RNS Number : 5323J

Gresham House Renewable EnergyVCT1

22 December 2020

Gresham House Renewable Energy VCT 1 plc

(the "VCT" or the "Company")

Final results for the year ended 30 September 2020

The VCT is pleased to announce its final results for the year ended 30 September 2020.

The Company's Annual Report and Financial Statements for the year ended 30 September 2020 are linked to this announcement http://www.rns-pdf.londonstockexchange.com/rns/5323J_1-2020-12-22.pdf , available on the Company's website at: https://greshamhouse.com/real-assets/new-energy-sustainable-infrastructure/gresham-house-renewable-energy-vct-1-plc/ and can be found at https://data.fca.org.uk/#/nsm/nationalstoragemechanism .


For further information, please contact:

 Gresham House Asset Management         t.hayes@greshamhouse.com 
 Tania Hayes                            Tel: 020 3875 9860 
 JTC (UK) Limited - Company Secretary   GreshamVCTs@jtcgroup.com 
 Ruth Wright                            Tel: 44 203 846 9774 


                                          30  30 September 
                                   September          2019 
                                        2020         Pence 
Net asset value per Ordinary 
 Share and 'A' Share                   106.8         117.2 
                                  ----------  ------------ 
Cumulative Dividends paid               51.3          45.5 
                                  ----------  ------------ 
Total return per Ordinary Share 
 and 'A' Share                         158.1         162.7 
                                  ----------  ------------ 


From March 2020 the global economy has been rocked by the extraordinary events of the coronavirus pandemic. The reduction in economic activity has led to a material fall in power prices whilst lockdowns have led to large changes in the way businesses function. In spite of this, the Board has been able to meet virtually to review the investments as well as go about its normal business, whilst the Investment Adviser, Administrator and other key service providers have been able to operate effectively with robust systems and staff working from home.

Renewables remains an asset class which offers investors exposure to highly defensive earnings, with a low correlation to other asset classes. This has become increasingly important during challenging market conditions such as those we have experienced since the onset of the pandemic. The VCT continues to be well positioned in this regard, given its large proportion of contracted revenues, subsidies and diversified asset base.

Overall performance, both technical and in terms of income received in the year has been slightly below budget as maintenance issues occurred at some of the older assets, and these could not be quickly resolved due to the restrictions on movements during lockdown.

I am delighted to say that these problems are in the course of being rectified and we expect the assets in question to perform well in the future having been technically upgraded.

The valuation of the portfolio has fallen by 2.1% or 2.5p per share before the payment of dividends. There are a number of factors that affect the valuation of the portfolio and these are described in more detail below and in the Investment Adviser's report. The VCT has continued to offer investors a mature, steady-yielding environmentally-friendly infrastructure investment and has delivered the best total returns since inception when compared to other Clean Energy VCTs launched in the same year, and is in the top 40% of all VCTs of that vintage, on a NAV Total Return basis.

Investment portfolio

At the year end, the VCT held a portfolio of 16 investments, which were valued at GBP30.4 million. There were two additions to the portfolio during the year, being a new investment of GBP0.6 million into bio- bean Limited in October 2019 and a new investment of GBP1.0 million into Rezatec Limited in January 2020. The VCT invested into these non-renewable energy assets to ensure that the VCT continued to meet all the HMRC rules relating to qualifying status which is clearly vital to protect shareholders' tax relief on both dividends and investment. There have been no exits during the year.

The portfolio is analysed (by value) between the different types of assets as follows:

  Solar            81.7% 
 Rooftop Solar     8.9% 
 Small Wind        3.9% 
  assets           5.5% 

The Board has reviewed the investment valuations at the year end, with a particular focus on ensuring the discount factors applied in the discounted cash flow model are in line with the industry standard. By way of reminder, the NAV represents the fair market valuation of the VCT's portfolio and, in the case of the renewable energy assets, is based on a discounted cash flow analysis over the life of each of the VCT's assets. The assumptions which underpin the valuation are provided by the Investment Adviser and the Board has satisfied itself as to the calculation methodology and assumptions.

Focusing on the key assumptions a 50 to 75 basis point reduction was applied to the discount rate used in the valuation of the assets compared with the rate used last year, resulting in a range of discount rates from 5.50% to 6.75% used across the portfolio (2019: 6.0% to 6.75%). This reduction in discount rates increases the holding value of the assets by GBP1.0 million, or 3.7p per share. Offsetting the benefit of the lower discount rates is a reduction in inflation expectations and as mentioned previously, power prices. This has resulted in a net unrealised decline in the value of the portfolio totalling GBP0.6 million, or 2.5p per share. The Board considers that this is the fair value for the portfolio, having discussed it at length with the Investment Adviser and having compared the valuation metrics to those used by other market participants. In addition, the Board commissioned an independent valuation of the assets by a leading professional adviser experienced in advising on renewables transactions in the UK which confirmed the Board's judgement. The non-renewable energy investments have been valued in line with the International Private Equity Valuation ("IPEV") Guidelines and are held at a value of GBP1.7 million.

Net asset value and results

At 30 September 2020, the Net Asset Value ("NAV") per Ordinary Share stood at 106.7p and the NAV per 'A' Share stood at 0.1p, producing a combined total of 106.8p per "pair" of Shares (2019: NAV per Ordinary Share of 117.1p, NAV per A Share of 0.1p and a combined total of 117.2p). This represents a decrease of 4.6p (3.9%) per share, before the deduction of dividends. Following the dividend payment of 5.3133p per Ordinary Share and 0.4867p per 'A' Share in December 2019, this has resulted in an overall decrease of 10.4p (8.9%) per share.

Total dividends paid to date for a combined holding of one Ordinary Share and one 'A' Share stand at 51.3p (2019: 45.5p). The NAV Total Return (NAV plus cumulative dividends) has decreased by 2.8% in the last year and now stands at 158.1p, compared to the cost to investors in the initial fundraising of GBP1.00 or 70.0p net of income tax relief of 30%.

The loss on ordinary activities after taxation for the year was GBP1.1 million (2019: profit of GBP808,000), comprising a revenue loss of GBP358,000 (2019: GBP411,000) and a capital loss of GBP754,000 (2019: capital gain of GBP1,219,000) as shown in the Income Statement.


On 3 December 2020, the Board declared dividends in respect of the year ended 30 September 2020 of 5.3133p per Ordinary Share and 0.4867p per 'A' Share. These dividends will be paid on 31 December 2020 to Shareholders on the register at 11 December 2020.

Fundraising and investment activities

In March and September 2018, the VCT undertook two small top-up offers for subscription and raised a total of GBP5.7 million.

As stated above the reason for raising these funds was to enable the VCT to make a small number of new VCT qualifying investments to protect its qualifying ratio in the face of changes to VCT rules.

In October 2019, the VCT invested a portion of this funding into bio-bean Limited, a company that recycles used coffee grounds into efficient, sustainable products for both consumer and industrial applications. In January 2020, the VCT invested a further GBP1.0 million into Rezatec Limited, a geospatial data analytics company. Both companies have weathered the pandemic relatively well. bio-bean lost its initial supply of waste coffee grounds, however due to a large stockpile of waste coffee grounds and efforts by management to diversify supply, the impact on the business is not expected to be significant in the long term. Rezatec has continued to win new clients and has not been materially affected by the pandemic. bio-bean and Rezatec are being held at cost and slightly above cost respectively.

The VCT continues to meet its VCT compliance tests and following these investments does not need to make any further investments in order to retain VCT qualifying status.

Continuation Vote

At the forthcoming Annual General Meeting in March 2021 the Directors are required to put an ordinary resolution to Shareholders that the VCT should continue as a venture capital trust for a further five year period.

The Board highlights the fact that this VCT has performed very well when compared to its peers in the VCT market. The VCT owns a portfolio of assets that benefit from Government-backed incentive schemes within a VCT wrapper providing tax-free dividends for investors. Since the VCT was established, the VCT Regulations have been changed so that they now preclude VCTs from investing in these types of assets and it is, therefore, no longer possible to replicate this portfolio, making renewable energy assets, with index- linked revenue streams benefitting from a tax-free wrapper increasingly rare. The duration of the structure is also attractive, in that the returns are earned over almost 15 years. If the VCT were to continue as a VCT, it is expected that it would continue to offer Shareholders a steady tax free income stream around the current level for a few more years, rising to higher levels during the second half of the VCT's 25-year lifetime. The current projections indicate cumulative dividends of between 150p and 160p over the lifetime.

The Board therefore recommends a vote in support of the resolution allowing the continuation of the VCT as a venture capital trust for a further five years. If the resolution is carried the Board will continue to operate the VCT in the existing manner, although the Directors will review the investment strategy and management arrangements at regular intervals with a particular focus on the management of ageing assets to ensure that the maximum possible return to shareholders is achieved.

A vote in favour of continuing does not preclude the VCT from making arrangements to support the disposal of shares by some Shareholders. However, Shareholders should be aware that the VCT has little capacity to buy shares back and the investment therefore has limited liquidity. This is expanded upon later in the statement.

If the resolution is not passed, the Directors will be required to draw up proposals for the voluntary liquidation, reconstruction or other reorganisation of the VCT for submission to the members of the VCT at a general meeting to be convened by the Directors for a date not more than four months after the date of the Annual General Meeting. The time frame for a liquidation, winding up or reconstruction could be lengthy as the assets are held in a complex structure with substantial loans embedded within it, making a rapid sale unlikely. Shareholders should not expect any distribution of funds for some time following any decision to discontinue the VCT. Should a decision to wind up the VCT be taken, the Directors will pay particular attention to those Shareholders who will still be in their initial five-year holding period and arrange matters so as to ensure that their income tax relief is not withdrawn.

In the event that the VCT votes to continue and VCT 2 not to continue or vice versa, the Board of the VCT voting to continue would consider what options were available to them. One of the Directors' main priorities is to retain VCT status and it will be very challenging to find a solution for one VCT to continue as a qualifying VCT by itself.

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 running of the VCT and the payment of dividends.

The Board is however aware that from time to time some Shareholders may wish to realise part or all of their investment and has therefore taken steps to try to ensure that there is a liquid market in the VCT's shares. Shareholders considering selling their Shares should contact the broker for the VCT.

Board composition

The Board comprises four Non-executive directors with a broad range of experience, and we continue to work closely with the Board of the sister company, VCT2.

2020 Annual General Meeting

The VCT's 2020 Annual General Meeting ("AGM") was materially affected by the COVID-19 pandemic. The VCT's AGM was originally intended to proceed on 17 March 2020, but, in response to the Government's guidance at the time and with the wellbeing of Shareholders and other attendees in mind, the Directors resolved to postpone the AGM.

The AGM was then rescheduled for 25 June 2020 and in light of COVID-19 and in accordance with the Government guidance the VCT implemented special measures, including the imposition of entry restrictions. The Board did not take this decision easily, but considered this to be in our Shareholders' best interests.

The majority of the resolutions proposed to the meeting were passed at the AGM, however, Resolutions 8 and 9, which permitted the directors to raise funds through the issue of new shares, were not passed.

The Board was disappointed that Resolutions 8 and 9 were not passed as the money raised would only have been used in exceptional circumstances to protect the VCT status.

The VCT engaged with those Shareholders who had voted against the resolutions and on review of the feedback provided by those Shareholders, it appears that the Board's rationale for the proposing of resolutions 8 and 9 has been misunderstood.

The Board is committed to transparency on all matters, and intends to put Resolutions 8 and 9 forward at the 2021 AGM as it believes this to be in the best interests of all Shareholders. The Board will not raise funds unless this is required in order to protect shareholders' tax position.

2021 Annual General Meeting

The continuing COVID-19 pandemic has led to the imposition of severe restrictions on public gatherings. In light of the UK Government's current guidance the Board has concluded that Shareholders will therefore not be permitted to attend the AGM in person for this financial year. The VCT understands and respects the importance of the AGM to Shareholders however the health and safety of our Shareholders and the broader community is of paramount importance.

The AGM will instead be held online, and Shareholders will be able to access the AGM by electronic means. To register to attend the AGM, Shareholders can click here: https:// greshamhouse.com/gresham-house- renewable-vcts-agm-registration/. The AGM will take place on 4 March 2021 at 11.00 a.m. and will include a question and answer session with the Board and the Investment Adviser. The live stream of the AGM will include a facility for questions to be submitted, however in order to cover as many questions as possible we would appreciate it if Shareholders submit their questions to the Board before the meeting. Shareholders are invited to submit questions via email at renewablevcts@greshamhouse.com or by contacting Gresham House Investor Relations by telephone on 020 3875 9862 by no later than noon on 3 March 2021.

Shareholders are being asked to participate in the meeting and ensure their votes are counted by submitting their proxy electronically or by post as soon as possible, and these must be received by no later than 11.00 a.m. on 2 March 2021.

We will continue to monitor the evolving impact of the COVID-19 pandemic and if it becomes necessary to make changes to the proposed format of the AGM we will inform Shareholders as soon as possible.


Looking ahead to Brexit we do not expect this to have a significant impact on the VCT's operations. The nature of the investments held by the VCT, fixed assets with long term contracts and subsidies, not reliant on significant human or other resources for daily operations, limits the vulnerability to disruption. The Investment Adviser and the Administrator are both well- resourced and UK based. Key subcontractors and suppliers have been reviewed to assess their robustness under any restrictions that might arise under a no deal Brexit scenario and risks have been found to be minimal and manageable. Power prices could rise in the event of supply disruption from Europe but this event would generally be positive for the VCT.

