TIDMHR1O 
 
   Hazel Renewable Energy VCT1 plc 
 
   Legal Entity Identifier: 213800IVQHJXUQBAAC06 
 
   Final results for the year ended 30 September 2018 
 
   FINANCIAL HIGHLIGHTS 
 
 
 
 
                                        30 September  30 September 
                                            2018          2017 
                                           Pence         Pence 
  Net asset value per Ordinary Share           120.2         116.0 
  Net asset value per 'A' Share                  0.1           0.1 
  Cumulative Dividends paid                     39.5          39.5 
  Total return per Ordinary Share and 
   'A' Share                                   159.8         155.6 
 
   CHAIRMAN'S STATEMENT 
 
   I am pleased to present my first Annual Report as Chairman of Hazel 
Renewable Energy VCT1 plc, which covers the year ended 30 September 
2018. 
 
   As most Shareholders will be aware, there have been a number of 
developments in respect of the management of the Company over the last 
year or so, with the transfer of the Investment Advisory Agreement to 
Gresham House Asset Management Limited, as well as a number of Board 
changes taking place. 
 
   I was encouraged by the recent announcement that Gresham House has 
agreed to acquire the fund and investment management business of 
Livingbridge VC LLP that includes the two Baronsmead Venture Capital 
Trusts (VCTs). Founded in 1995, the Baronsmead brand is well known and 
respected within the VCT community for delivering consistent performance 
and strong governance. 
 
   Whilst the investment emphasis of the Hazel Capital Renewable Energy 
VCTs remains on renewable infrastructure, I expect there to be benefits 
to shareholders resulting from the deal. The addition of eight 
specialist investment and research professionals covering both public 
and private market opportunities will provide broader coverage and 
increased deal flow. Additional resource in the middle office at Gresham 
House should also lead to improved efficiency in performance analysis 
and reporting. 
 
   Also, over the last two years there have also been some significant 
changes to the VCTs regulations and, partly as a result of this, the 
Company decided to raise additional funds by way of two small top-up 
offers for subscription. 
 
   I am pleased to report that the underlying investment portfolio has been 
stable and has produced satisfactory results for the year. Although 
solar irradiation was strong during the summer months, some technical 
issues offset some of the performance gains that might otherwise have 
arisen from this year's sunny weather. However, the long-term outlook 
for the portfolio as a whole looks positive, with returns from the 
installed base of assets expected to continue to generate steady cash 
flows, resulting in an overall unrealised valuation uplift of 
GBP753,000. 
 
   Board composition 
 
   As has been noted in the Half-Yearly Report, Stephen Hay, the Company's 
former Chairman, stepped down from the Board on 30 April 2018 in order 
to focus on his other business interests. We thank Stephen for his 
substantial contribution to the Company since it was first launched. 
Prior to Stephen's departure, the Board commenced a formal process to 
identify two new candidates to join the Board as non-executive 
directors. 
 
   On 1 May 2018, I joined the Board as Chairman and, on 16 July 2018, 
Duncan Grierson joined as a non-executive director. Whilst I have many 
years' experience as an NED and Chairman of VCTs and investment trusts, 
Duncan has more than 20 years' experience as an entrepreneur and 
technology investor (See further details on page 2 of the Annual 
Report). 
 
   The Board now comprises three non-executive directors with a broad range 
of experience and we continue to work closely with the Board of the 
sister company, Hazel Renewable Energy VCT2 plc ("Hazel2"). 
 
   Investment portfolio 
 
   At the year end, the Company held a portfolio of 16 investments, which 
were valued at GBP30.5 million. There were no additions to the portfolio 
during the year, however two loan note investments were partially 
redeemed, and one loan note investment was fully redeemed, all at par. 
 
   The portfolio is analysed (by value) between the different types of 
assets as follows: 
 
 
 
 
Ground-mounted Solar   81.5% 
Rooftop Solar          11.1% 
Small Wind              5.7% 
Vehicle Charging        1.7% 
 
 
 
   The Board has reviewed the investment valuations at the year end and 
made a number of adjustments. Net unrealised gains on the portfolio 
totalled GBP753,000. This has been driven by favourable movements in 
some of the key inputs into the financial models of the underlying 
assets. 
 
   Further detail on the investment portfolio is provided in the Investment 
Advisor's Report. 
 
   Net asset value and results 
 
   At 30 September 2018, the Net Asset Value ("NAV") per Ordinary Share 
stood at 120.2p and the NAV per 'A' Share stood at 0.1p, producing a 
combined total of 120.3p per "pair" of Shares. This represents an 
increase of 4.2p (3.6%) over the year. 
 
   Total dividends paid to date (including those paid in December 2018) for 
a combined holding of one Ordinary Share and one 'A' Share stand at 
45.5p. Total Return (NAV plus cumulative dividends, including those paid 
in December 2018) stands at 159.8p, compared to the cost to investors in 
the initial fundraising of GBP1.00 or 70.0p net of income tax relief. 
 
   The profit on ordinary activities after taxation for the year was 
GBP804,000, comprising a revenue profit of GBP111,000 and a capital gain 
of GBP693,000 as shown in the Income Statement. 
 
   Dividends 
 
   In recent years the Company has paid its annual dividend in September. 
In the Half Year Report, I announced that the Company plans to pay 
dividends in future in December as this better synchronises with the 
income generated by the assets held by the portfolio companies. 
 
   On 14 November 2018, the Board declared dividends in respect of the year 
ended 30 September 2018 of 5.4965p per Ordinary Share and 0.5035p per A 
Share. These dividends were paid on 14 December 2018 to Shareholders on 
the register at 23 November 2018. 
 
   Fundraising activities 
 
   Changes to the VCT regulations over the last two years have created some 
challenges for your Company. You will recall that from April 2014 new 
investments in contract backed renewable energy projects are no longer 
eligible as qualifying VCT investments. Furthermore, with effect from 1 
October 2019 for this Company, the required level of qualifying 
investments the VCT must hold will increase from 70% to 80%. The Board 
reviewed how this might best be achieved in the longer term and 
considered that a further fundraise, in order to invest in new 
qualifying investments, would be the most appropriate course of action. 
 
