disclosed within
the Report of the Directors.
Performance incentive
The structure of 'A' Shares, whereby Management (being staff of the Investment
Adviser) owns one third of the 'A' Shares in issue (known as the "Management
'A' Shares"), enables a payment, by way of a distribution of income, of the
Performance Incentive to the Management Team. The performance incentive
structure of 'A' shares is detailed in of the Strategic Report.
The NAV hurdle was not met for the financial year end 30 September 2024 and no
dividend was paid in respect of the 'A' shares during the year, therefore
there was no Performance Incentive.
Annual Report on remuneration
The Board has prepared this report in accordance with the requirements of the
Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations
2008 (SI2008/410) and the Companies Act 2006.
Under the requirements of Section 497 of the Companies Act 2006, the VCT's
Auditor is required to audit certain disclosures contained within this report.
These disclosures have been highlighted and the audit opinion thereon is
contained within the Auditor's Report.
Directors' remuneration (audited)
Directors' remuneration for the VCT for the year under review is shown in the
table below.
The basic annual fees of the Directors during the year were £29,494 for the
Chairman, £26,712 for the Audit Committee Chairman and £23,930 for the other
Non-Executive Director.
Effective 1 October 2024, an increase of 6% will be applied to director fees.
This increase is within the limit set by the Remuneration Policy. Both changes
are shown in the table below:
Current Year ended Additional Total Year ended Additional Total
Annual 30 September Special Year ended 30 September Special Year ended
Fee 2024 Payment 30 September 2023 Payment 30 September
£ fee for the 2024 fee for the 2023
£ year end fee £ year end fee
30 September £ 30 September £
2024 2023
£ £
Christian Yates 31,264 29,494 N/A 29,494 27,825 7,500 35,325
Andrew Donovan 28,314 26,712 N/A 26,712 25,200 N/A 25,200
Matthew Evans 25,365 23,930 N/A 23,930 22,575 N/A 22,575
Totals 84,943 80,136 0 80,136 75,600 7,500 83,100
The £80,136 above excludes employer national insurance of £4,539.
No other emoluments, pension contributions or life assurance contributions
were paid by the VCT to, or on behalf of, any Director. The VCT does not have
any share options in place.
Annual percentage change in Directors' remuneration
The following table sets out the annual percentage change in Directors' fees
for the year up to 30 September 2024(1):
% change % change % change % change % change
for the year to for the year to for the year to for the year to for the year to
30 September 30 September 30 September 30 September 30 September
2024 2023 2022 2021 2020
Christian Yates 6 5((6)) 0 6((5)) 0((3))
Matthew Evans 6 5 0 7.5 0
Andrew Donovan 6 5 0((5)) N/A((4)(5)) N/A
Giles Clark((2)) N/A N/A 0((5)) 6.7((4)(5)) 12.5((3))
(1) Disclosed percentage changes in the table above reflect changes in base
underlying annual fees paid to Directors, and do not incorporate additional ad
hoc special payments made for additional work or oversight conducted during
any financial period (these special payments are disclosed below)
(2) Effective 30 September 2022, Giles Clark resigned from the Board and was
appointed as a new Non-Executive Director of VCT1.
(3) In view of the significant additional work involved in the integration of
the Investment Adviser into Gresham House and the share top up, the Board
agreed, during the year ended 30 September 2018, to pay a one-off additional
fee of £5,000 (exclusive of VAT) to each of Christian Yates and Giles Clark
and this was paid during the year ended 30 September 2019.
(4) Andrew Donovan was appointed as a Director on 7 December 2020. Giles Clark
was the Chair of the Audit Committee until 10 May 2021, stepping away from the
position to manage the sales process, and Andrew Donovan was then appointed as
the Chair of the Audit Committee with effect from 11 May 2021. Annual fees
were paid on a pro rata basis, with an additional annual fee of £2,500 paid
to the Chair of the Audit Committee.
(5) During the financial year to 30 September 2021, in recognition of the
increased oversight responsibilities, the Remuneration Committee approved
additional special payments to the Chairman, Chair of the Audit Committee and
Giles Clark (as the previous Chair of the Audit Committee), calculated at 25%
of their annual fee. The additional special payments were split into two
payment tranches. The first tranche was paid during the financial year to 30
September 2021 for additional oversight responsibilities relating to the 2021
financial year and the second tranche was paid in October 2021 for additional
oversight responsibilities relating to the 2022 financial year.
(6) During the year, in recognition of increased oversight responsibilities in
relation to the completion of the sale of certain solar assets in April 2023,
the Remuneration Committee approved an additional special payment of £7,500
to the Chairman. This additional payment was paid on 16 May 2023.
Directors' Shareholding (Audited)
The Directors of the VCT during the year and their beneficial interests in the
issued Ordinary Shares and 'A' Shares at 30 September 2024 and at the date of
this report were as follows:
Directors At the date of At At
this report 30 September 30 September
2024 2023
Christian Yates Ord 27,789 27,789 27,789
'A' 2,624,185 2,624,185 2,624,185
Matthew Evans Ord - - -
'A' - - -
Andrew Donovan Ord - - -
'A' - - -
Statement of voting at AGM
Remuneration report
At the AGM on 19 March 2024, the votes in respect of the resolution to approve
the Director's Remuneration Report were as follows:
In favour 4,691,696 votes (89.82%)
Against 342,696 votes (6.56%)
Withheld nil votes
Remuneration policy
At the 2023 AGM, when the remuneration policy was last put to a Shareholder
vote, 99.85% voted for the resolution, showing significant shareholder
support.
Relative importance of spend on pay
The difference in actual spend between 30 September 2024 and 30 September 2023
on Directors' remuneration in comparison to distributions (dividends and share
buybacks) and other significant spending are set out in the chart contained in
the Annual Report.
2024/25 Remuneration
The remuneration levels for the forthcoming year for the Directors of the VCT
are shown in the above table.
Performance graph
The graph contained in the Annual Report represents the VCT's performance over
the reporting periods since the VCT's Ordinary Shares and 'A' Shares were
first listed on the London Stock Exchange and shows share price total return
and net asset value total return performance on a dividends reinvested basis.
All returns are rebased to 100 at 10 January 2011, being the date the VCT's
shares were listed.
The Numis Smaller Companies Index has been chosen as a comparison as it is a
publicly available broad equity index which focuses on smaller companies and
is therefore more relevant than most other publicly available indices.
Matthew Evans
Remuneration Committee Chairman
29 January 2025
Corporate Governance
The Board of Gresham House Renewable Energy VCT2 plc has considered the
Principles and Provisions of the 2019 AIC Code of Corporate Governance (the
AIC Code). The AIC Code addresses the Principles and Provisions set out in the
2018 UK Corporate Governance Code (the UK Code), as well as setting out
additional Provisions on issues that are of specific relevance to Gresham
House Renewable Energy VCT2 plc.
The Board considers that reporting against the Principles and Provisions of
the AIC Code, which has been endorsed by the Financial Reporting Council,
provides more relevant information to Shareholders.
