Gresham House Renewable Energy VCT2 plc

Report & Accounts for the year ended 30 September 2022

2022

30 September

The 34.4MWp of renewable energy projects

co-owned by Gresham House Renewable Energy VCT

1 plc (VCT 1) and Gresham House Renewable Energy

VCT 2 plc (VCT) generated 33,378,218 kilowatt-hours

of electricity over the financial year, sufficient to

meet the annual electricity consumption of circa

8,442 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 circa 19,400

mature trees would remove from the atmosphere.

Overview

01 Shareholder information

02 Investment objectives, financial highlights,

Directors and Investment Adviser

04 Chairman’s statement

06 Investment Adviser’s Report

14 Review of investments

22 Strategic Report

30 Sustainable Investing

34 Section 172

Governance

36 Report of the Directors

39 Directors’ Remuneration Report

42 Corporate governance

45 Independent Auditor’s Report

Financial Statements

50 Income statement

51 Balance sheet

52 Statement of changes in equity

53 Cash flow statement

54 Notes to the accounts

69 Company information

For more information visit

https://greshamhouse.com/real-assets/new-energy-sustainable-infrastructure/

Gresham House Renewable Energy VCT2 plc is a Venture

Capital Trust established under the legislation introduced

in the Finance Act 1995. Following the adoption of the

New Investment Policy from 13 July 2021 (the New

Investment Policy), the VCT’s principal objective is to

manage the VCT with the intention of realising the sale

or monetisation otherwise of all remaining assets in the

portfolio in a prudent manner consistent with the principles

of good investment management and with a view to

returning value to Shareholders in an orderly manner,

whilst protecting the tax position of Shareholders.

The VCT will pursue its investment objective by effecting

an orderly realisation of its assets in a manner that seeks to

achieve a balance between maximising the value received

from those assets and making timely returns of capital to

Shareholders. This process might include sales of individual

assets or running of the portfolio in accordance with the

existing scope of the assets, or a combination of both.

The detailed New Investment Policy adopted to achieve the

investment objectives is set out in the Strategic Report on

pages 22 to 29.

Investment Objectives

Financial

StatementsGovernanceOverview

Share price

The VCT’s share prices can be found on various

financial websites with the following TIDM/

EPIC codes:

Ordinary

Shares ‘A’ Shares

TIDM/EPIC codes GV2O GV2A

Latest share price

(27January 2023)

85.00p

per share

5.05p

per share

Selling shares

The Board has decided that the VCT will not

be buying Shares for the foreseeable future as

highlighted in the Interim Results, as the VCT

wishes to conserve such cash as it generates

for the managed wind-down of the VCT and

the payment of dividends.

Financial calendar

21 March 2023 Annual General Meeting

June 2023 Announcement of half

yearly financial results

Dividends

Dividends will be paid by the registrar on

behalf of the VCT. Shareholders who wish

to have dividends paid directly into their

bank account, rather than by cheque to their

registered address, and did not complete

these details on their original application form

can, if they have a UK bank account, sign up

for this service on Signal Shares (by clicking

on ‘your dividend options’ and following the

on screen instructions) or by contacting the

Customer Support Centre. Signal Shares is a

secure online site where you can manage your

shareholding quickly and easily.

Link Group Customer Support Centre can

becontacted:

Æ By phone on UK – 0371 664 0324 (Calls are

charged at the standard geographic rate

and will vary by provider. Calls outside

the United Kingdom will be charged at

the applicable international rate. Lines

are open between 09:00 – 17:30, Monday

to Friday excluding public holidays in

England and Wales).

Æ By email – vcts@linkgroup.co.uk

Æ By post – Link Group, 10th Floor, Central

Square, 29 Wellington Street, Leeds,

LS14DL

Notification of change of address

Communications with Shareholders are mailed

to the registered address held on the share

or other amendment this should be notified

to the VCT’s registrar, Link Group, under the

signature of the registered holder.

Other information for Shareholders

Up to date VCT information (including financial

statements, share prices and dividend history)

is available on the Investment Adviser’s

website at:

https://greshamhouse.com/real-assets/

new-energy-sustainable-infrastructure/

If you have any queries regarding your

shareholding in Gresham House Renewable

Energy VCT2 plc, please contact the registrar

on the above number or visit Link’s website at

vcts@linkgroup.co.uk.

Shareholder

Information

Gresham House Renewable Energy VCT2 plc

Financial Highlights*

Net asset value per

Ordinary Share (pence)

(as at 30 September 2022)

NAV Total return per Ordinary

Share and ‘A‘ Share (pence)

(as at 30 September 2022)

148.4p

91.2p

148.4p

146.4p

Sep 22

Sep 21

91.2p

89.2p

Sep 22

Sep 21

Cumulative Dividends paid

(pence)

(as at 30 September 2022)

57.1p

Sep 22

Sep 21

VCT2 Share Price Total Return

The graph below represents the VCT’s performance over the reporting

periods since the VCT’s Ordinary Shares and ‘A’ Shares were first listed

on the London Stock Exchange, and shows share price total return

(share price plus cumulative dividends paid) and net asset value total

return (net asset value plus cumulative dividends paid) on a dividends

reinvested basis, as per the AIC method.

Total Return with dividends reinvested

Gresham House Renewable Energy VCT2 plc NAV Total Return

Gresham House Renewable Energy VCT2 plc Share Price Total Return

Pence (p)

60.0

80.0

100.0

120.0

140.0

160.0

180.0

200.0

Dec-

Cash Returned to Shareholders by date of investment

The chart below shows the cash returned to Shareholders based on the

subscription price and the income tax reclaimed on subscription.

100

120

140

2011

Ordinary

2012

Ordinary

2014

Ordinary

2018

Ordinary

2019

Ordinary

Cash invested (p)

Income tax reclaim (p)

Cumulative dividends (p)

* The above financial highlights are considered to be Alternative Performance

Measures, further details on how these are calculated have been included in

the Strategic Report under the Key Performance Indicators section.

Net asset value per

‘A’ Share (pence)

(as at 30 September 2022)

0.1p

Sep 22

Sep 21

Gresham House Renewable Energy VCT2 plc

Directors

Gresham House Asset Management Limited

(GHAM or Gresham House) is the Investment

Adviser to the VCT and Gresham House

Renewable Energy VCT1 plc (VCT1 and together

the VCTs). GHAM is owned by Gresham House

plc, an AIM quoted specialist alternative

asset manager providing funds, direct

investments and tailored investment solutions,

including co-investment across a range of

highly differentiated alternative investment

strategies. GHAM’s expertise includes strategic

public equity and private assets, forestry,

renewable energy, housing and infrastructure.

Investment Adviser

Christian Yates (Chairman) was

closely involved in establishing

both Gresham House Renewable

Energy VCTs in 2010 (formerly

Hazel Renewable Energy VCTs)

whilst a Partner at Hazel Capital

LLP from 2009 to 2012.

Having started his career in

financial services in 1988 he

has worked for a number of

investment houses holding

senior positions at Bear Stearns

Asset Management, Julius Baer,

Chase Asset Management and

Lazard Asset Management.

He has significant investment

experience across many

asset classes including

private equity, hedge funds,

infrastructure and real estate.

He remains active, both as an

investor and developer, in the

field of renewable energy.

He is the co-founder of a UK

self-storage business with a

focus on repurposing redundant

buildings in urban conurbations

and has recently joined the

Board of Echo Energy plc.

He is also a Board member/

trustee of a military charity F4H.

Matthew Evans was a founding

partner of LGT Vestra in 2007,

where he ran the ventures

team, focusing on renewables,

unlisted commercial property

and private equity investments.

More recently, Matthew founded

CH1 Investment Partners

LLP, which provides bespoke

investment solutions to high

net worth, professional and

sophisticated investors.

Matthew is also a director

of several other businesses,

including Innova Energy.

Andrew Donovan is an

experienced corporate

financier, with over 26 years

of M&A and capital-raising

transaction experience in

the utilities, energy and

infrastructure sectors.

He has specialised in the

renewable energy sector

for the past 15 years.

Andrew helped develop a

portfolio of UK grid-scale

battery storage projects for

Capbal Limited (2016-22).

Batteries have a crucial role to

play in balancing and stabilising

the electricity network in the

face of the rapid growth of

intermittent renewables.

Andrew is also a member of

Chartered Accountants Ireland.

Giles Clark has worked

on solar projects across

Europe since 2006 and on

UK projects since 2010.

In 2006, he co-founded SunRay

Renewable Energy, where he

was CFO, developing large

utility scale solar projects

across Southern Europe.

SunRay had built a pipeline of

1.4GWp of projects by the time

it was acquired by SunPower

Corporation for $277mn in

2010. From 2013 to 2016 Giles

was a founding shareholder

and Chairman of Solstice

Renewables which developed

and sold 100 MWp of ground

mounted solar farms in the UK.

From 2013 to 2017, Giles was the

founder and CEO of Primrose

Solar which acquired and built

253 MW of ground mounted

solar farms in the UK.

The completed projects

were sold in 2016 to Bluefield,

Greencoat and Equitix. Giles is

also a Director of Altano Energy

SLU and of AlSi Consulting

Limited. Giles has a BA in PPE

from Oxford and an MBA from

the London Business School.

Giles resigned from the

Board with effect from

30 September 2022.

Gresham House Renewable Energy VCT2 plc

Additional

InformationGovernanceOverview

I am pleased to present the Annual

Report of Gresham House Renewable

Energy VCT2 plc (VCT) for the year

ended 30 September 2022.

Chairman’s

Statement

Christian Yates

Chairman

The Company entered a Managed Wind-Down

in the previous financial year having adopted a

New Investment Policy which had the objective

of realising the Company’s investments in

a manner that achieves a balance between

maximising the net value received from the

sale of assets and making a timely return of

capital to Shareholders. Having initially entered

exclusivity with one interested party early

in the financial year it had been anticipated

that a sale of most of the assets would be

completed by the end of the financial year.

However, during the due diligence process

several issues were uncovered, many of which

related to the age of the assets and that

required further remediation. These points,

and both market turmoil following the Russian

Federation's invasion of Ukraine and instability

within the UK Government, resulted in a much

more protracted process and required further

negotiation with the potential purchaser. Whilst

many of the issues identified have been closed

off, the Board and the Investment Adviser

are continuing to work through the remaining

issues and it is hopeful that a conclusion

will be reached over the course of 2023.

In terms of the performance of the portfolio,

following extensive remedial works carried

out at several sites and that commenced

in the prior financial year, performance of

the entire estate has improved significantly,

with performance now being in line with

expectations. Despite higher irradiation over

the summer months, the significantly more

favourable power purchase agreements (PPAs)

negotiated and agreed during the year as well

as the portfolio’s inflation linked subsidies, the

NAV per share has remained broadly stable

over the year at 91.3p per share (2021: 89.3p

per share). This is because whilst the NAV per

share reflects the valuation of the portfolio at

30 September 2022, it takes into account the

Electricity Generator Levy (EGL), a 45% tax.

This was expected to impact the value as at

the 30September although the exact details

were not announced by the UK Government

until after the year end, and that would likely

be payable by the acquirer of these assets as

well as the rise in corporation tax to 25%. It is

the Board’s opinion that it is right to take into

consideration the impact of the EGL given the

New Investment Policy adopted in July 2021

and delivers a NAV that reflects the fair value

of the portfolio’s assets. Shareholders should

take note that if, as in previous years, a portfolio

value based purely on the cashflows generated

by the assets were to be used, it would result in

a value that would be considerably higher as the

Company would not be subject to the EGL. This

is because the Company’s generation output

falls below the threshold for the EGL, and the

revenues are within the £10mn allowance.

Should high inflation be sustained for the

longer term and/or the security of gas

supply from Russia remain the key factor

in European energy markets leading to

continued high power prices, it is expected

that the value of these assets will remain at a

higher level and could increase. However, the

assets do have a limited market compared

with newer solar assets as given their age

they can be challenging to manage, and

have complex financing arrangements

which any buyer must take over.

At the year-end, Giles Clark resigned and

stepped down from the Board. I thank him

for his valuable contribution. It is not the

intention to replace him given the Managed

Wind-Down. Giles Clark was appointed a

Director of Gresham House Renewable

Energy VCT1 Plc on 30 September 2022.

Investment portfolio

At the year end, the VCT held a portfolio

of 16investments, which were valued at

£28.0mn. One-follow on investment was

made during the year, investing an additional

£67,500 into bio-bean Limited to fund the

growth and development of the business.

There have been no exits during the year.

The portfolio is analysed (by value) between

the different types of assets as follows:

Ground mounted solar 85.8%

Rooftop solar 8.7%

Small wind 4.1%

Non-renewable assets 1.4%

The Board has reviewed the investment

valuations at the year end and notes that

the valuation of the portfolio has increased

by £0.5mn or 1.9%. As indicated earlier,

the underlying portfolio has been positively

impacted by the increase in power prices

as well as increases in inflation projections

as most of the revenue that the solar farms

in the Company’s portfolio receive is linked

to RPI which increases profitability and

therefore the valuation of the assets.

Gresham House Renewable Energy VCT2 plc

Through the renegotiation of several PPAs,

significantly higher power prices have been

locked into the portfolio which will generate

stronger returns over the next two years. On

the other hand, the discount rates applied

have increased in line with recent rises in the

Bank of England base rate. In addition, the UK

Government has announced a levy on revenue

from the sale of electricity, the EGL, which

effectively increases the marginal rate of

taxation on electricity revenues above £75 per

megawatt-hour to 70%. Whilst the Company

is below the de minimis threshold at which the

EGL applies, any future buyer of the Company’s

solar farms is likely to be within the scope

of the EGL, as currently proposed, and this

would reduce the fair market value at which

any disposal would be likely to take place.

As referred to previously a problem has arisen in

relation to the connection of the South Marston

solar farm to its off taker. This arose from

the decision of the off taker (Honda) to cease

business at the site South Marston supplies

and to sell the site to a third party. It has taken

considerable time and effort to resolve the

issue. Whilst the new owner of the site, a

provider of logistic facilities, says they want to

use the power from South Marston they cannot

commit until they have planning permission (not

yet granted) and customers on site. In order to

resolve the uncertainty around this situation

a new grid connection has been negotiated so

removing this impediment to the potential sale

of the asset and the others within the same

loan structure. For more details see page 9.

Venture Capital investments

The VCT also holds two investments that are

not in renewable energy. As indicated earlier

a follow-on investment of £67,500 was made

into bio-bean Limited (bio-bean) in December

2021 to fund the growth and development

of the business. However, despite demand

being strong, trading performance since this

investment has been below expectations due to

supply shortages. As a result, the valuation of

bio-bean has decreased by £0.4mn or 53.2%,

while the valuation of the VCT’s investment

into Rezatec has also decreased by £1.1mn or

94.4% due to continued underperformance

against budget and few new contract wins.

Further detail on the investment portfolio is

provided in the Investment Adviser’s Report.

Net asset value and results

At 30 September 2022, the Net Asset Value

(NAV) per Ordinary Share stood at 91.2p and

the NAV per ‘A’ Share stood at 0.1p, producing

a combined total of 91.3p per “pair” of Shares.

The movement in the NAV per share during

the year is detailed in the table below:

Pence per

‘pair’ of shares

NAV as at 1 October 2021 89.3

Plus NAV increase 2.0

NAV as at 30 September 2022 91.3

The NAV Total Return (NAV plus cumulative

dividends) has increased by 1.4% in the last year

and at the year end stands at 148.4p excluding

the initial 30% VCT tax relief, compared to

the cost to investors in the initial fundraising

of £1.00 or 70.0p net of income tax relief.

The profit on ordinary activities after

taxation for the year was £0.5mn (2021:

£2.7mn loss), comprising a revenue profit of

£80,000 (2021: £23,000) and a capital profit

of £445,000 (2021: capital loss of £2.7mn)

as shown in the Income Statement.

Dividends

On 21 December 2022, the Board declared

a dividend in respect of the year ended

30September 2022 of 2.0p per Ordinary Share.

This dividend was paid on 27 January 2023

to Shareholders on the register at 6 January

2023. Following the payment of this dividend,

total dividends paid to date for a combined

holding of one Ordinary Share and one ‘A’ Share

will increase to 59.1p (2021: 57.1p). This level of

dividend is lower than has been paid historically

in years up to 2020 (no dividend was paid in

2021) but the Company has faced exceptional

costs in the past two financial years. These

costs have mainly been associated with the

need for remediation work on the portfolio

of solar assets, which are ageing and hence

needed expenditure to replace old equipment

to restore their performance levels. The Board

is pleased to report that the results of these

works have been positive and that indications

are that performance levels are satisfactory

and in line with expectations. In addition,

there have been costs associated with the

proposed winding down of the Company and

the sale of investment assets in accordance

with Shareholders wishes as expressed in

the Continuation Vote in March 2021. The

improvement in returns for Shareholders

discussed in this Report are expected provide

additional resources to improve distributions

to Shareholders in future should the sale of

the assets not be achieved as planned.

To increase the Company’s distributable

reserves and facilitate future dividend

payments, the Directors will seek shareholder

approval for a reduction of certain non-

distributable reserves at the forthcoming AGM.

The implementation of such a reduction of

reserves is a Court led process that is likely

to take some months. The Board intends to

continue the payment of dividends as soon

as distributable reserves are increased.

2022 Annual General Meeting (AGM)

The VCT’s eleventh AGM was held on

23March 2022 at 11.30 a.m. and all

resolutions were passed by way of a poll.

2023 Annual General Meeting (AGM)

The VCT’s twelfth AGM will be held at The

Scalpel, 52 Lime Street, London EC3M

7AF on 21 March 2023 at 12.00 pm.

Share Buybacks

As noted in previous Reports, the Board has

decided that the VCT will not be buying in

Shares for the foreseeable future. The Board

will keep this under review as required.

Outlook

As noted earlier, the Board has not been able to

progress the sale of the Company’s assets as

quickly as Shareholders may have expected. It

would like to reassure Shareholders that it has

been making every effort to ensure that returns

are maximised at the point of sale. The Board

remains optimistic that significant progress

and a conclusion can be reached in 2023.

In the meantime, the improvement in power

prices and the rise in inflation has been very

beneficial for the Company’s assets. The

Board therefore believes that the outlook

for the portfolio, as a whole, is positive.

Christian Yates

Chairman

30 January 2023

Financial

StatementsGovernanceOverview

Gresham House Renewable Energy VCT2 plc

Investment Adviser’s Report

Portfolio Highlights

Gresham House Renewable Energy VCT 2

plc (VCT) remains principally invested in the

renewable energy projects that the VCT and

Gresham House Renewable Energy VCT 1 plc

(VCT1) have co-owned for a period of eight to

eleven years, depending on the asset, with

the value of these projects representing

close to 99% of the value of the portfolio.