The Board and the Investment Adviser are mindful of all aspects of Environmental, Social and Governance ("ESG") as they affect the operation of the VCT. The Board reviews this regularly and is delighted that the VCT was recently awarded the London Stock Exchange Green Economy Mark.

While COVID-19 presents an unprecedented challenge to the country and to the economy, any impact of COVID-19, and the government's response to it, should remain relatively limited under normal operations. The Board believes that the long-term outlook for the portfolio as a whole remains positive, with returns from the installed base of assets expected to continue to generate steady cash flows, so enabling the payment of steady or rising dividends.

Gill Nott


15 December 2020


Portfolio Highlights

Gresham House Renewable Energy VCT1 plc (the "VCT", formerly Hazel Renewable Energy VCT1 plc) remains principally invested in the renewable energy projects that it has owned for nine years on average, with the value of these projects representing well over 90% of the value of the portfolio. The total generation capacity of assets owned by the VCT is 34.8MWp. The VCT also has two venture capital investments.

The vast majority of the assets held by the VCT generate solar power. The solar assets are relatively old compared to other solar farms across the UK - they are older than 95% of total solar capacity in the UK. This means that the VCT's solar farms have secured higher incentives than 95% of the solar installations in the UK.

The total revenue from renewable energy generation was GBP11,070,969 and of this, GBP10,041,130 was from government incentives and inflation-linked contracts. The total revenue from the renewable assets was 93% of budget, stemming from both lower generation (97% of budget) and lower power prices (95% of budget).

The downside of having older assets is that they break down and require more maintenance to keep them operating effectively. Technical issues at two of the sites which required significant repair were exacerbated by delays in repairs in part caused by COVID-19, whilst the economic impacts of the pandemic on the wider economy reduced the revenue at two other sites which have exposure to the wholesale power price. Both these issues are being resolved, with the impacted sites undergoing significant works over Winter 2020 to replace older, obsolete equipment with newer designs whilst the sales price for power is being locked-in at higher rates as older variable price power purchase agreements expire.

In terms of performance, the solar irradiation has been stronger than projected during the year but not all of the increase was captured by the assets. The efficiency of solar photovoltaic panels is lower in the heat and some of the older inverters, which are approaching the end of their intended working life, have suffered technical problems, including failures in cooling systems in the hot weather associated with high-irradiation days. The VCT has built up cash reserves in order to replace older or failed equipment, mainly expected to be the inverters, after 10 years. With some assets demonstrating poor performance and given the challenges to maintain these sites during the COVID-19 lockdowns, projects to repair or replace certain components have been accelerated.

The COVID-19 pandemic began having a serious impact on the UK economy in March 2020. This has had the following effects on the value and operations of the portfolio:

   -       Power prices, which were already weakening towards the end of 2019, have fallen further and significantly since early 2020 and remain subdued compared to both last year and budget. The VCT is, however, to a great extent protected from this as only 9% of revenues come from wholesale power sales. This relatively low exposure to power prices for a renewable generating portfolio is considered to be a benefit that outweighs the corresponding challenges of having an older asset base that requires increased attention and maintenance. 

- Government safe working guidelines caused delays in performing repairs and Operations and Maintenance ("O&M") work. Whilst solar generating assets can normally perform with relatively little day-to-day human interaction, the age of the portfolio means human intervention is required regularly. The portfolio has suffered performance issues with some of this older equipment during the year, and with certain suppliers and contractors having to travel from overseas to make repairs, the travel restrictions have impacted on output and performance, as repairs to failed equipment were delayed substantially. The Investment Adviser ensured that the O&M contractors adhered to safe working protocols and has worked with them to mitigate the impacts of travel restrictions and safe working obligations.

- In addition, all works had to be suspended on solar installations on residential roof-mounted installations as engineers were not permitted to enter properties during lockdown.

- As a result of the expenditure required to combat the pandemic, the Government reversed the cuts in Corporation Tax that were set to apply from 1 April 2020, negatively impacting on future distributable profits and cash flows from the underlying investments.

- With much of the portfolio's revenue (as well as the third-party debt owed by the portfolio) being inflation linked, higher inflation increases the profitability of the assets and therefore their value. With the significant economic shock and the resulting Government actions to mitigate any long-term impacts, there are likely to be effects on inflation. In the short term, the inflation expectations have been reduced, having a negative impact on valuation, with the long term remaining at the levels previously projected.

During the year, the VCT made two new investments. GBP615,000 was invested in October 2019 into bio-bean Limited, the world's largest recycler of waste coffee grounds, which produces sustainable, clean fuels as well as advanced biochemical for use in the food industry.

In January 2020, GBP1,000,000 was invested into Rezatec Limited, a software developer that applies Artificial Intelligence based algorithms to a range of earth observation data sources (satellite imagery, soil data, weather data, topographic data etc.) to generate an information services platform to help monitor land-based assets in the forestry, agriculture and infrastructure verticals.

The payment of an annual dividend of 5.8p (5.3133p per Ordinary Share and 0.4867p per A Share) was announced on 3 December 2020, and this will be paid on 31 December 2020.

Portfolio Composition

Portfolio Composition by Asset Type and Impact on NAV

                                                               30 September 2020                          30 September 2019 
                                                                  Value   % of Portfolio                     Value    % of Portfolio 
   Asset Type                    kWp                              ('000)   Value                             ('000)    Value 
                               -------------------  --------------------  -------------------  ---------------------  -------------- 
 Ground-mounted Solar 
  (FIT)                        20,325               GBP22,580             74.2%                GBP22,387              75.7% 
                               -------------------  --------------------  -------------------  ---------------------  -------------- 
 Ground-mounted Solar 
  (ROC)                        8,699                GBP2,276              7.5%                 GBP3,044               10.3% 
                               -------------------  --------------------  -------------------  ---------------------  -------------- 
 Total ground-mounted 
  Solar                        29,024               GBP24,856             81.7%                GBP25,431              86.0% 
                               -------------------  --------------------  -------------------  ---------------------  -------------- 
 Rooftop Solar (FIT)           4,314                GBP2,696              8.9%                 GBP2,920               9.9% 
                               -------------------  --------------------  -------------------  ---------------------  -------------- 
 Total Solar                   33,338               GBP27,552             90.6%                GBP28,351              95.9% 
                               -------------------  --------------------  -------------------  ---------------------  -------------- 
 Wind Assets (FIT)             1,420                GBP1,188              3.9%                 GBP1,221               4.1% 
                               -------------------  --------------------  -------------------  ---------------------  -------------- 
 Total renewable generating 
  assets                       34,758               GBP28,740             94.5%                GBP29,572              100.0% 
                               -------------------  --------------------  -------------------  ---------------------  -------------- 
 Venture Capital Investments               N.A.               GBP1,688                5.5%                -           0.0% 
  TOTAL                                     34,758             GBP30,428               100.0%              GBP29,572 
                               -------------------  --------------------  -------------------  ---------------------  -------------- 
                               -------------------  --------------------  -------------------  ---------------------  -------------- 

The 34.8MWp of renewable energy projects in the portfolio generated 32,860,999 kilowatt-hours of electricity over the year, sufficient to meet the annual electricity consumption of 9,500 homes. The Investment Adviser estimates that the carbon dioxide savings achieved by generating this output from solar and wind versus gas-fired power, are equivalent to what 19,000 mature trees would remove from the atmosphere.

Portfolio Summary

Almost 95% of the portfolio value, and over 99% of the income for the portfolio, is derived from the renewable energy generation assets.

The performance against budget is shown below:

Portfolio Revenues by Asset Type (GBP Sterling)

                                Forecast             Actual Revenue          Revenue 
   Asset Type                    Revenue                                      Performance 
 Ground-mounted Solar 
  (FIT)                 8,985,321          8,247,893                 91.8% 
                        -----------------  ------------------------  -------------------- 
 Ground-mounted Solar 
  (ROC)                 1,287,266          1,285,459                 99.9% 
                        -----------------  ------------------------  -------------------- 
 Rooftop Solar          1,239,757          1,174,688                 94.8% 
                        -----------------  ------------------------  -------------------- 
 Wind Assets                  453,385            362,928             80.1% 
  TOTAL                        11,965,729         11,070,968 
                        -----------------  ------------------------  -------------------- 
                        -----------------  ------------------------  -------------------- 

The revenue is affected by:

   -       Renewable energy resources (solar irradiation or wind, as relevant); 

- The performance of the assets in converting the resources into revenue (i.e. how the assets are performing, any technical issues, etc); and

   -       The revenue per unit of energy generated. 

It is clear from the table above that the variance at the ground-mounted solar farms was most material, given their size, accounting for GBP739,235 of the GBP894,760 revenue shortfall compared to budget. The causes are shown in the chart below:

Ground-mounted Solar Revenues Variation of from Forecast to Actual Revenue (GBP Sterling)

                                                  Impact        Impact 
                               Forecast            of            of Output           Actual 
   Asset Type                  Revenue             Price         changes             Revenue 
 Ground-mounted Solar 
  (FIT)                 8,985,321        (43,925)           (693,503)       8,247,893 
                        ---------------  -----------------  --------------  ---------------- 
 Ground-mounted Solar 
  (ROC)                 1,287,266        (160,664)          158,857         1,285,459 
                        ---------------  -----------------  --------------  ---------------- 
 TOTAL                  10,272,587       (204,589)          (534,646)       9,533,352 
                        ---------------  -----------------  --------------  ---------------- 

Overall, 91% of income is inflation linked (either through the FIT, ROC or contracts for the sale of electricity), with those assets having price exposure being the ROC projects. Thus, they suffered a larger impact of the significant reduction in market pricing for power. However, it was the high revenue FIT projects that suffered the technical issues that caused significant fall in output despite the high irradiation during the year.

These themes will be expanded on below.

Renewable energy resources

The portfolio is heavily weighted to solar (96% by capacity of the renewable assets, and 91% of total portfolio).

During the year, the assets benefited from more solar resources than budgeted, with solar irradiation being 107% of forecast for the full year. Irradiation was below forecast from October 2019 to February 2020, followed by a very strong spring, with the overall outperformance partially surrendered through poor July and August irradiation.

Technical Performance

The table below shows the technical performance for each of the groups of assets.

Portfolio Technical Performance by Asset Type (kWh)

                                Forecast            Actual Output         Technical 
   Asset Type                    Output                                    Performance 
 Ground-mounted Solar 
  (FIT)                 20,373,397        18,800,941               92.3% 
                        ----------------  -----------------------  ------------------- 
 Ground-mounted Solar 
  (ROC)                 8,481,640         9,528,330                112.3% 
                        ----------------  -----------------------  ------------------- 
 Total Ground-mounted 
  Solar                 28,855,037        28,329,271               98.2% 
                        ----------------  -----------------------  ------------------- 
 Rooftop Solar          3,620,429         3,475,577                96.0% 
                        ----------------  -----------------------  ------------------- 
 Total Solar            32,475,466        31,804,848               97.9% 
                        ----------------  -----------------------  ------------------- 
 Wind Assets                 1,319,387         1,056,151           80.0% 
  TOTAL                       33,794,853        32,860,999 
                        ----------------  -----------------------  ------------------- 
                        ----------------  -----------------------  ------------------- 

The old equipment that caused the reduction in output is being replaced over winter 2020/21 which should improve both the performance and reliability whilst removing the reliance on overseas contractors.

It is worth noting that the impact of pricing and output was not the same across the assets. This is shown by splitting the impacts between the FIT and ROC assets, below.

The key variance in the technical performance is from the Ground-mounted solar (FIT) performance that was significantly behind budget. This is largely the result of technical issues at Kingston Farm and Lake Farm (each solar farm with 4.98MW capacity). Both of these assets have central inverters that were state- of-the art when built in 2011, but which are now no longer the best technical solution for solar farms. These inverters suffered significant component breakdowns during the spring lock- down, when irradiation was high. The supplier is not based in the UK and the pandemic led to significant delays in being able to get their specialist engineers and components on site in order to effect repairs. This has significantly reduced the ability of the plants to operate over the summer months. There were already projects ongoing to replace these older inverters with newer, more efficient and easier to maintain string inverters at these sites.

Contractors have been engaged to complete the repair and replacement works this winter.

The performance at Kingston Farm was 84% of budget, with Lake Farm at 79%. Between them, these assets represent over 27% of forecast generation and so this poor technical performance has been material overall.

As solar installations age some of the key components, e.g. inverters, need to be replaced as they reach the end of their expected useful life. All of the assets are now approaching this stage and have experienced some loss of generation due to faults in this older equipment. The Investment Adviser reviews the performance of these components on a regular basis and is working with contractors to arrange for the renewal and replacement of the less reliable parts across all sites as required.

The work will be funded using cash reserves that have been built up under the debt facility agreements to fund this type of work.

During the pandemic, the Investment Adviser issued updated health and safety guidance to contractors reflecting guidelines and directives issued by the UK Government. There was a negative impact on corrective and preventative maintenance work schedules as a result of this. Some of these restrictions have been eased and where possible, contractors have been instructed to find other solutions that can be implemented without breaching health and safety policies and Government directives.

Generation of the rooftop solar portfolio was 4% lower than forecast. Irradiation cannot be measured at roof-mounted solar installations as it is not cost effective to install pyranometers, but there is no reason to assume that the irradiation at these sites was materially below forecast. However, no access was possible to any residential properties during the periods of lockdown, unless it was for health and safety reasons (this was not required). The Investment Adviser is working with the O&M contractors to get access to the rooftop installations that are underperforming, to effect repairs as soon as possible.

The small wind portfolio performed 20% lower than forecast, continuing the poor performance experienced in recent years. Small wind accounts for only 4.1% of the portfolio in terms of capacity. There is an ongoing repair programme for this portfolio focused on retaining the best assets in terms of future cashflow expectations.