   In March 2018, the Company undertook a small top-up offer for 
subscription. This offer sold out very quickly raising GBP2.5 million 
for the Company and GBP1.7 million for Hazel2.  In view of the level of 
demand a further top-up was launched in September. This offer also sold 
out in short time raising, GBP3.2 million alongside GBP4.0 million for 
Hazel2.  For your Company, a total of 4,502,295 Ordinary and 5,159,175 
'A' Shares were issued in respect of the offers. 
 
   These new funds provide the opportunity for the Company to consider 
making a small number of new VCT qualifying investments and provide the 
Company with some additional flexibility that will help it to maintain 
the new 80% qualification threshold. 
 
   It is envisaged that the new investments, which must meet all of the VCT 
regulations including the type of business, size, age and the risk to 
capital test, will be different from the assets in which the VCT is 
currently invested. As stated in the top up offer document, the 
Investment Advisor will be looking for companies within the clean 
technology space, which offer the prospect of maximising returns for 
Shareholders, through them having a good management team, an excellent 
business plan and significant growth potential. The VCT may also invest 
in companies quoted on AIM. 
 
   Share Buybacks 
 
   The Board is 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 Company's shares. 
 
   During the period, the Company purchased a total of 2,361,063 Ordinary 
Shares at an average price of 113.6p per Share, and a total of 2,360,869 
'A' Shares at an average price of 0.1p. These Shares are held in 
treasury. 
 
   The Company has a policy of buying Shares that become available in the 
market at a price approximately equivalent to a 2% discount to NAV. This 
policy is subject to liquidity and regulatory constraints. 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. 
 
   Shareholders considering selling their Shares should contract the broker 
for the Company, whose details are shown on the Shareholder Information 
page of the Annual Report. 
 
   Change of name 
 
   Now that Hazel Capital LLP has been fully integrated into the Gresham 
House business, the Board believes that the logical next step is to 
change the name of the Company to Gresham House Renewable Energy VCT1 
plc (and that of the sister Company to Gresham House Renewable Energy 
VCT2 plc). 
 
   A resolution to approve the change of name will be put to both sets of 
Shareholders at their respective forthcoming AGMs. 
 
   Annual General Meeting 
 
   The Company's eighth AGM will be held at Gresham House's offices at 
Octagon Point, 5 Cheapside, London EC2V 6LP 11:00 a.m. on 6 March 2019. 
 
   Four items of special business will be proposed as follows: 
 
   -one resolution seeking authority to undertake share buybacks; 
 
   -two resolutions seeking authority to allow the Directors to allot 
shares and disapply pre-emption rights in respect of those shares 
(including shares held in treasury); and 
 
   -one resolution seeking authority to change the name of the Company, to 
Gresham House Renewable Energy VCT1 plc. 
 
   Outlook 
 
   Now that the changes to the Investment Advisory arrangements and to the 
Board are behind us, over the coming year we will be seeking to leverage 
the additional resources that Gresham House brings to the Company, to 
ensure that the performance of the assets and Shareholder returns are 
optimised, while also ensuring that the Company comfortably maintains 
its VCT status and the accompanying tax benefits. Working closely with 
the Investment Adviser, the Board will also be seeking to invest the 
proceeds of the top up offers in attractive VCT qualifying assets. 
 
   I look forward to meeting those investors that are able to attend the 
forthcoming AGM in March. Meanwhile, I would encourage you to take a 
look at the Gresham house website (newenergy.greshamhouse.com) where you 
can find all of the information regarding the Company and where, from 
time to time, the Investment Adviser will be publishing updates on the 
performance of the VCT. 
 
   Gill Nott 
 
   Chairman 
 
   INVESTMENT ADVISER'S REPORT 
 
   Portfolio Highlights 
 
   The Investment Adviser is pleased to report that the portfolio of assets 
owned by Hazel Renewable Energy VCT1 plc performed in line with 
expectations in the year ending 30 September 2018. There were no full 
acquisitions or disposals to report in the period, however some loan 
note investments were partially repaid. 
 
   The Companies remain principally invested in a diversified portfolio of 
well-constructed renewable energy projects that access long-term UK 
government-backed Feed-in-Tariff (FiT) and Renewable Obligation 
Certificate (ROC) support mechanisms which provide revenues which are 
predominantly linked to the Retail Price Index (RPI). 
 
   The total generation capacity of assets owned by the Companies is 
34.9MWp (see table below). 
 
   During the period from 1 April 2018 to 30 September 2018, the Company's 
Net Asset Value per share increased to 120.3p (30 September 2017: 
116.1p) with the overall Net Asset Value at GBP30.2 million (30 
September 2017: GBP27.5 million). 
 
   Portfolio revenues were 0.18% ahead of forecast for the year (8.3% below 
forecast in the year ending 30 September 2017). Revenues for all major 
segments of the portfolio came within 0.75% of the respective targets. 
 
   The performance in generation terms was 0.08% behind forecast in the 
period (6.2% below forecast in the year ending 30 September 2017). 
 
   The payment of an annual dividend of 6.0p (5.4965p per Ordinary Share 
and 0.5035p per A Share) was announced on 14 November, and this was paid 
on 14 December 2018. 
 
   GBP5.7m of additional funds were raised in 2018 via two Top-Up offers 
launched in February and September 2018. GBP2.5m and GBP3.2m were raised 
for the Company respectively.  This is covered in more detail in the 
Chairman's Statement. 
 
   The funds raised allow the Company to make new qualifying investments. 
The criteria used to evaluate new investments will be consistent with 
the original mandate of maximising capital gains and income for 
shareholders and will complement the majority of the portfolio's core 
holdings of asset-backed renewable generation investments. Areas of 
current focus include cleantech hardware and software development, and 
companies providing services to the cleantech sector. 
 
   In addition to the above, the Boards may make a limited proportion of 
total funds raised available for share buybacks in accordance with the 
Company's Share buyback policy. 
 