The total generation capacity of assets co-

owned by the VCT is 34.4MW. The VCT also

has two venture capital investments.

During the year the sale process of the solar

energy projects that are owned jointly with VCT1,

was progressed but has not yet concluded.

The two VCTs had appointed EY to prepare and

run the sales process in the previous financial

year. A number of parties carried out initial

due diligence on the portfolio in the autumn of

2021, and submitted non-binding offers subject

to further due diligence. One potential buyer

was granted exclusivity to perform detailed

due diligence and negotiations with that party

continued throughout the financial year. The

significant uncertainties in the short and longer

term, caused by a combination of macro and

more portfolio-specific circumstances including

economic and political turmoil in the UK during

the summer and autumn of 2022 at the top of the

UK Government, the impact on energy markets

of The Russian Federation’s invasion of Ukraine,

various windfall tax structures or iterations,

issues relating to remediation works, and in

particular relating to the long-term certainty of

the South Marston ground-mounted solar asset’s

grid connection, all prevented the sale process

from being finalised during the financial year.

The Investment Adviser, in the meantime,

continued to manage the assets with the

objective of deriving the best possible yield

from them, whilst also supporting the Board

of the VCT and its advisers in advancing

the sale process and evaluating the non-

binding offers that were received.

The Investment Adviser has undertaken a

valuation exercise for the purpose of determining

the Net Asset Value and has provided the

Directors with several valuation scenarios based

on different assumptions for the key variables

governing future performance. It is the Directors

of the VCT that have the responsibility of valuing

these assets. In light of the ongoing sales

process, the valuation presented in this annual

report necessarily reflects the Directors’ view of

the fair value of the assets which incorporates

potential costs (such as the Electricity Generator

Levy (EGL)) an acquirer may incur through

holding the assets as well as their view on

the levels of the assumptions that determine

future operational and financial performance.

The vast majority of the assets held by the VCT

produce solar power. The solar portfolio is older

than well over 90% of the total installed solar

capacity in the UK, but this means that the VCT’s

solar assets have higher government-backed

incentives than most other solar installations.

During the year, the total revenue from renewable

energy generation was £13.1mn (2021: £10.5mn)

and of this, £11.5mn (2021: £9.4mn) was from

government incentives and inflation-linked

contracts. The total revenue from the renewable

assets was 4.4% ahead of budget due to

higher irradiation and higher power prices.

The downside of the relatively old age of the

VCT’s solar assets is the additional maintenance

required to keep them operating effectively.

Projects to repair or replace certain components

across the three worst performing older assets

were completed during the previous financial

year. Performance since completion of those

works has been encouraging, with consistently

increased output and reliability at Kingston

Farm, Lake Farm and Beechgrove Farm with

new, 10-year warranties on some of the key

equipment (e.g. new inverters) and UK based

technical staff available for ongoing repairs or

maintenance. Successful warranty claims at

Beechgrove Farm and South Marston led to

additional remedial works that also improved

performance, particularly at Beechgrove Farm.

In terms of available resources, the year

benefited from strong solar irradiation which

came in 6.7% ahead of budget. This should

have resulted in better generation performance

but there were technical issues and downtime

caused by remedial works at three of the ground

mounted sites (Beechgrove, South Marston

and Ayshford Court, as described below) and

poorer than expected performance of the

roof mounted portfolio. These legacy issues

have been addressed through successful

warranty claims and repair works.

Whilst all works had to be suspended on

residential roof mounted solar installations in

the previous financial year as engineers were

not permitted to enter homes during Covid

lockdowns and restrictions that carried through

into the financial year, much of these have now

been carried out. Housing Associations, the

landlords of the majority of the properties, were

more cooperative in their approach in permitting

access for the contractors for remedial works.

In terms of the macroeconomic environment, the

effects on the portfolio are summarised below:

Æ Power prices were significantly reduced

through the initial months of the pandemic

and price fixes were therefore sought in

2020 and early 2021, as soon as Power

Purchase Agreement (PPA) providers

began offering above the budgeted levels

at the time. Fixing the prices under PPAs

provided security of revenues. However,

the fixed prices meant that the portfolio

could not then benefit from the increases

in wholesale power prices during the

autumn of 2021 and the further increases

experienced immediately after the Russian

Federation's invasion of Ukraine. However,

these PPAs expired during the financial

year and all but one were replaced with

new PPAs, with a 1-2 year fixed term, with

prices at a multiple of the previous levels.

Æ With much of the portfolio’s revenue being

inflation linked, higher and more sustained

inflation increased the profitability of the

assets and therefore their value, even

though most of the cost base and the debt

facilities are also inflation-linked.

The VCT also holds newer investments in

growth businesses; bio-bean Limited (bio-bean),

the world’s largest recycler of waste coffee

grounds, which produces sustainable, clean

fuels as well as advanced biochemicals for

use in the food industry; and Rezatec Limited

(Rezatec), a climate technology company and

software developer. Rezatec 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 sectors.

Both businesses went through challenging

times in the year. Rezatec failed to meet the

revenue growth rate in its business plan and

to secure institutional funding. This resulted

in an emergency funding round subscribed

to by some of the existing investors and

a drive to bring down the company’s cost

base. The company’s value has therefore

been written down by 94.4% to £0.07mn.

bio-bean also failed to meet its revenue

targets due to lower than expected deliveries

of its feedstock and less demand for its core

product due to a warmer than usual winter.

Emergency funding had to be secured from

some of its existing investors and the company

has now engaged an adviser to explore options

for a trade sale. It has also been written

down in value to £0.3mn, a fall of 53.2%.

Gresham House Renewable Energy VCT2 plc

Portfolio Composition

Portfolio Composition by Asset Type and Impact on Net Asset Value (NAV)

30 September 2022 30 September 2021

Asset Type kWp

Value

(‘000)

% of Portfolio

value

Value

(‘000)

% of Portfolio

value

Ground mounted solar (FiT)* 20,325 £20,745 74.1% £19,341 70.6%

Ground mounted solar (ROC)** 8,699 £3,262 11.7% £2,472 9.0%

Total ground mounted solar 29,024 £24,007 85.8% £21,813 79.6%

Rooftop solar (FiT) 4,297 £2,425 8.7% £2,602 9.5%

Total solar 33,321 £26,432 94.5% £24,415 89.1%

Wind assets (FiT) 1,030 £1,156 4.1% £1,171 4.3%

Total renewable generating assets 34,351 £27,588 98.6% £25,586 93.4%

Venture Capital investments N.A. £392 1.4% £1,814 6.6%

TOTAL 34,351 £27,980 100.0% £27,400 100.0%

* Feed in Tariff (FiT)

** Renewables Obligation Certificate (ROC)

The 34.4MWp of renewable energy projects in the portfolio of the VCT and VCT 1 generated 33,378,218 kilowatt-hours of electricity over the financial

year, sufficient to meet the annual electricity consumption of circa 8,442 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 circa 19,400 mature trees would remove from

the atmosphere.

Portfolio Summary

Approximately 99% of the portfolio value, and

all of the income for the portfolio, is derived

from the renewable energy generation assets.

Renewable Energy Revenue by Asset Type

Ground mounted solar (FiT) 76.0%

Ground mounted solar (ROC) 12.8%

Roof mounted solar 9.1%

Wind assets 2.1%

Renewable energy revenue by asset type

The performance against budget is shown below:

Portfolio revenues in the FYE 30 September 2022 by Asset Type (£ Sterling)

Asset type

Budgeted

revenue

Actual

revenue

Revenue

performance

Ground mounted solar (FiT) 9,510,159 9,950,021 104.6%

Ground mounted solar (ROC) 1,406,636 1,673,400 119.0%

Roof mounted solar 1,248,280 1,191,092 95.4%

Wind assets 375,675 278,776 74.2%

TOTAL 12,540,750 13,093,289 104.4%

The revenue is affected by:

Æ renewable energy resources (solar irradiation or wind, as relevant);

Æ the performance of the assets in converting the resources into revenue (i.e. how the assets

are performing, any technical issues, etc); and

Æ the revenue per unit of energy generated.

These themes will be expanded on below.

Gresham House Renewable Energy VCT2 plc

Financial

StatementsGovernanceOverview

It is clear from the table above that the positive variance at the ground-mounted solar farms was most material with actual revenues benefitting from

more generation as well as higher power prices. This is detailed in the chart below:

VCT GM Solar Portfolio Revenue Analysis 2021/2022

Forecast revenue

Negative Positive

Power price

Actual revenue

Output

11,623,421

10,916,795

541,759

164,868

£7,000,000

£7,500,000

£8,000,000

£8,500,000

£9,000,000

£9,500,000

£10,000,000

£10,500,000

£11,000,000

£11,500,000

£12,000,000

The old equipment, inverters and transformers that had been causing the reduction in output last

year were replaced in the prior financial year. Successful warranty claims against Jinko Solar who

supplied the solar modules for Beechgrove and South Marston resulted in remedial works being

carried out to the modules and associated cabling over the summer months. The positive results

of this significant remedial work became apparent in the ensuing generation numbers.

The slight underperformance at technical level, when adjusted for the high irradiation, was

caused by the ROC-remunerated Priory Farm and Ayshford Court assets underperforming due to

poor service from the Operations & Maintenance (O&M) contractor that substantially increased

response times. The issues at the Ayshford Court asset were addressed in the first half year

but the Priory Farm asset suffers from regular short duration outages that require manual

intervention. A new O&M contractor is in the process of being appointed.

Overall, 88% of income was inflation linked (either through the FiT, ROC or contracts for the sale

of electricity), with the ROC assets having the highest price exposure. Thus, they benefited more

from the renewal of the PPAs at higher prices.

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 94% of

total portfolio by value).

During the year the assets benefited from better solar resources than budgeted, with solar

irradiation being 6.7% ahead for the year.

However, better solar resources do not automatically imply better generation as the performance

of solar panels is also adversely affected by heat. The exceptionally hot weather over the summer

months, particularly in July 2022, resulted in some deterioration in technical performance.

Technical performance

The table below shows the technical performance, including the impact of the higher irradiation,

for each of the groups of assets.

Asset Type

Budgeted

output

Actual

output

Technical

performance

(in the

same period

last year)

Ground mounted solar (FiT) 20,392,254 20,445,981 100.3% 17,303,047

Ground mounted solar (ROC) 8,316,605 8,675,945 104.3% 8,661,522

Roof mounted solar 3,574,175 3,480,607 97.4% 3,498,469

Wind assets 1,045,301 775,684 74.2% 791,970

TOTAL 33,328,335 33,378,218 100.2% 30,255,008

The ground mounted solar (FiT) assets

performed ahead of budgets and significantly

ahead of the prior financial year.

The results of the successful repowering

works at Kingston Farm and Lake Farm (each

with 4.98MW capacity, FiT assets) were

evident with Kingston Farm performing better

than budget, even when adjusting for higher

irradiation. The figures for Lake Farm were

slightly lower than budget when adjusted

for irradiation but nevertheless a significant

improvement compared to the previous year.

Beechgrove’s (3.98MW, FiT) repowering works

were completed just before the end of the

last financial year, however performance was

held back by another issue, namely cracking

connectors at the back of its solar panels

which in turn were causing isolation faults on

the system. Following a root cause analysis,

this degradation of the connectors was

found to be caused by the high salt content

in the air due to the site’s proximity to the

sea. A successful warranty claim against

Jinko Solar, the manufacturer, resulted in the

replacement of all original connectors with

ones made from an improved polymer, which

can withstand the marine environment, over

the summer. The ensuing generation data

suggests that the issue has been resolved.

Investment Adviser’s Report (continued)

Gresham House Renewable Energy VCT2 plc

Kingston Farm Performance Ratio (%)

0.0%

20.0%

40.0%

60.0%

80.0%

100.0%

Repowering Achieved Performance Ratio (%)

Oct-17

Dec-17

Feb-18

Apr-18

Jun-18

Aug-18

Oct-18

Dec-18

Feb-19

Apr-19

Jun-19

Aug-19

Oct-19

Dec-19

Feb-20

Apr-20

Jun-20

Aug-20

Oct-20

Dec-20

Feb-21

Apr-21

Jun-21

Aug-21

Oct-21

Dec-21

Feb-22

Apr-22

Jun-22

Aug-22

Lake Farm Performance Ratio (%)

0.0%

20.0%

40.0%

60.0%

80.0%

100.0%

Repowering Achieved Performance Ratio (%)

Oct-17

Dec-17

Feb-18

Apr-18

Jun-18

Aug-18

Oct-18

Dec-18

Feb-19

Apr-19

Jun-19

Aug-19

Oct-19

Dec-19

Feb-20

Apr-20

Jun-20

Aug-20

Oct-20

Dec-20

Feb-21

Apr-21

Jun-21

Aug-21

Oct-21

Dec-21

Feb-22

Apr-22

Jun-22

Aug-22

Beechgrove Performance Ratio (%)

0.0%

20.0%

40.0%

60.0%

80.0%

100.0%

Repowering Achieved Performance Ratio (%)

Oct-17

Dec-17

Feb-18

Apr-18

Jun-18

Aug-18

Oct-18

Dec-18

Feb-19

Apr-19

Jun-19

Aug-19

Oct-19

Dec-19

Feb-20

Apr-20

Jun-20

Aug-20

Oct-20

Dec-20

Feb-21

Apr-21

Jun-21

Aug-21

Oct-21

Dec-21

Feb-22

Apr-22

Jun-22

Aug-22

Overall, the replacement works are expected to have a payback of under five

years and the assets benefit from ten-year warranties from Huawei, the inverter

manufacturer who has a strong customer service team in the UK.

South Marston (4.97MW FiT) has historically sold all its power to a Honda production plant adjacent to

the site at Swindon. Honda closed down this facility and its exit is leading to changes of contractual

arrangements for the sale of power to the businesses that will move into the site, and potentially to

the multi-part agreement governing the access to and use of the grid connection. The Investment

Adviser is working with Honda, the commercial real estate developer that intends to acquire the site

from Honda, and various advisers to ensure the continuity of supply of power by the solar farm.

The purchaser of the site is very keen to make the solar power available to its future tenants when

they are expected to move onto the site in the second half of 2024 and has maintained in its planning

submission for the new development that it will retain the existing infrastructure including the

switchgear through which South Marston connects to the electricity grid. Nevertheless, South

Marston’s contractual rights need to be bolstered to satisfy any buyer of the VCT’s assets that there

is zero risk of the project losing its ability to

export. The Investment Adviser is pursuing

multiple avenues to fully de-risk the grid

connection. These include accepting a grid

connection offer from Southern Electric Power

Distribution plc for a brand new and dedicated

connection outside the former Honda site,

putting in place contingent liability insurance

and negotiating with the new purchaser of

the site to improve the contractual position. A

provision for the cost of the new grid connection

has been made in the financial forecast that

forms the basis of the valuation in this Report.

The ground mounted solar (ROC) assets also

performed ahead of budgets, similar to the

previous year. These assets were not repowered

and did not suffer long outages needed for

remedial works in the prior financial year,

making the comparison more straightforward.

Ayshford Court (5.45MW, ROC) also exhibited

lower than expected performance in the first

half of the financial year. This was caused by

a small number of failing solar modules taking

down entire strings across several modules.

The string-based configuration of many solar

plants means that a small number of module

failures can take large parts of the plant offline.

The solution to this is close monitoring and

a rearrangement and redistribution of the

solar modules such that the faulty modules

are grouped together, thereby minimising the

number of impacted modules. These works were

carried out in March and April 2022 and have

delivered successful results. A warranty claim

is also in progress against the manufacturer.

Overall, the benefit of high irradiation was

offset by heat effects, planned outages

to carry out the works and lower technical

performance for some of the assets, but

generation was still above budget.

Generation of the rooftop solar portfolio

was 2.6% lower than budget and slightly

below the same period last year. Irradiation

cannot be measured at roof mounted solar

installations as it is not cost effective to install

pyranometers but one can assume that the

irradiation at these sites was in line with the

irradiation at the ground mounted assets.

The Investment Adviser continues to work

with the O&M contractors and landlords to get

access to the rooftop installations that are

underperforming, in order to effect repairs

as soon as possible, and have these repairs

completed in a cost-effective manner.

The small wind portfolio performed 25.8%

lower than budget, continuing the poor

performance experienced in recent years.

The Investment Adviser attributes the poor

performance to the turbines’ ability to capture

the resource having been overstated at the

time of installation. Small wind accounts for

only 3% of the portfolio in terms of capacity.

Gresham House Renewable Energy VCT2 plc

Financial

StatementsGovernanceOverview

Investment Adviser’s Report (continued)

The entire portfolio is composed of R9000

wind turbines, which have generally performed

satisfactorily and have the support of an

experienced O&M contractor with easy access

to spare parts and maintenance crews.

Revenue per kilowatt hour of renewable

energy generated

The UK Government has used several

mechanisms to encourage investment into

renewable energy generation, including

the FiT and 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 solar asset class has matured

and both 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 40p for every

kilowatt hour (kWh) of electricity it produced

(with the added extra of a floor price support

to ensure it may also sell this power at a

reasonable price), with inflation taking that

above 45p from 1 April 2023. 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 at market prices for their income.

VCT Solar Portfolio, Revenue split

for year 2021/2022

Ground mounted FiT 64%

Ground mounted export 16%

ROC buyout 7%

ROC recycle 1%

Private wire 1%

Rooftop FiT 9%

Rooftop export 1%

Other 1%

Of total revenues generated in the year,

81.5% was earned from government backed

incentives for generating renewable

electricity. Included within export revenue

above, a further 4% is inflation linked,

either through the FiT export floor price for

selling electricity or contracts for the sale of

electricity, taking the government backed

or RPI linked revenues to 85% of the total.

The high proportion of income that is fixed by

the government, is RPI linked and is not exposed

to wholesale power prices, a significant driver

of value in this portfolio. This enabled the

portfolio to be largely insulated from the very

significant reduction in the wholesale price of

electricity experienced during the initial months

of the pandemic in 2020. Whilst predictable,

government backed revenues reduce the risk,

given the low power prices through the first few

months of the pandemic, when prices increased

the assets entered into fixed price contracts

of various lengths to sell power. This further

reduced the risk of variability in revenues from

wholesale power price fluctuations. This was

beneficial when coming out of the pandemic

but it also meant that the assets missed out

on the increase in wholesale power prices until

the fixed price contracts started expiring in

April 2022. The PPA contracts were replaced

or updated with new prices valid for 1-2 years

as they expired during the financial year.