Revenue per kilowatt hour of renewable energy generated

The UK government has used several mechanisms to encourage investment into renewable energy generation, including the Feed in Tariff ("FIT") and Renewables Obligation Certificate ("ROC") support mechanisms.

The VCT's renewable assets benefit from these schemes which provide revenues predominantly linked to the Retail Price Index ("RPI"). As the costs, and perceived risks, of building new renewable energy generating capacity have fallen, so have the value of the incentives offered for new installations. For example, an asset that generates electricity from solar power that was commissioned and accredited for the FIT before the end of July 2011 currently receives over 39 pence for every kilowatt hour (kWh) of electricity it produces (with the added extra of a floor price support to ensure it may also sell this power at a reasonable price). The incentives for new capacity have fallen consistently since the assets owned by the VCT were commissioned, and new solar installations built today receive no such incentives and must rely on selling power for their income. In the 9 months to the end of September 2020 the average spot price (day ahead) price of power was 3.1 pence per kWh so a new asset selling power at the spot price would earn 3.1 pence whereas an older solar asset, like some of those owned by the VCT, could earn 3.9 pence per kWh for exporting the power (given the FIT export price floor) plus 39.28 pence per kWh FIT generation revenue.

The significance of these government backed incentives is shown by the following chart. VCT Portfolio, Revenue profile during period 1 October 2019 - 30 September 2020

This shows that of the total revenues of GBP11,070,968 in the year, GBP9,551,418 or 86% was earned from government backed incentives for generating renewable electricity (GBP8,731,619 of generation revenue provided under the FIT and GBP819,799 from ROCs). A further GBP489,712 is inflation linked, either through the FIT export floor price for selling electricity or contracts for the sale of electricity, taking the government backed and RPI linked revenues to 91% of total.

Such a high proportion of income that is fixed by Government, is RPI linked and is not exposed to wholesale power prices, is a significant driver of value in this portfolio. This has enabled it to be largely insulated from the very significant reduction in the wholesale price of electricity experienced since the new year, and greatly exacerbated by the COVID-19 pandemic.

The majority of the price variance occurred in the Ground-mounted Solar (ROC) plants at Ayshford Farm (5.47 MW capacity) and Priory Farm (3.23 MW). Whilst the Ground- mounted (FIT) assets have achieved their projected revenue of 44 pence per kWh, the ROC assets only achieved 13 pence per kWh which was 89% of the 15 pence per kWh budgeted. These assets were exposed to the market prices and, when the pandemic hit (combined with historically low gas prices), the power price fell significantly to under 2 pence per kWh, compared to the budgeted price of over 4 pence per kWh. Ayshford Farm has now fixed its price at 4.4 pence per kWh until mid-2021; Priory is already in a long term contract but with market price exposure and a floor price for power.

Operating Costs

The vast majority of the cost base is fixed and/ or contracted and includes rent, business rates, and regular O&M costs as the major categories.

The main cost item that shows variability from year-to-year is repair and maintenance costs. Repair and maintenance spend involving solar panels and inverters, the key components of a solar project, is covered by the maintenance reserves. These reserves totalled GBP3.1 million and are in place for all the ground-mounted solar assets and for the majority of the roof-mounted solar assets. The other significant maintenance cost is for the small wind portfolio that continues to suffer performance issues. The cost of this maintenance has increased during the year as there are few contractors capable of maintaining the turbines and the effort to do so has increased with the age of the fleet.

New Investments

In October 2019, the VCT made a new investment of GBP615,000 into bio-bean Limited, the world's largest recycler of waste coffee grounds. This investment represented 15% of the GBP4 million funding round announced by bio-bean in April 2019. The VCTs' investment formed the final part of that round, and valued bio-bean at GBP7.6 million on an Enterprise Value basis. The investment comprised of GBP400,000 of equity and GBP215,000 of debt.

Bio-bean sources waste coffee grounds from major retail coffee chains by offering the cheapest and most sustainable avenue for disposing of them. bio-bean then converts these into pellets for combustion in biomass- fed energy generators or coffee logs for use in wood burning stoves, which it sells through large supermarket and home improvement chains as well as online. Natural Coffee Extract for use in the food industry is also produced from the waste coffee grounds.

The COVID-19 pandemic has had a negative impact on bio-bean as the company is dependent on the continuous supply of waste coffee grounds from major coffee retail chains. The lockdown meant that these deliveries were completely suspended for a while and were at reduced volumes afterwards. However, due to a large stockpile of waste coffee grounds, efforts by management to diversify supply (albeit at an increased acquisition price), robust demand for its clean fuels, and a careful approach by management with a focus on minimising cash burn, this has meant that the impact on the business is not expected to be significant in the long term.

At the time of the VCT's investment, its advanced biochemicals business centred around producing Natural Coffee Extract and Natural Coffee Flavour (advanced biochemicals for use in the food chain). This business was in its early stages of development, but with significant growth projected following the investment as the products and markets are developed. Natural Coffee Extract, made from waste coffee grounds, has successfully gone through the regulatory approval process that permits its use in the food chain, and bio- bean has successfully made its first sale of the product to a global flavour and fragrances company. This is a significant milestone for the long-term development of the business.

In January 2020, the VCT invested GBP1 million into Rezatec Limited, a software developer that applies Artificial Intelligence based algorithms to a range of earth observation data sources (satellite imagery, soil data, weather data, topographic data etc.) to infrastructure verticals. Access to the platform is sold, on a subscription-basis, to commercial forestry operators for inventory management (analysis of current state of forest assets) and as an ongoing monitoring tool, to utility infrastructure owners for water pipeline, hydroelectric dam and power transmission network risk analyses, and to agriculture companies processing crops, for yield and logistics optimisation.

Rezatec has won over key industry players in countries around the world that include the USA, Canada and India which have large forestry and agricultural sectors as well as infrastructure over a large physical footprint.

The VCT's investment was part of a GBP5.0 million round into which the Baronsmead VCTs, managed by Gresham House Asset Management Ltd, also invested.

Rezatec has not seen a meaningful impact on its business as a result of the COVID-19 pandemic. Its platform is designed to help its customers increase efficiency, and sales pipeline conversion does not require physical meetings. It has sufficient funding in place not to necessitate further fundraising until the end of 2021, even if pipeline conversion slows down. The management team nevertheless took the prudent approach of suspending new hiring.

The pandemic and the uncertainty it brought has resulted in an extended sales conversion time, but Rezatec has successfully won new deals since the time of the investment.

Portfolio Valuation

The Net Asset Value ("NAV") of the renewable portfolio is comprised of the valuation of future projected cash flows generated by the renewable energy assets, as wel as the cash held by the companies in the portfolio and the cash held by the VCT. The NAV of the overall portfolio also includes the value of new investments in bio-bean and Rezatec. The total return is the value of net assets and the cash that has been distributed to shareholders since launch.

The future cash flow projections for renewable assets are impacted by:

- Renewable resources. Despite this year having higher solar irradiation than budgeted, we have not changed the assumptions on irradiation.

- Technical performance. As noted above, there were significant performance issues at two of the ground-mounted FIT solar farms. The failed inverters are to be replaced over the winter period and so the output is projected to improve back to budgeted levels going forward.

- Prices. Power price forecasts have been impacted by COVID-19 and so the forecasts have been updated to reflect this.

- Costs. Up-to-date costs for the assets are included, reflecting all commercial negotiations and also expectations for lower maintenance costs after the older assets are repaired.

- Corporation tax. The previously announced reduction in corporation tax has been reversed, so the projections have also reflected this.

- Inflation. With most of the revenues being linked to RPI, any increase in inflation projections increases the overall profitability, and therefore valuation of the assets. The short-term projections for inflation have fallen, largely as a result of COVID-19.

Once the free cash projected to be generated by the assets is calculated, the value of these cash flows has to be estimated. The Investment Adviser notes that these cash flows are supported by a very high proportion of government backed and index linked revenues. In the current financial market, such cash flows are dependable and therefore valuable. This has resulted in a slight reduction in the discount rates used (increasing the valuations) which reflects the Investment Adviser's experience in the market and evidence of third party transactions.

In particular, the discount rates used to value the future cash flows from the ground mounted solar assets have been reduced by 50 to 75 basis points (0.5% - 0.75%) compared to the rates used last year. These are the assets that have the highest levels of FiT and ROC income and so the Investment Adviser believes that the stable and predictable cash flows generated by these assets are very attractive, justifying the lower discount rate. The discount rates used to value the renewable assets are now in the range of 5.50% to 6.75% (2019: 6.0% to 6.75%). This reduction in discount rates increases the holding value of the assets by GBP1.0 million. The Investment Adviser notes that the VCT commissioned an independent review of the valuation of the renewable assets to consider both the Investment Adviser's valuation of the assets and the potential realisation proceeds should the portfolio be sold. This exercise, performed by a leading adviser involved with the sale of many renewable assets in the UK, confirmed that valuation is reasonable, in light of conservative asset life assumptions as well as uncertain timings and costs to realise a portfolio that includes long term, third party debt.

The value of new investments in bio-bean and Rezatec has been determined using International Private Equity Valuation Guidelines and are held at a valuation of GBP1.7 million, marginally higher (GBP70,000) than the cost of investment.


The Investment Adviser's immediate focus is to ensure that the underperforming assets are repaired as quickly and cost effectively as possible, despite the restrictions imposed by the COVID-19 pandemic.

Wholesale power prices, which have a small representation in the portfolio's revenues, are outside the Investment Adviser's control, however opportunities will be sought to enter long-term power purchase agreements (contracts to sell the power) if prices spike up in a quicker than anticipated fashion.

Contractors will continue to be monitored to assess whether they are doing everything that is allowable within the rules and regulations to improve performance at the older ground- mounted sites that have suffered from a drop in technical performance, as well as all the other sites that have continued to perform well. Any changes to safe working regulations are monitored closely so that generation can be restored at the small percentage of rooftop solar installations that are offline as and when restrictions are relaxed.

The COVID-19 pandemic is likely to have a long-lasting impact. The renewable generation business, particularly assets with a high degree of government subsidies, have only suffered a minor impact. In the event of a prolonged economic slump, these assets may be favoured to a higher degree than they have been to date by financial markets, particularly if the unprecedented level of government stimulus eventually triggers inflation.

Gresham House Asset Management Limited

December 2020


The Directors present the Strategic Report for the year ended 30 September 2020.

The Board have 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 are set out in the Chairman's Statement, Investment Adviser's Report, and the Review of Investments.

During the year to 30 September 2020, the investments held increased by a net value of GBP856,000, due to additions of GBP1,615,000 offset by net unrealized losses of GBP629,000. Net gains arising on investment realisations totalling GBP5,000.

The total operating loss for the year was GBP1,112,000 (2019: GBP808,000 profit) and net assets at the year end were GBP27.3 million (2019: GBP29.9 million). The annual dividend for the year to 30 September 2019 was paid on 20 December 2019. The annual dividend for the year to 30 September 2020 was announced on 3 December 2020 and will be paid on 31 December 2020.

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 agreement is for a minimum term of two years, effective from 7 November 2017, with a nine month notice period on either side thereafter.

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 2 to the financial statements, is still appropriate.

On 22 May 2019 the Board engaged JTC (UK) Limited ("JTC") as Administrator and Company Secretary, replacing Downing LLP. JTC provides administration and accounting services to the VCT for a fee of GBP40,000 (plus VAT, if applicable) per annum. It also provides company secretarial services for a fee of GBP40,000 (plus VAT, if applicable) per annum. The agreement, effective from 22 May 2019 shall continue in force until determined by either party, with a six month notice period on either side.

Trail commission

Historically the VCT had an agreement to pay trail commission annually to Hazel Capital LLP, in connection with the funds raised under the Offers for subscription. This was calculated at 0.4% of the net assets of the VCT at each year end. Out of these funds Hazel Capital LLP was liable to pay trail commission to financial intermediaries. The trail commission was payable to Hazel Capital LLP until the earlier of (i) the sixth anniversary of the closing of the Offers and (ii) the Investment Advisory Agreement being terminated. Upon the appointment of Gresham House as Investment Adviser on 7 November 2017, the agreement with Hazel Capital LLP was reissued and the new Investment Adviser has agreed to pay further trail commission to Haibun Partners LLP ("Haibun") and CH1 Investment Partners LLP ("CH1") with an agreement in place effective 11 July 2019. Payment of trail commission under this agreement is not deemed to be a related party transaction and is therefore not disclosed in Note 20 to the financial statements.

Pursuant to historic financial intermediary arrangements with Hazel Capital LLP, Haibun, of which Stuart Knight is a Designated Member, and CH1, of which Matthew Evans (Director of Gresham House Renewable Energy VCT2 plc) is a Designated Member, will continue to receive trail commission from Gresham House. The trail commission payable is equal to 0.15% of the net asset value of the shares issued by the VCT and its sister company, Gresham House Renewable Energy VCT2 plc ("VCT2"), to Haibun and CH1 clients under each of the 2010, 2012 and 2014 Offers. The amounts payable to Haibun and CH1 by Gresham House, in aggregate across both the VCT and VCT2, are as follows:

                       Year ended 30 September 
              Haibun        CH1          Total 
               GBP           GBP          GBP 
              ------------  -----------  --------- 
 2010 Offer   19,505        27,015       46,520 
              ------------  -----------  --------- 
 2020 Offer   1,980         1,980        3,960 
              ------------  -----------  --------- 
 2014 Offer   1,022         2,219        3,241 
  Total        22,507        31,214 
              ------------  -----------  --------- 
              ------------  -----------  --------- 

Investment policy


The VCT's objectives are 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 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, 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.