   Portfolio Composition 
 
 
 
 
Portfolio Composition by Asset Type and Impact on 
 NAV 
-------------------------------------------------------------------------- 
Asset Type                    MWp    Portfolio Value  % of Portfolio Value 
---------------------------  ------  ---------------  -------------------- 
Ground-mounted Solar (FIT)   20,291    GBP21,686,087                 71.2% 
---------------------------  ------  ---------------  -------------------- 
Ground-mounted Solar (ROC)    8,699     GBP3,140,385                 10.3% 
---------------------------  ------  ---------------  -------------------- 
Rooftop Solar                 4,425     GBP3,388,544                 11.1% 
---------------------------  ------  ---------------  -------------------- 
Wind Assets                   1,465     GBP1,738,343                  5.7% 
---------------------------  ------  ---------------  -------------------- 
Charge Point Services             -       GBP500,000                  1.7% 
---------------------------  ------  ---------------  -------------------- 
Other                             -                -                     - 
---------------------------  ------  ---------------  -------------------- 
TOTAL                        34,880    GBP30,453,359                100.0% 
---------------------------  ------  ---------------  -------------------- 
 
 
   The 34.9MWp renewable energy projects in the portfolio generated 
33,678,102 kilowatt-hours of electricity over the year, sufficient to 
meet the annual electricity consumption of c.9,730 homes. 
 
   Portfolio Summary 
 
   The solar projects within the portfolio (ground and roof-mounted 
installations) which comprise 33.4MWp, accounted for 97.6% of the 
generation output performance. These assets delivered performance just 
shy of expectations (0.08% less) during the year (6.3% below in the year 
ending 30 September 2017). They accounted for 92.6% of the Investment 
Portfolio Value. 
 
   While overall output performance was broadly in line with our 
expectations, generation versus forecast levels varied significantly 
over the 12-month period. A gloomier than usual winter saw average 
performance across the ground and roof-mounted solar assets, followed by 
underperformance in the very wet spring months of March and April. A 
very bright summer brought robust output from May through July. 
Generation levels were in line with forecast levels in August and 
September. 
 
   The eight ground-mounted solar installations, which have a total 
generation capacity of 29.0MW, accounted for 87.0% of the electricity 
generated and this was just above (by 0.33%) forecasts (6.3% below in 
the year ending 30 September 2017). This segment accounts for 81.5% of 
the Investment Portfolio Value. 
 
   The roof-mounted solar asset portfolio which has capacity of 4.42MW, 
accounted for 11.1% of the Investment Portfolio Value and 10.6% of the 
total electricity generated. This was 3.4% below expectations (10.5% 
below in the year ending 30 September 2017). 
 
   The small wind turbines, which have total generation capacity of 1.47MW, 
accounted for 5.7% of the Investment Portfolio Value and 2.4% of the 
total electricity generated. This segment met expectations that were 
previously downgraded to account for the Huaying HY-5 turbines that were 
put on hold in spring 2017 due to mechanical problems. 
 
   In revenue terms, the electricity generated by the entire asset base 
earned GBP11.1 million in the year which was 0.18% ahead of forecasts. 
GBP10.8m of this amount was generated by the solar ground-mounted and 
rooftop assets and the remainder by the small wind turbine portfolio. 
 
 
 
 
Portfolio Revenues by Asset Type (GBP Sterling) 
Asset Type               Forecast Revenue  Actual Revenue  Revenue Performance 
-----------------------  ----------------  --------------  ------------------- 
Ground-mounted Solar 
 (FIT)                          8,465,104       8,439,491               99.70% 
-----------------------  ----------------  --------------  ------------------- 
Ground-mounted Solar 
 (ROC)                          1,183,971       1,238,383              104.60% 
-----------------------  ----------------  --------------  ------------------- 
Rooftop Solar                   1,159,056       1,150,676               99.28% 
-----------------------  ----------------  --------------  ------------------- 
Wind Assets                       275,565         275,565              100.00% 
-----------------------  ----------------  --------------  ------------------- 
TOTAL                          11,083,696      11,104,115              100.18% 
-----------------------  ----------------  --------------  ------------------- 
 
 
   The portfolio benefited from higher than forecast inflation, power 
prices (including the recycling component of the Renewable Obligation 
Certificates (ROCs)) and irradiation, however surrendered much of the 
combined benefit to lost production from the heat effect and other 
technical factors. 
 
   A kilowatt-hour (kWh) generated by a ground-mounted solar asset earned 
33.0p on average, whereas a kWh generated by a wind turbine earned an 
average of 34.0p. 
 
   By asset type, 86.7% of revenues (being 78.5% FiT, 6.7% ROC, 1.5% Export 
Fixed) were RPI-linked while 9.0% came from the sale of power (Export 
Variable), of which 3.2% in absolute terms is under fixed-price 
contracts running until 2019. 
 
   The FiT-remunerated ground-mounted solar assets that earn FiTs as well 
as income from the sale of power in the wholesale market, accounted for 
75.9% of the portfolio level income, whereas the ROC-remunerated 
ground-mounted solar assets, that earn ROCs and variable export revenues, 
accounted for 11.2%, and the roof-mounted solar assets that earn FiTs 
and fixed export tariffs accounted for 10.4%. 
 
   Overall Portfolio and Operational Review 
 
   The analysis of performance is based on three pillars. The first covers 
macro factors including inflation, power prices, variable components of 
subsidies and climactic conditions. The second category covers technical 
performance, and the third category covers costs. 
 
   Macro 
 
   Solar irradiation was 7.3% ahead of forecasts on a capacity-weighted 
basis, a welcome development after two years of poor sunshine. Project 
by project, measurements varied between 97.7% and 134.8% of forecast 
levels for the eight ground-mounted solar projects in the portfolio. 
Each 1% change, in absolute terms, in irradiation for this portfolio 
results in a GBP108,000 movement in revenues. 
 
   The portfolio's revenues were helped by inflation as both FiT and ROC 
payments are index-linked to the RPI. FiTs and ROCs increased in price 
by 4.1% on 1 April 2018. The RPI has drifted down from these levels over 
2018, however it remains above the 3% level used in long-term forecasts. 
For every 1% increase, in absolute terms, in inflation, portfolio 
revenues rise by GBP96,000. 
 