Total (power price sales and subsidies) revenues

per kWh generated by the solar assets were

39.4p for the year ended 30September

2022. These are projected to rise by over

50% to 60.9p in the financial year ending

30 September 2023 and to 64.2p in the

financial year ending 30 September 2024.

Operating costs

The majority of the cost base is fixed

and/or contracted under long-term

contracts and includes rent, business

rates, and regular O&M costs.

Many of these costs have also risen in line

with inflation. A minority of the leases for

the ground-mounted solar assets contain

clauses that require supplemental rent

to be paid to the landlords in the event of

revenues exceeding set thresholds, and

these thresholds will be exceeded in the new

financial year due to high power prices.

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 cash held in the

maintenance reserves. At the financial year

end reserves totalling £1.0mn were in place

for all the ground mounted solar assets and for

the majority of the roof mounted solar assets,

and additional amounts will be deposited in the

reserves in the future. These provisions were

revised upwards following a technical review

that was commissioned early in the financial

year looking at historic experience of repairs.

Feedback from the sales process indicated

that third parties would charge more in the

future for managing the SPVs (to account for

the complexity of managing a portfolio of this

type and age and which includes leverage and

a large number of distributed, roof-mounted

solar assets) than the Investment Adviser has

historically modelled to date. The Investment

Adviser therefore increased the cost

assumptions used in the portfolio valuation by

100% at the time of the half year valuation. This

increase does not apply to ongoing cashflow

that the assets earn until the portfolio is sold.

Venture Capital investments

The VCT holds an investment of £0.7mn

(at cost, including the £67,500 additional

investment made in the year) in bio-bean,

the world’s largest recycler of waste coffee

grounds. 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 coffee logs for use in

wood burning stoves as well as into pellets

for combustion in biomass-fed energy

generators. It sells the logs online, through

large supermarkets and through home

improvement chains. bio-bean also markets

and sells dried coffee grounds for use in a

diverse set of applications including cosmetics,

bioplastics and the automotive industry.

Demand for the coffee logs (the main product)

remained strong, albeit with the temporary

impact of warmer weather in the second half

of last winter. However, bio-bean was not

able to benefit as much as was hoped from

the surge in the price of gas (and therefore

the cost of indoor heating) that took place

following the Russian Federation’s invasion

of Ukraine. Its coffee logs compete mainly

against sawdust-derived heat logs rather

than gas-fuelled heating. bio-bean was also

constrained, especially in the first few months

of the financial year by reduced deliveries of

waste coffee grounds, its primary feedstock.

The new, higher margin dried coffee grounds

is a developing market, with first revenues

achieved during the year and a pipeline of

business development opportunities that

could lead to a significantly improved profit

outlook, but have not had a meaningful

impact on financial performance so far.

bio-bean required additional funding from

its investors in the spring of 2022. The VCT

chose not to participate on the basis of bio-

bean’s vulnerability to weather patterns, its

heavy dependence on timely and low-cost

feedstock deliveries and its lack of pricing

power for coffee logs, even in an exceptional

environment where energy and heating

became very expensive. bio-bean’s board

decided to explore an exit for Shareholders

through a trade sale, and mandated an advisory

firm in September to assist. The Investment

Adviser believes a buyer will be found but

recognises that there is significant uncertainty

Gresham House Renewable Energy VCT2 plc

in relation to the achievable price. The

valuation of the VCT’s stake has been marked

down by 52% to reflect this uncertainty.

The VCT’s other growth investment, Rezatec

Limited, also ran into difficulties. Rezatec’s

management managed to achieve steady

growth but far from the rate envisaged in

the business plan on the basis that the VCT

invested in January 2020. This, coupled

with a cost base that was handled with

less prudence than the Investment Adviser

would have liked, led to Rezatec requiring

a significant amount of new investment in

the financial year. A process led by KPMG

failed to secure the necessary amount and

management had to approach the existing

investor base for emergency funding.

The VCT decided not to participate as it was

not convinced of management’s ability to

deliver the original business plan and achieve

a successful exit. Investors that chose to

participate did so on the basis of terms that

gave them as much protection as possible

in the event of no upturn in performance.

Although, the investment by the VCT had been

structured in a way that initially provided an

element of protection against slower than

expected growth and the dilution that can

come with additional funding rounds, this

protection had to be in large part surrendered

as a condition of the emergency funding round.

The company has now been put up for a

trade sale as it is believed that its software,

algorithms and customer base could be

useful to commercial satellite owners in

monetising the value of the large amount

of geospatial data they generate.

The value of this investment has

therefore been marked down to close to

£nil to reflect the Board’s belief that a

negative outcome is far more likely than

a positive outcome for the company.

Regardless of these regrettable developments

for the two venture capital investments, it

would always have been a challenge to realise

these investments in line with the disposal

of the other VCT assets. The market for

secondary stakes in private, venture capital

funded companies is less liquid than the

market for renewable energy investments.

Portfolio valuation

Whilst the Investment Adviser is supporting the

proposed sale of the VCT’s renewable assets

and notes that a firm (i.e. binding) offer to

purchase the assets will be the best indication

of value, consistent with prior years the NAV

of the renewable portfolio is imputed from

the valuation of future projected cash flows

generated by the renewable energy assets, as

well 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

now marked down value of the venture capital

investments into bio-bean and Rezatec.

The future cash flow projections for

renewable assets are impacted by:

Æ Renewable resources. Despite this year

enjoying higher solar irradiation than

budgeted, the assumptions on irradiation

have not been changed.

Æ Technical performance. As noted above,

the repairs at Lake Farm, Kingston Farm

and Beechgrove Farm largely resolved

their historic performance issues, however

expectations for future generation were

slightly marked down at the half year

point to assume a more prudent position.

Ayshford Court, South Marston and Priory

Farm suffered technical issues that

were addressed. The O&M contractor for

Ayshford Court, Priory Farm, Wychwood

and Parsonage is in the process of being

replaced and this is expected to lead to

better and more timely maintenance of

these assets.

Æ Power prices. Power price forecasts

that were initially adversely impacted by

COVID-19 have now risen to the highest

levels in the lifetime of the VCT due to

acceleration of demand post the COVID-19

lockdowns and restrictions ending

coinciding with the Russian Federation’s

invasion of Ukraine and the ensuing

disruption to European power markets.

The Investment Adviser was able to

capitalise on these by entering into new

PPAs that have locked in high prices for

the next one to two years.

The Investment Adviser also decided

to reflect the growing proportion of

solar power in the UK energy mix in

assumptions for prices the solar assets

would earn in the future. Solar power

is available throughout daylight hours

which do not always cover peak price

periods. A solar asset therefore has to

sell a greater (compared to a provider of

“baseload” power) proportion of its power

at times in the day when prices are lower

due to demand being lower and power

being more plentiful due to all the solar

plants generating at the same time. This

is known as the solar capture price.

The latest generation-weighted

forecasts provided by a leading market

consultant, and current offers for

PPAs from purchasers for the power

generated are used to value the assets.

The UK Government responded to the

cost-of-living crisis, caused in part by

high energy bills for households and

businesses, by introducing the Electricity

Generator Levy (EGL) that imposes a 45%

charge on exceptional receipts generated

from the production of wholesale

electricity where exceptional receipts will

be defined as wholesale electricity sold at

an average price in excess of £75 per MWh

over an accounting period. This does not

cover revenues earned from government

subsidies such as ROCs and FiTs. The

EGL will only apply to exceptional receipts

exceeding £10mn in an accounting period.

There is also a de minimis threshold of

50GWh of annual generation at portfolio

level below which the EGL is not charged.

The VCT is in the fortunate position that

its portfolio falls below this level. However,

almost all potential buyers, including all of

the parties who submitted offers during

the sales process, would not be exempt

from the EGL and would therefore have

to account for its impact in their offer

prices. The EGL will be in effect from

1January 2023 until 31 March 2028, and will

apply to pro-rated profits for accounting

periods between those dates. The levy

will be administered via the Corporation

Tax system and paid by the responsible

company in a group of companies.

Æ Asset Life. The assets are valued taking

into account the duration of the subsidies,

the leases and the planning permissions,

without assuming extensions. It will be

appropriate as the end of the lease terms

get closer to approach landowners and

local planning authorities with a view

to negotiating extensions. Although

power prices in the future are projected

to decline from the current high levels,

falling costs of equipment and the fact

that most of the investment has already

been incurred, would enable additional

returns in the longer term from such life

extensions.

Æ Costs. Up-to-date costs for the assets

are included, reflecting all commercial

negotiations, expectations for lower

maintenance costs after the older assets

are repaired and the need to provision for

the costs of repairs to equipment such

as switchgear and transformers that

may be needed in the future. The asset

management costs going forward have

been doubled from those charged by the

Investment Adviser, following feedback

from the sales process.

Gresham House Renewable Energy VCT2 plc

Financial

StatementsGovernanceOverview

Æ Corporation tax. The actual corporation

tax paid will impact on the cash available

to Shareholders.

Æ 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. This is countered, to some degree,

by debt service for the two debt facilities

also being indexed to inflation, with an

increase in inflation resulting in higher

interest charges.

It is particularly challenging to forecast the

future direction of inflation. Central Banks

around the world have raised interest

rates in a bid to quell inflation. Financial

markets are pricing inflation well in excess

of 3% even in the medium to long-term. A

more prudent long run forecast of 3% has

been used in the calculation of the NAV.

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. With greater certainty of output

at the three large ground mounted solar

assets that comprise 40% of the installed

capacity there is greater visibility on the

returns on these assets. The discount rates

used reflect the Investment Adviser’s

experience in the market and evidence of

third-party transactions, as well as based on

feedback from other independent advisers.

The discount rates used to value the future

cash flows have been increased by 1.5%

for the solar asset portfolio since the end

of the financial year (2021: 5.5% to 5.75%)

to reflect the increase in the risk-free rate

as a result of the Bank of England raising

interest rates. An increase of equal magnitude

has been applied to the wind assets.

The value of the investments in bio-bean

and Rezatec has been determined using

International Private Equity Valuation

Guidelines. Due to the highly dilutive emergency

funding round and the company’s diminished

future prospects, Rezatec’s valuation was

marked down to less than 53% of investment

cost to reflect its continued, despite nearing

the end of the pandemic, to variability in

feedstock supply, as well as weather patterns.

The business has improved in many respects

including better margins, increased demand

for its core product, good traction in a new

product, but success is highly dependent on

sustained and growing deliveries of feedstock

at low prices. Bio bean’s valuation has also

been marked down to reflect its continued,

despite the end of the pandemic, variability

in feedstock supply, as well as weather

patterns. The business has improved in

many respects including better margins,

increased demand for its core product, good

traction in a new product, but success is

highly dependent on sustained and growing

deliveries of feedstock at low prices.

Overall, a £1.9mn increase in the value

of the renewable generation assets was

offset by a £1.4mn reduction in the value

of the venture capital investments.

Outlook

The Investment Adviser’s continued focus is

to ensure that the assets operate at or above

budget whilst it supports the Directors’ efforts

to maximise exit value for Shareholders.

Addressing the contractual status of the grid

connection arrangement at South Marston and

de-risking the low probability (but high potential

impact) loss of this grid connection remains a

key priority. In recent months, new avenues in

the form of an offer from the local Distribution

Network Operator for South Marston to

connect to the grid at dedicated Point of

Connection outside the former Honda site, and

contingent liability insurance have emerged.

The discussions between the parties involved,

on new arrangements once the new owner

of the site is in place, have also progressed.

The repairs of the underperforming assets

that were completed in the last financial year

appear, from this year’s generation data,

to have been successful, as have warranty

claims for the Beechgrove ground mounted

solar asset and these have provided greater

visibility and reliability of revenues. A new

O&M contractor is about to be formally

engaged for four of the eight ground-mounted

solar assets and this is expected to improve

reliability for those assets. The generation

outlook for the portfolio has improved since

the beginning of the last financial year.

There is an observable impact of age on

many of the assets that have not yet been

repowered in the portfolio. The Investment

Adviser remains vigilant for the purpose of

spotting any signs of degradation early so that

the impact on availability can be managed

and reduced. Further maintenance provisions

have been incorporated into the financial

model to cover the risk of higher maintenance

expenditure on roof mounted assets.

The higher inflation outlook, whilst of concern

from the point of view of the wider UK and

global economies, is positive for the owners

of subsidised UK renewable assets. Although

most costs also rise in line with inflation,

as does the cost of servicing the two debt

facilities, the net benefit of increased inflation

is strongly positive since it increases the

inflation linked revenues more than it increases

the costs. The portfolio has been enjoying the

benefit of higher inflation from 1 April 2022

when subsidy levels rose, with even higher

inflation figures raising tariffs from 1 April 2023.

All but one of the eight ground mounted solar

assets came out of their fixed price PPAs during

the financial year, which coincided with the

spike in power prices following the Russian

Federation's invasion of Ukraine. The Investment

Adviser entered into new fixed price PPAs for one

or two year durations for each of these assets.

The combined effect of inflation and power

prices locked in at high levels should translate

into significantly improved revenue and

cashflow over the next two years. Total

revenues per kWh generated by the solar

assets are expected to rise to 60.9p in the new

financial year and 64.2p in the financial year

ending 30 September 2024, from 39.4p in the

last financial year ending 30 September 2022.

Should generation stay at the same levels as in

the financial year, total revenues will increase

in the same proportion, with a corresponding

impact on cashflow after debt service.

Beyond the one to two year term for the fixed

power prices, it becomes very challenging

to predict the future course of inflation and

power prices, with a wide range of forecasts

for medium to long-term inflation. There

are plausible future scenarios that could

bring the levels of inflation as well as power

prices down substantially from current levels,

which are already down from the highest

levels experienced in recent months.

The VCT is very fortunate that the EGL

introduced by the UK Government with

effect from 1 January 2023 does not

apply to the VCT, as the total generation

of its portfolio falls below the de minimis

threshold of 50GWh per year.

However, most likely buyers of the VCT’s assets

already have renewable energy portfolios

and would not therefore be able to avoid

paying the EGL as a result of the de minimis.

Accordingly, a fair value has been determined

with the assets valued for the purposes of

the NAV as if the EGL would need to be paid.

The venture capital investments that

accounted for close to 7p of the NAV have

been marked down by slightly under 6p,

which is a disappointing outcome. Whilst

fortunes can turn around, the Investment

Adviser is not at this time expecting to

recover the original amounts invested.

Investment Adviser’s Report (continued)

Gresham House Renewable Energy VCT2 plc

The last financial year has certainly been

notable in terms of the outlook for renewable

generation in the UK and the rest of the

world. In particular, the Russian Federation's

invasion of Ukraine exposed Europe and

the UK’s vulnerability to energy price shocks

and this is expected to add an additional

impetus to the deployment of renewable

energy. The low power price and low inflation

environment changed rapidly allowing

renewable asset owners to benefit, before

the impact of the EGL, from selling their

power at much higher rates, and those with

subsidy-backed assets enjoying higher inflation

as well. These have been reflected in the

renewable generation portfolio’s valuation.

For this specific portfolio, that has had

successful upgrades implemented on many

of its assets, the outlook is very positive

it remains to be seen whether this can be

translated into a successful sale in 2023.

Gresham House Asset Management Limited

30 January 2023

Gresham House Renewable Energy VCT2 plc

Financial

StatementsGovernanceOverview

Review of Investments

Portfolio of investments

The following investments were held at 30 September 2022:

Qualifying and part-qualifying

investments Operating sites Sector

Cost

£’000

Valuation

£’000

Valuation

movement

in year

£’000

% of

portfolio

Lunar 2 Limited* South Marston, Beechgrove Ground mounted solar 1,330 15,271 1,163 54.6%

Lunar 1 Limited* Kingston Farm, Lake Farm Ground mounted solar 125 2,403 185 8.6%

New Energy Era Limited Wychwood Solar Farm Ground mounted solar 884 1,835 50 6.6%

Ayshford Solar (Holding) Limited* Ayshford Farm Ground mounted solar 826 1,740 378 6.2%

Tumblewind Limited* Priory Farm Small wind/solar 1,188 1,521 410 5.4%

Vicarage Solar Limited Parsonage Farm Ground mounted solar 871 1,236 7 4.4%

Gloucester Wind Limited Gloucester Wind Roof solar 1,000 789 (68) 2.8%

Hewas Solar Limited Hewas Solar Roof solar 1,000 743 (88) 2.7%

HRE Willow Limited HRE Willow Small wind 875 709 9 2.5%

St Columb Solar Limited St Columb Solar Roof solar 650 529 (4) 1.9%

Penhale Solar Limited Penhale Solar Roof solar 825 365 (16) 1.3%

bio-bean Limited** Cambridgeshire Clean energy 695 325 (370) 1.2%

Minsmere Power Limited Minsmere Small wind/solar 975 311 (14) 1.1%

Small Wind Generation Limited Small Wind Generation Small wind 975 136 (11) 0.5%

Rezatec Limited** United Kingdom Clean energy 1,000 67 (1,119) 0.2%

Lunar 3 Limited* Ground mounted solar 1 0 0 0.0%

13,220 27,980 512 100.0%

Cash at bank and in hand 1 0.0%

Total investments 27,981 100.0%

* Part-qualifying investment

** These investments were permanently impaired during the financial year. £370,000 of the valuation movement in bio-bean Limited and £933,000 of the valuation movement in

Rezatec Limited have been recognised as a realised loss.

All venture capital investments are incorporated in England and Wales.

Gresham House Renewable Energy VCT1 plc, of which Gresham House Asset Management Limited (GHAM) is the Investment Adviser, holds the same

investments as above.

Gresham House Renewable Energy VCT2 plc

Investment movements for the year ended 30 September 2022

Purchases

Cost at

30September

2021

£’000

Valuation at

30September

2021

£’000

Additions

during the

year

£’000

Valuation at

30September

2022

£’000

Realised

loss

£’000

VCT qualifying investments

bio-bean Limited 628 628 67.5 325 (370)*

Total 628 628 67.5 325 (370)

* This was recognised as a permanent impairment and as a realised loss in the financial year.

Disposals

No investments were disposed of during the financial year.

The basis of valuation for the largest investments is set out on pages 16 to 20.

Financial

StatementsGovernanceOverview

Gresham House Renewable Energy VCT2 plc

Review of Investments (continued)

Further details of the ten largest investments (by value):

Lunar 2 Limited

Lunar 2 Limited is a holding company of FiT remunerated

ground-mounted solar farms of 5MW (Wiltshire), 4MW

(near Hawkchurch) and 0.64MW (Ilminster, Somerset).

