Half Yearly Report -8-
October 29 2010 - 5:40AM
UK Regulatory
the power purchase agreements entered into by project companies for the sale of
their generated output.
Gearing
The Company does not intend to borrow funds for investment purposes. However the
Company is exposed to gearing through its investee companies which typically
fund a portion of the construction costs of each project through senior bank
debt finance. The Investment Manager is involved in negotiating the terms of
this finance to ensure competitive terms are achieved. The interest rate is
typically fixed via an interest rate swap for the duration of the bank loan so
that investee companies are not exposed to changes in market interest rates.
To the extent that borrowing is required, the Directors shall restrict the
borrowings of the Company, and shall so far as possible by the exercise of the
Company's voting powers and other rights or powers of control over its
subsidiaries secure that they restrict their borrowings. The aggregate principal
amount at any time outstanding in respect of money borrowed by the Group shall
not without the previous sanction of an ordinary resolution of the Company
exceed a sum equal to 10% of the adjusted share capital and reserves of the
Company in accordance with its Articles. These provisions only apply to the
borrowings of investee companies where those companies are considered to be
subsidiaries of the Company. As at the date of this report the aggregate
borrowings of the Group do not exceed 10% of the adjusted share capital and
reserves of the Company.
Maximum Exposures
In order to gauge the maximum exposure of the funds to various risks, the
following can be used as a guide:
i) Investments in qualifying holdings
70-95% of the funds will be invested in qualifying holdings no later than three
years after the date that provisional approval by HM Revenue & Customs of the
Company's status as a VCT becomes effective. The relevant compliance date for
the initial share offer was 1 March 2009 and for the 2009 "C" share offer and
2009 ordinary share "top-up" offer is 1 March 2012. The relevant compliance date
for the 2010 "C" share offer is 1 March 2013.
For the purpose of the 70% qualifying holdings requirement, disposals of
qualifying investments for cash may be disregarded for a period of six months.
Where a VCT breaches one or more of the requirements due to factors outside of
its control, it may apply to HM Revenue & Customs for a determination that the
breach will be disregarded for a period of 90 days while the breach is remedied.
ii) Concentration limits
Under VCT regulations no more than 15% of the Company's total assets may be in a
single investee company at the time the investment is made in that investee
company.
iii) Investments in pre-planning projects
A maximum of 10% of the net funds raised from each of the initial ordinary share
offer and the 2009 and 2010 "C" share offers respectively may be invested in
pre-planning projects.
UK Market Outlook
The Coalition Government has stated its intention to be the greenest government
ever and, following the recent Comprehensive Spending Review, details have begun
to emerge as to how it intends to achieve its policy objectives.
The Spending Review confirmed the anticipated reductions in the budgets of a
number of key areas of public sector provision, including the Department of
Energy and Climate Change. However, against this backdrop of budget cuts, the
Government highlighted its continued support for "action on renewables" and the
commitment to obtain 15% of energy from renewables by 2020 in supporting the
roll out of both large and small scale technologies, improving energy
efficiency, supporting growth and facilitating a private sector led transition
to a green economy.
The Spending Review announced a range of initiatives to support the development
of a low carbon economy including facilitating greater deployment of offshore
wind and supporting the establishment of manufacturing infrastructure at UK
ports, renewable heat incentives, increased expenditure on renewable energy and
environmental technologies through existing support mechanisms and the
establishment of a "green investment bank" to facilitate increased private
sector investment. There was also re-affirmation of the existing support
structures such as the Renewables Obligation and Feed-in Tariffs that are
already in place for developers and generators of renewable energy.
The debt financing environment for new projects continues to improve after the
difficulties in bank funding markets over the last two years. The number of
lending banks in the small to medium sized renewable energy project sector
remains relatively few but some increased competition is coming back as banks
that were active pre-credit crunch start to re-engage with the market.
Wind turbine prices have softened further over the course of 2010, although
turbine prices in the UK are still difficult to predict due to the volatility in
the Euro/Sterling exchange rate. Whilst factory prices (denominated in Euros)
may start to stabilise as spare capacity in the supply chain is taken up, most
manufacturers are still able to deliver in relatively short time frames.