   Technical Performance 
 
   The ground-mounted solar asset base achieved its target level of 
generation. The strong solar irradiation in the summer months was offset 
by the temporary but negative effect on panel performance of the high 
ambient temperatures on the surfaces of the solar panels. This effect is 
expected in solar power generation. 
 
   However, other technical factors such as the age of some of the 
components used in the projects, also prevented the ground-mounted solar 
asset base from benefitting from the strong solar irradiation. 
 
 
 
 
Portfolio Technical Performance by Asset Type 
Asset Type               Forecast Output  Actual Output  Technical Performance 
-----------------------  ---------------  -------------  --------------------- 
Ground-mounted Solar 
 (FIT)                        20,657,691     20,116,689                 97.38% 
-----------------------  ---------------  -------------  --------------------- 
Ground-mounted Solar 
 (ROC)                         8,538,000      9,175,955                107.47% 
-----------------------  ---------------  -------------  --------------------- 
Rooftop Solar                  3,699,550      3,575,458                 96.65% 
-----------------------  ---------------  -------------  --------------------- 
Wind Assets                      810,000        810,000                100.00% 
-----------------------  ---------------  -------------  --------------------- 
TOTAL                         33,705,241     33,678,102                 99.92% 
-----------------------  ---------------  -------------  --------------------- 
 
 
   During the year a comprehensive technical review has been undertaken. 
This included a study to determine whether accelerating the replacement 
of inverters, (which would typically be replaced after 10 years), would 
achieve an attractive payback profile. The outcome led to a 
recommendation to proceed and any inverter replacement will be funded by 
the equipment replacement reserves (GBP2.4 million) already held as 
funded cash deposits within the debt facility for the six 
FiT-remunerated ground-mounted projects. 
 
   Generation of the rooftop solar portfolio was 3.4% lower than forecast. 
Work is ongoing to address known metering issues at certain 
installations at which access is difficult. Resolution of these issues 
is expected to lead to a recovery of 50% of the revenue shortfall. 
 
   The small wind portfolio performed in line with the reduced expectations 
following the poor performance from the start of these projects. Small 
wind accounts for 5.7% of the portfolio. Following initial inspections 
to determine the scale of the issue with the Huaying HY-5 turbines (92 
of the 290 turbines in total), a programme of repair was initiated in 
the spring of this year and is progressing well. It was decided that 
only the installations where the incremental sum invested would generate 
a payback period of less than or equal to six years, would be repaired. 
This amounted to 67 of the 92. At the time of writing, 39% of the 
turbines had been repaired with the work expected to be completed in the 
spring. 
 
   Operating Costs 
 
   The third factor that determines performance is costs. The vast majority 
of the cost base is fixed and/or contracted and includes rent, business 
rates, and regular operations and maintenance (O&M) costs as the major 
categories. 
 
   During the year, the O&M contracts for the small Wychwood and Parsonage 
ground-mounted solar projects (1.4MW of capacity) were awarded to 
Silverstone Green Energy, a contractor that has been delivering a good 
service for two larger ground-mounted solar assets. This generated a 25% 
saving on those contracts, worth GBP4,460 per annum going forward. 
 
   There is the potential for further reductions in O&M costs as prices in 
the UK become more aligned with those in Continental Europe, however the 
long-term nature of the O&M contracts (a requirement under the debt 
facility agreements) mean that we would not expect to receive the 
benefits of such a realignment until current contracts expire or can be 
renegotiated, the earliest of which is in seven years. 
 
   The main cost item that shows variability from year-to-year is repair 
and maintenance costs. These are closely monitored and compared with a 
budget that is set every year. Repair and maintenance spend involving 
solar panels and inverters, the key components of a solar project, is 
covered by the maintenance reserves totalling GBP2.6m that are in place 
for all the ground-mounted solar assets and for most of the roof-mounted 
solar assets. 
 
   In addition, there are some one-off costs that were not covered by 
reserves such as meter replacements and pigeon-proofing for the 
roof-mounted solar assets, and cable replacement for the ground-mounted 
assets. This cost was GBP70,000 above the GBP190,000 budget set for the 
year due to what are expected to be one-off repairs to the roof-mounted 
solar installations. 
 
   Portfolio Valuation 
 
   The NAV of the Company has increased from 116.1p to 120.3p in the period 
from 1 October 2017 to 30 September 2018. The Total Return for the 
period has increased from 155.6p to 159.8p. 
 
   This year's increase in NAV principally resulted from a change in the 
discount rate used to value the FiT-remunerated ground-mounted solar 
assets from 7.0% on an unlevered basis to 6.5% on a levered basis. The 
NAV impact of this change was GBP0.8m or 3.4p per share. By comparison 
the discount rate used to value the ROC-remunerated ground-mounted solar 
assets and FiT-remunerated roof-mounted solar assets within the 
portfolio on a levered basis is 6.75%. 
 
   The 25bp difference in the levered discount rates for the two FiT and 
ROC groups is accounted for by the lower level, in the medium to long 
term, of exposure to wholesale power prices of the former (12%) compared 
to the latter (16%), and the fact that the latter includes roof-mounted 
solar assets which carry more inherent risks than ground-mounted solar 
assets. 
 
 
 
 
                  30 Sep 2018       Share of      30 Sep 2017  Share of Portfolio 
                      (000)      Portfolio Value     (000)            Value 
----------------  ------------  ----------------  -----------  ------------------ 
FiT-remunerated 
 ground-mounted 
 solar projects    GBP21,686               71.2%    GBP20,948               66.7% 
----------------  ------------  ----------------  -----------  ------------------ 
ROC-remunerated 
 ground-mounted 
 solar projects     GBP3,140               10.3%     GBP4,298               13.7% 
----------------  ------------  ----------------  -----------  ------------------ 
Rooftop solar 
 projects           GBP3,389               11.1%     GBP3,704               11.8% 
----------------  ------------  ----------------  -----------  ------------------ 
Small wind 
 turbines           GBP1,738                5.7%     GBP1,939                6.2% 
----------------  ------------  ----------------  -----------  ------------------ 
ChargePoint 
 Services            GBP500                 1.7%       GBP500                1.7% 
----------------  ------------  ----------------  -----------  ------------------ 
TOTAL PORTFOLIO    GBP30,453                100%    GBP31,390                100% 
----------------  ------------  ----------------  -----------  ------------------ 
Other net           GBP(222)                      GBP(3,925) 
 liabilities 
----------------  ------------  ----------------  -----------  ------------------ 
TOTAL NAV          GBP30,230                       GBP27,465 
----------------  ------------  ----------------  -----------  ------------------ 
NAV per share        120.3p                         116.1p 
 (Ordinary and A 
 combined) 
----------------  ------------  ----------------  -----------  ------------------ 
 