Compliance with the Principles and Provisions of the AIC Code by the VCT is
detailed on within the Annual Report.
The AIC Code is available on the AIC website (www.theaic.co.uk). It includes
an explanation of how the AIC Code adapts the Principles and Provisions set
out in the UK Code to make them relevant for investment companies.
The Board
The VCT has a Board comprising three Non-Executive Directors, chaired by
Christian Yates. Andrew Donovan is independent from the Investment Adviser.
Matthew Evans is not considered independent as he is a Designated Member of
CH1 Investment Partners LLP, which receives trail commission from the
Investment Adviser. Christian Yates was independent on appointment, however,
he is no longer considered independent as he has been on the Board for over 9
years. The VCT has not appointed a Senior Independent Director. Biographical
details of all Board members (including significant other commitments of the
Chairman) are shown within the Annual Report.
Full Board meetings take place quarterly and the Board meets or communicates
more regularly to address specific issues. The Board has a formal schedule of
matters specifically reserved for its decision which includes but is not
limited to: considering recommendations from the Investment Adviser; making
decisions concerning the acquisition or disposal of investments; and
reviewing, annually, the terms of engagement of all third party advisers
(including the Investment Adviser and Administrator).
The Board has also established procedures whereby Directors wishing to do so
in the furtherance of their duties may take independent professional advice at
the VCT's expense.
All Directors have access to the advice and services of the Company Secretary.
The Company Secretary facilitates the Board's access to full information on
the VCT's assets and liabilities and other relevant information requested by
the Chairman in advance of each Board meeting.
The Board has decided that the VCT will not be buying shares for the
foreseeable future as the VCT wishes to conserve such cash as it generates for
the Managed Wind Down of the VCT and the potential payment of dividends.
The capital structure of the VCT is disclosed in Note 19 to the financial
statements.
During the period under review, all the Directors of the VCT were
Non-Executive and served on each committee of the Board. Andrew Donovan is the
Chairman of the Audit Committee and Matthew Evans is the Chairman of the
Remuneration and Nomination Committees. The Audit Committee normally meets
four times yearly, and the Remuneration and Nomination Committees normally
meet once each year. The Board has delegated a number of areas of
responsibility to its committees and each committee has defined terms of
reference and duties.
Audit Committee
The Audit Committee is responsible for reviewing the half-year and annual
accounts before they are presented to the Board, the terms of appointment of
the Auditor, together with their remuneration, as well as a full review of the
effectiveness of the VCT's internal control and risk management systems.
In particular, the Committee reviews, challenges (where appropriate) and
agrees the basis for the carrying value of the unquoted investments, as
prepared by the Investment Adviser, for presentation within the half-year and
annual accounts.
The Committee also takes into consideration comments on matters regarding
valuation, revenue recognition and disclosures arising from the Report to the
Audit Committee as part of the finalisation process for the annual accounts.
The Committee is also responsible for reviewing the going concern assessment
and viability statement including consideration of all reasonably available
information about the future financial prospects of the VCT, the possible
outcomes of events and changes in conditions and realistic possible responses
to such events and conditions.
The Audit Committee met five times during the year. The Committee reviewed the
internal financial controls and concluded that they were appropriate.
As the VCT has no staff, other than the Directors, there are no procedures in
place in respect of whistle blowing. The Audit Committee understands that the
Investment Adviser and Administrator have whistle blowing procedures in place.
External Auditor
The Audit Committee reviews and agrees the audit strategy paper, presented by
the Auditor in advance of the audit, which sets out the key risk areas to be
covered during the audit and confirms their status on independence.
The Committee also confirms that the main areas of risk for the period under
review are the carrying value of investments, management override of controls
and the potential for fraud in relation to revenue recognition. The Company
faces ongoing liquidity and solvency risks after the period under review, in
anticipation of the Company's need to enter voluntary liquidation once the
majority of the assets have been sold.
The Committee, after taking into consideration the timeline for the proposed
members' voluntary liquidation of the Company in addition to comments from the
Investment Adviser and Administrator regarding the effectiveness of the audit
process; immediately before the conclusion of the annual audit, will recommend
to the Board either the re-appointment or removal of the Auditor.
Under the Competition and Markets Authority regulations and subject to
transitional provisions, there is a requirement that an audit tender process
be carried out every ten years and mandatory rotation at least every twenty
years. The VCT undertook an audit tender in respect of the audit required for
the year ended 30 September 2021 and, following a competitive tender process
in early 2021, BDO was re-appointed.
Under the FRC's Revised Ethical Standard (2024), there is a requirement for
the key audit partner to cease their participation in the statutory audit not
later than five years from the date of their appointment. In order to comply
with the independence rules of the FRC's Revised Ethical Standard and
safeguard the quality of the audit, a new audit partner was appointed by BDO
to oversee the audit for the year ended 30 September 2024.
Board and Committee Meetings
The following table sets out the Directors' attendance at the Board and
Committee meetings during the year:
Quarterly Adhoc Audit Nomination Remuneration
Board Board Committee Committee Committee
meetings meetings meetings meetings meetings
attended attended attended attended attended
(4 held) (14 held) (5 held) (1 held) (1 held)
Christian Yates 4 13 5 1 1
Matthew Evans 3 10 5 1 1
Andrew Donovan 4 14 5 1 1
The Directors attended a number of ad hoc board meetings, mainly to discuss
the Managed Wind Down of the VCT and the sale of the remaining assets held by
the Company.
Remuneration Committee
The Committee meets as and when required to review the levels of Directors'
remuneration. The Committee is also responsible for considering the need to
appoint external remuneration consultants.
Details of the specific levels of remuneration to each Director are set out in
the Directors' Remuneration Report.
Financial Reporting
The Directors' responsibilities statement for preparing the accounts is set
out in the Report of the Directors and a statement by the Auditor about their
reporting responsibilities is set out in the Independent Auditor's report.
Nomination Committee
The Nomination Committee's primary function is to make recommendations to the
Board on all new appointments and also to advise generally on issues relating
to Board composition and balance. The Committee meets as and when appropriate.
Before any appointment is made by the Board, the Committee shall evaluate the
balance of skills, knowledge, and experience, and consider candidates on
merit, against objective criteria, and with due regard for the benefits of
diversity on the Board. Diversity includes and makes good use of differences
in knowledge and understanding of relevant diverse geographies, peoples and
their backgrounds including race or ethnic origin, sexual orientation, gender,
age, disability, or religion.
During the period, the Committee carried out a rigorous internal board
evaluation during which it assessed the effectiveness of the Board and its
committees. The Committee found that the Board was functioning well and had
maintained a strong degree of oversight of the Managed Wind Down, and it was
further confirmed that all Directors contributed to the discussions at
meetings. A number of topics were raised and discussed and overall, the Board
and its committees were found to be performing satisfactorily.
Diversity
The Board currently comprises of three Non-Executive Directors, all of which
are male. Summary biographical details of the Directors, including their
relevant experience, are set out within the Annual Report. The Company has no
employees, with day-to-day executive management functions carried out by the
Investment Adviser.