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 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. 

Asset allocation

During the period the VCT was required to hold 80% of its funds in VCT qualifying investments. At 30 September 2020, the VCT had a significant margin over the 80% qualifying holdings requirement. The VCT aims to maintain a level of up to 90% and therefore its maximum exposure to qualifying investments will be 90%. The VCT intends to retain the remaining funds in non-qualifying investments to fund the annual running costs of the VCT to reduce the risk profile of the overall portfolio of its fund and to provide investments which can be realised to fund any follow-on investments in the investee companies.

It is expected that the VCT shall hold at least eight investments to provide diversification and risk protection. In relation to the VCT, no single investment (including most loans to investee companies) will represent more than 15% of the aggregate net asset value of its fund save where such investment is in an investee company which has acquired or is to acquire, whether directly or indirectly, securities in the following companies: 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.

Risk diversification

The structure of the VCT's funds, and its investment strategies, have been designed to reduce risk as much as possible.

The main risk management features include:

- portfolio of investee companies - the VCT seeks to invest in at least eight different companies, thereby reducing the potential impact of poor performance by any individual investment;

- monitoring of investee companies - the 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.

In respect of the VCT's investment in Lunar 1 Limited and Lunar 2 Limited the VCT has followed the above risk diversification strategy with regard to their 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.


The VCT has the ability to borrow up to 15% of its net asset value* save that this limit shall not apply to any loan monies used to facilitate the acquisition by the VCT, whether directly or indirectly, of any shares or securities in certain operational asset/holding companies**.

It is not intended that the VCT will borrow (other than from investee companies). As at 30 September 2020, the VCT had the ability to borrow GBP4.5 million (2019: GBP4.5 million) in accordance with the articles, and had actual borrowings of GBPnil (2019: GBPnil). The long-term creditors shown on the Balance Sheet represent amounts owed to investee companies used to fund dividend payments. The Board expect these creditors to be repaid in the future by way of dividends being declared from these companies.

External debt is held by several of the VCT's investee companies. The VCT has ensured that Lunar 1 Limited and Lunar 2 Limited have borrowed no more than 90% of their respective net asset values to facilitate the acquisition, whether directly or indirectly, of any shares or securities in certain operational asset/holding companies**.

* Following the 2018 AGM the articles of the VCT were amended such that amounts borrowed from investee companies are now excluded from the calculation of the 15% borrowing restriction.

** 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.

Listing rules

In accordance with the 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 Listing Rules and Part 6 of the Income Tax Act.

The Listing Rules have been complied with for the year ended 30 September 2020.

Directors and senior management

The VCT has four Non-executive Directors, comprising one female and three 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 believes the VCT's key performance indicators are Net Asset Value (NAV) Total Return and dividends per share. 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 VCT aims to increase NAV Total Return each year. As at 30 September 2020, NAV Total Return was 158.1p per share; representing a decrease of 2.8% (4.6p per share) since 30 September 2019 (NAV Total Return of 162.7p) which the Directors are disappointed by, but reflects the challenges faced by the VCT during the year.

The VCT's dividend policy is to distribute surplus funds generated by the underlying investments, subject to maintaining an appropriate cash reserve within the VCTs to meet anticipated future requirements. The VCT has an objective of paying dividends of 5p per share per annum. In the year ended 30 September 2020, the VCT paid a dividend of 5.8p per share, therefore exceeding this KPI.


There continues to be uncertainty surrounding the future effects of Brexit, which has deflated Sterling thus far, and has the potential to impose restrictions on the free movement of people and goods. However, as the VCT has, to date, invested solely in UK assets which generate revenues from contracts with parties based in the UK, the Board and Investment Adviser believe that, subject to major economic disruption taking place, the potential impact of Brexit on the VCT is limited.


COVID-19 has presented an unprecedented challenge to the country and the economy in 2020, causing a significant drop in power prices since February and likely long-term inflationary effects are still to be seen.

Despite this challenging environment, the VCT's assets have continued to generate steady cashflows and have not suffered any significant operational disruptions as a result of the government-imposed restrictions both locally and nationally. The majority of the VCT's assets are concentrated in solar farms, which, by their nature, require a relatively low level of human presence. Furthermore, the VCT has been largely insulated from the drop in power prices as only 9% of its revenues are generated by wholesale power sales. As such, the Board and Investment Adviser believe that COVID-19 will continue to have only a limited impact on the VCT.

Principal risks and uncertainties

The principal financial risks faced by the VCT, which include interest rate, market price, investment valuation, credit and liquidity risks, are summarised within Note 17 to the financial statements.

Note 17 includes an analysis of the sensitivity of the 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; and 
   -       Economic, political and other external factors. 

The Board considers the COVID-19 pandemic to be a factor which exacerbates existing risks, rather than being a new emerging risk itself. Its impact has been considered within the relevant risks below.

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.

 Principal         Context                   Specific risks           Possible impact           Mitigation 
 Investment        The VCT holds             Poor investment          Reduction in              The Investment Adviser 
  Performance       investments in           decisions or              the NAV of the           has significant 
                    unquoted UK businesses   strategy or poor          VCT and the              experience 
                    in the renewable         monitoring, management    inability of             in the renewable 
                    energy sector.           and realisation           the VCT to pay           energy 
                                             of investments.           dividends.               sector. The Investment 
                                             Adverse weather                                    Adviser also actively 
                                             conditions, low                                    manages the portfolio, 
                                             inflation rates                                    engaging reputable and 
                                             and/or low power                                   experienced Operations 
                                             prices due to                                      and 
                                             the                                                Maintenance (O&M) 
                                             COVID-19 pandemic                                  contractors. 
                                             resulting in                                       The assets have 
                                             below forecast                                     limited 
                                             investment returns.                                exposure to power 
                                                                                                due to the use of the 
                                                                                                Feed in Tariff (FiT) 
                                                                                                and Renewable 
                                                                                                Certificate (ROC) 
                                                                                                The Board regularly 
                                                                                                the performance of the 
                                                                                                portfolio, alongside 
                                                                                                the Board of the 
                  ------------------------  -----------------------  ------------------------  ----------------------- 
 Loss of           The VCT must              Breach of any            The loss of VCT           The VCT Qualification 
  VCT status        maintain continued        of the rules             status would             is actively monitored 
                    compliance with           could result             result in dividends      by the Investment 
                    the VCT Regulations,      in the loss of           becoming taxable         Adviser 
                    which prescribe           VCT status.              and new Shareholders     and the Administrator, 
                    a number of tests                                  losing their             who liaise with the 
                    and conditions.                                    initial tax relief.      designated 
                                                                                                VCT Status Adviser. 
                                                                                                VCT Status Adviser 
                                                                                                produces twice yearly 
                                                                                                reports for the Board. 
                  ------------------------  -----------------------  ------------------------  ----------------------- 
 Legislative       In recent years,          Increasing difficulty    The VCT is not            Both the Investment 
                    the changes to           for the VCT in            able to make             Adviser 
                    VCT Regulations          making new Qualifying     new Qualifying           and the Administrator 
                    have narrowed            investments.              investments.             closely monitor 
                    the breadth of           A change in government    The VCT may not          developments 
                    permitted investments.   policy could              be able to raise         and attend AIC 
                    VCTs were established    result in a cessation     any further funds.       conferences. 
                    to encourage             of tax reliefs                                     The VCT Status Adviser 
                    private individuals      or reduction                                       also has significant 
                    to invest in             of the amount                                      experience in this 
                    early stage companies    of tax relief                                      field 
                    that are considered      available to                                       and works closely with 
                    to be risky and          investors which                                    HMRC. 
                    have limited             would make them                                    The Investment Adviser 
                    funding options.         less attractive                                    engages with HMT and 
                    The state provides       to investors.                                      industry 
                    these investors                                                             representative 
                    with tax relief.                                                            bodies to demonstrate 
                                                                                                the cost benefit of 
                                                                                                to the economy in 
                                                                                                of employment 
                                                                                                and taxation revenue. 
                  ------------------------  -----------------------  ------------------------  ----------------------- 
 Regulatory        As a listed entity,       Any breaches             Reduction in              The VCT Secretary and 
  and compliance    the VCT is subject       of relevant               the NAV of the           Administrator have a 
                    to the UK Listing        regulations               VCT due to financial     long history of acting 
                    Rules and related        could result              penalties and            for VCTs. The Board, 
                    regulations.             in suspension             a suspension             Investment Adviser and 
                                             of trading in             of trading in            Administrator also 
                                             the VCT's shares          its Shares, also         employ 
                                             or financial              leading to loss          the services of 
                                             penalties.                of VCT status.           reputable 
                                                                                                lawyers, auditors and 
                                                                                                other advisers to 
                                                                                                continued compliance 
                                                                                                with its regulatory 
                  ------------------------  -----------------------  ------------------------  ----------------------- 
 Operational       The VCT relies            Inferior provision       Errors in Shareholder     The VCT, the 
  - VCT level       on the Investment         of these services,       records, a loss          Investment 
                    Adviser, Administrator    for example due          of Shareholders'         Adviser and the 
                    and other third           to working remotely      personal data,           Administrator 
                    parties to provide        during the COVID-19      incorrect mailings,      engage experienced and 
                    many of its services      pandemic, thereby        misuse of data,          reputable service 
                    at the VCT level.         leading to inadequate    non- compliance          providers, 
                                              systems and controls     with key legislation,    the performance of 
                                              or inefficient           loss of assets,          which 
                                              management of            breach of legal          is reviewed on an 
                                              the VCT's assets         duties and inadequate    annual 
                                              and its reporting        financial reporting.     basis. 
                                              requirements.                                     As a result of the 
                                              Service providers,                                COVID-19 
                                              predominantly                                     pandemic the 
                                              the Registrar,                                    Investment 
                                              hold Shareholders'                                Adviser reviewed all 
                                              personal data                                     major service 
                                              and there is                                      providers 
                                              a risk of a cyber                                 to confirm they could 
                                              attack on a provider.                             operate as usual 
                                                                                                The Directors and the 
                                                                                                Investment Adviser 
                                                                                                review the service 
                                                                                                and the procedures and 
                                                                                                policies they have in 
                                                                                                place for preventing 
                                                                                                cyber attacks. 
                  ------------------------  -----------------------  ------------------------  ----------------------- 
 Operational       At the portfolio          Inferior provision       Poor investment           The VCT, the 
  - portfolio       level, the VCT           of these services,       performance due           Investment 
  level             uses third party         thereby leading          to assets being           Adviser and the 
                    O&M contractors          to inadequate            offline and non-revenue   Administrator 
                    to manage the            systems and controls     generating.               engage experienced and 
                    various sites.           or inefficient                                     reputable service 
                                             management of                                      providers, 
                                             the VCT's assets.                                  the performance of 
                                             Maintenance and                                    which 
                                             repairs not carried                                is reviewed on an 
                                             out in a timely                                    ongoing 
                                             manner as a result                                 basis. At the 
                                             of travel restrictions                             portfolio 
                                             and social distancing                              level, technical 
                                             rules put in                                       reviews 
                                             place due to                                       and studies are 
                                             the COVID-19                                       conducted 
                                             pandemic.                                          on the assets as 
                                                                                                Repair and 
                                                                                                work is carried out 
                                                                                                O&M procedures are 
                                                                                                to reduce dependence 
                                                                                                on overseas 
                                                                                                and specialists. 
                  ------------------------  -----------------------  ------------------------  ----------------------- 
 Economic,         The VCT's investments     Retrospective            A significant             The Investment Adviser 
  political         are heavily exposed       changes to the           negative impact          and Board members 
  and other         to the Feed in            regimes.                 on performance.          closely 
  external          Tariff (FiT)                                                                monitor policy 
  factors           and Renewable                                                               developments. 
                    Obligation Certificate                                                      However, the UK 
                    (ROC) regimes.                                                              Government 
                                                                                                has a general policy 
                                                                                                of not introducing 
                                                                                                legislation. The 
                                                                                                Adviser and Board 
                                                                                                review the valuation 
                                                                                                model and its inputs. 
                  ------------------------  -----------------------  ------------------------  ----------------------- 

Viability statement

In accordance with Provisions 33 and 36 of the 2019 AIC Code of Corporate Governance, the Directors have carried out a robust assessment of the emerging and principal risks facing the VCT that would threaten its business model, future performance, solvency or liquidity, and have assessed the prospects of the VCT over a longer period than the 12 months required by the 'Going Concern' provision.

The Board has conducted this review for a period of five years from the balance sheet date as developments are considered to be reasonably foreseeable over this period. This is also the minimum recommended holding period for new investors. If the continuation vote at the March 2021 AGM were to result in a decision to wind up the VCT, the Board still consider that the VCT would remain viable up until the point at which its assets were sold, or the voluntary liquidation completed, and as such the Board are satisfied that a five-year viability assessment remains applicable. For further detail on the continuation vote.

In making the viability assessment, the Board has taken the following factors into consideration:

- The nature and liquidity of the VCT's portfolio (long-term, revenue-generating fixed assets);

- The potential impact of the Principal Risks & Uncertainties, including the potential impact of COVID-19 on these risks; Maintaining VCT approval status;

   -       New investment activity; 
   -       Operating expenditure; and 
   -       Future dividends and share buybacks. 

The Board paid particular attention to the impact of the COVID-19 pandemic on the economic, regulatory and political environment as well as its direct impact upon the VCT.

The Board has also evaluated the ability of third-party suppliers to continue to deliver services to the VCT during COVID-19.