 
   The Investment Adviser believes that the discount rates used for all the 
assets are consistent with what other owners of solar assets use while 
valuing their own portfolios, and its experience gained from selling 
similar assets in other areas of its business. The discount rate that 
purchasers of ground-mounted solar assets use varies according to the 
level of exposure to wholesale power prices and has been observed to be 
as low as 5 to 5.5% on a levered basis for FiT-remunerated ground 
mounted solar projects that were built in 2011.The low risk profile of 
the FiT-remunerated ground-mounted solar assets justifies this reduction 
of 50 basis points. Discount rates used in the market have moved down 
for these types of assets with a high proportion (88% for this 
portfolio) of fixed tariff revenues. Furthermore, the GBP2.1m in 
maintenance reserves, which at current market prices is sufficient to 
replace as much as 30% of the panels and inverters, and the GBP4.4m of 
cash, albeit restricted under the debt facilities, imply lower risk to 
future cashflows. 
 
   Inflation as measured by the RPI remains above 3% and RPI has gone up as 
high as 4.1% in December 2017 (as opposed to our forecast for long-term 
inflation of 3%). However, this increase could prove to be very 
transient, given the currently heightened level of macroeconomic 
uncertainty. 
 
   Key assumptions for the revenues and operating costs of the projects 
remain the same as they were last year. 
 
   In the longer term, the potential to create additional value through the 
extension of land leases beyond their current 25-year term and through 
upgrading the equipment using improved technology with much better 
yields may arise. 
 
   Outlook 
 
   The Investment Adviser will continue to target improvements in yield and 
reductions in risk across the portfolio, and to evaluate incremental 
maintenance capital expenditure and replacement decision where these can 
be justified in economic terms. 
 
   The Investment Adviser is conscious that the most valuable FiT assets in 
the portfolio are now over seven years old and will be monitoring them 
more closely to identify and replace or repair aging equipment before it 
can impact generation. 
 
   An emerging trend in the solar industry in the UK is the extension of 
leases beyond the 25 -year term that is customary across the solar asset 
base. The end of the lease term is still at least 18 years away, however 
many landowners are receptive to locking in rent for the longer term. 
Capital expenditure on upgrading the projects when the current leases 
expire is expected to generate yields in excess of six percent. 
 
   A key focus will be the deployment of funds raised in the Top-Up. As 
stated in the Top-Up prospectus, asset-backed renewable energy 
generation investments are no longer qualifying under current VCT rules. 
 
   The Investment Adviser is currently screening potential opportunities in 
order to identify investments in line with the Company's mandate. 
Consideration is being given to companies in the clean technology space 
that have already secured funding from Venture Capital firms, companies 
listed on the UK's AIM market and companies that are active in key areas 
of growth such as recycling and waste management, generation asset 
optimisation and information services. 
 
   The investment process will be enhanced by the acquisition by Gresham 
House Plc of the fund and investment management business of Livingbridge 
VC LLP which includes the two Baronsmead VCTs. The addition of eight 
specialist investment and research professionals covering both public 
and private market opportunities will provide broader coverage and 
increased deal flow when investing the top-up funds. 
 
   Gresham House Asset Management Limited 
 
   REVIEW OF INVESTMENTS 
 
   Portfolio of investments 
 
   The following investments were held at 30 September 2018: 
 
 
 
 
                                                                                              Valuation 
                                                                                               movement 
                                                                          Cost     Valuation   in year    % of portfolio 
                                                                        GBP'000    GBP'000     GBP'000 
Qualifying and part-qualifying 
 investments                     Operating sites       Sector 
                                 South Marston,        Ground-mounted 
Lunar 2 Limited*                  Beechgrove            solar             2,976       15,937        615            48.4% 
                                 Kingston Farm, Lake   Ground-mounted 
Lunar 1 Limited*                  Farm                  solar               125        2,605        484             7.9% 
Ayshford Solar (Holding)                               Ground-mounted 
 Limited*                        Ayshford Farm          solar             1,308        2,128      (406)             6.5% 
                                                       Ground-mounted 
New Energy Era Limited           Wychwood Solar Farm    solar               884        1,713        323             5.2% 
                                                       Ground-mounted 
Vicarage Solar Limited           Parsonage Farm         solar               871        1,431        216             4.3% 
Hewas Solar Limited              Hewas Solar           Roof Solar         1,000        1,217      (138)             3.7% 
Gloucester Wind Limited          Gloucester Wind       Roof Solar         1,000        1,047         94             3.2% 
                                                       Small 
Tumblewind Limited*              Priory Farm            Wind/Solar        1,231        1,012         38             3.1% 
HRE Willow Limited               HRE Willow            Small Wind           875          874        148             2.7% 
St Columb Solar Limited          St Columb Solar       Roof Solar           650          594       (79)             1.8% 
                                                       Small 
Minsmere Power Limited           Minsmere               Wind/Solar          975          531      (198)             1.6% 
Penhale Solar Limited            Penhale Solar         Roof Solar           825          530      (195)             1.6% 
                                                        Vehicle 
Chargepoint Services Limited                             Charging           500          500          -             1.5% 
                                 Small Wind 
Small Wind Generation Limited     Generation           Small Wind           975          334      (149)             1.0% 
Sunhazel UK Limited                                     Roof Solar            1            -          -             0.0% 
                                                                         14,196       30,453        753            92.5% 
 
Cash at bank and in hand                                                               2,497                        7.5% 
Total investments                                                                     32,950                      100.0% 
 
 
 
 
   * Part-qualifying investment 
 
   All venture capital investments are incorporated in England and Wales. 
 