The Board notes the FCA UK Listing Rules requirements (UKLR 6.6.6(9), (10))
which set out targets for board diversity as follows:
· At least 40% of board members to be women;
· At least one senior board position (Chair, chief executive officer (CEO),
senior independent director or chief financial officer (CFO)) to be held by a
woman; and
· At least one individual on the board to be from a minority ethnic background,
defined to include those from an ethnic background and/or an ethnic group,
other than a white ethnic group, as specified in categories recommended by the
Office for National Statistics.
As an externally managed Venture Capital Trust, there is no CEO or CFO. Due to
the size of the Board and the nature of the VCT's business, a senior
independent director has not been appointed. However, the Board considers the
Chair of the Company and Chair of any of the Company's Committees to be senior
positions in the Company. The below table sets out the constitution of the
Company's Board against these targets. The data was collected on a
self-identifying basis.
The Board considers that three Non-Executive Directors are sufficient given
the current size of the Company. The Board notes that, as of 30 September 2024
and at the time of signing these financial statements, it did not meet the
first or second target on gender diversity. The Board did not meet the third
target on ethnic diversity. Whilst the Board gives due regard to the benefits
of diversity and the diversity targets set out in the UKLR, no further
appointments are anticipated as the Company has entered the Managed Wind Down
process and will enter voluntary liquidation in due course.
Board Diversity as at 30 September 2024
Gender Number Percentage Number of
of Board of the senior positions
members Board on the Board
Men 3 100% 4
Women 0 0% 0
Prefer not to say 0 0% 0
Ethnic background Number of Percentage of Number of senior
Board members the Board positions on
the Board
White British or other White (including minority-white groups) 3 100% 4
Other ethnic group 0 0% 0
Prefer not to say 0 0% 0
Relations with Shareholders
Shareholders have the opportunity to meet the Board at the AGM. The Board is
also happy to respond to any written queries made by Shareholders during the
course of the period, or to meet with major Shareholders if so requested.
In addition to the formal business of the AGM, representatives of the
Investment Adviser and the Board are available to answer any questions a
Shareholder may have. The notice of the fourteenth AGM and proxy form will be
circulated separately following the publication of this Annual Report.
The terms of reference of the Committees and the conditions of appointment of
Non-Executive Directors are available to Shareholders on request.
Internal Control
The Directors are fully informed of the internal control framework established
by the Investment Adviser and the Administrator to provide reasonable
assurance on the effectiveness of internal financial control.
The Board is responsible for ensuring that the procedures to be followed by
the advisers and themselves are in place, and they review the effectiveness of
the internal controls, based on the report from the Audit Committee, on an
annual basis to ensure that the controls remain relevant and were in operation
throughout the year.
The Board also reviews the perceived risks faced by the VCT in line with
relevant guidance on an annual basis and implements additional controls as
appropriate.
The Board also considered the requirement for an internal audit function and
considered that this was not necessary as the internal controls and risk
management in place were adequate and effective.
Although the Board is ultimately responsible for safeguarding the assets of
the VCT, the Board has delegated, through written agreements, the day-to-day
operation of the VCT (including the Financial Reporting Process) to the
following advisers:
Investment Adviser
Gresham House Asset Management Limited
Administrator and Company Secretary
JTC (UK) Limited
Anti-bribery policy
In order to ensure compliance with the UK Bribery Act 2010, the Directors
confirm that the VCT has zero tolerance towards bribery and a commitment to
carry out business openly, honestly and fairly.
Going concern
In assessing the VCT as a going concern, the Directors have considered the
forecasts which reflect the proposed strategy for portfolio investments and
the result of the continuation votes at the AGM and General Meeting held on 22
March 2021 and 13 July 2021 respectively. At the meeting on 13 July 2021, the
proposed special resolution was approved by Shareholders, resulting in the
VCTs entering a Managed Wind Down and a New Investment Policy replacing the
existing investment policy. The VCT's principal objective is to manage the VCT
with the intention of realising the sale or monetisation otherwise of all
remaining assets in the portfolio in a prudent manner consistent with the
principles of good investment management and with a view to returning value to
Shareholders in an orderly manner. Given that a formal decision has been made
to wind up the VCT, the Directors intend to liquidate the VCT.
The VCT will pursue its investment objective by effecting an orderly
realisation of its assets in a manner that seeks to achieve a balance between
maximising the value received from those assets and making timely returns of
capital to Shareholders. This process includes sales of individual assets. The
VCT will enter members' voluntary liquidation, anticipated by mid-September
2025, or sooner if the remaining assets are sold.
Since the start of the Managed Wind Down in July 2021, the Directors do not
consider it to be appropriate to adopt the going concern basis of accounting
in preparing the financial statements. On this basis, the Directors have
prepared the VCT's financial statements on a basis other than going concern.
As a result, the investments held at fair value through profit or loss were
transferred from fixed assets to current assets in the 30 September 2021
annual financial statements and subsequent periods. No additional adjustments
in the financial year ended 30 September 2024 have been required to the
financial statements as a result of them being prepared on a basis other than
going concern.
Share capital
The VCT has two classes of share capital: Ordinary Shares and 'A' Shares. The
rights and obligations attached to those shares, including the power of the
VCT to buy back shares and details of any significant shareholdings, are set
out in the Report of the Directors.
Compliance statement
The UK Listing Rules require the Board to report on compliance with the AIC
Code provisions throughout the accounting period. With the exception of the
limited items outlined below, the VCT has complied throughout the accounting
year ended 30 September 2024 with the provisions set out in Section 5 to 9 of
the AIC Code.
a) The VCT has no major Shareholders, so Shareholders are not given the
opportunity to meet any new Non-Executive Directors at a specific meeting
other than the AGM. (5.2.3)
b) Due to the size of the Board and the nature of the VCT's business, a senior
independent director has not been appointed. (6.2.14)
c) Due to the size of the Board and the nature of the VCT's business, the Board
considers it appropriate for the entire Board to fulfil the role of the
nomination and remuneration committees. (7.2.22, 9.2.37)
d) Due to the size of the VCT, the Board thought it would be unnecessarily
burdensome to establish a separate management engagement committee to review
the performance of the Investment Adviser. (6.2.17, 7.2.26)
e) Due to the size of the Board and the nature of the VCT's business, the Board
considers it appropriate for the entire Board, including the Chairman, to
fulfil the role of the audit committee. (8.2.29)
f) The Directors are not subject to annual re-election but must be re-elected
every three years. At the next Annual General Meeting following a Director's
first appointment such Director shall retire from office and be eligible for
election. A Director may then retire at any Annual Meeting following the
Annual General Meeting at which they last retired and were re-elected provided
that they must retire from office at or before the third Annual General
Meeting following the Annual General Meeting at which they last retired and
were re-elected. (7.2.23)
By order of the Board
JTC (UK) Limited
Company Secretary
Company number: 04301763
Registered office:
The Scalpel, 18th Floor
52 Lime Street
London EC3M 7AF
29 January 2025
Income Statement
For the year ended 30 September 2024
Year ended 30 September 2024 Year ended 30 September 2023
Note Revenue Capital Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'000
Income 3 1,695 - 1,695 1,055 - 1,055
Loss on investments 10 - (3,552) (3,552) - (4,892) (4,892)
1,695 (3,552) (1,857) 1,055 (4,892) (3,837)
Investment advisory fees 4 (129) (43) (172) (235) (79) (314)
Other expenses 5 (382) (174) (555) (409) - (409)
(511) (217) (727) (644) (79) (723)
Profit/(loss) on ordinary activities before tax 1,184 (3,769) (2,584) 411 (4,971) (4,560)
Tax on total comprehensive income/(loss) and ordinary activities 7 - - - - - -
Profit/(loss) for the year and total comprehensive income/(loss) 1,184 (3,769) (2,584) 411 (4,971) (4,560)
Basic and diluted earnings/(loss) per share:
Ordinary Share 9 4.5p (14.4p) (9.9p) 1.6p (19.0p) (17.4p)
'A' Share 9 - - - - - -
The above results arise from activities classified as continuing operations,
however as described in Note 1, the VCT is in a Managed Wind Down process. The
total column within the Income Statement represents the Statement of Total
Comprehensive Income of the VCT 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 July 2022) by the Association of
Investment Companies (AIC SORP).