Cost at 30/09/22: £1,330,000

Cost at 30/09/21: £1,330,000

Date of first investment: Dec 2013

Valuation at 30/09/22: £15,271,000

Valuation at 30/09/21: £14,108,000

Valuation method: Discounted cash flows (business)

Investment comprises:

Ordinary shares: £1,330,000

Proportion of equity held: 50%

Summary financial information

from statutory accounts

(non-consolidated): 31 March 2022

Turnover: *

Operating profit/(loss): *

Net assets: £2,880,000

*This information is not publicly available

Lunar 1 Limited

Lunar 1 Limited is a holding company of FiT remunerated

ground-mounted solar farms of two 5MW (Wiltshire) and

one 0.7MW (Oxfordshire).

Cost at 30/09/22: £125,000

Cost at 30/09/21: £125,000

Date of first investment: Dec 2013

Valuation at 30/09/22: £2,403,000

Valuation at 30/09/21: £2,218,000

Valuation method: Discounted cash flows (business)

Investment comprises:

Ordinary shares: £125,000

Proportion of equity held: 5%

Summary financial information

from statutory accounts: 31 March 2022

Turnover: £nil

Operating loss: £(9,000)

Net assets: £884,000

Gresham House Renewable Energy VCT2 plc

New Energy Era Limited

New Energy Era Limited owns a FiT remunerated solar farm

of 0.7MW near Shipton-under- Wychwood, Oxfordshire.

Cost at 30/09/22: £884,000

Cost at 30/09/21: £884,000

Date of first investment: Nov 2011

Valuation at 30/09/22: £1,835,000

Valuation at 30/09/21: £1,785,000

Valuation method: Discounted cash flows (business)

Investment comprises:

Ordinary shares: £884,000

Proportion of equity held: 45%

Summary financial information

from statutory accounts: 31 March 2022

Turnover: £342,000

Operating profit: £187,000

Net assets: £2,234,000

Ayshford Solar (Holding) Limited

Ayshford Solar (Holding) Limited is the holding company of a

ROC remunerated ground-mounted solar farm of 5.5MW near

Tiverton, Devon.

Cost at 30/09/22: £826,000

Cost at 30/09/21: £826,000

Date of first investment: Mar 2012

Valuation at 30/09/22: £1,740,000

Valuation at 30/09/21: £1,362,000

Valuation method: Discounted cash flows (business)

Investment comprises:

Ordinary shares: £827,000

Proportion of equity held: 50%

Summary financial information

from statutory accounts

(non-consolidated): 31 March 2022

Turnover: £3,000

Operating loss: £(23,000)

Net assets: £498,000

Gresham House Renewable Energy VCT2 plc

Financial

StatementsGovernanceOverview

Review of Investments (continued)

Tumblewind Limited

Tumblewind Limited owns a portfolio of FiT remunerated wind

turbines on largely farmer owned sites located throughout

East Anglia. The Total capacity of the wind assets owned by

Tumblewind Limited is 160kW. Tumblewind also owns Priory

Farm Solar Farm Limited, which owns a ROC remunerated

solar farm of 3.2MW near Lowestoft.

Cost at 30/09/22: £1,188,000

Cost at 30/09/21: £1,188,000

Date of first investment: Nov 2011

Valuation at 30/09/22: £1,521,000

Valuation at 30/09/21: £1,111,000

Valuation method: Discounted cash flows (business)

Investment comprises:

Ordinary shares: £790,000

Loan stock: £398,000

Proportion of equity held: 50%

Proportion of loan stock held: 68%

Summary financial information

from statutory accounts: 31 March 2022

Turnover: £52,000

Operating profit: £6,000

Net assets: £856,000

Vicarage Solar Limited

Vicarage Solar Limited is the holding company of a FiT

remunerated solar farm of 0.7MW near Ilminster, Somerset.

Cost at 30/09/22: £871,000

Cost at 30/09/21: £871,000

Date of first investment: Mar 2012

Valuation at 30/09/22: £1,236,000

Valuation at 30/09/21: £1,229,000

Valuation method: Discounted cash flows (business)

Investment comprises:

Ordinary shares: £871,000

Proportion of equity held: 45%

Summary financial information

from statutory accounts

(non-consolidated): 31 March 2022

Turnover: *

Operating loss: *

Net assets: £1,944,000

* This information is not publicly available

Gresham House Renewable Energy VCT2 plc

Gloucester Wind Limited

Gloucester Wind Limited owns a portfolio of FiT remunerated

roof-mounted solar assets located on residential housing

stock across the UK. The total capacity of the solar assets

owned by Gloucester Wind Limited is 1,121kW.

Cost at 30/09/22: £1,000,000

Cost at 30/09/21: £1,000,000

Date of first investment: Apr 2012

Valuation at 30/09/22: £789,000

Valuation at 30/09/21: £857,000

Valuation method: Discounted cash flows (business)

Investment comprises:

Ordinary shares: £800,000

Loan stock: £200,000

Proportion of equity held: 50%

Proportion of loan stock held: 50%

Summary financial information

from statutory accounts: 31 March 2022

Turnover: £217,000

Operating profit: £6,000

Net assets: £1,526,000

Hewas Solar Limited

Hewas Solar Limited owns a portfolio of FiT remunerated

roof-mounted solar assets located on housing stock owned

by two housing associations. The total capacity of the solar

assets owned by Hewas Solar Limited is 1,978kW.

Cost at 30/09/22: £1,000,000

Cost at 30/09/21: £1,000,000

Date of first investment: Aug 2011

Valuation at 30/09/22: £743,000

Valuation at 30/09/21: £831,000

Valuation method: Discounted cash flows (business)

Investment comprises:

Ordinary shares: £1,000,000

Proportion of equity held: 50%

Summary financial information

from statutory accounts: 31 March 2022

Turnover: £637,000

Operating profit: £181,000

Net assets: £356,000

Financial

StatementsGovernanceOverview

Gresham House Renewable Energy VCT2 plc

Review of Investments (continued)

HRE Willow Limited

HRE Willow owns a portfolio of FiT remunerated wind

turbines on largely farmer-owned sites located throughout

East Anglia. The total capacity of the wind assets owned by

HRE Willow Limited is 420kW.

Cost at 30/09/22: £875,000

Cost at 30/09/21: £875,000

Date of first investment: Jun 2011

Valuation at 30/09/22: £709,000

Valuation at 30/09/21: £700,000

Valuation method: Discounted cash flows (business)

Investment comprises:

Ordinary shares: £875,000

Proportion of equity held: 44%

Summary financial information

from statutory accounts: 31 March 2022

Turnover: £149,000

Operating profit: £17,000

Net assets: £1,205,000

St Columb Solar Limited

St Columb Solar Limited owns a portfolio of FiT remunerated

roof-mounted solar assets located on housing stock owned

by two housing associations. The total capacity of the solar

assets owned by St Columb Solar Limited is 838.5kW.

Cost at 30/09/22: £650,000

Cost at 30/09/21: £650,000

Date of first investment: Sep 2011

Valuation at 30/09/22: £529,000

Valuation at 30/09/21: £533,000

Valuation method: Discounted cash flows (business)

Investment comprises:

Ordinary shares: £650,000

Proportion of equity held: 50%

Summary financial information

from statutory accounts: 31 March 2022

Turnover: £360,000

Operating profit: £98,000

Net assets: £948,000

Explanatory notes

The summary financial information has been sourced from the statutory accounts of the underlying investee companies. The net asset/liability

figures presented therefore do not approximate a valuation.

The proportion of equity held in each investment also represents the level of voting rights held by the VCT in respect of the investment.

Gresham House Renewable Energy VCT2 plc

Summary of loan stock interest income

Year ended

30September

2022

£’000

Year ended

30September

2021

£’000

Loan stock interest income in the period

bio-bean Limited – 15

Tumblewind Limited 32 32

Minsmere Power Limited 11 11

Small Wind Generation Limited 11 11

53 69

Analysis of investments by commercial sector

The split of the investment portfolio by sector (by cost and by value at 30 September 2022) is as follows:

Spread of investment by sector (cost) Spread of investment by sector (value)

Ground-mounted solar 39%

Roof-mounted solar 27%

Small wind 21%

Non-renewable assets 13%

Ground-mounted solar 86%

Roof-mounted solar 9%

Small wind 4%

Non-renewable assets 1%

Gresham House Renewable Energy VCT2 plc

Financial

StatementsGovernanceOverview

The Directors present the Strategic Report

for the year ended 30 September 2022.

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, including an update on the wind

down process for the VCT, are set out in the

Chairman’s Statement, Investment Adviser’s

Report, and the Review of Investments.

During the year to 30 September

2022, the renewable investments held

increased in value by £2,001,000 and

the non-renewable investments held

decreased in value by £1,489,000.

Investment realisations totalled £nil.

Income over expenditure for the year resulted

in a net profit, after accounting for capital

expenses, of £525,000 (2021: £2,679,000 loss).

The total gain for the year was £525,000

(2021: £2,679,000 loss) and net assets at the

year-end were £23.9mn (2021: £23.4mn). A

dividend of 2 pence per Ordinary Share for

the year to 30 September 2022 has been

declared and was paid on 27 January 2023.

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 4 to the

financial statements, is still appropriate.

JTC (UK) Limited (JTC) acts as Administrator

and Company Secretary. JTC provides

administration and accounting services

to the VCT for a fee of £40,000 (plus VAT,

if applicable) per annum. It also provides

company secretarial services for a fee

of £40,000 (plus VAT, if applicable) per

annum. The agreement 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 agreed to pay

further trail commission to Haibun Partners

LLP (Haibun) and CH1 Investment Partners LLP

(CH1) with an agreement in place effective from

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 21 to the financial statements.

Pursuant to historic financial intermediary arrangements with Hazel Capital LLP, Haibun, of which

Stuart Knight (Director of Gresham House Renewable Energy VCT1 plc until his resignation on

30September 2022) is a Designated Member, and CH1 , of which Matthew Evans 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, VCT1,

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 2022

Haibun

CH1

Total

2010 Offer 17,196 22,635 39,831

2012 Offer 2,435 1,580 4,015

2014 Offer 943 1,900 2,843

Total 20,574 26,115 46,689

Strategic Report

Gresham House Renewable Energy VCT2 plc

Investment policy

General

In the previous financial year, at the General

Meeting held on 13 July 2021, 99.59% of the

Shareholders resolved to approve the New

Investment Policy of the Company to reflect

a realisation strategy and the Company

ceasing to make any new investments. The

new Investment Policy replaced the previous

Investment Policy in its entirety.

The Directors believed that being prescriptive

as regards the timeframe for realising

the Company’s investments could prove

detrimental to the value achieved on realisation.

Therefore, it was the Board’s view that the

strategy for the realisation of the Company’s

investments would need to be flexible and may

need to be altered to reflect changes in the

circumstances of a particular investment or in

the prevailing market conditions.

Once all, or substantially all, of the Company’s

investments have been realised and an initial

distribution in respect thereof made, the

Company will, at an appropriate time, seek

Shareholders’ approval for it to be placed into

members’ voluntary liquidation.

Since inception to 13 July 2021

Up to 13 July 2021, the VCT’s objectives were

to maximise tax free capital gains and income

to Shareholders from dividends and capital

distributions by investing the VCT’s funds in:

Æ a portfolio of clean technology and

environmentally sustainable investments,

primarily being in the UK and the EU,

that have attractive income and growth

characteristics, with investments

in existing asset-backed renewable

generation projects as the core of the

portfolio; and

Æ a range of non-qualifying investments,

comprised from a selection of cash

deposits, fixed income funds, securities

and secured loans and which will have

credit ratings of not less than A minus

(Standard & Poor’s rated)/A3 (Moody’s

rated). In addition, as the portfolio of VCT

qualifying investments will involve smaller

start-up companies, non-qualifying loans

could be made to these companies to

negate the need to borrow from banks

and, therefore, undermine the companies’

security within the conditions imposed

on all VCTs under current and future VCT

legislation applicable to the VCT.

13 July 2021 to 30 September 2022

Following shareholder approval at the General

Meeting on 13 July 2021, the New Investment

Policy of the VCT is that the Company will be

managed with the intention of realising all

remaining assets in the Portfolio in a prudent

manner consistent with the principles of good

investment management and with a view to

returning cash to Shareholders in an orderly

manner, whilst protecting the tax position

ofShareholders.

The Company will pursue its investment

objective by effecting an orderly realisation of

its assets in a manner that seeks to achieve a

balance between maximising the value received

from those assets and making timely returns

of capital to Shareholders. This process might

include sales of individual assets or running off

the portfolio in accordance with the existing

terms of the assets, or a combination of both.

The Company will cease to make any

new investments or to undertake capital

expenditure except where, in the opinion of

both the Board and the Investment Adviser

(or, where relevant, the Investment Adviser’s

successors):

Æ the investment is a follow-on investment

made in connection with an existing asset

in order to comply with the Company’s pre-

existing obligations; or

Æ failure to make the follow-on investment

may result in a breach of contract or

applicable law or regulation by the

Company; or

Æ the investment is considered necessary

to protect or enhance the value of any

existing investments or to facilitate

orderlydisposals; or

Æ any cash received by the Company as

part of the realisation process prior to its

distribution to Shareholders will be held by

the Company as cash on deposit and/or as

cash equivalents.

Investment strategy

Investee companies generally reflect the

following criteria:

Æ a well-defined business plan and ability

to demonstrate strong demand for its

products and services;

Æ products or services which are cash

generative;

Æ objectives of management and

Shareholders which are similarly aligned;

Æ adequate capital resources or access to

further resources to achieve the targets

set out in its business plan;

Æ high calibre management teams;

Æ companies where the Investment Adviser

believes there are reasonable prospects

of an exit, either through a trade sale or

flotation in the medium term; and

Æ a focus on small and long-term renewable

energy projects that utilise proven

technology.

In the previous financial year, at the General

Meeting held on 13 July 2021, the new

Investment Policy was adopted to reflect a

realisation strategy and the Company ceasing

to make any new investments.

Asset allocation

During the year the VCT was required to hold

80% of its funds in VCT qualifying investments.

At 30 September 2022, 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. During the Managed Wind-

Down the number of investments will decrease

following the sale of the VCT’s assets. 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.

Gresham House Renewable Energy VCT2 plc

Financial

StatementsGovernanceOverview

Risk Diversification

During the year, 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:

Æ 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. During the Managed

Wind-Down the number of investments

will decrease following the sale of the

VCT’s assets;

Æ monitoring of investee companies – the

Investment Adviser will closely monitor

the performance of all the investments

made by the VCT in order to identify any

issues and to enable necessary corrective

action to be taken; and

Æ 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.

Gearing

It is not intended that the VCT will borrow (other

than from investee companies). However, it

will have 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 the

operational asset / holding 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 the

following: 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 long-term creditors shown on the Balance

Sheet represent amounts owed to investee

companies, which the Board expect to be

repaid in the future by way of dividends from, or

the sale of, these companies.

As at 30 September 2022, the VCT had the

ability to borrow £4.5mn in accordance with the

articles, and had actual borrowings of £nil.

The VCT has no intention to borrow any funding

in the foreseeable future.

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 2022.

Directors and senior management

Up until 30 September 2022, the VCT had four

Non-Executive Directors, comprising four

males. On this date, one Director retired. The

VCT has no employees.

Key performance indicators

At each Board meeting, the Directors consider

a number of performance measures to assess

the VCT’s success in meeting its objectives. The

Board has identified the VCT's key performance

indicators as Net Asset Value (NAV) Total Return

and dividends per share, the performance of

which during the year are in the table below:

Year ended

30 September

2022

Year ended

30 September

2021

Net Asset Value

Total Return 1.4% (6.7)%

Dividends per share 2.0p nil p

See Note 24 for details of the introduction of

the Electricity Generator Levy. On the basis of

the scope to which this levy applies, there is

no impact on the current or future revenues

received by the VCT, however the fair value

of the portfolio incorporates the potential

additional costs a purchaser may incur.

These are defined as follows:

Net Asset Value Total Return: the sum of

NAV per Ordinary Share, NAV per ‘A’ Share and

cumulative dividends paid.

Net Asset Value per Ordinary Share: The

closing total net asset position of the VCT as at

the reporting date less the total par value of all

‘A’ Shares in issue at the reporting date divided

by the total number of Ordinary Shares in issue

at the reporting date.

Net Asset Value per ‘A’ Share: Par value per

‘A’Share.

Cumulative dividends paid: The gross total

of all dividends paid for both Ordinary and ‘A’

Shares from inception up to the reporting date.

The total net asset position of the VCT as at

the reporting date is as per the Balance Sheet,

while the total number of shares in issue for

both Ordinary and ‘A’ Shares is disclosed in

Note15.

In addition, the Board considers the VCT’s

performance in relation to other VCTs.

The position of the VCT’s Net Asset Value Total

Return as at 30 September 2022 is shown

earlier. A Summary of dividends per Share is

shown on earlier. The VCTs 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.

Strategic Report (continued)

* 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.

Gresham House Renewable Energy VCT2 plc

Principal risks and uncertainties

Schedule of principal and emerging risks

The other principal and emerging risks faced by the VCT, along with the steps taken to mitigate these risks, are shown in the table below. These

principally apply during the period until the underlying assets are sold during the Wind-down process.

Principal Risk Context Specific risks Possible impact Mitigation

Investment

Performance

The VCT holds

investments in unquoted

UK businesses in the

renewable energy sector.

Poor investment

decisions or strategy

or poor monitoring,

management

and realisation of

investments.

Adverse weather

conditions, low inflation

rates and/or low power

prices resulting in below

forecast investment

returns.

Reduction in the NAV

of the VCT and the

inability of the VCT to pay

dividends.

The Investment Adviser has significant

experience in the renewable energy

sector. The Investment Adviser also

actively manages the portfolio, engaging

reputable and experienced Operations

and Maintenance (O&M) contractors. The

assets have limited exposure to power

prices, due to the use of the Feed in Tariff

(FiT) and Renewable Obligation Certificate

(ROC)regimes.

The Board regularly reviews the performance

of the portfolio, alongside the Board of the

sister company.

The higher inflation outlook, whilst of

concern from the point of view of the wider

UK and global economy, is positive for the

owners of subsidised UK renewable assets.

Although most costs also rise in line with

inflation, as does the cost of servicing

the two debt facilities, the net benefit of

increased inflation is strongly positive since

it increases the inflation linked revenues

more than it increases the costs.