   Hazel Renewable Energy VCT2 plc, of which Gresham House Asset Management 
Limited ("GHAM") is the Investment Adviser, holds the same investments 
as above. 
 
   REVIEW OF INVESTMENTS 
 
   Investment movements for the year ended 30 September 2018 
 
 
   DISPOSALS 
 
 
 
 
                                                         Redemption 
                                          Valuation        of loan 
                                        at 30 September   notes/Sale   Profit   Realised 
                               Cost          2017          Proceeds    vs cost    Gain 
                              GBP'000      GBP'000         GBP'000    GBP'000   GBP'000 
VCT Qualifying investments 
Ayshford Solar (Holdings) 
 Limited                          620               620          620         -         - 
                                  620               620          620         -         - 
                              -------  ----------------  -----------  --------  -------- 
 
Non-qualifying investments 
AEE Renewables UK 3 Limited 
 (Note 1)                         900               900          900         -         - 
Tumblewind Limited                170               170          170         -         - 
                                1,070             1,070        1,070         -         - 
 
Liquidation proceeds 
Hemp Technology Limited 
 (Note 2)                           -                 -           33        33        33 
 
Total                           1,690             1,690        1,723        33        33 
                              =======  ================  ===========  ========  ======== 
 
 
   The basis of valuation for the largest investments is set out on pages 
15 to 18 of the Annual Report. 
 
   Note 1: The loan note redemption proceeds of GBP900,000 were not 
received in cash by the Company and were instead used to repay a 
long-term loan balance between the Company and Lunar 2 Limited. 
 
   Note 2: The proceeds received were in connection with the liquidation of 
Hemp Technology Limited, a subsidiary of Lime Technology Limited, a 
company in which the VCT previously held a loan note investment. The 
amounts received were secured under a debenture between the VCT and the 
company. No further amounts are receivable. 
 
   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 Company and of the profit 
or loss of the Company 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 Company will continue in business. 
 
   The Directors are responsible for keeping adequate accounting records 
that are sufficient to show and explain the Company's transactions, to 
disclose with reasonable accuracy at any time the financial position of 
the Company 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 Company 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 Company's 
performance, business model and strategy. 
 
   INCOME STATEMENT 
 
   for the year ended 30 September 2018 
 
 
 
 
                                    Year ended 30 September    Year ended 30 September 
                                              2018              2017 
 
                                  Revenue   Capital    Total   Revenue   Capital    Total 
                                  GBP'000   GBP'000   GBP'000  GBP'000   GBP'000   GBP'000 
 
Income                                 766         -      766       492         -      492 
 
Gain on investments                      -       786      786         -     1,038    1,038 
                                       766       786    1,552       492     1,038    1,530 
 
 
Investment advisory 
 fees                                (281)      (93)    (374)     (415)     (139)    (554) 
 
Other expenses                       (374)         -    (374)     (273)         -    (273) 
 
Profit/(loss) on ordinary 
 activities before tax                 111       693      804     (196)       899      703 
 
Tax on total comprehensive 
 income and ordinary 
 activities                              -         -        -         -         -        - 
 
Profit/(loss) for the 
 year and total comprehensive 
 income                                111       693      804     (196)       899      703 
 
Basic and diluted earnings per 
 share: 
Ordinary Share                    0.5p      3.0p      3.5p     (0.8p)    3.8p      3.0p 
'A' Share                         -         -         -        -         -         - 
 
   All Revenue and Capital items in the above statement derive from 
continuing operations. No operations were acquired or discontinued 
during the year. The total column within the Income Statement represents 
the Statement of Total Comprehensive Income of the Company prepared in 
accordance with Financial Reporting Standards ("FRS 102"). The 
supplementary revenue and capital return columns are prepared in 
accordance with the Statement of Recommended Practice issued in November 
2014 (updated in February 2018) by the Association of Investment 
Companies ("AIC SORP"). 
 
   Other than revaluation movements arising on investments held at fair 
value through the profit and loss, there were no differences between the 
return/loss as stated above and at historical cost. 
 
   BALANCE SHEET 
 
   as at 30 September 2018 
 
 
 
 
                                               2018              2017 
                                     GBP'000  GBP'000  GBP'000  GBP'000 
 
Investments                                    30,453            31,390 
 
Current assets 
Debtors                                  242               443 
Cash at bank and in hand               2,497               129 
                                       2,739               572 
 
Creditors: amounts falling due 
 within one year                       (130)              (71) 
 
Net current assets                              2,609               501 
 
Creditors: amounts falling due 
 after more than one year            (2,832)           (4,426) 
 
Net assets                                     30,230            27,465 
 
 
Capital and reserves 
Called up Ordinary Share capital                   27                24 
Called up 'A' Share capital                        39                36 
Share premium account                           8,187             3,910 
Treasury Shares                               (2,695)                 - 
Funds held in respect of Shares 
 not yet allotted                                 515                 - 
Special reserve                                 8,920             9,062 
Revaluation reserve                            16,257            15,504 
Capital redemption reserve                          2                 2 
Capital reserve - realised                    (1,255)           (1,195) 
Revenue reserve                                   233               122 
Total Shareholders' funds                      30,230            27,465 
 
Basic and diluted net asset value 
 per share 
Ordinary Share                                120.2p            116.0p 
'A' Share                                     0.1p              0.1p 
 
 
   STATEMENT OF CHANGES IN EQUITY 
 
   for the year ended 30 September 2018 
 
 
 
 
                                                       Funds 
                                                       held in 
                                                       respect 
                       Called     Share               of Shares                             Capital       Capital 
                       up share   Premium  Treasury    not yet     Special   Revaluation   redemption     reserve    Revenue 
                       capital    Account   Shares    allotted      Reserve    reserve      reserve       realised   reserve    Total 
                       GBP'000   GBP'000   GBP'000    GBP'000      GBP'000     GBP'000      GBP'000      GBP'000     GBP'000   GBP'000 
 
At 30 September 
 2016                        60     3,910         -           -      10,244       14,466            2      (1,056)        318   27,944 
 