Other than revaluation movements arising on investments held at fair value
through the profit or loss, there were no differences between the return/loss
as stated above and at historical cost.
The accompanying notes form an integral part of these financial statements.
Balance Sheet
As at 30 September 2024
2024 2023
Note £'000 £'000 £'000 £'000
Current assets
Investments 10 14,074 17,963
Costs incurred on sale of VCT's assets 11 305 252
Debtors 12 51 80
Cash at bank and in hand 1 4
14,431 18,299
Creditors 13 (4,489) (1,926)
Net current asset 9,942 16,373
Creditors: amounts falling due after more than one year 14 - (1,887)
Net assets 9,942 14,486
Capital and reserves
Called up Ordinary Share capital 15 29 29
Called up 'A' Share capital 15 42 42
Treasury Shares 16 (3,404) (3,403)
Special reserve 16 8,736 9,713
Revaluation reserve 16 9,830 11,546
Capital reserve - realised 16 (5,318) (3,265)
Revenue reserve 16 27 (176)
Total Shareholders' funds 9,942 14,486
Basic and diluted net asset value per share
Ordinary Share 17 37.9p 55.3p
'A' Share 17 0.1p 0.1p
The financial statements of Gresham House Renewable Energy VCT2 plc were
approved and authorised for issue by the Board of Directors and were signed on
its behalf by:
Christian Yates
Chairman
Company number: 07378395
Date: 29 January 2025
The accompanying Notes form an integral part of these financial statements.
Statement of Changes in Equity
For the year ended 30 September 2024
Called Share Treasury Special Revaluation Capital Capital Revenue Total
up share Premium Shares reserve reserve redemption reserve reserve £'000
capital Account £'000 £'000 £'000 reserve realised £'000
£'000 £'000 £'000 £'000
At 30 September 2022 71 9,734 (3,403) 4,813 16,869 1 (3,617) (587) 23,881
Total comprehensive (loss)/income - - - - (5,323) - 352 411 (4,560)
Cancellation of Share premium and Capital redemption reserve - (9,734) - 9,735 - (1) - - -
Dividend paid - - - (4,835) - - - - (4,835)
At 30 September 2023 71 - (3,403) 9,713 11,546 - (3,265) (176) 14,486
Total comprehensive (loss)/income - - - - (1,717) - (2,052) 1,184 (2,584)
Dividend paid - - - (980) - - - (980) (1,960)
At 30 September 2024 71 - (3,404) 8,736 9,830 - (5,318) 27 9,942
The accompanying Notes form an integral part of these financial statements.
Cash Flow Statement
For the year ended 30 September 2024
Note Year ended Year ended
30 September 30 September
2024 2023
£'000 £'000
Cash flows from operating activities
Loss for the financial year (2,584) (4,560)
Loss on investments 10 3,552 4,892
Cost incurred on sale of VCT's assets write off 98
Dividend income (1,667) (998)
Interest income (28) (53)
Decrease in debtors 1 -
Increase/(decrease) in creditors 608 (130)
Net cash outflow from operating activities (20) (849)
Cash flows from investing activities
Net proceeds from sale of investments/loan note redemptions 10 338 4,453
Cost incurred on sale of VCT's assets (84) (124)
Interest received 56 97
Dividend income received 1,667 998
Net cash inflow from investing activities 1,977 5,424
Cash flows from financing activities
Dividend paid (1,960) (4,835)
Proceeds from loans - 263
Net cash outflow from financing activities (1,960) (4,572)
Net (decrease)/increase in cash (3) 3
Cash and cash equivalents at start of year 4 1
Cash and cash equivalents at end of year 1 4
Cash and cash equivalents comprise
Cash at bank and in hand 1 4
Total cash and cash equivalents 1 4
The accompanying Notes form an integral part of these financial statements.
Notes to the Accounts
For the year ended 30 September 2024
1. General Information
Gresham House Renewable Energy VCT2 plc (VCT) 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 (Company
No. 07378395). The Company's principal activity is that of a VCT which invests
in renewable energy investments. The registered office of the Company is The
Scalpel 18th floor, 52 Lime Street, London, EC3M 7AF. Its share capital is
denominated in Pound Sterling (GBP) and consists of Ordinary shares and 'A'
shares.
Going Concern
In assessing the VCT as a going concern, the Directors have considered the
forecasts which reflect the proposed strategy for portfolio investments and
the result of the continuation votes at the AGM and General Meeting held on 22
March 2021 and 13 July 2021 respectively. At the meeting on 13 July 2021, the
proposed special resolution was approved by Shareholders, resulting in the
VCTs entering a Managed Wind Down and a new investment policy replacing the
existing investment policy. The VCT's principal objective is to manage the VCT
with the intention of realising the sale or monetisation otherwise of all
remaining assets in the portfolio in a prudent manner consistent with the
principles of good investment management and with a view to returning value to
Shareholders in an orderly manner. Given that a formal decision has been made
to wind up the VCT, the Directors intend to liquidate the VCT.
The VCT will pursue its investment objective by effecting an orderly
realisation of its assets in a manner that seeks to achieve a balance between
maximising the value received from those assets and making timely returns of
capital to Shareholders. This process includes sales of individual assets. The
VCT will enter members' voluntary liquidation, anticipated by mid-September
2025, or sooner if the remaining assets are sold.
Since the start of the Managed Wind Down in July 2021, the Directors do not
consider it to be appropriate to adopt the going concern basis of accounting
in preparing the financial statements. On this basis, the Directors have
prepared the VCT's financial statements on a basis other than going concern.
As a result, the investments held at fair value through profit or loss were
transferred from fixed assets to current assets in the 30 September 2021
annual financial statements and subsequent periods. No additional adjustments
in the financial year ended 30 September 2024 have been required to the
financial statements as a result of them being prepared on a basis other than
going concern.