The Board is satisfied that the underlying assets held by the SPVs have been built to a sufficient quality and there is an appropriate level of ongoing repairs and maintenance to prevent substantial degradation. It is also considered highly unlikely that the portfolio would suffer from such poor irradiation and severe degradation that it would be unable to generate income over the period. Asset life, along with the other inputs to the valuation model, are discussed further in Note 17.

The Board also noted that the SPVs have sufficient debt cover and that there are significant cash reserves at the SPV level, available to be paid up to the VCT through dividends, reverse loans or the repayment of existing shareholder loans.

The Board have assessed the VCT's ability to cover its annual running costs under several scenarios, in which sensitivity analysis has been performed over the value of the investment portfolio. The Directors note that under none of these scenarios was the VCT unable to cover its costs.

The Directors believe that the VCT is well placed to manage its business risks successfully. Based upon this viability assessment, the Board confirms that, taking into account the VCT's current position and subject to the principal risks faced by the business, the VCT will be able to continue in operation and meet its liabilities as they fall due for a period of at least five years from the balance sheet date.

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.

Annual running costs cap

The annual running costs for the year are capped at 3.0% of net assets; 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 2020 were 2.4% (2019: 1.9%) and therefore less than 3.0% of net assets.

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. 'A' Share dividends 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 of dividend proceeds: 
 Shareholders                   99.97%  80%    70% 
                                ------  -----  ----- 
 Management                     0.03%   20%    30% 
                                ------  -----  ----- 

As the NAV hurdle was met and the annual dividend to be paid on 31 December 2020 will exceed the dividend hurdle, Management will receive a Performance Incentive in respect of the year ended 30 September 2020. The Performance Incentive will be equivalent to 0.2586p per Ordinary Share, or approximately GBP66,000 (2019: 0.2586p per Ordinary Share, or approximately GBP66,000). Payment of the performance incentive fee is not deemed to be a related party transaction and is therefore not disclosed in Note 20 to the financial statements.

Pursuant to historic financial intermediary arrangements with Hazel Capital LLP, Haibun Partners LLP ("Haibun"), of which Stuart Knight is a Designated Member, and CH1 Investment Partners LLP ("CH1"), of which Matthew Evans (Director of Gresham House Renewable Energy VCT2 plc) is a Designated Member, will receive a proportion of the Performance Incentive payments made to Management by the VCT and its sister company, Gresham House Renewable Energy VCT2 plc ("VCT2"). Haibun and CH1 will share an amount equal to approximately 8.0% of the Performance Incentive paid to Management in respect of the "Management 'A' Shares" issued by the VCT and VCT2 in connection with the Ordinary Shares issued to Haibun and CH1 clients under the 2010, 2012 and 2014 Offers. The agreements were put in place prior to the appointment of Stuart Knight and Matthew Evans as Directors of the VCT and VCT2 respectively.

The Directors, with the help of the Investment Adviser, actively monitor and ensure the investee companies have less than GBP5 million state backed financing in a 12-month period listed in order to remain compliant with the VCT regulations.

Share buybacks

The VCT has a policy of buying shares that become available in the market if liquidity and regulatory constraints permit. The VCT is not currently buying in shares as the VCT needs to conserve such cash as it generates for the running of the VCT and the payment of dividends. The Board reviews the buyback policy from time to time and may make changes if it considers that to be in the best interests of Shareholders as a whole.

There were no share buybacks during the financial year. A special resolution to

renew the authority to repurchase Shares is proposed for the forthcoming AGM.

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:

                                                        at the year 
                                                        30 September 
 1. To ensure that the VCT's income in 
  the period has been derived wholly or 
  mainly (70% plus) from shares or securities;       100.0% 
 2. To ensure that the VCT has not retained 
  more than 15% of its income from shares 
  and securities;                                    0.0% 
 3. To ensure that the VCT has not made              Complied 
  a prohibited payment to Shareholders 
  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 represented 
  throughout the period by shares or securities 
  comprised in qualifying holdings of 
  the VCT;                                           85.1% 
 5. To ensure that at least 70% by value 
  of the VCT's qualifying holdings has 
  been represented throughout the period 
  by holdings of eligible shares (disregarding 
  investments made prior to 6 April 2018 
  from funds raised before 6 April 2011);            92.9% 
 6. To ensure that of funds raised on 
  or after 1 October 2018, at least 30% 
  has been invested in qualifying holdings 
  by the anniversary of the end of the 
  accounting period in which the shares 
  were issued;                                       30.0% 
 7. To ensure that no holding in any                 Complied 
  company has at any time in the period 
  represented more than 15% by value of 
  the VCT's investments at the time of 
 8. To ensure that the VCT's ordinary                Complied 
  capital has throughout the period been 
  listed on a regulated European market; 
 9. To ensure that the VCT has not made              Complied 
  an investment in a company which causes 
  it to receive more than the permitted 
  investment from State Aid sources; 
 10. To ensure that since 17 November                Complied 
  2015, the VCT has not made an investment 
  in a company which exceeds the maximum 
  permitted age requirement; 
 11. To ensure that since 17 November                Complied 
  2015, funds invested by the VCT in another 
  company have not been used to make a 
  prohibited acquisition; and 
 12. To ensure that since 6 April 2016,              Complied 
  the VCT has not made a prohibited non-qualifying 


The Directors present the tenth Annual Report and Accounts of the VCT for the year ended 30 September 2020. The Corporate Governance Report forms part of this report.

Share capital

At the year end, the VCT had in issue 25,515,242 Ordinary Shares and 38,512,032 '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 14.99% of the total number of each class of issued shares from time to time.

At the Annual General Meeting ("AGM") that took place on 25 June 2020, the VCT was authorised to make market purchases of its Ordinary Shares and 'A' Shares, up to a limit of 4,218,239 Ordinary Shares and 6,166,429 'A' Shares which represented approximately 14.99% of the issued Ordinary Share capital and 'A' Share capital at the date of the AGM. At the current date, authority remains for 883,596 Ordinary Shares and 2,722,436 'A' Shares. A resolution to renew this authority will be put to Shareholders at the AGM taking place on 4 March 2021.

The payment of an annual dividend of 5.8p (5.3133p per Ordinary Share and 0.4867p per 'A' Share) was announced on 3 December, and this will be paid on 31 December 2020.

The minimum price which may be paid for an Ordinary Share or an 'A' Share is 0.1p, exclusive of all expenses, and the maximum price which may be paid for an Ordinary Share or an 'A' Share is an amount, exclusive of all expenses, equal to 105% of the average of the middle market quotations.

Substantial interests

As at 30 September 2020, 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

                               Pence     Pence 
                                per       per 
                    GBP'000     Ord       'A' 
                                Share     Share 
  for the year       (1,112)    4.4      - 
                 -----------  -------  -------- 
  20 Dec 2019 
    Dividend        1,543     5.3133   0.4867 
                 -----------  -------  -------- 
  31 Dec 2020 
    Dividend        1,543     5.3133   0.4867 
                 -----------  -------  -------- 


The Directors of the VCT during the year and their beneficial interests in the issued Ordinary Shares and 'A' Shares at 30 September 2020 and at the date of this report were as follows:

                                 As at the          As at 30             As at 
                                   date of              Sept           30 Sept 
   Directors                   this report              2020              2019 
 Ord                                24,953            24,953            24,953 
 Gill Nott 
 'A'                                24,953            24,953            24,953 
 ----------------------  -----------------  ----------------  ---------------- 
 Ord                               330,750           330,750           330,750 
 Stuart Knight 
 'A'                               330,750           330,750           330,750 
 ----------------------  -----------------  ----------------  ---------------- 
 Ord                                16,635            16,635                 - 
 Duncan Grierson 
 'A'                                16,635            16,635                 - 
 ----------------------  -----------------  ----------------  ---------------- 
 Ord                                     -                 -                 - 
 David Hunter 
 'A'                                     -                 -                 - 
 ----------------------  -----------------  ----------------  ---------------- 

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, which were refreshed during the year and are terminable on three months' notice by either side. They are available on request at the VCT'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, none of the directors are due to stand for re-election. The Directors' appointment dates and the date of their last election are shown below:

                         Date of             Most recent 
                          original            date of 
  Director                appointment         re-election 
Gill Nott 
 (Chairman)          01/05/2018          06/03/2019 
                   ------------------  ------------------ 
Stuart Knight      31/01/2017          25/06/2020 
 Duncan Grierson 
 David Hunter 
                   ------------------  ------------------ 
                   16/07/2018          06/03/2019 
                   ------------------  ------------------ 
                   18/09/2019          25/06/2020 
                   ------------------  ------------------ 

The Directors believe that the Board has an appropriate balance of skills, experience, independence and knowledge of the VCT and the sector in which it operates to enable it to provide effective strategic leadership and proper guidance of the VCT. The Board confirms that, following the evaluation process set out in the Corporate Governance Statement, the performance of each 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 tenth Annual General Meeting ("AGM") will be held on Thursday 4 March 2021. The Notice of the Annual General Meeting and Form of Proxy will be circulated with this Annual Report.

The Board has considered all options for the upcoming AGM in 2021 and in particular how best to manage the potential impact of the COVID-19 pandemic and minimise disruption in convening the AGM. The Board has taken into account Government guidance, including evolving rules on staying at home, social distancing and avoiding public gatherings ("COVID-19 Measures"). Given the possibility that some level of restriction on public gatherings and maintaining social distancing will remain in place in March 2021, the Board may decide to amend the format of the AGM. Any change of format will be notified via the VCT's website and Regulatory Information Service.


There is a requirement to undertake an audit tender for the year ended 30 September 2021, and BDO LLP has indicated its willingness to retender. Separate resolutions will be proposed at the AGM to appoint the new auditor, or 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 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.

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

performance, business model and strategy.

Directors' statement pursuant to the disclosure and transparency rules

Each of the Directors 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, '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/new-energy-sustainable- infrastructure/) 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.

Other matters

During the year, the VCT did not have any employees (2019: nil) and therefore there is no comparison data available for the change in the Directors' remuneration to average change in employee remuneration.

Events after the end of the reporting period

Following the period end the VCT will pay dividends in respect of the year ended 30 September 2020, of 5.3133p per Ordinary Share and 0.4867p per 'A' Share. These dividends will be paid on 31 December 2020 to Shareholders on the register at 11 December 2020.

The VCT invested GBP12,500 into bio-bean Limited in October 2020 as part of a follow-on funding round alongside other investors, including its sister company, VCT2.

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

Gill Nott


21 December 2020


The financial information set out below does not constitute the Company's statutory accounts for the years ended 30 September 2019 and 2020 but is derived from those accounts. Statutory accounts for 2019 have been delivered to the Registrar of Companies, and those for 2020 will be delivered in due course. The Auditors have reported on those accounts; their report was (i) unqualified, (ii) did not include a reference to any matters to which the Auditors drew attention by way of emphasis without qualifying their report and (iii) did not contain a statement under Section 498 (2) or (3) of the Companies Act 2006. The text of the Auditors' report can be found in the Company's full Annual Report and Accounts at https://greshamhouse.com/real-assets/new-energy/gresham-house-renewable-energy-vct-1-plc/ .


For the year ended 30 September 2020

                                      Year ended 30 September      Year ended 30 September 
                                       2020                         2019 
                                      Revenue  Capital  Total      Revenue   Capital   Total 
                                ----  -------  -------  ---------  --------  --------  ------- 
                                Note  GBP'000  GBP'000  GBP'000    GBP'000   GBP'000   GBP'000 
                                ----  -------  -------  ---------  --------  --------  ------- 
 Income                         3     256      -        256        86        -         86 
                                ----  -------  -------  ---------  --------  --------  ------- 
 (Loss)/gain on investments     10    -        (624)    (624)      -         1,305     1,305 
                                ----  -------  -------  ---------  --------  --------  ------- 
                                      256      (624)    (368)      86        1,305     1,391 
                                ----  -------  -------  ---------  --------  --------  ------- 
 Investment advisory 
  fees                          4     (240)    (80)     (320)      (260)     (86)      (346) 
                                ----  -------  -------  ---------  --------  --------  ------- 
 Other expenses                 5     (374)    (50)     (424)      (237)     -         (237) 
                                ----  -------  -------  ---------  --------  --------  ------- 
                                      (614)    (130)    (744)      (497)     (86)      (583) 
                                ----  -------  -------  ---------  --------  --------  ------- 
 (Loss)/profit on ordinary 
  before tax                            (358)    (754)    (1,112)    (411)     1,219     808 
                                ----  -------  -------  ---------  --------  --------  ------- 
 Tax on total comprehensive 
  and ordinary activities       7     -        -        -          -         -         - 
                                ----  -------  -------  ---------  --------  --------  ------- 
 (Loss)/profit for 
  the year and total 
  comprehensive (loss)/income           (358)    (754)    (1,112)    (411)     1,219     808 
                                ----  -------  -------  ---------  --------  --------  ------- 
 Basic and diluted 
  (loss)/earnings per 
                                ----  -------  -------  ---------  --------  --------  ------- 
 Ordinary Share                 9     (1.4p)   (3.0p)   (4.4p)     (1.7p)    5.1p      3.4p 
                                ----  -------  -------  ---------  --------  --------  ------- 
 'A' Share                      9     -        -        -          -         -         - 
                                ----  -------  -------  ---------  --------  --------  ------- 

All Revenue and Capital items in the above statement derive from continuing operations. No operations were discontinued during the year. 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 October 2019) 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.