Total comprehensive 
 income                       -         -         -           -           -          992            -         (93)      (196)      703 
Transactions 
 with owners 
Dividend 
 Paid                         -         -         -           -     (1,182)            -            -            -          -  (1,182) 
Transfer 
 between 
 Reserves                     -         -         -           -           -           46            -         (46)          -        - 
                                 --------  --------                                       -----------  -----------  --------- 
At 30 September 
 2017                        60     3,910         -           -       9,062       15,504            2      (1,195)        122   27,465 
                                 --------  --------              ----------               -----------  ----------- 
 
Total comprehensive 
 income                       -         -         -           -           -          753            -         (60)        111      804 
Transactions 
 with owners 
Repurchase 
 of Shares                    -         -   (2,695)           -           -            -            -            -          -  (2,695) 
Issue of 
 Shares                       6     4,277         -           -       (142)            -            -            -          -    4,141 
Unallotted 
 Shares                       -         -         -         515           -            -            -            -          -      515 
At 30 September 
 2018                        66     8,187   (2,695)         515       8,920       16,257            2      (1,255)        233   30,230 
                      =========  ========  ========  ==========  ==========  ===========  ===========  ===========  =========  ======= 
 
 
   CASH FLOW STATEMENT 
 
   for the year ended 30 September 2018 
 
 
 
 
                                               Year ended      Year ended 
                                                30 September    30 September 
                                                2018            2017 
                                                   GBP'000        GBP'000 
Cash flows from operating activities 
Profit for the financial year                             804            703 
Gains on investments                                    (786)        (1,038) 
Decrease/(increase) in debtors                            201           (27) 
Decrease in creditors                                     (3)           (86) 
Net cash inflow/(outflow) from operating 
 activities                                               216          (448) 
 
Cash flows from investing activities 
Proceeds from sale of investments/loan note 
 redemptions                                              823            589 
Net cash inflow from investing activities                 823            589 
 
Net cash inflow before financing activities             1,039            141 
 
Cash flows from financing activities 
Equity dividends paid                                       -        (1,182) 
Long term loans                                         (694)          1,164 
Issue of Shares                                         4,203              - 
Funds held in respect of Shares not yet 
 allotted                                                 515              - 
Purchase of own Shares                                (2,695)              - 
Net cash inflow/(outflow) from financing 
 activities                                             1,329           (18) 
                                                               ------------- 
 
Net increase in cash                                    2,368            123 
Cash and cash equivalents at start of year                129              6 
Cash and cash equivalents at end of year                2,497            129 
 
Cash and cash equivalents comprise 
Cash at bank and in hand                                2,497            129 
Total cash and cash equivalents                         2,497            129 
 
 
   NOTES TO THE ACCOUNTS 
 
   for the year ended 30 September 2018 
 
   General Information 
 
   Hazel Renewable Energy VCT1 plc ("the Company") is a venture capital 
trust established under the legislation introduced in the Finance Act 
1995 and is domiciled in the United Kingdom and incorporated in England 
and Wales. 
 
   Accounting policies 
 
   Basis of accounting 
 
   The Company 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 February 2018 ("SORP") as well as the 
Companies Act 2006. 
 
   The Company 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 VCT 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 Company's compliance 
with certain requirements set out in Part 6 of the Income Tax Act 2007. 
 
   Investments 
 
   All investments are designated as "fair value through profit or loss" 
assets due to investments being managed and performance evaluated on a 
fair value basis. A financial asset is designated within this category 
if it is both acquired and managed on a fair value basis, in accordance 
with the Company'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, 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: 
 
   -Price of recent investment; 
 
   -Multiples; 
 
   -Net assets; 
 
   -Discounted cash flows or earnings (of underlying business); 
 
   -Discounted cash flows (from the investment); and 
 
   -Industry valuation benchmarks. 
 
   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. 
 
   It is not the Company's policy to exercise controlling influence over 
investee companies. Therefore, the results of these companies are not 
incorporated into the Income Statement except to the extent of any 
income accrued. This is in accordance with the SORP and FRS 102 sections 
14 and 15 that does not require portfolio investments, where the 
interest held is greater than 20%, to be accounted for using the equity 
method of accounting. 
 
   Income 
 
   Dividend income from investments is recognised when the Shareholders' 
rights to receive payment have been established, normally the 
ex-dividend date. 
 
   Interest income is accrued on a time apportionment basis, by reference 
to the principal sum outstanding and at the effective interest rate 
applicable and only where there is reasonable certainty of collection in 
the foreseeable future. 
 
   Expenses 
 
   All expenses are accounted for on an accruals basis. In respect of the 
analysis between revenue and capital items presented within the Income 
Statement, all expenses have been presented as revenue items except as 
follows: 
 
   -Expenses which are incidental to the disposal of an investment are 
deducted from the disposal proceeds of the investment; and 
 
   -Expenses are split and presented partly as capital items where a 
connection with the maintenance or enhancement of the value of the 
investments held can be demonstrated. The Company 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 Company over the long 
term. 
 
   Taxation 
 
   The tax effects on different items in the Income Statement are allocated 
between capital and revenue on the same basis as the particular item to 
which they relate, using the Company's effective rate of tax for the 
accounting period. 
 
   Due to the Company's status as a VCT and the continued intention to meet 
the conditions required to comply with Part 6 of the Income Tax Act 
2007, no provision for taxation is required in respect of any realised 
or unrealised appreciation of the Company'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 of the Annual Report) 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. 
 
   Income 
 
 
 
 
 Year ended                        Year ended 
  30September 2018                  30September 2017 
                          GBP'000       GBP'000 
Income from investments 
Loan stock interest           166                185 
Dividend income               600                307 
                              766                492 
Other income 
Bank interest                   -                  - 
                              766                492 
                                   ================= 
 
 
   As the Company 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. 
 
   Basic and diluted net asset value per share 
 
 
 
 
                    Shares in issue            2018         2017 
                    2018        2017     Net asset value*   Net asset value 
                                           per 
                                          share    GBP'000  per share  GBP'000 
      Ordinary 
       Shares    24,694,442  23,638,058     120.2   29,678      116.0   27,429 
      'A' 
       Shares    37,034,352  35,977,774       0.1       37        0.1       36 
 
 
   *Excluding funds held in respect of Shares not yet allotted. 
 