2. Accounting policies
Basis of accounting
The VCT 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 "Financial Statements of
Investment Trust Companies and Venture Capital Trusts" issued by the
Association of Investment Companies (AIC) in November 2014 and revised in July
2022 (SORP) as well as the Companies Act 2006.
The VCT implements new Financial Reporting Standards (FRS) issued by the
Financial Reporting Council when they become effective. No new FRS were
implemented during the year.
The financial statements are presented in Sterling (£) as this is the VCT's
functional currency.
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 net revenue is the measure the Directors
believe appropriate in assessing the VCT'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, in accordance with the VCT'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 and subsequent to acquisition, fair value is
established by using the IPEV guidelines.
Based on the ongoing sales process, a fair market view based upon the
estimated realisation proceeds has been used as a primary valuation approach
in the financial year ended 30 September 2024. Further details are contained
in Note 10.
Effective 1 January 2019, the IPEV guidelines to establish fair value were
updated whereby the cost or price of a recent investment are no longer
considered valid valuation methodologies for establishing the fair value of an
investment. The VCT along with its Investment Adviser may, under orderly
market conditions, deem the cost or recent price paid for an investment as an
appropriate fair value for an investment at the time of acquisition but
subsequent to recognition must reconsider the assigned fair value based on
up-to-date market conditions and performance of the underlying investee
company in order to assign a fair value in line with the IPEV guidelines.
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.
The investee companies held by the VCT are treated as a portfolio of
investments and are therefore measured at fair value in accordance with
section 9 of FRS 102. 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 on 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 VCT has adopted a policy of charging 75% of the
investment advisory 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 VCT over its lifetime
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 VCT's status as a Venture Capital Trust and the continued intention
to meet the conditions required to comply with Part 6 of the Income Tax Act
2007, no provision for taxation is required in respect of any realised or
unrealised appreciation of the VCT'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 as set out in
Note 10 are included within the accounts at amortised cost.
3. Income
Year ended Year ended
30 September 30 September
2024 2023
£'000 £'000
Income from investments
Bank interest - 4
Dividend income 1,667 998
Loan stock interest 28 53
1,695 1,055
4. Investment advisory fees
The investment advisory fees for the year ended 30 September 2024, which were
charged quarterly in advance to the VCT, were based on 1.15% of the net assets
as at the previous quarter end. Based on each quarter's final NAV, as and when
available, the quarter's investment advisory fees previously charged are
adjusted. In addition, investment advisory fees of £22,000 (2023: £44,000)
relating to additional costs incurred by the Investment Adviser during the
financial year were approved by the Board.
Year ended 30 September 2024 Year ended 30 September 2023
Revenue Capital Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'000
Investment advisory fees 129 43 172 235 79 314
5. Other expenses
Year ended 30 September 2024 Year ended 30 September 2023
Revenue Capital Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'000
Administration services 132 - 132 96 - 96
Directors' remuneration 85 - 85 81 - 81
Social security costs 3 - 3 3 - 3
Auditor's remuneration for audit 49 - 49 59 - 59
Other 113 174 287 170 - 170
382 174 555 409 - 409
At 30 September 2023, the annual running costs of the VCT for the year were
subject to a cap of 3.0% of NAV. Due to the significant reduction in the NAV
as a result of the Managed Wind Down process, the annual running costs for the
financial year ending 30 September 2024 were forecasted to exceed this cap. To
rectify this unintended consequence, the Investment Advisory Agreement was
amended through a variation in June 2024 raising the cap to 5.0% of NAV or
£625,000 whichever is the lower. During the year ended 30 September 2024, the
annual running costs came to £506,000 being total expenses (£727,000) less
one-off expenditure, which is less than the applicable cap of £625,000 (2023:
2.8% which was less than the cap of 3.0% of NAV), therefore the cap has not
been breached.
6. Directors' remuneration
Details of remuneration (excluding employer's NIC) are given in the audited
part of the Directors' Remuneration Report.
The VCT had no employees during the year. Costs in respect of the Directors
are referred to in Note 5 above. No other emoluments or pension contributions
were paid by the VCT to, or on behalf of, any Director.
7. Tax on ordinary activities
Year ended Year ended
30 September 30 September
2024 2023
£'000 £'000
(a) Tax charge for the year
UK corporation tax at 25% (2023: 22%) - -
Charge for the year - -
(b) Factors affecting tax charge for the year
Loss on ordinary activities before taxation (2,584) (4,560)
(Tax credit)/tax calculated on loss on ordinary activities before taxation at (646) (1,003)
the applicable rate of 25% (2023: 22%)
Effects of:
UK dividend income (417) (220)
Losses on investments 888 1,076
Excess management expenses on which deferred tax not recognised 175 147
Total tax charge - -
Excess management fees, which are available to be carried forward and set off
against future taxable income, amounted to £4,953,000 (2023: £4,253,000).
The associated deferred tax asset of £1,238,000 (2023: £1,063,000) has not
been recognised due to the fact that it is unlikely that the excess management
fees will be set off against future taxable profits in the foreseeable future.
The corporation tax rate of 25% became effective from 1 April 2023. A blended
rate of 22% was applied for the year ended 30 September 2023.
8. Dividends
Year ended 30 September 2024 Year ended 30 September 2023
Revenue Capital Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'000
Paid
2022 Interim Ordinary - 2p - - - - 523 523
2023 Interim Ordinary - 16.5p - - - - 4,312 4,312
2023 Interim Ordinary - 7.5p 980 980 1,960 - - -
980 980 1,960 - 4,835 4,835
The interim Ordinary 7.5p dividend was paid on 21 December 2023 to
Shareholders on the register as at 1 December 2023.
As announced on 2 December 2024, the Company would not pay a dividend in 2024.
The board intends to declare and pay a dividend as soon as practically
possible following the sale of the remaining portfolio of assets.
9. Basic and diluted earnings per share
Weighted Revenue Pence Capital Pence Net Pence
average number profit per share Loss per share (loss)/ per share
of shares £'000 £'000 profit
in issue £'000
Year ended 30 September 2024 Ordinary Shares 26,133,036 1,184 4.5 (3,769) (14.4) (2,584) (9.9)
'A' Shares 39,463,845 - - - - - -
Year ended 30 September 2023 Ordinary Shares 26,133,036 411 1.6 (4,971) (19.0) (4,560) (17.4)
'A' Shares 39,463,845 - - - - - -
As the VCT has not issued any convertible securities or share options, there
is no dilutive effect on earnings per Ordinary Share or 'A' Share. The
earnings per share disclosed therefore represents both the basic and diluted
return per Ordinary Share or 'A' Share
10. Investments
2024 2023
Unquoted Unquoted
investments investments
£'000 £'000
Opening cost at start of the year 8,918 13,220
Permanent impairment in cost of investments (1,695) (1,303)
Accumulated net unrealised gains at start of the year 10,740 16,063
Opening fair value at start of the year 17,963 27,980
Movement in the year:
Purchased at cost - -
Disposals at cost (338) (4,302)
Permanent impairment in cost of investments (1,835) (392)
Net unrealised losses in the income statement (1,717) (5,323)
Closing fair value at year end 14,074 17,963
Closing cost at year end 8,580 8,918
Permanent impairment in cost of investments as at 30 September 2024 (3,530) (1,695)
Accumulated net unrealised gains at year end 9,024 10,740
Closing fair value at year end 14,074 17,963
During the financial year, the VCT received £338,000 from the disposal at
cost of loan notes.