Loss of VCT

status

The VCT must maintain

continued compliance

with the VCT Regulations,

which prescribe a number

of tests and conditions.

The VCT must maintain

continued compliance

with the VCT Regulations,

which prescribe a number

of tests and conditions.

Breach of any of the rules

could result in the loss of

VCT status.

The loss of VCT status

would result in dividends

becoming taxable and

new Shareholders losing

their initial tax relief.

The VCT Qualification is actively

monitored by the Investment Adviser and

the Administrator, who liaise with the

designated VCT Status Adviser. The VCT

Status Adviser also produces twice yearly

reports for the Board.

Legislative In recent years, the

changes to VCT

Regulations have

narrowed the breadth of

permitted investments.

VCTs were established

to encourage private

individuals to invest in

early stage companies

that are considered to

be risky and have limited

funding options. The

state provides these

investors with tax relief.

A change in government

policy could result in a

cessation of tax reliefs or

reduction of the amount

of tax relief available

to investors which

would make them less

attractive to investors.

The loss of VCT status

would result in dividends

becoming taxable and

new Shareholders losing

their initial tax relief.

Both the Investment Adviser and

the Administrator closely monitor

developments and attend AIC conferences.

The VCT Status Adviser also has significant

experience in this field and works closely

with HMRC.

Further commentary on VCT Status is

provided on page 29.

The Investment Adviser engages with

HMT and industry representative bodies

to demonstrate the cost benefit of VCTs

to the economy in terms of employment

generation and taxation revenue.

Regulatory and

compliance

As a listed entity, the

VCT is subject to the UK

Listing Rules and related

regulations.

Any breaches of relevant

regulations could result

in suspension of trading

in the VCT’s shares or

financial penalties.

Reduction in the NAV

of the VCT due to

financial penalties and a

suspension of trading in

its Shares, also leading to

loss of VCT status.

The VCT Secretary and Administrator have

a long history of acting for VCTs. The Board,

Investment Adviser and Administrator also

employ the services of reputable lawyers,

auditors and other advisers to ensure

continued compliance with its regulatory

obligations.

Gresham House Renewable Energy VCT2 plc

Financial

StatementsGovernanceOverview

Strategic Report (continued)

Principal Risk Context Specific risks Possible impact Mitigation

Operational –

VCT level

The VCT relies on the

Investment Adviser,

Administration Manager

and other third parties

to provide many of its

services at the VCT level.

Inferior provision of

these services, thereby

leading to inadequate

systems and controls or

inefficient management

of the VCT’s assets

and its reporting

requirements. Service

providers, predominantly

the Registrar, hold

Shareholders’ personal

data and there is a risk

of a cyber attack on a

provider.

Errors in Shareholder

records, incorrect

mailings, misuse of data,

non-compliance with key

legislation, loss of assets,

breach of legal duties

and inadequate financial

reporting.

The VCT, the Investment Adviser and

the Administrator engage experienced

and reputable service providers, the

performance of which is reviewed on an

annual basis.

The Directors and the Investment Adviser

regularly review the service providers and

the procedures and policies they have in

place for preventing cyber attacks.

Operational –

portfolio level

At the portfolio level, the

VCT uses third party O&M

contractors managing

the various sites.

Inferior provision of

these services, thereby

leading to inadequate

systems and controls or

inefficient management

of the VCT’s assets.

Maintenance and repairs

not carried out in a timely

manner.

Poor investment

performance due to

assets being offline and

non-revenue generating.

The VCT, the Investment Adviser and

the Administrator engage experienced

and reputable service providers, the

performance of which is reviewed

on an ongoing basis. At the portfolio

level, technical reviews and studies are

conducted on the assets as appropriate.

Repair and reconfiguration work is carried

out and O&M procedures are revised

to reduce dependence on overseas

contractors and specialists.

Economic,

political and

other external

factors

The VCT’s investments

are heavily exposed

to the Feed in Tariff

(FiT) and Renewable

Obligation Certificate

(ROC) regimes. Events

such as the Russian

Federation's invasion of

Ukraine, inflation and

climate change can also

have impacts on portfolio

performance.

Retrospective changes

to the regimes. Changes

in energy prices and

inflation. An increase in

inflation results in higher

interest charges for the

two debt facilities.

A significant negative

impact on performance

in respect of regime

changes, low inflation

and energy prices

can reduce portfolio

revenues.

The Investment Adviser and Board

members closely monitor policy and geo-

political developments. However, the UK

Government has a general policy of not

introducing retrospective legislation. The

Investment Adviser and Board regularly

review the valuation model and its inputs.

Higher energy prices and inflation can

improve portfolio performance as returns

are directly linked to both factors.

Change to

Energy Market

regulation and

policies

The VCT operates within

the UK Energy market

which is governed by UK

regulation and could be

subject to change.

The current or future UK

Government may decide

that subsidies provided

to renewable energy

generation assets in the

form of feed-in-tariffs

(FiTs) and renewable

obligation certificates

(ROCs) pose too big a

burden on electricity

consumers and reduce

or even eliminate them

retroactively. Similarly,

other measures that

achieve a similar effect

such as special taxes,

a cap on applicable

inflation rates, limits on

generated KWhs that

earn FiTs and ROCs.

A significant negative

impact of the renewable

energy generation assets

revenue reducing the

cash availability of the

VCT. The Chancellor

announced at the

Autumn Statement 2022

the introduction of the

Electricity Generator

Levy (EGL) effective

1January 2023.

The Investment Adviser continuously

monitors the regulatory landscape in the

UK. If an action that retroactively targets

these subsides it would join forces with

other owners of these assets and vigorously

challenge such retroactive law changes

in the courts. All of the sites owned by the

VCTs are fully-accredited which means that

there is no risk of an individual asset losing

its subsidy. The EGL does not impact the

VCT's portfolio given its smaller size, but any

potential acquirer may subsequently incur

this levy.

Gresham House Renewable Energy VCT2 plc

Since inception to 13 July 2021

The principal financial risks faced by the VCT, which include interest rate, market price, investment valuation, credit and liquidity risks, are

summarised within Note 18 to the financial statements.

Note 18 includes an analysis of the sensitivity of valuation of the portfolio to changes in each of the key inputs to the valuation model.

Other principal risks faced by the VCT have been assessed by the Board and grouped into the key categories outlined below:

Æ underperformance;

Æ loss of VCT status;

Æ VCT regulations;

Æ regulatory and compliance;

Æ operational;

Æ economic, political and other external factors; and

Æ government intervention in the renewables market.

13 July 2021 to 30 September 2022

In approving a new Investment Policy for the Company, a number of risks which are material and currently known to the Company have been

disclosed. Additional risks and uncertainties not currently known to the Company, or that the Company deems immaterial, may also have an

adverse effect on the Company.

The main risks identified as part of the new Investment Policy of the Company are:

Risk identified Context Mitigation

Asset diversification In a Managed Wind-Down, the value of the portfolio will be

reduced as investments are realised and concentrated

in fewer holdings, and the mix of asset exposure will be

affected accordingly.

None identified.

Ownership All of the VCT’s main solar assets are owned 50:50

between the VCT and VCT1 and there are no rights

attached to such ownership that would allow one

company to force the other to sell its share in each asset.

The VCTs will sell their shares in each asset

simultaneously, so that no VCT holds more than 50% of

the underlying assets.

Volatility in NAV and/or

share price

The VCT might experience increased volatility in its Net

Asset Value and/or its share price as a result of possible

changes to the Portfolio structure following the adoption

of the new Investment Policy.

None identified.

Sale of assets The VCT’s assets may not be realised at their carrying

value, and it is possible that the VCT may not be able

to realise some assets at any value. The VCT’s assets’

fair value is linked to estimates and assumptions

about a variety of matters, including macroeconomic

considerations, which assumptions may prove to be

incorrect and which are subject to change. A material

change of governmental, economic, fiscal, monetary or

political policy, may result in a reduction in the value of

the VCT’s assets on sale.

The Board has engaged several experts in this field to

ensure an appropriate sale price is reached. The Directors

will ensure that the sale price reflects the best available

offer for the Company’s assets taking into account future

income generation by the portfolio and the age and

condition of the assets.

Sale of assets Sales commissions, liquidation costs, taxes

and other costs associated with the realisation

of the VCT’s assets together with the usual

operating costs of the VCT will reduce the cash

available for distribution to the Shareholders.

The Investment Adviser prepares detailed cashflow

forecasts which are presented to the Board quarterly.

The forecasts include the additional costs expected to be

incurred during the managed wind-down of the VCT.

Sale of assets A sale of the VCT’s assets may prove materially more

complex than anticipated, and the distribution of

proceeds to Shareholders may be delayed by a number

of factors, including, without limitation, the ability of

a liquidator to make distributions to Shareholders.

The Board has engaged several experts in this field,

to ensure against an extended handover period. If an

extended handover period occurs then it is the Directors

intention to ensure that the sale value obtained will

ultimately be in Shareholders interests.

Gresham House Renewable Energy VCT2 plc

Financial

StatementsGovernanceOverview

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 three years from the balance sheet

date as developments are considered to be

reasonably foreseeable over this period. The

period of review has been shortened from the

prior year due to the commencement of the

Managed Wind-Down of the VCT. Following

the results of the continuation vote at the

2021 AGM and the Shareholders' subsequent

approval of the Managed Wind-Down of the

Company at the 2021 General Meeting, the

Board still considers that the VCT remains

viable up until the point at which its assets

are fully sold, or the voluntary liquidation

completed, and as such the Board are

satisfied that a three-year viability assessment

remains applicable.

In making the viability assessment, the

Board has taken the following factors into

consideration:

Æ the nature and liquidity of the VCT’s

portfolio (long-term, revenue generating

fixed assets);

Æ the sales process currently underway to

realise the VCT’s renewable assets;

Æ the potential impact of the Principal Risks

and Uncertainties;

Æ maintaining VCT approval status;

Æ operating expenditure; and

Æ future dividends.

The Board is satisfied that the underlying

assets held by the SPVs have been built

to a sufficient quality and there are no

current indications that the assets will

degrade substantially over the period. It

is also considered highly unlikely that the

renewable portfolio would suffer from such

poor irradiation and severe degradation that it

would be unable to generate income over the

period. The improvement in power prices and

the benefit of higher inflation on the portfolio

performance has improved the prospects

for returns materially. Asset life, along with

the other inputs to the valuation model, are

discussed further in Note 2.

The Board also noted that the SPVs have very

good debt cover and that there are sufficient

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, to cover debt and running costs over the

review period.

The Board have assessed the VCT’s ability to

cover its annual running costs under several

stress scenarios evaluating the impact of

receiving lower dividends from the SPV level and

the impact of higher VCT and SPV level running

costs. The Board noted 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 on the results, 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 three years from the balance sheet date,

notwithstanding that the VCT is currently

undergoing a Managed Wind-down and may be

wound up in this timeframe.

Directors’ remuneration

It is a requirement under The Companies Act

2006 for Shareholders to vote on the Directors’

remuneration every three years, or sooner if

the VCT wants to make changes to the policy.

The Directors’ remuneration policy for the

three-year period from 25 June 2020 is set out

on page 39.

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 2022 were

2.3% (2021: 2.4%) 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.

The allocation to the 'A' shares of any revenue

or capital dividends declared by the VCT, will

be increased if, at the end of each year, the

hurdle is met, which is illustrated below:

i) Shareholders who invested under the

offer for subscription receive dividends in

excess of 5.0p per Ordinary Share in any

one financial period; and

ii) one Ordinary Share and one ‘A’ Share has

a combined net asset value of at least

100.0p.

The Performance Incentive is calculated

each year and is not based on cumulative

dividendspaid.

A summary of how proceeds are allocated between Shareholders and Management, before and after

the hurdle is met, and as dividends per Ordinary Share increase is as follows:

Hurdle criteria:

Annual dividend per Ordinary Share 0-5p 5-10p >10p

Combined NAV Hurdle N/A >100p >100p

Allocation:

Shareholders 99.97% 80% 70%

Management 0.03% 20% 30%

As the NAV as at 30 September 2022 was below 100p, the NAV hurdle for the year was not met and no

dividend was paid during the year, therefore there was no Performance Incentive paid.

Pursuant to historic financial intermediary arrangements with Hazel Capital LLP, Haibun , of which

Stuart Knight (Director of Gresham House Renewable Energy VCT1 plc until his resignation on

30 September 2022) is a Designated Member, and CH1, of which Matthew Evans is a Designated

Member, receive approximately 8.0% of the Performance Incentive payments made to Management

in respect of the ‘Management ‘A’ Shares’ by the VCT and its sister company, VCT1.

Strategic Report (continued)

Gresham House Renewable Energy VCT2 plc

VCT status

The VCT has reappointed Philip Hare & Associates LLP (Philip Hare) to advise it on compliance with

VCT requirements, including evaluation of investment opportunities as appropriate and regular

review of the portfolio. Although Philip Hare works closely with the Investment Adviser, they report

directly to the Board.

Compliance with the VCT regulations for the year under review is summarised as follows:

Position at the

year ended

30September

2022

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; – see note below

22.4%*

3. To ensure that the VCT has not made a prohibited payment to

Shareholders derived from an issue of shares since 6 April 2014;

0.0%

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;

84.9%

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);

93.4%

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;

Complied

7. To ensure that no holding in any company has at any time in the period

represented more than 15% by value of the VCT’s investments at the

time of investment;

Complied

8. To ensure that the VCT’s ordinary capital has throughout the period

been listed on a regulated European market;

Complied

9. To ensure that the VCT has not made an investment in a company which

causes it to receive more than the permitted investment from State

Aidsources;

Complied

10. To ensure that since 17 November 2015, the VCT has not made an

investment in a company which exceeds the maximum permitted

agerequirement;

Complied

11. To ensure that since 17 November 2015, funds invested by the VCT in

another company have not been used to make a prohibited acquisition;

and

Complied

12. To ensure that since 6 April 2016, the VCT has not made a prohibited

non-qualifying investment.

Complied

* As the VCT has negative revenue reserves, the Company’s VCT status adviser has confirmed that this

requirement is deemed to have been met for VCT compliance purposes.

The Directors, with the help of the

Investment Adviser, actively monitor and

ensure the investee companies have less

than £5mn state backed financing in a

12-month period listed in order to remain

compliant with the VCT regulations.

Share Buybacks

The Board has decided that the VCT will

not be buying in Shares for the foreseeable

future as highlighted in the Interim Results,

as the VCT needs to conserve such cash as

it generates for the managed wind-down of

the VCT and the payment of dividends.

Future prospects

The Board’s assessment of the outlook

and future strategy of the VCT are

set out in the Chairman’s Statement

and Investment Adviser’s Report.

Gresham House Renewable Energy VCT2 plc

Financial

StatementsGovernanceOverview

Strategic Report (continued)

The VCT seeks to conduct its affairs

responsibly and the Investment Adviser is

encouraged to consider environmental, social

and community issues, where appropriate,

when making investment decisions and

the Board will continue to monitor the

Adviser’s progress in these areas.

The Board is conscious of its potential

impact on the environment as well as

its social and corporate governance

responsibilities. The Investment Adviser

has presented its Environmental, Social and

Governance (ESG) strategy to the Board.

The VCT, whilst not having an explicit

sustainable investment objective,

demonstrates clear promotion of environmental

characteristics by investing in technologies

that contribute to climate change mitigation

by supporting a decarbonisation of the energy

system in the UK and a net zero economy

underpinned by cheap clean electricity.

Sustainable Investing at Gresham House

Gresham House, the Investment Adviser,

is committed to sustainable investment

as an integral part of its business strategy.

In2021, Gresham House further enhanced its

approach to sustainability by publishing its

first Corporate Sustainability Strategy (CSS)

which supports its GH25 ambition to “become

a leader in sustainable investment, including

Environmental, Social and Governance (ESG)”.

The CSS details objectives and actions to

ensure its progresses against its ambition

to be a leader in sustainable investment

and that ESG factors and stewardship

responsibilities continue to be integrated

into the management of each asset division.

More information on Gresham House’s

sustainability approach and CSS can be

found in its Sustainable Investment Report.

Policies and processes

Gresham House publishes a Sustainable

Investing Policy along with asset specific

policies, including the New Energy Sustainable

Investment Policy, which covers Gresham

House’s sustainable investment commitments,

how the investment processes meet these

commitments and the application of the

Sustainable Investment Framework.

The Sustainable Investment Team assesses

adherence to the commitments in the

Sustainable Investment Policies on an

annual basis and provides updates on

the findings of these assessments to

the Sustainability Executive Committee

and Board Sustainability Committee.

Sustainability Executive Committee

The Investment Adviser’s Sustainable Investing

Committee (SIC), formed at the start of 2020,

evolved in 2021 to become the Sustainability

Executive Committee (Sustainability ExCo).

The aim of this evolution was to elevate

responsibility for sustainability to senior

executive level, reflecting the importance and

materiality of sustainability to the business.

The Sustainability ExCo meets regularly

to drive sustainability related deliverables

outlined in the CSS, as well as providing

a forum to share best practice, ideas and

education. The Committee is chaired by the

Director of Sustainable Investment and has

representation from the Gresham House

Group Management Committee (GMC) and

heads of divisions including investment

divisions, sales, compliance and marketing.

(1)

https://www.baywa-re.co.uk/en/company/about-baywa-re/sustainability/#our-approach-regarding-carbon

Sustainable

Investing

Gresham House Renewable Energy VCT2 plc

New Energy Sustainable Investment

Committee

In 2022, the New Energy division evolved its

structures with regards to the ownership

and development of Sustainable Investment

objectives and actions for the division by

creating a New Energy Sustainable Investment

Committee (NESIC). The purpose of the New

Energy Sustainability Committee’s purpose

is to provide leadership, strategic direction

and implement processes to enhance the

integration of sustainability across the New

Energy division, supporting the achievement

of fund-specific objectives and the CSS.

The core objectives of the NESIC include:

Æ To become the experts in sustainability

within the New Energy division and apply

their knowledge to their areas of business.

Æ To be advocates for sustainable

investment and innovation for the division.

Æ To set and oversee the New Energy

sustainability objectives and targets at fund

and divisional level, aligned to Gresham

House Corporate Sustainability Strategy.

Æ To ensure key sustainability related

risks and opportunities are proactively

identified and managed by the division.

Æ To ensure that New Energy SI-related

tools, processes, framework and data

remain relevant and meet commitments

made in the New Energy Sustainable

Investment Policy to ensure the division

is able to evidence SI contribution and

progress to external parties.

New Energy Sustainability Objectives

The NESIC developed and agreed a set of

sustainability objectives for the division

applicable to all assets under management.