As at 30 September 2020

                                                               2020                  2019 
                                    Note          GBP'000   GBP'000      GBP'000  GBP'000 
                                    ----  ----------------  -------  -----------  ------- 
 Fixed assets 
                                    ----  ----------------  -------  -----------  ------- 
 Investments                        10                      30,428                29,572 
                                    ----  ----------------  -------  -----------  ------- 
 Current assets 
                                    ----  ----------------  -------  -----------  ------- 
 Debtors                            11               230                    273 
                                    ----  ----------------  -------  -----------  ------- 
 Cash at bank and in hand                             57                  1,046 
                                    ----  ----------------  -------  -----------  ------- 
                                                     287                  1,319 
                                    ----  ----------------  -------  -----------  ------- 
 Creditors: amounts falling 
  due within one year               12              (367)                  (147) 
                                    ----  ----------------  -------  -----------  ------- 
 Net current (liabilities)/assets                           (80)                  1,172 
                                    ----  ----------------  -------  -----------  ------- 
 Creditors: amounts falling 
  due after more than one year      13             (3,081)                 (822) 
                                    ----  ----------------  -------  -----------  ------- 
 Net assets                                                 27,267                29,922 
                                    ----  ----------------  -------  -----------  ------- 
 Capital and reserves 
                                    ----  ----------------  -------  -----------  ------- 
 Called up Ordinary Share 
  capital                           14                      28                    28 
                                    ----  ----------------  -------  -----------  ------- 
 Called up 'A' Share capital        14                      41                    41 
                                    ----  ----------------  -------  -----------  ------- 
 Share premium account              15                      9,541                 9,541 
                                    ----  ----------------  -------  -----------  ------- 
 Treasury Shares                    15                      (2,991)               (2,991) 
                                    ----  ----------------  -------  -----------  ------- 
 Special reserve                    15                      5,714                 7,257 
                                    ----  ----------------  -------  -----------  ------- 
 Revaluation reserve                15                      16,893                17,522 
                                    ----  ----------------  -------  -----------  ------- 
 Capital redemption reserve         15                      3                     3 
                                    ----  ----------------  -------  -----------  ------- 
 Capital reserve - realised         15                      (1,426)               (1,301) 
                                    ----  ----------------  -------  -----------  ------- 
 Revenue reserve                    15                      (536)                 (178) 
                                    ----  ----------------  -------  -----------  ------- 
 Total Shareholders' funds                                  27,267                29,922 
                                    ----  ----------------  -------  -----------  ------- 
 Basic and diluted net asset 
  value per share 
                                    ----  ----------------  -------  -----------  ------- 
 Ordinary Share                     16                      106.7p                117.1p 
                                    ----  ----------------  -------  -----------  ------- 
 'A' Share                          16                      0.1p                  0.1p 
                                    ----  ----------------  -------  -----------  ------- 

The financial statements of Gresham House Renewable Energy VCT1 plc were approved and authorised for issue by the Board of Directors and were signed on its behalf by:

Gill Nott


Company number: 07378392

Date: 21 December 2020

The accompanying notes form an integral part of these financial statements.


For the year ended 30 September 2020

                    Called   Share    Treasury  Funds     Special  Reevaluation  Capital     Capital         Revenue  Total 
                    up       Premium   Shares   held      reserve   reserve      redemption   reserve        reserve 
                    share    Account            in                               reserve      realised 
                    capital                     respect 
                                                not yet 
                    GBP'000  GBP'000  GBP'000   GBP'000   GBP'000      GBP'000   GBP'000         GBP'000     GBP'000  GBP'000 
                    -------  -------  --------  --------  -------  ------------  ----------  --------------  -------  --------- 
 At 30 September 
  2018              66       8,187    (2,695)   515       8,920        16,257    2               (1,255)     233      30,230 
                    -------  -------  --------  --------  -------  ------------  ----------  --------------  -------  --------- 
  income            -        -        -         -         -             1,219    -           -               (411)    808 
                    -------  -------  --------  --------  -------  ------------  ----------  --------------  -------  --------- 
 Transfer of net 
  realised loss to 
  reserve-realised    -        -        -         -         -                46    -                   (46)    -        - 
                    -------  -------  --------  --------  -------  ------------  ----------  --------------  -------  --------- 
 Transactions with 
                    -------  -------  --------  --------  -------  ------------  ----------  --------------  -------  --------- 
 Dividend paid      -        -        -         -         (1,612)  -             -           -               -        (1,612) 
                    -------  -------  --------  --------  -------  ------------  ----------  --------------  -------  --------- 
 Repurchase of 
  Shares            -        -        (296)     -         -        -             1           -               -        (295) 
                    -------  -------  --------  --------  -------  ------------  ----------  --------------  -------  --------- 
 Issue of Shares    3        1,354    -         -         (51)     -             -           -               -        1,306 
                    -------  -------  --------  --------  -------  ------------  ----------  --------------  -------  --------- 
 Unallotted Shares  -        -        -         (515)     -        -             -           -               -        (515) 
                    -------  -------  --------  --------  -------  ------------  ----------  --------------  -------  --------- 
 At 30 September 
  2019              69       9,541    (2,991)   -         7,257        17,522    3                (1,301)    (178)    29,922 
                    -------  -------  --------  --------  -------  ------------  ----------  --------------  -------  --------- 
   loss               -        -        -         -         -        (754)         -           -               (358)    (1,112) 
                    -------  -------  --------  --------  -------  ------------  ----------  --------------  -------  --------- 
 Transfer of net 
  realised loss to 
  reserve-realised    -        -        -         -         -               125    -                  (125)    -        - 
                    -------  -------  --------  --------  -------  ------------  ----------  --------------  -------  --------- 
 Transactions with 
                    -------  -------  --------  --------  -------  ------------  ----------  --------------  -------  --------- 
 Dividend paid      -        -        -         -         (1,543)  -             -           -               -        (1,543) 
                    -------  -------  --------  --------  -------  ------------  ----------  --------------  -------  --------- 
 At 30 September 
  2020              69       9,541    (2,991)   -         5,714       16,893     3           (1,426)         (536)    27,267 
                    -------  -------  --------  --------  -------  ------------  ----------  --------------  -------  --------- 

The accompanying notes form an integral part of these financial statements.


For the year ended 30 September 2020

                                                      Year ended     Year ended 
                                                       30 September   30 September 
                                                      2020           2019 
                                                      -------------  --------------------------- 
                                                Note  GBP'000        GBP'000 
                                                ----  -------------  --------------------------- 
 Cash flows from operating activities 
  (Loss)/profit for the financial year                  (1,112)        808 
                                                ----  -------------  --------------------------- 
 Losses/(gains) on investments                        624            (1,305) 
                                                ----  -------------  --------------------------- 
 Decrease/(increase) in debtors                       43             (31) 
                                                ----  -------------  --------------------------- 
 Decrease in creditors                                (12)           (48) 
                                                ----  -------------  --------------------------- 
 Net cash outflow from operating activities           (457)          (576) 
                                                ----  -------------  --------------------------- 
 Cash flows from investing activities 
  Proceeds from sale of investments/loan 
  note redemptions                                      135            546* 
                                                ----  -------------  --------------------------- 
 Investments purchased at cost                        (1,615)        (5) 
                                                ----  -------------  --------------------------- 
 Net cash (outflow)/inflow from investing 
  activities                                          (1,480)        541 
                                                ----  -------------  --------------------------- 
 Net cash outflow before financing activities         (1,937)        (35) 
                                                ----  -------------  --------------------------- 
 Cash flows from financing activities 
  Equity Dividends paid                           8     (1,543)        (1,612) 
                                                ----  -------------  --------------------------- 
 Proceeds from/(repayment of) loans Issue             2,491 
  of Shares                                            -                             (300)* 
  Purchase of own shares                               -                              791^ (295) 
                                                ----  -------------  --------------------------- 
 Net cash inflow/(outflow) from financing 
  activities                                          948            (1,416) 
                                                ----  -------------  --------------------------- 
 Net decrease in cash                                 (989)          (1,451) 
                                                ----  -------------  --------------------------- 
 Cash and cash equivalents at start of 
  year                                                1,046          2,497 
                                                ----  -------------  --------------------------- 
 Cash and cash equivalents at end of year             57             1,046 
                                                ----  -------------  --------------------------- 
 Cash and cash equivalents comprise 
  Cash at bank and in hand                              57             1,046 
                                                ----  -------------  --------------------------- 
 Total cash and cash equivalents                      57             1,046 
                                                ----  -------------  --------------------------- 

*In December 2018 the loan note investment made in Lunar 2 Limited by the VCT was repaid. Instead of the VCT receiving the cash proceeds from this repayment, the amount was instead credited to various outstanding loans due to investee companies, including Lunar 2 Limited, from the VCT and included within amounts falling due after more than one year. Please refer to note 13.

^ In October 2018 the VCT issued additional shares to participating investors. A portion of the cash proceeds for these share subscriptions were received during the prior year and accounted for as Funds held in respect of Shares not yet allotted in the prior year. The remaining balance of the cash proceeds due to the VCT for these share subscriptions was received during the year ended 30 September 2019.

The accompanying notes form an integral part of these financial statements.


For the year ended 30 September 2020

   1.             General Information 

Gresham House Renewable Energy VCT1 plc ("the 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 under the Companies Act 2006.

   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 October 2019 ("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. The financial statements are presented in Sterling (GBP).

Presentation of income statement

In order to better reflect the activities of a Venture Capital Trust and in accordance with the SORP, supplementary information which analyses the Income Statement between items of a revenue and capital nature has been presented alongside the Income Statement. The 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.


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. The valuation methodologies for unquoted entities used by the IPEV to ascertain the fair value of an investment are as follows:

   -       Multiples; 
   -       Net assets; 
   -       Discounted cash flows or earnings (of underlying business); 
   -       Discounted cash flows (from the investment); and 
   -       Industry valuation benchmarks. 

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.


Dividend income from investments is recognised when the Shareholders' rights to receive payment have been established, normally the ex-dividend date.

Interest income is accrued on a time apportionment basis, by reference to the principal sum outstanding and at the effective interest rate applicable and only where there is reasonable certainty of collection in the foreseeable future.


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 the long term.


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 VCT'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 realized 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.

Issue costs

Issue costs in relation to the shares issued for each share class have been deducted from the special reserve.

   3.             Income 
                           Year ended     Year ended 
                            30 September   30 September 
                            2020           2019 
                            GBP'000        GBP'000 
 Income from investments 
                           -------------  ------------- 
 Loan stock interest       71             86 
                           -------------  ------------- 
 Dividend income           185            - 
                           -------------  ------------- 
                           256            86 
                           -------------  ------------- 
   4.             Investment advisory fees 

The investment advisory fees for the year ended 30 September 2020, which were charged quarterly to the VCT, were based on 1.15% of the net assets as at the previous quarter end.

                            Year ended 30 September         Year ended 30 September 
                             2020                            2019* 
                            Revenue  Capital        Total   Revenue   Capital   Total 
                            -------  -------  ------------  --------  --------  ------- 
                            GBP'000  GBP'000       GBP'000  GBP'000   GBP'000   GBP'000 
                            -------  -------  ------------  --------  --------  ------- 
 Investment advisory fees   240      80              320    260       86        346 
                            -------  -------  ------------  --------  --------  ------- 

* With effect from 7 November 2017, the Investment Advisory fee percentage was reduced from 2.0% of net assets per annum to 1.4%, for the period to 6 November 2018. With effect from 7 November 2018, the Investment Advisory fee has reduced further, to 1.15% of net assets per annum.

   5.             Other expenses 
                              Year ended 30 September      Year ended 30 September 
                               2020                         2019 
                              Revenue   Capital   Total    Revenue   Capital   Total 
                              --------  --------  -------  --------  --------  ------- 
                              GBP'000   GBP'000   GBP'000  GBP'000   GBP'000   GBP'000 
                              --------  --------  -------  --------  --------  ------- 
 Administration services      138       -         138      50        -         50 
                              --------  --------  -------  --------  --------  ------- 
 Directors' remuneration      92        -         92       68        -         68 
                              --------  --------  -------  --------  --------  ------- 
 Social security costs        3         -         3        4         -         4 
                              --------  --------  -------  --------  --------  ------- 
 Auditor's remuneration for 
  audit                       34        -         34       29        -         29 
                              --------  --------  -------  --------  --------  ------- 
 Transaction costs            -         50        50       -         -         - 
                              --------  --------  -------  --------  --------  ------- 
 Other                        107       -         107      86        -         86 
                              --------  --------  -------  --------  --------  ------- 
                              374       50        424      237       -         237 
                              --------  --------  -------  --------  --------  ------- 

The annual running costs of the VCT for the year are subject to a cap of 3.0% of the net assets of the VCT. During the year ended 30 September 2020, the annual running costs came to 2.4% of net assets (2019: 1.9%), therefore this 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 
                                                                   2020           2019 
                                                                    GBP'000        GBP'000 
                                                                   -------------  ------------- 
 (a) Tax charge for the year 
                                                                   -------------  ------------- 
       UK corporation tax at 19% (2019: 19%)                       -              - 
                                                                   -------------  ------------- 
       Charge for the year                                         -              - 
                                                                   -------------  ------------- 
 (b) Factors affecting tax charge for the year 
                                                                   -------------  ------------- 
       (Loss)/profit on ordinary activities before taxation        (1,112)        808 
                                                                   -------------  ------------- 
       Tax (credit)/charge calculated on (loss)/return 
        on ordinary activities before taxation at the applicable 
        rate of 19% (2019: 19%)                                      (211)          154 
                                                                   -------------  ------------- 
       Effects of: 
                                                                   -------------  ------------- 
       UK dividend income                                          (35)           - 
                                                                   -------------  ------------- 
       Losses/(gains) on investments                               118            (248) 
                                                                   -------------  ------------- 
       Excess management expenses on which deferred tax 
        not recognised                                             128            94 
                                                                   -------------  ------------- 
       Total tax charge                                            -              - 
                                                                   -------------  ------------- 

Excess management fees, which are available to be carried forward and set off against future taxable income, amounted to 4,376,000 (2019: GBP3,812,000). The associated deferred tax asset of GBP831,000 (2019: GBP648,000) 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.