The level of opportunity for those investors with capital to deploy appears to
remain significant throughout the range of technology sectors. This is in part
due to the fact that lending banks remain cautious about high levels of gearing
and want to see sponsors providing a suitable degree of equity. The environment
for the Company as a key provider of equity and mezzanine debt capital to the
small to medium sized UK renewables market therefore remains encouraging.
Climate Change Capital Limited
Investment Manager
28 October 2010
Directors and Advisers
Directors
Alan Moore (Chairman)
Paul Thomas
Colin Wood
D Pinckney (resigned 13 July 2010)
Company Secretary
The City Partnership (UK) Limited
Thistle House
21 Thistle Street
Edinburgh
EH2 1DF
Auditors
PKF (UK) LLP
Farringdon Place
20 Farringdon Road
London
EC1M 3AP
Principal Banker
HSBC Bank plc
60 Queen Victoria Street
London
EC4N 4TR
Investment Manager
Climate Change Capital Limited
3 More London Riverside
London
SE1 2AQ
Registrar & Registered Office
Capita Registrars
The Registry
34 Beckenham Road
Beckenham
Kent
BR3 4TU
Broker
Matrix Corporate Capital LLP
1 Vine Street
London
W1J 0AH
VCT Taxation Adviser
PricewaterhouseCoopers LLP
1 Embankment Place
London
WC2N 6RH
Solicitors
Berwin Leighton Paisner LLP
Adelaide House
London Bridge
London
EC4R 9HA
Group Statement of Comprehensive Income
for the six month period ended 31 August 2010 (unaudited)
+---------------+------+---------+---------+--------+---------+---------+--------+---------+---------+--------+
| | | Ordinary | "C" Shares | Total |
| | | Shares | | |
+---------------+------+----------------------------+----------------------------+----------------------------+
| | | Revenue | Capital | Total | Revenue | Capital | Total | Revenue | Capital | Total |
+---------------+------+---------+---------+--------+---------+---------+--------+---------+---------+--------+
| | Note | GBP000 | GBP000 | GBP000 | GBP000 | GBP000 | GBP000 | GBP000 | GBP000 | GBP000 |
+---------------+------+---------+---------+--------+---------+---------+--------+---------+---------+--------+
| Net | 9 | - | 534 | 534 | - | - | - | - | 534 | 534 |
| unrealised | | | | | | | | | | |
| gains on | | | | | | | | | | |
| investments | | | | | | | | | | |
+---------------+------+---------+---------+--------+---------+---------+--------+---------+---------+--------+
| Income | 2 | 635 | - | 635 | 95 | - | 95 | 730 | - | 730 |
+---------------+------+---------+---------+--------+---------+---------+--------+---------+---------+--------+
| Investment | 3 | (52) | (156) | (208) | (31) | (92) | (123) | (83) | (248) | (331) |
| management | | | | | | | | | | |
| fees | | | | | | | | | | |
+---------------+------+---------+---------+--------+---------+---------+--------+---------+---------+--------+
| Merger costs | 4 | (30) | - | (30) | - | - | - | (30) | - | (30) |
+---------------+------+---------+---------+--------+---------+---------+--------+---------+---------+--------+
| Other | 5 | (67) | - | (67) | (39) | - | (39) | (106) | - | (106) |
| expenses | | | | | | | | | | |
+---------------+------+---------+---------+--------+---------+---------+--------+---------+---------+--------+
| Profit/(loss) | | 486 | 378 | 864 | 25 | (92) | (67) | 511 | 286 | 797 |
| before | | | | | | | | | | |
| taxation | | | | | | | | | | |
+---------------+------+---------+---------+--------+---------+---------+--------+---------+---------+--------+
| Taxation | 7 | (54) | 32 | (22) | (5) | 27 | 22 | (59) | 59 | - |
+---------------+------+---------+---------+--------+---------+---------+--------+---------+---------+--------+
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