The VCT 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 1 Level 2 Level 3 2024 Level 1 Level 2 Level 3 2023
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
Unquoted loan notes - - 330 330 - - 668 668
Unquoted equity - - 13,744 13,744 - - 17,295 17,295
- - 14,074 14,074 - - 17,963 17,963
During the years ended 30 September 2024 and 30 September 2023 there were no
transfers between levels.
A reconciliation of fair value for Level 3 financial instruments held at the
year-end is shown below:
Unquoted Unquoted Total
loan notes equity £'000
£'000 £'000
Balance at 30 September 2023 668 17,295 17,963
Movement in the income statement
Unrealised losses in the income statement - (1,717) (1,717)
Impairment realised during the period - (1,835) (1,835)
Redemption of loan notes (338) - (338)
Balance at 30 September 2024 330 13,744 14,074
FRS 102 sections 11 and 12 require disclosure to be made of the possible
effect of changing one or more of the inputs to reasonable possible
alternative assumptions where this would result in a significant change in the
fair value of the Level 3 investments. There is an element of judgement in the
choice of assumptions for unquoted investments and it is possible that, if
different assumptions were used, different valuations could have been
attributed to some of the VCT's investments.
The Board believes that valuing the investments as at 30 September 2024 based
on the estimated realisation proceeds from the ongoing sales process is the
most appropriate valuation method. For the Company's valuation 30 September
2024, the Company's multiple non-binding offers for its assets before
financial year end were used. The offers received were representative of arm's
length prices, based on what market participants were prepared to pay.
Therefore, the year-end valuation reflects the market offers received, which
are considered to be in the best interest of shareholders in the context of
the planned Managed Wind Down of the Company.
11. Costs incurred on sale of VCT's assets
Since the beginning of the Managed Wind Down in July 2021, the VCT has
capitalised the professional fees in relation to the sale of assets. The
capitalised costs directly attributable to the current sales of assets process
incurred during the financial year amounted to £151,000. Costs of sale, no
longer or not related to the current sale of assets process, amounting to
£98,000 have been expensed in the financial year.
2024 2023
£'000 £'000
Cost incurred on sale of VCT's assets 305 252
305 252
12. Debtors
2024 2023
£'000 £'000
Prepayments and accrued income 51 80
51 80
13. Creditors: amounts falling due within one year
2024 2023
£'000 £'000
Other loans 4,293 1,802
Taxation and social security 3 3
Accruals and deferred income 172 98
Creditors 21 23
4,489 1,926
The balance of other loans is made up of amounts borrowed from the underlying
portfolio companies. All loans are interest free. Subject to any sale of
assets as part of the Managed Wind Down, these loans will be repaid at the
date of such transaction. Other loans falling due within one year are
as follows:
Investee company Drawdown date Repayment date 2024 2023
£'000 £'000
Minsmere Power Limited 13 January 2020 ^ 50 -
50 -
Lunar 2 Limited 12 February 2018 ^ 768 768
17 December 2019 ^ 1,581 -
13 January 2020 ^ 474 -
2,823 768
Subtotal ^ 2,873 768
Minsmere Power Limited 22 December 2020 ^^ 25 25
30 June 2021 ^^ 27 27
6 June 2022 ^^ 13 13
65 65
HRE Willow Limited 22 December 2020 ^^ 228 228
16 March 2021 ^^ 64 64
6 June 2022 ^^ 44 44
336 336
Lunar 2 Limited 23 December 2020 ^^ 152 370
8 February 2023 ^^ 134 134
27 February 2023 ^^ 89 89
31 March 2023 ^^ 40 40
13 December 2023 ^^ 604 -
1,019 633
Subtotal ^^ 1,420 1,034
Amounts repayable within one year 4,293 1,802
^ The lender may demand full repayment of all amounts outstanding at any
time after 5 years and 1 day from the date of the initial drawdown of the
loan. The loans are interest free.
^^ The VCT and the indicated SPV's (the 'lender') entered into loan
agreements whereby the lender may, at any time, without having to provide any
reason, by one or several demands require immediate repayment of all or any
part of the loan and all or any accrued interest thereon. The loans are
interest free.
14. Creditors: amounts falling due after more than one year
2024 2023
£'000 £'000
Other loans - 1,887
- 1,887
The balance of other loans is made up of amounts borrowed from the underlying
portfolio companies. The classification of the loans shown below is by
reference to the contractual agreement repayment date as detailed in Note 13.
All loans are interest free.
Creditors falling due after more than one year are repayable at any time after
the following repayment dates:
Investee company Repayment date 2024 2023
£'000 £'000
Lunar 2 Limited 18 December 2024 - 1,481
14 January 2025 - 356
- 1,837
Minsmere Power Limited 14 January 2025 - 50
Amounts repayable after more than one year - 1,887
15. Called up share capital
2024 2023
£'000 £'000
Allotted, called up and fully-paid:
26,133,036 (2023: 26,133,036) Ordinary Shares of 0.1p each 29 29
39,463,845 (2023: 39,463,845) 'A' Shares of 0.1p each 42 42
71 71
The VCT's capital is managed in accordance with its investment policy as shown
in the Strategic Report, in pursuit of its principal investment objectives.
There has been no significant change in the objectives, policies or processes
for managing capital from the previous period.
The VCT has the authority to buy back shares as described in the Report of the
Directors. During the year ended 30 September 2024, the VCT did not repurchase
any Ordinary Shares or 'A' Shares.
During the year ended 30 September 2024, the VCT issued no Ordinary Shares or
'A' shares.
The holders of Ordinary Shares and 'A' Shares shall have rights as regards to
dividends and any other distributions or a return of capital (otherwise than
on a market purchase by the VCT of any of its shares) which shall be applied
on the following basis:
1) unless and until Ordinary Shareholders receive a dividend of at least 5.0p per
Ordinary Share, and one Ordinary Share and one 'A' Share has a combined net
asset value of 100p (the Hurdle), distributions will be made as to 99.9% to
Ordinary Shares and 0.1% to 'A' Shares;
2) after (and to the extent that) the Hurdle has been met, and subject to point 3
below, the balance of such amounts shall be applied as to 40% to Ordinary
Shares and 60% to 'A' Shares; and
3) any amount of a dividend which, but for the entitlement of 'A' Shares pursuant
to point 2 above, would have been in excess of 10p per Ordinary Share in any
year shall be applied as to 10% to Ordinary Shares and 90% to 'A' Shares.