   8.             Dividends 
                            Year ended 30 September      Year ended 30 September 
                             2020                         2019 
                            Revenue   Capital   Total    Revenue   Capital   Total 
                            --------  --------  -------  --------  --------  ------- 
                            GBP'000   GBP'000   GBP'000  GBP'000   GBP'000   GBP'000 
                            --------  --------  -------  --------  --------  ------- 
  2020 Interim Ordinary - 
  5.3133p                     -         1,356     1,356    -         -         - 
                            --------  --------  -------  --------  --------  ------- 
 2020 Interim A - 0.4867p   -         187       187      -         -         - 
                            --------  --------  -------  --------  --------  ------- 
  2019 Interim Ordinary - 
  5.3133p                     -         -         -        -         1,356     1,356 
                            --------  --------  -------  --------  --------  ------- 
 2019 Interim A - 0.4867p   -         -         -        -         187       187 
                            --------  --------  -------  --------  --------  ------- 
                            -         1,543     1,543    -         1,543     1,543 
                            --------  --------  -------  --------  --------  ------- 

The Interim 2019 dividends were paid on 20 December 2019, to Shareholders on the register as at 29 November 2019. The Interim 2020 dividends will be paid on 31 December 2020 to Shareholders on the register as at 11 December 2020.

   9.             Basic and diluted earnings per share 
                                                     Weighted                                   Capital 
                                                     average      Revenue          Pence        (loss)/          Pence 
                                                     number       loss             per          return           per 
                                                     of shares    GBP'000          share        GBP'000          share 
                                                     in issue 
 Year ended 
  2020       Ordinary Shares 25,515,242                         (358)      (1.4)          (754)          (3.0) 
             -------------------------------------------------  ---------  -------------  -------------  ------------- 
             'A' Shares 38,512,032                              -          -              -              - 
             -------------------------------------------------  ---------  -------------  -------------  ------------- 
 Year ended 
  2019       Ordinary Shares 23,957,228                         (411)      (1.7)          1,219          5.1 
             -------------------------------------------------  ---------  -------------  -------------  ------------- 
 'A' Shares 36,912,555                                          -          -              -              - 
 -------------------------------------------------------------  ---------  -------------  -------------  ------------- 

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.          Fixed assets - investments 
                                                                                     2020                 2019 
                                                                                     Unquoted              Unquoted 
                                                                                     investments           investments 
                                               GBP'000                                              GBP'000 
---------------------------------------------  ---------------------------------------------------  ------------------ 
 Opening cost at start of the year             12,050                                               14,196 
 Net unrealised gains at start of the year     17,522                                               16,257 
---------------------------------------------  ---------------------------------------------------  ------------------ 
 Opening fair value at start of the year       29,572                                               30,453 
 Movement in the year: 
  Purchased at cost                              1,615                                                5 
 Disposals proceeds/redemption of loan notes   (135)                                                (2,191) 
 Realised gains on disposals                   5                                                    40 
 Net unrealised (losses)/gains in the income 
  statement                                    (629)                                                1,265 
---------------------------------------------  ---------------------------------------------------  ------------------ 
 Closing fair value at year end                30,428                                               29,572 
---------------------------------------------  ---------------------------------------------------  ------------------ 
 Closing cost at year end                      13,536                                               12,050 
 Net unrealised gains at year end              16,892                                               17,522 
---------------------------------------------  ---------------------------------------------------  ------------------ 
 Closing fair value at year end                30,428                                               29,572 
---------------------------------------------  ---------------------------------------------------  ------------------ 

During the year, the VCT received GBP135,000 (2019: GBP2,191,000) from the disposal of investments comprising of both equity and loan notes. The cost of these investments at the start of the year was GBP130,000 (2019: GBP2,151,000). These investments have been revalued and measured at fair value over time, and up until the point of disposal any unrealised gains or losses were included in the fair value of the investments.

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        Level       2020    Level    Level    Level    2019 
                                 2             3                  1        2        3 
---------------------  -------  -------  ----------  ----------  -------  -------  -------  ------- 
                       GBP'000  GBP'000     GBP'000     GBP'000  GBP'000  GBP'000  GBP'000  GBP'000 
---------------------  -------  -------  ----------  ----------  -------  -------  -------  ------- 
 Unquoted loan notes   -        -            1,960       1,960   -        -        809      809 
 Unquoted equity       -        -           28,468      28,468   -        -        28,763   28,763 
---------------------  -------  -------  ----------  ----------  -------  -------  -------  ------- 
                       -        -           30,428      30,428   -        -        29,572   29,572 
---------------------  -------  -------  ----------  ----------  -------  -------  -------  ------- 

During the years ended 30 September 2020 and 30 September 2019 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 
                                                         loan notes    equity      Total 
                                                       GBP'000       GBP'000     GBP'000 
-----------------------------------------------------  ------------  ----------  ------- 
 Balance at 30 September 2019                          809           28,763      29,572 
 Movements in the income statement: 
 Unrealised gains/(losses) in the income statement     66            (695)       (629) 
 Realised gains in the income statement                5             -           5 
-----------------------------------------------------  ------------  ----------  ------- 
                                                       71            (695)       (624) 
 Additions at cost                                     1,215         400         1,615 
 Sales proceeds/redemption of loan notes               (135)         -           (135) 
-----------------------------------------------------  ------------  ----------  ------- 
 Balance at 30 September 2020                          1,960         28,468      30,428 
-----------------------------------------------------  ------------  ----------  ------- 

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.

Investments which are reaching maturity or have an established level of maintainable earnings are valued on a discounted cash flow basis. This was also the case in the prior year.

The Board and the Investment Adviser believe that the valuation as at 30 September 2020 reflects the most appropriate assumptions at that date, giving due regard to all information available from each investee company. Consequently, the variation in the spread of reasonable, possible, alternative valuations is likely to be within the range set out in Note 17.

   11.          Debtors 
                                  2020              2019 
                                   GBP'000           GBP'000 
--------------------------------  --------  ---------------- 
 Prepayments and accrued income   230       273 
--------------------------------  --------  ---------------- 
                                  230       273 
--------------------------------  --------  ---------------- 

12. Creditors: amounts falling due within one year

                                                                                        2020             2019 
                                                                                         GBP'000          GBP'000 
----------------------------------  -------------------------  ---------------------------------  --------------- 
 Other loans*                                                  297                                65 
 Taxation and social security                                  7                                  4 
 Accruals and deferred income                                  63                                 78 
-------------------------------------------------------------  ---------------------------------  --------------- 
                                                               367                                147 
 ------------------------------------------------------------  ---------------------------------  --------------- 
  * Other loans falling due 
  within one year: 
                                                                                        2020             2019 
   Investee company                        Repayment date                                GBP'000          GBP'000 
----------------------------------  -------------------------  ---------------------------------  --------------- 
 Hewas Solar Limited                     n/a^                  65                                 65 
      30 April 2021                                            66 (1)                             - 
 ------------------------------------------------------------  ---------------------------------  --------------- 
                                                               131                                65 
 ------------------------------------------------------------  ---------------------------------  --------------- 
 St Columb Solar Limited                 30 April 2021         20                                 - 
----------------------------------  -------------------------  ---------------------------------  --------------- 
                                                               20                                 - 
 ------------------------------------------------------------  ---------------------------------  --------------- 
 Ayshford Solar (Holding) Limited        23 September 2021     31                                 - 
----------------------------------  -------------------------  ---------------------------------  --------------- 
                                                               31                                 - 
 ------------------------------------------------------------  ---------------------------------  --------------- 
 HRE Willow Limited                      15 June 2021          18                                 - 
       12 September 2021                                        68 
        23 September 2021                                       29 
 ------------------------------------------------------------  ---------------------------------  --------------- 
                                                               115                                - 
 ------------------------------------------------------------  ---------------------------------  --------------- 

^ In September 2015, the VCT and Hewas Solar Limited (the "lender") entered into a loan agreement whereby 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 loan is interest free.

(1) The above loan amounts were included within amounts falling due after one year in the prior year financial statements.

13. Creditors: amounts falling due after more than one year

                                2020              2019 
                             GBP'000           GBP'000 
 Other loans                   3,081               822 
               ---------------------  ---------------- 
                               3,081               822 
               ---------------------  ---------------- 

The balance of other loans is made up of amounts borrowed from the underlying portfolio companies. An analysis of the maturity dates of each of the loans is shown below. Whilst each loan has an applicable repayment date, the VCT has the right to repay all or any part of the loans at any time. All loans are interest free.

Creditors falling due after more than one year are repayable as follows:

                                                                               2020             2019 
   Investee company              Repayment date                                 GBP'000          GBP'000 
 HRE Willow Limited            15 June 2021        -*                                    18 
                            ---------------------  ------------------------------------  --------------- 
    12 September 2021                              -*                                    68 
 ------------------------------------------------  ------------------------------------  --------------- 
    23 September 2021                              -*                                    29 
 ------------------------------------------------  ------------------------------------  --------------- 
                                                   -                                     115 
 ------------------------------------------------  ------------------------------------  --------------- 
 Hewas Solar Limited           30 April 2021       -*                                    66 
                            ---------------------  ------------------------------------  --------------- 
                                                   -                                     66 
 ------------------------------------------------  ------------------------------------  --------------- 
 St Columb Solar Limited       30 April 2021       -*                                    20 
                            ---------------------  ------------------------------------  --------------- 
    2 February 2023                                40                                    40 
 ------------------------------------------------  ------------------------------------  --------------- 
                                                   40                                    60 
 ------------------------------------------------  ------------------------------------  --------------- 
 Ayshford Solar (Holding) 
  Limited                      23 September 2021   -*                                    31 
                            ---------------------  ------------------------------------  --------------- 
    13 October 2021                                20                                    20 
 ------------------------------------------------  ------------------------------------  --------------- 
    11 September 2022                              300                                   300 
 ------------------------------------------------  ------------------------------------  --------------- 
    28 September 2022                              50                                    50 
 ------------------------------------------------  ------------------------------------  --------------- 
    22 February 2023                               180                                   180 
 ------------------------------------------------  ------------------------------------  --------------- 
                                                   550                                   581 
 ------------------------------------------------  ------------------------------------  --------------- 
 Amounts repayable in up 
  to five years                                    590                                   822 
                                                   ------------------------------------  --------------- 
 Lunar 2 Limited               18 December 2024    1,543                                 - 
                            ---------------------  ------------------------------------  --------------- 
    14 January 2025                                473                                   - 
 ------------------------------------------------  ------------------------------------  --------------- 
    1 April 2025                                   50                                    - 
 ------------------------------------------------  ------------------------------------  --------------- 
    23 April 2025                                  100                                   - 
 ------------------------------------------------  ------------------------------------  --------------- 
                                                   2,166                                 - 
 ------------------------------------------------  ------------------------------------  --------------- 
 Gloucester Wind Limited       14 January 2025     200                                   - 
                            ---------------------  ------------------------------------  --------------- 
                                                   200                                   - 
 ------------------------------------------------  ------------------------------------  --------------- 
 Penhale Solar Limited         14 January 2025     75                                    - 
                            ---------------------  ------------------------------------  --------------- 
                                                   75                                    - 
 ------------------------------------------------  ------------------------------------  --------------- 
 Minsmere Power Limited        14 January 2025     50                                    - 
                            ---------------------  ------------------------------------  --------------- 
                                                   50                                    - 
 ------------------------------------------------  ------------------------------------  --------------- 
 Amounts repayable after 
  more than five years                             2,491                                 - 
                                                   ------------------------------------  --------------- 
 Other loans                                       3,081                                 822 
                                                   ------------------------------------  --------------- 

14. Called up share capital

                                                 2020              2019 
                                                  GBP'000           GBP'000 
-----------------------------------------------  --------  ---------------- 
 Allotted, called up and fully-paid: 
 25,515,242 (2019: 25,515,242) Ordinary Shares 
  of 0.1p each                                   28        28 
 38,512,032 (2019: 38,512,032) 'A' Shares of 
  0.1p each                                      41        41 
-----------------------------------------------  --------  ---------------- 
                                                 69        69 
-----------------------------------------------  --------  ---------------- 

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 2020 the VCT did not repurchase any Ordinary Shares or 'A' Shares (2019: 264,048 Ordinary Shares and 264,048 'A' Shares, at an average price, per combined holding, of 111.8p). All repurchased shares are currently held in treasury.

During the year ended 30 September 2020, the VCT issued no Ordinary Shares (2019: 1,084,848 Ordinary Shares at an average price of 124.9p) and no 'A' Shares (2019: 1,741,728 'A' Shares at an average price of 0.1p).

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 GBP5,000; 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 externally imposed capital requirements.

   15.          Reserves 
                              2020              2019 
                               GBP'000           GBP'000 
----------------------------  --------  ---------------- 
 Share premium account        9,541     9,541 
 Treasury shares              (2,991)   (2,991) 
 Special reserve              5,714     7,257 
 Revaluation reserve          16,893    17,522 
 Capital redemption reserve   3         3 
 Capital reserve - realised   (1,426)   (1,301) 
 Revenue reserve              (536)     (178) 
----------------------------  --------  ---------------- 
                              27,198    29,853 
----------------------------  --------  ---------------- 

The Special reserve is available to the VCT to enable the purchase of its own shares in the market without affecting its ability to pay dividends. The Special reserve, Capital reserve - realised and Revenue reserve are all distributable reserves. At 30 September 2020, distributable reserves were GBP3,752,000 (2019: GBP5,778,000).