   The Directors allocate the assets and liabilities of the Company 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 of the Annual Report. 
 
   As the Company 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. 
 
   The Company's investment activities expose the Company to a number of 
risks associated with financial instruments and the sectors in which the 
Company invests. The principal financial risks arising from the 
Company'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 Company 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 Company 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 VCT, the Company 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 Company is exposed are: 
 
   -Investment price risk; and 
 
   -Interest rate risk 
 
   Investment price risk 
 
   The Company's investments which comprise both equity and debt financial 
instruments in unquoted investments are all in renewable energy projects 
with predetermined expected returns. Consequently, the investment price 
risk arises from uncertainty about the future prices and valuations of 
financial instruments held in accordance with the Company'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 Company might suffer through 
changes in the fair value of unquoted investments that it holds. 
 
   At 30 September 2018, the unquoted portfolio was valued at GBP30,453,000 
(2017: GBP31,390,000). The key inputs to the valuation model are 
discount rates, inflation, irradiation, degradation, power prices and 
asset life. The Board has undertaken some sensitivity analysis into the 
effects of fluctuations in these inputs. 
 
   The analysis below is provided to illustrate the sensitivity of the fair 
value of 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 in fair      Change in NAV 
Input         Base case         input      value of investments    per share 
                                                 GBP'000             pence 
Discount 
 rate         6.5% -- 7.25%        +0.5%                (1,060)          (4.1) 
                                   -0.5%                  1,129            4.4 
 
Inflation     3.0% -- 3.2%         +0.5%                  1,122            4.4 
                                   -0.5%                (1,182)          (4.6) 
 
              785 -- 
Irradiation    1,270kWh/m(2)       +1.0%                    684            2.7 
                                   -1.0%                  (685)          (2.7) 
 
Degradation   0.3% -- 0.4%         +0.1%                  (671)          (2.6) 
                                   -0.1%                    680            2.6 
 
              GBP40 -- 
Power prices   GBP60/MWh          +10.0%                  1,390            5.4 
                                  -10.0%                (1,390)          (5.4) 
 
 
   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 Company'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 Company, which cannot be 
terminated early, and any extensions to the leases would require further 
planning permission. Accordingly, the Board does not consider it 
appropriate to disclose a sensitivity analysis in respect of asset life. 
 
   Interest rate risk 
 
   The Company accepts exposure to interest rate risk on floating-rate 
financial assets through the effect of changes in prevailing interest 
rates. The Company 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 Company's investments is shown below. 
 
   There are three categories in respect of interest which are attributable 
to the financial instruments held by the Company 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. 
 
   The Company 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 GBP2,500. The Bank of 
England base rate increased from 0.25% per annum to 0.5% per annum on 2 
November 2017 and from 0.5% to 0.75% on 2 August 2018. 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 Company. 
 
   Credit risk 
 
   Credit risk is the risk that a counterparty to a financial instrument is 
unable to discharge a commitment to the Company made under that 
instrument. The Company 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 Adviser manages credit risk in respect of loan stock with a similar 
approach as described under "Market risks" above. 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 A-rated 
financial institution and also ultimately part-owned by the UK 
Government. 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 is 
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 Company 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 Company has a relatively low 
level of creditors being GBP130,000 (2017: GBP71,000) and has long term 
loans from investee companies (see Note 13 of the Annual Report 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 GBP2,832,000 (2017: GBP4,426,000), 
the Board believes that the Company's exposure to liquidity risk is low. 
The Company 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 Company's exposure to liquidity risk is 
minimal. 
 
 
 
   The Company'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. 
 
   Controlling party and related party transactions 
 
   In the opinion of the Directors there is no immediate or ultimate 
controlling party. 
 
   Events after the end of the reporting period 
 
   On 23 October 2018 the Company issued 751,673 Ordinary Shares at an 
average price of 125.1p and 751,673 'A' Shares at an average price of 
0.1p. 
 
   On 24 October 2018 the Company issued 333,175 Ordinary Shares at an 
average price of 124.9p and 990,055 'A' Shares at an average price of 
0.1p. 
 
   At the date of this report, the Company's issued share capital comprised 
25,779,290 Ordinary Shares and 38,776,080 'A' Shares and the total 
number of voting rights in the Company were 25,818,066,080. 
 
   Following the period end the Company paid dividends in respect of the 
year ended 30 September 2018, of 5.4965p per Ordinary Share and 0.5035p 
per A Share. These dividends were paid on 14 December 2018 to 
Shareholders on the register at 23 November 2018. 
 
   Following the year end the Company made repayments in respect of the 
loan balances due to certain SPVs. Details of the amounts repaid are 
shown in Note 13 of the Annual Report. 
 
   ANNOUNCEMENT BASED ON AUDITED ACCOUNTS 
 
   The financial information set out in this announcement does not 
constitute the Company's statutory financial statements in accordance 
with section 434 Companies Act 2006 for the year ended 30 September 
2018, but has been extracted from the statutory financial statements for 
the year ended 30 September 2018, which were approved by the Board of 
Directors on 31 January 2018 and will be delivered to the Registrar of 
Companies following the Company's Annual General Meeting. The 
Independent Auditor's Report on those financial statements was 
unqualified and did not contain any emphasis of matter nor statements 
under s498(2) and (3) of the Companies Act 2006. 
 
   The statutory accounts for the year ended 30 September 2017 have been 
delivered to the Registrar of Companies and received an Independent 
Auditor's Report which was unqualified and did not contain any emphasis 
of matter nor statements under s498(2) and (3) of the Companies Act 
2006. 
 
   A copy of the full Annual Report and financial statements for the year 
ended 30 September 2018 will be printed and posted to shareholders 
shortly. Copies will also be available to the public at the registered 
office of the Company at 6(th) Floor, St. Magnus House, 3 Lower Thames 
Street, London EC3R 6HD and will be available for download from 
https://newenergy.greshamhouse.com/investor-relations-vct1/. 
 
 
 
 

(END) Dow Jones Newswires

January 31, 2019 10:43 ET (15:43 GMT)

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