If, on the date on which a dividend is to be declared on the Ordinary Shares,
the amount of any dividend which would have been payable to the 'A' Shares
(the ''A' Dividend Amount'), together with any previous amounts which were not
paid as a result of this clause (the ''A' Share Entitlement'), would together:
a) in aggregate be less than £5,000; or
b) be less than an amount being equivalent to 0.25p per 'A' Share.
then the 'A' Dividend amount shall not be declared and paid but shall be
aggregated with any 'A' Share Entitlement and retained by the VCT until either
threshold is reached. No interest shall accrue on any 'A' Share Entitlement.
The VCT does not have any explicit externally imposed capital requirements.
16. Reserves
2024 2023
£'000 £'000
Treasury shares (3,404) (3,403)
Special reserve 8,736 9,713
Revaluation reserve 9,830 11,546
Capital reserve - realised (5,318) (3,265)
Revenue reserve 27 (176)
9,871 14,415
The Special reserve is available to the VCT to enable the purchase of its own
shares in the market. The Special reserve, Capital reserve - realised and
Revenue reserve are all distributable reserves for the purpose of dividend
payments to Shareholders. At 30 September 2024, distributable reserves were
£3.4mn (2023: £6.3mn).
Share premium account
This reserve accounts for the difference between the prices at which shares
are issued and the nominal value of the shares, less issue costs and transfers
to the other distributable reserves.
Treasury Shares
This reserve represents the aggregate consideration paid for the Shares
repurchased by the VCT.
Revaluation reserve
Increases and decreases in the valuation of investments held at the year-end
against cost are included in this reserve.
Capital redemption reserve
This reserve accounts for amounts by which the issued share capital is
diminished through the repurchase and cancellation of the VCT's own shares.
Capital reserve - realised
The following are disclosed in this reserve:
· gains and losses compared to cost on the realisation of investments; and
· expenses, together with the related taxation effect, charged in accordance
with the above accounting policies.
Revenue reserve
This reserve accounts for movements from the revenue column of the Income
Statement and other non-capital realised movements.
17. Basic and diluted net asset value per share
2024 2023 2024 2023
Shares in issue Net asset value Net asset value
Pence £'000 Pence £'000
per share per share
Ordinary Shares 26,133,036 26,133,036 37.9 9,903 55.3 14,447
'A' Shares 39,463,845 39,463,845 0.1 39 0.1 39
Total 38.0p 9,942 55.4p 14,486
The Directors allocate the assets and liabilities of the VCT between the
Ordinary Shares and 'A' Shares such that each share class has sufficient net
assets to represent its dividend and return of capital rights as described in
Note 15.
As the VCT has not issued any convertible shares or share options, there is no
dilutive effect on net asset value per Ordinary Share or per 'A' Share. The
NAV per share disclosed therefore represents both the basic and diluted net
asset value per Ordinary Share and per 'A' Share.
18. Financial instruments
The VCT held the following categories of financial instruments at 30 September
2024:
2024 2024 2023 2023
Cost Value Cost Value
£'000 £'000 £'000 £'000
Assets at fair value through profit or loss 8,580 14,074 8,918 17,963
Other financial liabilities (145) (145) (43) (43)
Cash at bank 1 1 4 4
Other loans (4,293) (4,293) (3,689) (3,689)
Total 4,143 9,637 5,190 14,235
The VCT's financial instruments comprise investments held at fair value
through profit or loss, being equity and loan stock investments in unquoted
companies, other loans and receivables consisting of short-term debtors, cash
deposits and financial liabilities being creditors arising from its
operations. Other loans are borrowed from the VCT's underlying portfolio
companies. Other financial liabilities and assets include operational debtors
and prepaid expenses and short-term creditors which are measured at amortised
cost. The main purpose of these financial instruments is to generate cashflow
and revenue and capital appreciation for the VCT's operations. The VCT does
not use any derivatives.
The fair value of investments is determined using the detailed accounting
policy as shown in Note 2. The composition of the investments is set out in
Note 10.
The VCT's investment activities expose the VCT to a number of risks associated
with financial instruments and the sectors in which the VCT invests. The
principal financial risks arising from the VCT's operations are:
· market risks;
· credit risk; and
· liquidity risk.
The Board regularly reviews these risks and the policies in place for managing
them. There have been no significant changes to the nature of the risks that
the VCT was expected to be exposed to over the year and there have also been
no significant changes to the policies for managing those risks during the
year.
The risk management policies used by the VCT in respect of the principal
financial risks and a review of the financial instruments held at the year-end
are provided below:
Market risks
As a Venture Capital Trust, the VCT is exposed to investment risks in the form
of potential losses and gains that may arise on the investments it holds in
accordance with its investment policy and since 13 July 2021, with reference
to the New Investment Policy. The management of these investment risks is a
fundamental part of investment activities undertaken by the Investment Adviser
and overseen by the Board. The Adviser monitors investments through regular
contact with management of investee companies, regular review of management
accounts and other financial information and attendance at investee company
board meetings. This enables the Adviser to manage the investment risk in
respect of individual investments. Investment risk is also mitigated by
holding a diversified portfolio spread across various operating sites across
several asset classes. During the Managed Wind Down, the investment portfolio
will be reduced as investments are realised and concentrated in fewer
holdings, and the mix of asset exposure will be affected accordingly.
The key investment risks to which the VCT is exposed are:
· investment price risk; and
· interest rate risk.
Investment price risk
The VCT's investments which comprise of both equity and debt financial
instruments in unquoted investments are concentrated in renewable energy
projects with predetermined expected returns. Consequently, the investment
price risk arises from uncertainty about the future prices and valuations of
financial instruments held in accordance with the VCT's investment objectives
which can be influenced by many macro factors such as changes in interest
rates, electricity power prices and movements in inflation. It represents the
potential loss that the VCT might suffer through changes in the fair value of
unquoted investments that it holds.
At 30 September 2024, the unquoted portfolio was valued at £14.1mn (2023:
£18.0mn). The Board believes that valuing the investments as at 30 September
2024 based on the estimated realisation proceeds from the ongoing sales
process is the most appropriate valuation method. For the Company's valuation
30 September 2024,the Company's multiple non-binding offers for its assets
before financial year end were used. The offers received were representative
of arm's length prices, based on what market participants were prepared to
pay. Therefore, the year-end valuation reflects the market offers received,
which are considered to be in the best interest of shareholders in the context
of the planned Managed Wind Down of the Company.
Interest rate risk
The VCT accepts exposure to interest rate risk on floating-rate financial
assets through the effect of changes in prevailing interest rates. The VCT
receives interest on its cash deposits at a rate agreed with its bankers.
Where investments in loan stock attract interest, this is predominately
charged at fixed rates. A summary of the interest rate profile of the VCT's
investments is shown below.
There are three categories in respect of interest which are attributable to
the financial instruments held by the VCT as follows:
· "Fixed rate" assets represent investments with predetermined yield targets and
comprise certain loan note investments and preference shares;
· "Floating rate" assets predominantly bear interest at rates linked to The Bank
of England base rate or LIBOR and comprise cash at bank; and
· "No interest rate" assets do not attract interest and comprise equity
investments, certain loan note investments, loans and receivables.