The objectives were determined by

identifying the ESG topics deemed most

material to the assets. They were also

selected to align with the core topics and

objectives in the Investment Adviser’s

2025 Corporate Sustainability Strategy.

The objectives will focus future sustainability-

related activities for the division to 2025 and are

detailed below. The funds will provide updates

against the objectives in future reporting.

Gresham House Renewable Energy VCT2 plc

Financial

StatementsGovernanceOverview

Table 1: New Energy Sustainability Objectives

Topic 2025 Objective

G: Commitment to Sustainability Meet all relevant regulatory sustainability requirements.

G: Risk and Compliance Become a leader in the measurement and disclosure of ESG risks and outcomes.

Have a comprehensive set of ESG KPIs to support investment and asset management decisions and

regularly report these to stakeholders.

G: Marketplace Responsibility Have market-leading Sustainable Investment policies and processes and ensure all investment activities

meet commitments at a high-quality level.

G: Governance & Ethics Engage with key counterparties to increase capacity of renewable energy or battery storage and the

contribution of these assets to a low carbon economy.

E: Climate Change & Pollution Demonstrate the role of New Energy in the energy transition and understand the carbon footprint of the full

lifecycle of assets.

E: Natural Capital Fully understand natural capital impacts and dependencies and aim to demonstrate enhancement of

biodiversity for all sites.

S: Supply Chain Management Determine best-in-class suppliers to work with long-term, and encourage more responsible supplier

practices, reducing supply chain sustainability risks.

E: Waste Management Incorporate full lifecycle analysis into investment and supplier decision making (product design,

construction, operation and end-of-life use) to reduce negative environmental and social impacts of assets.

Develop a market-leading approach to end-of-life use.

Risk and Compliance: Embedding ESG factors

As the assets within the VCTs are all well-

established, the assessment of ESG is

applied as part of our asset management

activities. All Operations & Maintenance

providers are required to report on various

ESG factors, including Health & Safety

and Environmental risks or incidents. Any

significant incidents must be reported to

us within 24 hours. Furthermore, they are

also expected to be proactive and to make

recommendations for improvements.

There is work underway to expand the ESG

key performance indicators (KPIs) measured,

reported, and monitored by the New Energy

division for all assets under management. This

includes the VCTs. This reflects increased

investor and regulatory demand for ESG

data and the Adviser’s ambitions to enhance

ESG data and transparency. It is anticipated

that the expanded ESG data will be used by

investment teams and asset management

teams to increase their understanding of the

operational ESG performance of assets under

management and to identify any material ESG

risks. It is expected that the asset management

team will aim to improve ESG metrics over

time, as feasible within the context of

the existing fund mandate. Examples of

expanded ESG factors to be measured include

biodiversity and supply chain-related data.

Supply Chain Management

The Investment Adviser published its

first Supply Chain Policy in 2020. The

Supply Chain Policy covers material ESG

topics and places obligations on suppliers

(including contractors) to ensure their own

compliance, as well as the compliance of

their subcontractors, with the Policy. It also

requires suppliers to monitor and report any

non-compliance to the Investment Adviser.

Since July 2021, all new supplier contracts

have been updated to include clauses

specifically mandating suppliers to declare

that they have not been involved in any

practices linked to modern slavery and that

they will permit on-site audits at any time

should we have reason to suspect instances

of slavery and human trafficking. Any VCT

suppliers with contracts due for renewal

will be obliged to update clauses relating to

modern slavery within their contract terms.

In addition, all operators of Gresham House

managed renewables projects were asked

to complete a modern slavery questionnaire

to assess modern slavery related risk to

the New Energy division’s renewables

assets in 2021. An updated version of this

questionnaire is due to be sent out after the

publication of this report to determine any

material changes regarding the risk profile

associated with this topic. Responses to the

questionnaire will be reviewed and potential

engagement topics for suppliers identified.

Climate Change & Pollution

Based on the renewable electricity generated

by the VCT wind and solar assets, 33,378MWh,

it is estimated that the fund avoided 14,419

tonnes of CO

and powered circa 8,442

homes during the reporting period.

As a UK quoted company the VCT is required to

report on its Greenhouse Gas (GHG) Emissions.

Emissions can be broken down into three

categories by the Greenhouse Gas Protocol:

Æ Scope 1: all direct emissions from the

activities of the VCT or under its control.

Æ Scope 2: indirect emissions from

electricity purchased and used by the VCT.

Æ Scope 3: all other indirect emissions

from activities of the VCT, occurring from

sources that it does not use or control.

Sustainable Investing (continued)

1 Assuming an “all non-renewable fuels” emissions statistic of 440tCO2/GWh of electricity supplied, BEIS statistics. “Carbon avoided” calculated using Renewable UK methodology

2 Assuming an average annual household usage of 3.748 MWh, BEIS December 2021 statistics.

Gresham House Renewable Energy VCT2 plc

The VCT does not itself produce any Scope1

or Scope 2 carbon emissions as it does not

itself directly or indirectly create carbon

emissions by generating or purchasing

electricity for its own use. The reporting of

Scope 1 and 2 carbon emissions for the fund

as 0 tCO

e is in line with industry standards

and guidance by an external consultant that

supported the Adviser in the carbon footprint

measurement for all Gresham House financed

emissions. The Investment Adviser continues

to consider how best to monitor and measure

the Scope 3 emissions relevant to the VCT and

is working with an external carbon consultant

to progress this at time of publication.

Director’s Duties

Directors must consider the long-term

consequences of any decision they make.

They must also consider the interests of

the various stakeholders of the VCT, the

impact the VCT has on the environment

and community, and operate in a manner

which maintains their reputation for having

high standards of business conduct and

fair treatment between Shareholders.

Fulfilling this duty naturally supports the VCT in

its Investment Objective to maximise tax-free

capital gains and income to Shareholders and

helps ensure that all decisions are made in a

responsible and sustainable way. In accordance

with the requirements of the Companies

(Miscellaneous Reporting) Regulations 2018,

and the AIC Code, the information overleaf

explains how the Directors have individually

and collectively discharged their duties under

section 172 of the Companies Act 2006.

Gresham House Renewable Energy VCT2 plc

Financial

StatementsGovernanceOverview

Role of the Board

The Board, which comprised of four

independent Non-Executive Directors during

the financial year and, following the Directorate

change effective from 30 September 2022,

comprised of three independent Non-Executive

Directors at the year end, with a broad range

of skills and experience, retains responsibility

for taking all decisions relating to the VCT’s

principal objectives, corporate governance and

strategy, and for monitoring the performance of

the VCT’s service providers.

The Board aims to ensure that the VCT

operates in a transparent culture where all

parties are able to contribute to the decisions

made and challenge where necessary with the

overall aim of achieving the expectations of

Shareholders and other stakeholders alike.

In discharging their section 172 duties the

Directors have regard to the likely consequences

of any decisions during the managed Wind-Down

process; the need to foster the VCT’s business

relationships with suppliers, customers and

others; the impact of the VCT’s operations on the

community and environment; and the desirability

of the VCT maintaining a reputation for high

standards of business conduct, and need to act

fairly as between members of the VCT.

The Board works very closely with the

Investment Adviser and Company Secretary to

ensure there is visibility and openness in how

the affairs of the VCT are being conducted. The

VCT co-owns all its assets with Gresham House

Renewable Energy VCT1 plc (VCT1).

The VCT is an investment vehicle, externally

managed, has no employees, and is overseen

by an independent Non-Executive Board of

Directors. As such the Board considers its

stakeholders to be the Shareholders, the

service providers, including the Investment

Adviser, and regulatory bodies.

Following the adoption of the new Investment

Policy from 13 July 2021, the VCT’s principal

objective is to manage the Company with the

intention of realising all remaining assets in the

portfolio in a prudent manner consistent with

the principles of good investment management

and with a view to returning to Shareholders in

an orderly manner.

Key Stakeholders

Shareholders

The Board engages with the VCT’s

Shareholders in a variety of ways, including

annual and half-yearly reports and accounts,

an AGM and information provided on the

Investment Adviser’s website as well as ad

hoc communications with shareholders. The

Registrar is available to help Shareholders to

manage their shareholding.

The VCT welcomes and encourages attendance

and participation from Shareholders at the AGM

and values any feedback and questions it may

receive from Shareholders ahead of and during

the AGM.

The Board communicates with its Shareholders

through the publication of Annual and Half-Year

reports which are available on the VCT’s website

(https://greshamhouse.com/real-assets/new-

energy-sustainable-infrastructure/) and sent

toShareholders.

The Board is also happy to respond to any

written queries made by Shareholders during

the course of the period, or to meet with major

Shareholders if so requested. In addition to the

formal business of the AGM, representatives

of the Investment Adviser and the Board are

available to answer any questions a Shareholder

may have. During the period the Board engaged

with Shareholders on several matters, including

the update on the Sale of Solar Assets. Details

of this is included in the Chairman’s statement.

The Directors consider that in conducting the business of the VCT over the course of

the year they have complied with Section 172(1) of the Companies Act 2006 (the Act) by

fulfilling their duty to promote the success of the VCT and to act in the way they consider,

in good faith, would be most likely to promote the success of the VCT for the benefit of its

members as a whole, whilst also considering the broad range of stakeholders who interact

with and are impacted by the VCT’s business, especially with regard to major decisions.

Section 172

The Section 172 statement forms part of the Strategic Report.

Gresham House Renewable Energy VCT2 plc

Investment Adviser

The Board has delegated authority for day-to-

day management of the VCT to the Investment

Adviser. The Board then engages with the

Adviser in setting, approving and overseeing the

execution of the business strategy and related

policies. The Investment Adviser attends

Valuation Forums, Board meetings and Audit

Committee meetings to update the Directors on

the performance of the portfolio. At every Board

meeting a review of financial and operational

performance, as well as legal and regulatory

compliance, is undertaken. Since the General

Meeting held in the previous financial year on

13 July 2021, the Managed Wind-Down of the

Company has been reviewed at each quarterly

Board meeting and at ad hoc board meetings

being held as and when required. The Board

also reviews other areas over the course of

the financial year including the VCT’s business

strategy; key risks; stakeholder-related

matters; diversity and inclusion; environmental

matters; corporate responsibility and

governance, compliance and legal matters.

The Investment Adviser’s performance is

critical for the VCT to successfully deliver its

investment strategy and meet its objectives.

Service Providers

The VCT has a limited pool of service providers

which include the Investment Adviser, the

Administrator, the Registrar, the Legal Advisers,

the Auditor, the Tax Adviser and the VCT

StatusAdvisers.

These service providers are fundamental to

ensuring that as a business the VCT meets the

high standards of conduct that the Board sets.

The Board meets at least annually to review

the performance of the key service providers

and receives reports from them at Board and

Committee meetings.

The Board has regular contact with the two

main service providers: the Investment

Adviser and Administrator through quarterly

Board meetings, with the Chairman and

Audit Chairman meeting more regularly. The

Audit Committee also reviews the controls

of the VCT’s service providers on an annual

basis to ensure that they are performing their

responsibilities in line with Board expectations

and providing value for money.

Regulators/Government

The Board regularly considers how it meets

regulatory and statutory obligations and follows

voluntary and best-practice guidance, including

how any governance decisions it makes impact

its stakeholders both in the shorter and in the

longer-term.

The VCT engages an external adviser to report

half-yearly on its compliance with the VCT

rules and a Company Secretary report is tabled

quarterly at Board meetings.

Environmental, Social and Governance (ESG)

Details on ESG are included above.

Key Board decisions and specific examples of

Stakeholder consideration during the year

The Board is fully engaged in both oversight

and the general strategic direction of the VCT.

During the year, the Board’s main strategic

discussions focused around the below items.

Managed Wind-Down process

Following the General Meeting held during the

previous financial year on 13 July 2021, the

Shareholders resolved to approve the Managed

Wind-Down of the Company and associated

amendments to the Company’s Investment

Policy. Under the Managed-Wind Down process,

the Company will be managed with the intention

of realising all assets in its Portfolio in a

prudent manner consistent with the principles

of good investment management and with a

view achieving fair value for the Company’s

assets and subsequently returning cash to

Shareholders in an orderly manner.

The Board takes seriously its responsibilities

to uphold the highest standards of corporate

governance and is open to constructive dialogue

with Shareholders and shareholder bodies.

By order of the Board

JTC (UK) Limited

Company Secretary

Company number: 04301763

Registered office:

The Scalpel, 18th Floor

52 Lime Street

London EC3M 7AF

30 January 2023

Gresham House Renewable Energy VCT2 plc

Financial

StatementsGovernanceOverview

The Corporate Governance Report on pages42

to 44 forms part of this report.

Share capital

At the year end, the VCT had in issue 26,133,036

Ordinary Shares and 39,463,845 ‘A’ Shares.

There are no other share classes in issue.

All shares have voting rights; each Ordinary

Share has 1,000 votes and each ‘A’ Share has

one vote. Where there is a resolution in respect

of a variation of the rights of ‘A’ Shareholders

or a Takeover Offer, the voting rights of

the ‘A’ Shares rank pari-passu with those of

OrdinaryShares.

Pursuant to the articles and subject to a special

resolution, the VCT is able to make market

purchases of its own shares, up to a maximum

number of shares equivalent to 14.99% of the

total number of each class of issued shares

from time to time.

Substantial interests

As at 30 September 2022, 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

£’000

Pence

per Ord

Pence

per ‘A’

Profit for the year 525 2.0 –

30 Sep 2022 Dividend 523 2.0 –

Directors

The Directors of the VCT during the year and

their beneficial interests in the issued Ordinary

Shares and ‘A’ Shares at 30 September 2022

and at the date of this report are detailed on

page40 of the Remuneration Report.

Biographical details of the Directors, all of

whom are Non-Executive, can be found on

page3.

It is the Board’s policy that Directors do not

have service contracts, but each Director

is provided with a letter of appointment.

The Directors’ letters of appointment, are

terminable on three months’ notice by either

side. They are available on request at the

Company’s registered office during business

hours and will be available for 15 minutes prior

to and during the forthcoming AGM.

Report of the Directors

The Directors present the twelfth Annual

Report and Accounts of the VCT for the

year ended 30 September 2022.

Gresham House Renewable Energy VCT2 plc

The Articles of Association require that

each Director retires by rotation every three

years and being eligible, offer themselves

for re-election. Accordingly, Matthew

Evans will stand for re-election in 2023.

The Directors’ appointment dates and the

date of their last election are shown below:

Director

Date of

original

appointment

Most recent

date of

re-election

Christian Yates

(Chairman) 28/09/2010 22/03/2021

Matthew Evans 07/11/2017 25/06/2020

Giles Clark* 31/01/2017 22/03/2021

Andrew Donovan 07/12/2020 22/03/2021

* Giles Clark resigned as a Director on 30 September 2022.

The Directors believe that the Board has an

appropriate balance of skills, experience,

independence and knowledge of the Company

and the sector in which it operates to enable

it to provide effective strategic leadership

and proper guidance of the Company.

The Board confirms that, following

the evaluation process set out in the

Corporate Governance Statement on

page42, the performance of the Directors

is, and continues to be, effective and

demonstrates commitment to the role.

Each Director is required to devote

such time to the affairs of the VCT as

the Board reasonably requires.

Annual general meeting

The VCT’s twelfth Annual General Meeting

(AGM) will be held at The Scalpel, 18thFloor,

52Lime Street, London EC3M 7AF at 12.00pm

on 21 March 2023. The Notice of the Annual

General Meeting and Form of Proxy will

be circulated with this Annual Report.

Any change of format will be notified

via the company’s website and

Regulatory Information Service.

Auditor

The Independent Auditor’s Report can be

found on pages 45. At the 2022 AGM, the

Shareholders approved the re-appointment

of BDO LLP as the auditor. Separate

resolutions will be proposed at the 2023 AGM

to re-appoint BDO LLP and to authorise the

Directors to determine their remuneration.

Directors’ responsibilities

The Directors are responsible for preparing the

Strategic Report, the Report of the Directors,

the Directors’ Remuneration Report and the

financial statements in accordance with

applicable law and regulations. They are also

responsible for ensuring that the Annual Report

includes information required by the 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:

Æ select suitable accounting policies and

then apply them consistently;

Æ make judgments and accounting

estimates that are reasonable and

prudent;

Æ state whether applicable UK accounting

standards have been followed, subject

to any material departures disclosed and

explained in the financial statements; and

Æ prepare the financial statements on

the going concern basis unless it is

inappropriate to presume that the VCT

will continue in business. As explained in

Note1 to the financial statements, as last

year, following the continuation vote on

13 July 2021, the Directors do not believe

the going concern basis to be appropriate

and, in consequence, these financial

statements have not been prepared on

that basis.

The Directors are responsible for keeping

adequate accounting records that are sufficient

to show and explain the VCT’s transactions, to

disclose with reasonable accuracy at any time

the financial position of the VCT and to enable

them to ensure that the financial statements

comply with the Companies Act 2006. They

are also responsible for safeguarding the

assets of the VCT and hence for taking

reasonable steps for the prevention and

detection of fraud and other irregularities.

In addition, each of the Directors considers

that the Annual Report, taken as a whole,

is fair, balanced and understandable and

provides the information necessary for

Shareholders to assess the VCT’s position and

performance, business model and strategy.

Financial

StatementsGovernanceOverview

Gresham House Renewable Energy VCT2 plc

Report of the Directors (continued)

Directors’ statement pursuant to the

disclosure and transparency rules

Each of the Directors, whose names and

functions are listed on page 3, confirms that, to

the best of each person’s knowledge:

Æ the financial statements, which have

been prepared in accordance with UK

Generally Accepted Accounting Practice

and the 2014 Statement of Recommended

Practice (updated in April 2021), ‘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

Æ 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.

Corporate governance

The VCT’s Corporate Governance statement

and compliance with, and departures from the

2019 AIC Code of Corporate Governance which

has been endorsed by the Financial Reporting

Council (www.frc.org.uk) is shown on page 44.

Other matters

Information in respect of risk management

and risk diversification has been disclosed

within the Strategic Report on page 24.

Information in respect of greenhouse

emissions which is normally disclosed within

the Report of the Directors has been disclosed

within the Strategic Report on page 32.

During the year, the VCT did not have any

employees (2021: nil) and therefore there

is no comparison data available for the

change in Directors’ remuneration to average

change in employee remuneration.

Events after the end of the reporting period

Following the period end the VCT paid

a dividend in respect of the year ended

30September 2022, of 2p per Ordinary Share.

This dividend was paid on 27 January 2023 to

Shareholders on the register at 6 January 2023.