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, the payment of dividends and other non-capital realised movements.

   16.          Basic and diluted net asset value per share 
                2020        2019                2020                        2019 
                Shares in issue           Net asset value             Net asset value 
             ----------------------  --------------------------  -------------------------- 
                                     Pence per share             Pence per share 
                                                        GBP'000                     GBP'000 
             ----------  ----------  ---------------  ---------  ---------------  --------- 
 Shares      25,515,242  25,515,242  106.7            27,229     117.1            29,884 
             ----------  ----------  ---------------  ---------  ---------------  --------- 
'A' Shares   38,512,032  38,512,032  0.1              38         0.1              38 
             ----------  ----------  ---------------  ---------  ---------------  --------- 

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 14.

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 net asset value per share disclosed therefore represents both the basic and diluted net asset value per Ordinary Share and per 'A' Share.

   17.          Financial Instruments 

The VCT held the following categories of financial instruments at 30 September 2020:

                                                                 2020            2020            2019           2019 
                                                                  Cost           Value            Cost           Value 
                                        GBP'000                         GBP'000         GBP'000         GBP'000 
                                        ------------------------------  --------------  --------------  -------------- 
 Assets at fair value through 
  profit or loss                        13,536                          30,428          12,050          29,572 
                                        ------------------------------  --------------  --------------  -------------- 
 Other financial (liabilities)/assets   (58)                            (58)            (68)            (68) 
                                        ------------------------------  --------------  --------------  -------------- 
 Cash at bank                           57                              57              1,046           1,046 
                                        ------------------------------  --------------  --------------  -------------- 
 Other loans                            (3,378)                         (3,378)         (887)           (887) 
                                        ------------------------------  --------------  --------------  -------------- 
 Total                                  10,157                          27,049          12,141          29,663 
                                        ------------------------------  --------------  --------------  -------------- 

The VCT's financial instruments comprise investments held at fair value through profit or loss, being equity and loan stock investments in unquoted companies, loans and receivables consisting of short term debtors, cash deposits and financial liabilities being creditors arising from its operations. 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 has no gearing or other financial liabilities apart from short and long-term creditors and 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 overleaf.

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. 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.

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 both equity and debt financial instruments in unquoted investments are concentrated in renewable energy projects with predetermined expected returns. Consequently, the investment price risk on these assets 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 2020, the unquoted portfolio was valued at GBP30,428,000 (2019: GBP29,572,000). The key inputs to the renewable assets' valuation model are discount rates, inflation, irradiation, degradation, power prices and asset life. The Board has undertaken a sensitivity analysis into the effects of fluctuations in these inputs.

The analysis below is provided to illustrate the sensitivity of the fair value of these investments to an individual input, while all other variables remain constant. The Board considers these changes in inputs to be within reasonable expected ranges. This is not intended to imply the likelihood of change or that possible changes in value would be restricted to this range. The possible effects are quantified below:

                                                               Change in             Change 
                                        Change in               fair value            in NAV 
   Input           Base case            input                   of investments        per share 
                                                                GBP'000               pence 
---------------  -------------------  -----------  ---------------------------  --------------- 
 Discount rate   5.75% - 6.75%        +0.5%        (760)                        (3.0) 
                                      -0.5%        806                          3.2 
 -----------------------------------  -----------  ---------------------------  --------------- 
 Inflation       1.20% - 3.00%        +0.5%        877                          3.4 
                                      -0.5%        (930)                        (3.6) 
 -----------------------------------  -----------  ---------------------------  --------------- 
 Irradiation     785 - 1,270kWh/m 2   +1.0%        638                          2.5 
                                      -1.0%        (638)                        (2.5) 
 -----------------------------------  -----------  ---------------------------  --------------- 
 Degradation     0.30% - 0.40%        +0.1%        (707)                        (2.8) 
                                      -0.1%        716                          2.8 
 -----------------------------------  -----------  ---------------------------  --------------- 
 Power prices    GBP34 - GBP53/MWh    +10.0%       563                          2.2 
                                      -10.0%       (534)                        (2.1) 
 -----------------------------------  -----------  ---------------------------  --------------- 

Asset life

The Board has also considered the potential impact of changes to the anticipated lives of assets in the portfolio. Close to ninety percent of the VCT's value is in assets refinanced by debt, and under the debt facility agreements, substantial reserves are in place for renewing key equipment as and when required. Furthermore, the underlying assets have leases that are valid for the lifetime of the VCT, which cannot be terminated early, and any extensions to the leases would require further planning permission. Accordingly, the asset life assumption has been kept at 25 years and the Board does not consider it appropriate to disclose a sensitivity analysis in respect of asset life.

Non-renewable assets

Investment price risk has been considered separately for the non-renewable energy investments, bio-bean and Rezatec, as these have been valued using private-equity principles and in accordance with the International Private Equity Valuation ("IPEV") Guidelines. The estimation uncertainty for these unquoted investments has been further increased by the COVID-19 pandemic and associated government intervention.

In determining what level of risk applies to these investments a range of factors have been considered, such as the availability and extent of cash resources, the impact of COVID-19 on the relevant industry, and operational impacts on the business. Based upon this assessment, a sensitivity of +/- 20% has been applied to the valuation of Rezatec and bio-bean as at 30 September 2020. This would result in an increase or decrease of GBP161,500 to the fair value of these investments and reflects both the potential positive and negative impacts of COVID-19 on these businesses.

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 and other financial liabilities.


                                                         Average     Average                  2020            2019 
                                                         interest    period                  GBP'000           GBP'000 
                                                         rate        until 
 Fixed rate       8%                                                          days  797               489 
                  -----------------------------------------------  ---------------  ----------------  ---------------- 
 Floating rate    0%                                                                57                1,046 
                  -----------------------------------------------  ---------------  ----------------  ---------------- 
 No interest 
  rate                                                                              26,195            28,128 
                  -----------------------------------------------  ---------------  ----------------  ---------------- 
                                                                                    27,049            29,663 
                  -----------------------------------------------  ---------------  ----------------  ---------------- 

The VCT monitors the level of income received from fixed and floating rate assets and, if appropriate, may make adjustments to the allocation between the categories, in particular, should this be required to ensure compliance with the VCT regulations.

It is estimated that an increase of 1% in interest rates would have increased profit before tax for the year by GBP570 (2019: GBP10,000). The Bank of England base rate increased from 0.5% to 0.75% on 2 August 2018; on 11 March 2020, the Bank of England opted to reduce the base rate to 0.25%. On 19 March 2020, the base rate was reduced further to 0.1%. 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:

                                             2020      2019 
                                              GBP'000   GBP'000 
-------------------------------------------  --------  -------- 
 Investments in loan stocks                  1,960     809 
 Cash and cash equivalents                   57        1,046 
 Interest, dividends and other receivables   225       265 
-------------------------------------------  --------  -------- 
                                             2,242     2,120 
-------------------------------------------  --------  -------- 

The 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.

There have been no loan investments for which the terms have been renegotiated during the year.

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. As the VCT has a relatively low level of creditors being GBP63,000 (2019: GBP82,000) and has long term loans from investee companies (see Note 13 for an analysis of the repayment terms), which have either been repaid at the date of this report or are expected to be repaid by way of future dividends from these companies, being GBP3,378,000 (2019: GBP887,000), the Board believes that the VCT's exposure to liquidity risk is low. The VCT always holds sufficient levels of funds as cash in order to meet expenses and other cash outflows as they arise. For these reasons the Board believes that the 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:

                                                          Due       Due between 
                                                          in         1 year and            Due after    Total 
                                                          less       5 years               5 years 
 As at 30 September 2020        GBP'000                          GBP'000           GBP'000            GBP'000 
                                -------------------------------  ----------------  -----------------  ---------------- 
 Loans payable to investee 
  companies                     297                              590               2,491              3,378 
                                -------------------------------  ----------------  -----------------  ---------------- 
                                297                              590               2,491              3,378 
                                -------------------------------  ----------------  -----------------  ---------------- 
                                                           Due        Due between 
                                                           in         1 year and     Due after 
                                -------------------------------  ----------------  -----------------  ---------------- 
                                1 year                           5 years           5 years                    Total 
   As at 30 September 2019       GBP'000                          GBP'000           GBP'000                    GBP'000 
                                -------------------------------  ----------------  -----------------  ---------------- 
 Loans payable to investee 
  companies                     65                               822               -                  887 
                                -------------------------------  ----------------  -----------------  ---------------- 
                                65                               822               -                  887 
                                -------------------------------  ----------------  -----------------  ---------------- 

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 or loss account at 30 September 2020 as analysed by the expected maturity date is as follows:

                                                 Not     Between    Between    Between            More than 
                                                 later    1 and      2 and      3 and              5 years       Total 
                                                 than 1   2 years    3 years    5 years 
 As at 30 September 2020   GBP'000                       GBP'000    GBP'000    GBP'000    GBP'000              GBP'000 
                           ----------------------------  ---------  ---------  ---------  -------------------  ------- 
 Fully performing loan 
  stock                    -                             -          -          1,100      860                  1,960 
                           ----------------------------  ---------  ---------  ---------  -------------------  ------- 
 Past due loan stock       -                             -          -          -          -                    - 
                           ----------------------------  ---------  ---------  ---------  -------------------  ------- 
                           -                             -          -          1,100      860                  1,960 
                           ----------------------------  ---------  ---------  ---------  -------------------  ------- 
                                                  Not      Between    Between    Between            More than 
                                                  later    1 and      2 and      3 and              5 years 
                                                  than     2 years    3 years    5 years                         Total 
                           ----------------------------  ---------  ---------  ---------  -------------------  ------- 
 As at 30 September 2019   GBP'000                       GBP'000    GBP'000    GBP'000    GBP'000              GBP'000 
                           ----------------------------  ---------  ---------  ---------  -------------------  ------- 
 Fully performing loan 
  stock                    -                             -          -          -          809                  809 
                           ----------------------------  ---------  ---------  ---------  -------------------  ------- 
 Past due loan stock       -                             -          -          -          -                    - 
                           ----------------------------  ---------  ---------  ---------  -------------------  ------- 
                           -                             -          -          -          809                  809 
                           ----------------------------  ---------  ---------  ---------  -------------------  ------- 
   18.          Capital management 

The VCT's objectives when managing capital are to safeguard the VCT's ability to continue as a going concern, so that it can continue 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 to remain a going concern.

As the Investment Policy implies, the Board would consider levels of gearing. As at 30 September 2020 the VCT had loans from investee companies of GBP3,378,000 (2019: GBP887,000). 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 period.

   19.          Contingencies, guarantees and financial commitments 

At 30 September 2020, the VCT had no contingencies, guarantees or financial commitments.

   20.          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.

   21.          Significant interests 

Details of shareholdings in those companies where the VCT's holding, as at 30 September 2020, represents more than 20% of the nominal value of any class of shares issued by the portfolio company are predominantly disclosed in the Review of Investments. Relevant companies which do not feature in the Review of Investments are listed below. All of the companies named are incorporated in England and Wales. The percentage holding in each class of shares also reflects the percentage voting rights in each company as a whole.

                           Registered        Class of   Number    Proportion     Capital          Profit/(loss) 
   Company                  office            shares     held      of class       and reserves     for the 
                                                                   held                            year 
-------------------------  -----------  --------------  -------  -----------  ----------------  --------------- 
 Tumblewind Limited        EC4A 3TW         Ordinary    790,000  50%              GBP852,000    (GBP102,000) 
-------------------------  -----------  --------------  -------  -----------  ----------------  --------------- 
 St Columb Solar Limited   EC4A 3TW         Ordinary    649,999  50%             GBP1,100,000   (GBP36,000) 
-------------------------  -----------  --------------  -------  -----------  ----------------  --------------- 
 Minsmere Power Limited    EC4A 3TW         Ordinary    200,001  50%               GBP191,000   (GBP122,000) 
-------------------------  -----------  --------------  -------  -----------  ----------------  --------------- 
 Penhale Solar Limited     EC4A 3TW         Ordinary    299,601  50%              GBP545,000    GBP15,000 
-------------------------  -----------  --------------  -------  -----------  ----------------  --------------- 
 Small Wind Generation 
  Limited                  EC4A 3TW         Ordinary    840,001  50%          (GBP485,000)      (GBP28,000) 
-------------------------  -----------  --------------  -------  -----------  ----------------  --------------- 
 Lunar 3 Limited           EC4A 3TW         Ordinary    100      50%          GBPnil            GBPnil 
-------------------------  -----------  --------------  -------  -----------  ----------------  --------------- 
   22.          Events after the end of the reporting period 

The Board is fully aware of the severity of the current COVID-19 pandemic and its significant impact on economic activity and the ability of companies to continue to do business. The Board in conjunction with the Investment Adviser continues to monitor the current situation and its potential long term impact on the VCT's investments.

The VCT invested GBP12,500 into bio-bean Limited in October 2020 as part of a follow-on funding round alongside other investors, including its sister company, VCT2.

On 3 December 2020, the Board declared dividends in respect of the year ended 30 September 2020 of 5.3133p per Ordinary Share and 0.4867p per 'A' Share. These dividends will be paid on 31 December 2020 to Shareholders on the register at 11 December 2020.

There are no other significant events which require disclosure in these financial statements.

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(END) Dow Jones Newswires

December 22, 2020 06:02 ET (11:02 GMT)

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