Average Average period 2024 2023
interest rate until maturity £'000 £'000
Fixed rate 8% 1,920 days 330 668
Floating rate 0% 1 4
No interest rate 9,306 18,046
9,637 18,718
The VCT monitors the level of income received from fixed and floating rate
assets and, if appropriate, may adjust the allocation between the categories,
in particular, should this be required to ensure compliance with the VCT
regulations.
It is estimated that an increase of 1% in interest rates would have increased
loss before tax for the year by £9 (2023: £10). The Bank of England ('BoE')
base rate was 5.25% at the beginning of the financial year. As at 30 September
2024, the BoE base rate was 5.0%, having decreased from 5.25% on 1 August
2024. On 7 November 2024, the BoE base rate decreased to 4.75%. Any potential
change in the base rate, at the current level, would have an immaterial impact
on the net assets and total return of the VCT.
Credit risk
Credit risk is the risk that a counterparty to a financial instrument is
unable to discharge a commitment to the VCT made under that instrument. The
VCT is exposed to credit risk through its holdings of loan stock in investee
companies, cash deposits and debtors. Credit risk relating to loan stock in
investee companies is considered to be part of market risk as the performance
of the underlying SPVs impacts the carrying values.
The VCT's financial assets that are exposed to credit risk are summarised as
follows:
2024 2023
£'000 £'000
Investments in loan stocks 330 668
Cash and cash equivalents 1 4
Interest, dividends, and other receivables 43 71
374 743
The Investment Adviser manages credit risk in respect of loan stock with a
similar approach as described under "Market risks". Similarly, the management
of credit risk associated with interest, dividends and other receivables is
covered within the investment advisory procedures. The level of security is a
key means of managing credit risk. Additionally, the risk is mitigated by the
security of the assets in the underlying investee companies.
Cash is held by the Royal Bank of Scotland plc which is an investment grade
rated financial institution. Consequently, the Directors consider that the
credit risk associated with cash deposits is low.
There have been no changes in fair value during the year that are directly
attributable to changes in credit risk. Any balances that are past due are
disclosed further under liquidity risk.
Liquidity risk
Liquidity risk is the risk that the VCT encounters difficulties in meeting
obligations associated with its financial liabilities. Liquidity risk may also
arise from either the inability to sell financial instruments when required at
their fair values or from the inability to generate cash inflows as required.
The VCT's creditors at year end were £196,000 (2023: £123,000) of which
£67,300 related to the Costs incurred on sale of VCT's assets. The VCT's has
short-term loans from investee companies (see Note 13 for an analysis of the
repayment terms), which are expected to be repaid by way of future dividends
from, or the sale of, these companies, being £4,293,000 (2023: £3,689,000
short and long-term loans). The Board therefore believes that the VCT's
exposure to liquidity risk is low. The SPVs hold sufficient levels of funds as
cash to pay up in order to meet the VCT expenses and other cash outflows as
they arise. For these reasons the Board believes that the VCT's exposure to
liquidity risk is minimal.
The VCT's liquidity risk is managed by the Investment Adviser in line with
guidance agreed with the Board and is reviewed by the Board at
regular intervals.
The following table analyses the VCT's loan payables by contractual maturity
date:
As at 30 September 2024 Due in Due between Due after Total
less than 1 year and 5 years £'000
1 year 5 years £'000
£'000 £'000
Loans payable to investee companies 4,293 - - 4,293
4,293 - - 4,293
As at 30 September 2023 Due in Due between Due after Total
less than 1 year and 5 years £'000
1 year 5 years £'000
£'000 £'000
Loans payable to investee companies 1,802 1,887 - 3,689
1,802 1,887 - 3,689
Although the VCT's investments are not held to meet the VCT's liquidity
requirements, the table below shows an analysis of the assets, highlighting
the length of time that it could take the VCT to realise its assets if it were
required to do so.
The carrying value of loan stock investments held at fair value through the
profit and loss account at 30 September 2024 as analysed by the expected
maturity date is as follows:
As at 30 September 2024 Not later Between Between Between More Total
than 1 and 2 and 3 and than £'000
1 year 2 years 3 years 5 years 5 years
£'000 £'000 £'000 £'000 £'000
Fully performing loan stock 330 - - - - 330
330 - - - - 330
As at 30 September 2023 Not later Between Between Between More Total
than 1 and 2 and 3 and than £'000
1 year 2 years 3 years 5 years 5 years
£'000 £'000 £'000 £'000 £'000
Fully performing loan stock 668 - - - - 668
668 - - - - 668
19. Capital management
The VCT's objectives when managing capital are to safeguard the VCT's ability
to provide returns for Shareholders and to provide an adequate return to
Shareholders by allocating its capital to assets commensurately with the level
of risk.
By its nature, the VCT has an amount of capital, at least 80% (as measured
under the tax legislation; and for the VCT, effective 1 October 2019) of which
is and must be, and remain, invested in the relatively high risk asset class
of small UK companies within three years of that capital being subscribed. The
VCT accordingly has limited scope to manage its capital structure in the light
of changes in economic conditions and the risk characteristics of the
underlying assets. Subject to this overall constraint upon changing the
capital structure, the VCT may adjust the amount of dividends paid to
Shareholders, return capital to Shareholders, issue new shares, or sell assets
if so required to maintain a level of liquidity.
As the Investment Policy implies, the Board would consider levels of gearing.
As at 30 September 2024, the VCT had loans from investee companies of
£4,293,000 (2023: £3,689,000). It regards the net assets of the VCT as the
VCT's capital, as the level of liabilities are small and the management of
them is not directly related to managing the return to Shareholders. There has
been no change in this approach from the previous year.
20. Contingencies, guarantees and financial commitments
At 30 September 2024, the VCT had no contingencies or guarantees. During the
financial year, the VCT has entered into financial commitments in respect of
the Managed Wind Down process. The estimated financial commitments, in case a
sale of assets completes, at 30 September 2024 amount to £255,000. However,
this amount may be less if any of the agreements are terminated early.
21. Controlling party and related party transactions
In the opinion of the Directors there is no immediate or ultimate controlling
party. For total Directors' remuneration during the year, please refer to Note
5 as well as the Directors' Remuneration Report. Gresham House Asset
Management Limited is the Investment Adviser of the VCT, please refer to Note
4 for total investment advisory fees.
22. Significant interests
The details of all shareholdings in the remaining companies where the VCT's
holding, as at 30 September 2024, represents more than 20% of the nominal
value of any class of shares issued by the portfolio company are disclosed in
the Review of Investments.
23. Net debt reconciliation
1 October Non Cashflows 30 September
2023 cashflows £'000 2024
£'000 £'000 £'000
Cash at bank and in hand 4 - (3) 1
Other loans 3,689 - 604 4,293
24. Events after the end of the reporting period
No significant events have occurred between the statement of financial
position date and the date when the financial statements have been approved,
which would require adjustments to, or disclosure in the financial statements.
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