Statement as to disclosure of information to

the Auditor

The Directors in office at the date of the report

have confirmed, as far as they are aware,

that there is no relevant audit information

of which the Auditor is unaware. Each of the

Directors has confirmed that they have taken

all the steps that they ought to have taken as

Directors in order to make themselves aware of

any relevant audit information and to establish

that it has been communicated to the Auditor.

For and on behalf of the Board

Christian Yates

Chairman

30 January 2023

Gresham House Renewable Energy VCT2 plc

Directors’

Remuneration Report

Annual statement of the remuneration

committee

The Remuneration Committee consists of

each of the VCT Directors. The Remuneration

Committee assists the Board to fulfil its

responsibility to Shareholders to ensure that

the remuneration policy and practices of the

VCT reward directors’ fairly and responsibly,

with a clear link to corporate and individual

performance, having regard to statutory and

regulatory requirements. The Remuneration

Committee meets as and when required to

review the levels of Directors’ remuneration.

The Committee is also responsible for

considering the need to appoint external

remuneration consultants.

During the financial year 2020/2021, in

recognition of the increased oversight

responsibilities, the Remuneration Committee

approved additional special payments to the

Chairman, Audit Chairman and Giles Clark

(as the previous Audit Chairman), calculated

at 25% of their annual fee. The additional

special payments were split into two payment

tranches. The first tranche was paid during

the 30September 2021 financial year for the

additional oversight responsibilities relating

to the 2021 financial year and the second

tranche was paid in October 2021 for additional

oversight responsibilities relating to the 2022

financial year. Neither the Chairman, the Audit

Chairman or Giles Clark voted upon their own

additional special payments.

Giles Clark was the Audit Committee chairman

until 10 May 2021, stepping away from this

position to manage the sales process, and

Andrew Donovan was then appointed as the

chairman of the Audit Committee with effect

from 11 May 2021.

Following a review of the remuneration during

the financial year 2021/2022, the Remuneration

Committee recommended a 5% increase in the

directors’ remuneration which was approved

by the Board. These increases took effect from

1 October 2022. The changes to the Directors’

remuneration are outlined in this report.

Details of the specific levels of remuneration to

each Director as well as the fee increases are

outlined in the report.

Report on remuneration policy

Below is the VCT’s remuneration policy. This

policy applies from 25 June 2020. Shareholders

must vote on the remuneration policy every

three years, or sooner, if the VCT want to

make changes to the policy. The policy was

last approved by Shareholders at the 2020

AGM and will be presented to the Shareholders

for approval again at the 2023 AGM. There

are currently no planned changes to the

remuneration policy.

The VCT’s policy on Directors’ remuneration is

to seek to remunerate Board members at a level

appropriate for the time commitment required

and degree of responsibility involved and to

ensure that such remuneration is in line with

general market rates. Non-Executive Directors

will not be entitled to any performance related

pay or incentive.

Directors’ remuneration is also subject to the

VCT’s Articles of Association which provide that:

(i) the aggregate fees will not exceed

£100,000 per annum (excluding any

Performance Incentive fees to which the

Directors may be entitled from time to

time); and

(ii) the Directors shall be entitled to be repaid

all reasonable travelling, hotel and other

expenses incurred by them respectively in

or about the performance of their duties

as Directors.

Agreement for services

Information in respect of the Directors’

agreements has been disclosed within the

Report of the Directors on page 36.

Performance incentive

The structure of ‘A’ Shares, whereby

Management (being staff of the Investment

Adviser) owns one third of the ‘A’ Shares in

issue (known as the “Management ‘A’ Shares”),

enables a payment, by way of a distribution of

income, of the Performance Incentive to the

Management Team.

The NAV hurdle was not met for the financial

year end 30 September 2022 and no dividend

was paid during the year, therefore there was

no Performance Incentive.

Annual report on remuneration

The Board has prepared this report in

accordance with the requirements of the

Large and Medium-sized Companies and

Groups (Accounts and Reports) Regulations

2008 (SI2008/410) and the Companies Act

2006.

Under the requirements of Section 497 of

the Companies Act 2006, the VCT’s Auditor is

required to audit certain disclosures contained

within the report. These disclosures have

been highlighted and the audit opinion thereon

is contained within the Auditor’s Report on

pages45 to 49.

Directors’ remuneration (audited)

Directors’ remuneration for the VCT for the

year under review is shown in the table below.

The basic annual fees of the Directors during

the year were £26,500 for the Chairman,

£24,000 for the Audit Committee Chairman

and £21,500 for the other Non-Executive

Directors. In addition, as reported above,

an additional special payment was made

to the Chairman, Audit Chairman and

Giles Clark in October 2021 for additional

oversight responsibilities relating to the 2022

financialyear.

Gresham House Renewable Energy VCT2 plc

Financial

StatementsGovernanceOverview

Directors’ Remuneration Report (continued)

Effective 1 October 2022, an increase of 5% will be applied to director fees. This increase is within the limit set by the Remuneration Policy and is

show in the table below:

Current

Annual

Fee

Year ended

30 September

2022

fee

Additional

Special

Payment

for the

year end

30 September

2022

Total

Year ended

30 September

2022

fee

Year ended

30 September

2021

fee

Additional

Special

Payment

for the

year end

30 September

2021

Total

Year ended

30 September

2021

fee

Christian Yates 27,825 26,500 N/A 26,500 26,500 5,482 31,982

Matthew Evans 22,575 21,500 N/A 21,500 21,500 N/A 21,500

Andrew Donovan 25,200 24,000 406 24,406 18,533 1,945 20,478

Giles Clark – 21,500 630 22,130 23,020 3,019 26,039

Totals 75,600 93,500 1,036 94,536 89,553 10,446 99,999

No other emoluments, pension contributions or life assurance contributions were paid by the VCT to, or on behalf of, any Director. The VCT does not

have any share options in place.

Annual Percentage Change in Directors’ Remuneration

The following tables sets out the annual percentage change in Directors’ fees for the year up to 30 September 2022:

% change

for the year to

30 September

2022

% change

for the year to

30 September

2021

% change

for the year to

30 September

2020

Christian Yates 0 6 0

Matthew Evans 0 7.5 0

Andrew Donovan 0 N/A N/A

Giles Clark 0 6.7 0

Directors’ Shareholding (Audited)

The Directors of the VCT during the year and their beneficial interests in the issued Ordinary Shares and ‘A’ Shares at 30 September 2022 and at the

date of this report were as follows:

Directors

At the date of

this report

30 September 2022

30 September 2021

Christian Yates

Ord 27,789 27,789 27,789

‘A’ 2,624,185 2,624,185 2,624,185

Matthew Evans

Ord – – –

‘A’ – – –

Giles Clark*

Ord – – –

‘A’ – – –

Andrew Donovan

Ord – – –

‘A’ – – –

On 30 September 2022, Giles Clark resigned from the Board.

Gresham House Renewable Energy VCT2 plc

Statement of voting at AGM

Remuneration report

At the AGM on 23 March 2022, the votes in respect of the resolution to

approve the Director’s Remuneration Report were as follows:

In favour 89.60%

Against 10.40%

Withheld nil votes

Remuneration policy

At the 2020 AGM, when the remuneration policy was

last put to a Shareholder vote, 99.78% voted for the

resolution, showing significant shareholder support.

Relative importance of spend on pay

The difference in actual spend between 30 September 2022 and

30 September 2021 on Directors’ remuneration in comparison

to distributions (dividends and share buybacks) and other

significant spending are set out in the chart below.

500

1000

2021

2022

Pounds (£’000)

Investment

Advisory

fees

Directors

remuneration

buybacks

Dividends

Dividends on

“Management

‘A’ Shares”

2022/2023 remuneration

The remuneration levels for the forthcoming year for the Directors of the

VCT are shown in the above table on page 40.

Performance graph

The graph below represents the VCT’s performance over the

reporting periods since the VCT’s Ordinary Shares and ‘A’ Shares

were first listed on the London Stock Exchange and shows share

price total return and net asset value total return performance

on a dividends reinvested basis. All returns are rebased to 100 at

10 January 2011, being the date the VCT’s shares were listed.

Gresham House Renewable Energy VCT2 plc NAV Total Return

Gresham House Renewable Energy VCT2 plc Share Price Total Return

Numis Smaller Companies Index

Pence (p)

60.0

80.0

100.0

120.0

140.0

160.0

180.0

200.0

220.0

240.0

260.0

280.0

300.0

320.0

Dec-

The Numis Smaller Companies Index has been chosen as a comparison as it

is a publicly available broad equity index which focuses on smaller companies

and is therefore more relevant than most other publicly available indices.

Matthew Evans

Remuneration Committee Chairman

30 January 2023

Gresham House Renewable Energy VCT2 plc

Financial

StatementsGovernanceOverview

The Board of Gresham House Renewable Energy

VCT2 plc has considered the Principles and

Provisions of the 2019 AIC Code of Corporate

Governance (the AIC Code). The AIC Code

addresses the Principles and Provisions set out

in the UK Corporate Governance Code (the UK

Code), as well as setting out additional Provisions

on issues that are of specific relevance to

Gresham House Renewable Energy VCT2 plc.

The Board considers that reporting against the

Principles and Provisions of the AIC Code, which

has been endorsed by the Financial Reporting

Council, provides more relevant information

toShareholders.

Compliance with the Principles and Provisions of

the AIC Code by the VCT is detailed on page 44.

The AIC Code is available on the AIC website

(www.theaic.co.uk). It includes an explanation

of how the AIC Code adapts the Principles and

Provisions set out in the UK Code to make them

relevant for investment companies.

The Board

At the start of the year, the VCT had a Board

comprising four Non-Executive Directors,

chaired by Christian Yates. Giles Clark and

Andrew Donovan were independent from the

Investment Adviser, while Matthew Evans

was not considered independent as he is a

Designated Member of CH1 Investment Partners

LLP, which receives trail commission from

the Investment Adviser. Christian Yates was

independent on appointment, however, he is no

longer considered independent as he has been

on the Board for over 9 years. The VCT has not

appointed a Senior independent Director.

On 30 September 2022, Giles Clark resigned

from the Board. Biographical details of all

Board members (including significant other

commitments of the Chairman) are shown on

page 3.

Full Board meetings take place quarterly and

the Board meets or communicates more

regularly to address specific issues. The Board

has a formal schedule of matters specifically

reserved for its decision which includes, but is

not limited to: considering recommendations

from the Investment Adviser; making decisions

concerning the acquisition or disposal

of investments; and reviewing, annually,

the terms of engagement of all third party

advisers (including the Investment Adviser

andAdministrator).

The Board has also established procedures

whereby Directors wishing to do so in

the furtherance of their duties may take

independent professional advice at the

VCT’sexpense.

All Directors have access to the advice and

services of the Company Secretary. The

Company Secretary provides the Board with full

information on the VCT’s assets and liabilities

and other relevant information requested by the

Chairman, in advance of each Board meeting.

The Board has decided that the VCT will not

be buying Shares for the foreseeable future

as the VCT wishes to conserve such cash as it

generates for the managed wind-down of the

VCT and the potential payment of dividends.

The capital structure of the VCT is disclosed in

Note 19 to the financial statements.

During the period under review, all the Directors

of the VCT were Non-Executive and served on

each committee of the Board. Andrew Donovan

was the chairman of the Audit Committee

and Matthew Evans is the chairman of the

Remuneration and Nomination Committees.

The Audit Committee normally meets twice

yearly, and the Remuneration and Nomination

Committees meet as required. The Board has

delegated a number of areas of responsibility

to its committees and each committee has

defined terms of reference and duties.

Audit Committee

The Audit Committee is responsible for

reviewing the half-year and annual accounts

before they are presented to the Board, the

terms of appointment of the Auditor, together

with their remuneration, as well as a full review

of the effectiveness of the VCT’s internal control

and risk management systems.

In particular, the Committee reviews,

challenges (where appropriate) and agrees the

basis for the carrying value of the unquoted

investments, as prepared by the Investment

Adviser, for presentation within the half-year

and annual accounts.

The Committee also takes into consideration

comments on matters regarding valuation,

revenue recognition and disclosures arising

from the Report to the Audit Committee

as part of the finalisation process for the

annualaccounts.

The Committee is also responsible for

reviewing the going concern assessment and

viability statement including consideration

of all reasonably available information about

the future financial prospects of the VCT, the

possible outcomes of events and changes in

conditions and realistic possible responses to

such events and conditions.

The Audit Committee met four times during

the year. The Committee reviewed the internal

financial controls and concluded that they

wereappropriate.

As the VCT has no staff, other than the

Directors, there are no procedures in place

in respect of whistle blowing. The Audit

Committee understands that the Investment

Adviser and Administrator have whistle blowing

procedures in place.

External Auditor

The Committee reviews and agrees the audit

strategy paper, presented by the Auditor in

advance of the audit, which sets out the key

risk areas to be covered during the audit and

confirms their status on independence.

The Committee confirms that the main area of

risk for the period under review is the carrying

value of investments.

The Committee, after taking into consideration

comments from the Investment Adviser and

Administrator, regarding the effectiveness

of the audit process; immediately before the

conclusion of the annual audit, will recommend

to the Board either the re-appointment or

removal of the Auditor.

Under the Competition and Markets Authority

regulations, there is a requirement that an

audit tender process be carried out every ten

years and mandatory rotation at least every

twenty years. The VCT undertake an audit

tender in respect of the audit required for the

year ended 30 September 2021 and, following a

competitivetender process in early 2021, BDO

was re-appointed.

Corporate Governance

Gresham House Renewable Energy VCT2 plc

Board and Committee Meetings

The following table sets out the Directors’ attendance at the Board and Committee meetings

during the year:

Quarterly

Board

meetings

attended

Audit

Committee

meetings

attended

Nomination

Committee

meetings

attended

Remuneration

Committee

meetings

attended

(4 held) (4 held) (1 held) (1 held)

Christian Yates 4 4 1 1

Giles Clark 4 4 1 1

Matthew Evans 4 4 1 1

Andrew Donovan 4 4 1 1

In addition the Directors attended a number of ad hoc board meetings, mainly to discuss the

managed wind-down of the VCT.

Remuneration Committee

The Committee meets as and when required

to review the levels of Directors’ remuneration.

The Committee is also responsible for

considering the need to appoint external

remuneration consultants.

During the period, the Committee

recommended an increase in board

remuneration which was approved by the

Board. These increases took effect from

1October 2022. Details of the specific levels

of remuneration to each Director as well as

the fee increases are set out in the Directors’

Remuneration Report on page 39.

Financial reporting

The Directors’ responsibilities statement

for preparing the accounts is set out in the

Report of the Directors on page 36 and a

statement by the Auditor about their reporting

responsibilities is set out in the Independent

Auditor’s report on page 45.

Nomination committee

The Nomination Committee’s primary

function is to make recommendations to the

Board on all new appointments and also to

advise generally on issues relating to Board

composition and balance. The Committee

meets as and when appropriate. Before

any appointment is made by the Board, the

Committee shall evaluate the balance of skills,

knowledge and experience, and consider

candidates on merit, against objective criteria,

and with due regard for the benefits of

diversity on the Board. Diversity includes and

makes good use of differences in knowledge

and understanding of relevant diverse

geographies, peoples and their backgrounds

including race or ethnic origin, sexual

orientation, gender, age, disability or religion.

During the period, the Committee carried out

a rigorous board evaluation during which it

assessed the effectiveness of the Board and

its committees. The Committee found that

the Board was functioning well and that all

directors contributed to the discussions at

meetings. A number of topics were raised

and discussed and overall, the Board and its

committees were found to be performing

satisfactorily.

Relations with Shareholders

Shareholders have the opportunity to meet

the Board at the AGM. The Board is also

happy to respond to any written queries made

by Shareholders during the course of the

period, or to meet with major Shareholders if

sorequested.

In addition to the formal business of the AGM,

representatives of the Investment Adviser and

the Board are available to answer any questions

a Shareholder may have. The notice of the

twelfth AGM and proxy form will be circulated

with this Annual Report.

The terms of reference of the Committees

and the conditions of appointment of

Non-Executive Directors are available to

Shareholders on request.

Internal control

The Directors are fully informed of the

internal control framework established by the

Investment Adviser and the Administrator

to provide reasonable assurance on the

effectiveness of internal financial control.

The Board is responsible for ensuring that the

procedures to be followed by the advisers and

themselves are in place, and they review the

effectiveness of the internal controls, based

on the report from the Audit Committee, on an

annual basis to ensure that the controls remain

relevant and were in operation throughout

theyear.

The Board also reviews the perceived risks

faced by the VCT in line with relevant guidance

on an annual basis and implements additional

controls as appropriate.

The Board also considered the requirement for

an internal audit function and considered that

this was not necessary as the internal controls

and risk management in place were adequate

and effective.

Although the Board is ultimately responsible for

safeguarding the assets of the VCT, the Board

has delegated, through written agreements,

the day-to-day operation of the VCT (including

the Financial Reporting Process) to the

following advisers:

Investment Adviser

Gresham House Asset Management Limited

Administrator and Company Secretary

JTC (UK) Limited

Anti-bribery policy

In order to ensure compliance with the UK

Bribery Act 2010, the Directors confirm that

the VCT has zero tolerance towards bribery and

a commitment to carry out business openly,

honestly and fairly.

Going concern

In assessing the VCT as a going concern,

the Directors have considered the forecasts

which reflect the proposed strategy for

portfolio investments and the results of the

continuation votes at the AGM and General

Meeting held on 22 March 2021 and 13 July 2021

respectively. At the meeting on 13 July 2021,

the proposed special resolution was approved

by Shareholders, resulting in the VCTs entering

a managed wind-down and a new investment

policy replacing the existing investment

policy. The Board agreed to realise the VCTs’

investments in a manner that achieves balance

between maximising the net value received

from those investments and making timely

returns to Shareholders.

Gresham House Renewable Energy VCT2 plc

Financial

StatementsGovernanceOverview

Corporate Governance (continued)

Given a formal decision has been made to wind

the VCT up, the financial statements have been

prepared on a basis other than going concern.

The Board notes that the VCT has sufficient

liquidity to pay its liabilities as and when they fall

due, during the managed wind-down, and that

the VCT has adequate resources to continue in

business until the formal liquidation and wind-

up commences.

Share capital

The VCT has two classes of share capital:

Ordinary Shares and ‘A’ Shares. The rights and

obligations attached to those shares, including

the power of the VCT to buy back shares and

details of any significant shareholdings, are set

out on page 36 of the Report of the Directors.

Compliance statement

The Listing Rules require the Board to report

on compliance with the AIC Code provisions

throughout the accounting period. With

the exception of the limited items outlined

below, the VCT has complied throughout the

accounting year ended 30 September 2022 with

the provisions set out in Section 5 to 9 of the

AIC Code.

a) The VCT has no major Shareholders so

Shareholders are not given the opportunity

to meet any new Non-Executive Directors

at a specific meeting other than the AGM.

(5.2.3)

b) Due to the size of the Board and the

nature of the VCT’s business, a senior

independent director has not been

appointed. (6.2.14)

c) Due to the size of the Board and the nature

of the VCT’s business, the Board considers

it appropriate for the entire Board to

fulfil the role of the nomination and

remuneration committees. (7.2.22, 9.2.37)

d) Due to the size of the VCT, the Board

thought it would be unnecessarily

burdensome to establish a separate

management engagement committee to

review the performance of the Investment

Adviser. (6.2.17, 7.2.26)

e) Due to the size of the Board and the nature

of the VCT’s business, the Board considers

it appropriate for the entire Board,

including the chair, to fulfil the role of the

audit committee. (8.2.29)

f) The Directors are not subject to annual

re-election but must be re-elected every

three years. A Director may retire at any

Annual Meeting following the Annual

General Meeting at which he last retired

and was re-elected provided that he must

retire from office at or before the third

Annual General Meeting following the

Annual General Meeting at which he last

retired and was re-elected. (7.2.23)

By order of the Board

JTC (UK) Limited

Company Secretary

Company number: 0430176

Registered office:

The Scalpel, 18th Floor

52 Lime Street

London EC3M 7AF

30 January 2023

Gresham House Renewable Energy VCT2 plc

Independent auditor’s report to the

members of Gresham House

Renewable Energy VCT2 Plc

Opinion on the financial statements

In our opinion the financial statements:

Æ give a true and fair view of the state of

the Company’s affairs as at 30 September

2022 and of the Company’s profit for the

year then ended;

Æ have been properly prepared in

accordance with UK Generally Accepted

Accounting Practice; and

Æ have been prepared in accordance with

the requirements of the Companies Act

2006.

We have audited the financial statements

of Gresham House Renewable Energy

VCT2 Plc (the ‘Company’) for the year ended

30September 2022 which comprise the

Income statement, the Balance sheet, the

Statement of Changes in Equity, the Cash

Flow Statement, and notes to the financial

statements, including a summary of

significant accounting policies. The financial

reporting framework that has been applied

in their preparation is applicable law and UK

accounting standards inlcuidng FRS 102 The

Financial Reporting Standard applicable in the

UK and Republic of Ireland (United Kingdom

Generally Accepted Accounting Practice).

Basis for opinion

We conducted our audit in accordance with

International Standards on Auditing (UK) (ISAs

(UK)) and applicable law. Our responsibilities

under those standards are further described

in the Auditor’s responsibilities for the

audit of the financial statements section

of our report. We believe that the audit

evidence we have obtained is sufficient and

appropriate to provide a basis for our opinion.

Our audit opinion is consistent with the

additional report to the audit committee.

Independence

Following the recommendation of the audit

committee, we were appointed by Directors

to audit the financial statements for the year

ended 30 September 2011 and subsequent

financial periods. We were re-appointed by

shareholders at the AGM held on 23 March

2022 to audit the financial statements for the

year ended 30 September 2022. The period

of total uninterrupted engagement including

retenders and reappointments is 12 years,

covering the years ended 30 September 2011 to

30 September 2022. We remain independent

of the Company in accordance with the ethical

requirements that are relevant to our audit of

the financial statements in the UK, including

the FRC’s Ethical Standard as applied to

listed public interest entities, and we have

fulfilled our other ethical responsibilities

in accordance with these requirements.

The non-audit services prohibited by that

standard were not provided to the Company.

Emphasis of matter – financial statements

prepared on a basis other than going concern

We draw attention to note 1 to the financial

statements which explains that a formal

decision has been taken by the Directors to

wind up the Company and therefore do not

consider the Company to be a going concern.

Accordingly, the financial statements have been

prepared on a basis other than that of going

concern as described in note 1. Our opinion

is not modified in respect of this matter.

In relation to the Company’s reporting on how

it has applied the UK Corporate Governance

Code, we have nothing material to add or

draw attention to in relation to the Directors’

statement in the financial statements

about whether the Directors considered it

appropriate to adopt the going concern basis

of accounting. As explained in note 1, the

Directors have concluded that the company

is not a going concern and accordingly the

financial statements have been prepared

on a basis other than going concern.

Overview

Key audit

matters

2022 2021

Valuation of

unquoted

investments X X

Materiality £471,000

(2021:£545,000)

based on 2% of

net assets (2021:

2% of value of

investments)

An overview of the scope of our audit

Our audit was scoped by obtaining an

understanding of the Company and its

environment, including the Company’s system

of internal control, and assessing the risks

of material misstatement in the financial

statements. We also addressed the risk of

management override of internal controls,

including assessing whether there was

evidence of bias by the Directors that may have

represented a risk of material misstatement.

Key audit matters

Key audit matters are those matters that, in

our professional judgement, were of most

significance in our audit of the financial

statements of the current period and include

the most significant assessed risks of material

misstatement (whether or not due to fraud) that

we identified, including those which had the

greatest effect on: the overall audit strategy,

the allocation of resources in the audit, and

directing the efforts of the engagement team.

This matters wwas addressed in the context of

our audit of the financial statements as a whole,

and in forming our opinion thereon, and we do

not provide a separate opinion on this matter.

Independent Auditor’s

Report

Gresham House Renewable Energy VCT2 plc

Financial

StatementsGovernanceOverview

Key Audit Matter How the scope of our audit addressed the key audit matter

Valuation of unquoted investments

100% of the underlying investment portfolio is

represented by unquoted equity and loan stock.

Further information is disclosed in notes 10 to the

financial statements.

These investments have been classified within

level 3 as they are not traded and contain certain

unobservable inputs and there is a high level of

estimation uncertainty involved in determining the

unquoted equity and loan investments.

The valuation of investments is a highly subjective

accounting estimate where there is an inherent risk

of management override arising from the investment

valuations being prepared by the Investment

Manager, who is remunerated based on the net asset

value of the company.

Valuation based on discounted cash flow (DCF)

In respect of the unquoted equity investments valued using discounted cash flow models

(“DCF”), we performed the following specific procedures:

Æ Considered the appropriateness of overall fair value and valuation movement in the

period;

Æ Considered alternate valuation reference point and relevant information such as non-

binding offer;

Æ Used spreadsheet analysis tools to assess the integrity of the valuation models and

track changes to inputs or structure;

Æ Agreed power price forecasts to independent reports and contracts if any;

Æ we analysed changes in significant assumptions compared with assumptions used

in previous periods audits and vouched these changes to independent evidence

including available industry data;

Æ Considered whether the valuation methodology was the most appropriate in the

circumstances under the International Private Equity and Venture Capital Valuation

(“IPEV”) Guidelines and FRS 102 Sections 11 and 12;

Æ Reviewed and challenged the appropriateness of the selection and application of

key assumptions in the model including the discount factor, inflation, asset life,

energy yield and power price applied by benchmarking to available industry data and

consulting with our internal valuations specialists;

Æ Agreed cash and other net assets to bank statements and investee company

management accounts;

Æ Considered the accuracy of forecasting by comparing previous forecasts to actual

results; and

Æ Considered the economic environment in which the investment operates to identify

factors that could impact the investment valuation.

Valuations based on multiples

In respect of other unquoted investments valued on the basis of Multiples, we performed

the following procedures:

Æ Considering whether the valuation methodology is the most appropriate in the

circumstances under the IPEV Guidelines;

Æ Checked the arithmetic accuracy of the multiples-based investment valuations;

Æ Verifying and benchmarking key inputs and estimates to independent information

from our own research;

Æ Challenging the assumptions inherent to the valuation of unquoted investments and

assessing the impact of estimation uncertainty concerning these assumptions and

the disclosure of these uncertainties in the financial statements; and

Æ Where appropriate, performing sensitivity analysis on the valuation calculations

where there is sufficient evidence to suggest reasonable alternative inputs might

exist.

For each of the key assumptions in the valuation models, we considered the

appropriateness of the assumption and whether alternative reasonable assumptions could

have been applied. We considered each assumption in isolation as well as in conjunction

with other assumptions and the valuation as a whole. Where appropriate, we sensitised

the valuations where other reasonable alternative assumptions could have been applied.

We also considered the completeness and clarity of disclosures regarding the range of

reasonable alternative outcome on key assumptions iin the financial statements.

Key observations:

Based on the procedures performed we were satisfied that the estimated and judgements

made in the valuation of the portfolio was acceptable .

Independent Auditor’s Report (continued)

Gresham House Renewable Energy VCT2 plc

Our application of materiality

We apply the concept of materiality both in planning and performing our audit, and in evaluating the effect of misstatements. We consider materiality

to be the magnitude by which misstatements, including omissions, could influence the economic decisions of reasonable users that are taken on the

basis of the financial statements.

In order to reduce to an appropriately low level the probability that any misstatements exceed materiality, we use a lower materiality level,

performance materiality, to determine the extent of testing needed. Importantly, misstatements below these levels will not necessarily be evaluated

as immaterial as we also take account of the nature of identified misstatements, and the particular circumstances of their occurrence, when

evaluating their effect on the financial statements as a whole.

Based on our professional judgement, we determined materiality for the financial statements as a whole and performance materiality as follows:

Company Financial Statements

2022

(£)

2021

(£)

Financial Statement Materiality 471,000 545,000

Basis for determining materiality 2% of the value of net assets 2% of the value of investments

Rationale for the benchmark applied Æ In setting materiality, we have had regard to the nature and disposition

of the investment portfolio. Given that the VCT’s portfolio is comprised

of unquoted investments which would typically have a wider spread of

reasonable alternative possible valuations, we have applied a percentage

of 2% of net assets (2021: 2% of the investment portfolio).

Æ This was changed from the prior year’s benchmark of gross investment

value to align with a standardised benchmark across the investment

company sector.

Performance materiality 353,000 409,000

Basis for determining performance materiality 75% of materiality

Risk assessment of the control environment and consideration of the

number of historical errors identified.

Specific materiality

We also determined that for items impacting

revenue return, a misstatement of less than

materiality for the financial statements as a

whole, specific materiality, could influence the

economic decisions of users. As a result, we

determined materiality for these items to be

£24,000 based on 2% of revenue (2021: NIL).

We further applied a performance materiality

level of 75% of specific materiality to ensure

that the risk of errors exceeding specific

materiality was appropriately mitigated.

Reporting threshold

We agreed with the Audit Committee that

we would report to them all individual audit

differences in excess of £10k (2021:£11k).

We also agreed to report differences below

this threshold that, in our view, warranted

reporting on qualitative grounds.

Other information

The Directors are responsible for the other

information. The other information comprises

the information included in the Annual Report

other than the financial statements and our

auditor’s report thereon. Our opinion on the

financial statements does not cover the other

information and, except to the extent otherwise

explicitly stated in our report, we do not express

any form of assurance conclusion thereon. Our

responsibility is to read the other information

and, in doing so, consider whether the other

information is materially inconsistent with the

financial statements or our knowledge obtained

in the course of the audit, or otherwise appears

to be materially misstated. If we identify such

material inconsistencies or apparent material

misstatements, we are required to determine

whether this gives rise to a material misstatement

in the financial statements themselves. If, based

on the work we have performed, we conclude

that there is a material misstatement of this other

information, we are required to report that fact.

We have nothing to report in this regard.

Corporate governance statement

The Listing Rules require us to review the

Directors’ statement in relation to going

concern, longer-term viability and that part

of the Corporate Governance Statement

relating to the Company’s compliance

with the provisions of the UK Corporate

Governance Code specified for our review.

Based on the work undertaken as part of

our audit, we have concluded that each of

the following elements of the Corporate

Governance Statement is materially

consistent with the financial statements or

our knowledge obtained during the audit.

Gresham House Renewable Energy VCT2 plc

Financial

StatementsGovernanceOverview

Independent Auditor’s Report (continued)

Going concern and longer-Going concern and longer-

term viabilityterm viability

Æ The Directors’ statement with regards to the appropriateness of adopting the going concern basis of

accounting and any material uncertainties identified set out on page 37; and

Æ The Directors’ explanation as to their assessment of the entity’s prospects, the period this assessment covers

and why the period is appropriate set out on page 37.

Other Code provisionsOther Code provisions Æ Directors’ statement on fair, balanced and understandable set out on page 37;

Æ Board’s confirmation that it has carried out a robust assessment of the emerging and principal risks set out on

page 28;

Æ The section of the annual report that describes the review of effectiveness of risk management and internal

control systems set out on page 43; and

Æ The section describing the work of the audit committee set out on page 42

Other Companies Act 2006 reporting

Based on the responsibilities described below and our work performed during the course of the audit, we are required by the Companies Act 2006

and ISAs (UK) to report on certain opinions and matters as described below.

Strategic report and

Directors’ report

In our opinion, based on the work undertaken in the course of the audit:

Æ the information given in the Strategic report and the Directors’ report for the financial year for which the

financial statements are prepared is consistent with the financial statements; and

Æ the Strategic report and the Directors’ report have been prepared in accordance with applicable legal

requirements.

In the light of the knowledge and understanding of the Company and its environment obtained in the course

of the audit, we have not identified material misstatements in the Strategic report or the Directors’ report.

Directors’ remuneration In our opinion, the part of the Directors’ remuneration report to be audited has been properly prepared in

accordance with the Companies Act 2006.

Matters on which we are

required to report by

exception

We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires

us to report to you if, in our opinion:

Æ adequate accounting records have not been kept, or returns adequate for our audit have not been received

from branches not visited by us; or

Æ the financial statements and the part of the Directors’ remuneration report to be audited are not in agreement

with the accounting records and returns; or

Æ certain disclosures of Directors’ remuneration specified by law are not made; or

Æ we have not received all the information and explanations we require for our audit.

Responsibilities of Directors

As explained more fully in the Directors’

responsibilities statement, the Directors

are responsible for the preparation of the

financial statements and for being satisfied

that they give a true and fair view, and for such

internal control as the Directors determine

is necessary to enable the preparation of

financial statements that are free from material

misstatement, whether due to fraud or error.

In preparing the financial statements, the

Directors are responsible for assessing the

Company’s ability to continue as a going

concern, disclosing, as applicable, matters

related to going concern and using the

going concern basis of accounting unless

the Directors either intend to liquidate the

Company or to cease operations, or have

no realistic alternative but to do so.

Auditor’s responsibilities for the audit of the

financial statements

Our objectives are to obtain reasonable

assurance about whether the financial

statements as a whole are free from material

misstatement, whether due to fraud or error,

and to issue an auditor’s report that includes

our opinion. Reasonable assurance is a high

level of assurance, but is not a guarantee that

an audit conducted in accordance with ISAs

(UK) will always detect a material misstatement

when it exists. Misstatements can arise from

fraud or error and are considered material

if, individually or in the aggregate, they

could reasonably be expected to influence

the economic decisions of users taken on

the basis of these financial statements.

Gresham House Renewable Energy VCT2 plc

Extent to which the audit was capable of

detecting irregularities, including fraud

Irregularities, including fraud, are instances

of non-compliance with laws and regulations.

We design procedures in line with our

responsibilities, outlined above, to detect

material misstatements in respect of

irregularities, including fraud. The extent to

which our procedures are capable of detecting

irregularities, including fraud is detailed below:

We gained an understanding of the legal

and regulatory framework applicable to the

Company and the industry in which it operates,

and considered the risk of acts by the Company

which were contrary to applicable laws and

regulations, including fraud. These included but

were not limited to compliance with Companies

Act 2006, the FCA listing and DTR rules, the

principles of the UK Corporate Governance

Code, industry practice represented by

the Statement of Recommended Practice:

Financial Statements of Investment Trust

Companies and Venture Capital Trusts (“the

SORP”) with consequential amendments and

FRS 102. We also considered the Company’s

qualification as a VCT under UK tax legislation.

Our tests included, but were not limited to:

Æ Obtaining an understanding of the control

environment in monitoring compliance

with laws and regulations;

Æ Agreement of the financial statement

disclosures to underlying supporting

documentation;

Æ Enquiries of management and those

charged with governance;

Æ Obtaining the VCT compliance reports

during the year and as at year end and

reviewing their calculations to check

that the Company was meeting its

requirements to retain VCT status; and

Æ Review of minutes of board meetings

throughout the period.

We assessed the susceptibility of the financial

statements to material misstatement including

fraud and considered the key fraud risk areas

to be the valuation of unquoted investments

and management override of controls.

Our tests included, but were not limited to:

Æ The procedures set out in the Key Audit

Matter section above;

Æ Obtaining independent evidence to

support the ownership of investments;

Æ Recalculating the investment

management fees in total;

Æ Obtaining independent confirmation of

bank balances; and

Æ Testing journals, based on risk assessment

criteria as well as an unpredictable

sample, and evaluating whether there

was evidence of bias by the Investment

Manager and Directors that represented a

risk of material misstatement due to fraud.

We also communicated relevant identified laws

and regulations and potential fraud risks to all

engagement team members and remained alert

to any indications of fraud or non-compliance

with laws and regulations throughout the audit.

Our audit procedures were designed to respond

to risks of material misstatement in the

financial statements, recognising that the risk

of not detecting a material misstatement due

to fraud is higher than the risk of not detecting

one resulting from error, as fraud may involve

deliberate concealment by, for example,

forgery, misrepresentations or through

collusion. There are inherent limitations in the

audit procedures performed and the further

removed non-compliance with laws and

regulations is from the events and transactions

reflected in the financial statements, the

less likely we are to become aware of it.

A further description of our responsibilities

is available on the Financial Reporting

Council’s website at: www.frc.org.uk/

auditorsresponsibilities. This description

forms part of our auditor’s report.

Use of our report

This report is made solely to the Company’s

members, as a body, in accordance with

Chapter 3 of Part 16 of the Companies Act 2006.

Our audit work has been undertaken so that we

might state to the Company’s members those

matters we are required to state to them in

an auditor’s report and for no other purpose.

To the fullest extent permitted by law, we do

not accept or assume responsibility to anyone

other than the Company and the Company’s

members as a body, for our audit work, for this

report, or for the opinions we have formed.

Kelly Sheppard

(Senior Statutory Auditor)

For and on behalf of BDO LLP, Statutory Auditor

London

United Kingdom

Date: 30 January 2023

BDO LLP is a limited liability partnership

registered in England and Wales

(with registered number OC305127).

Gresham House Renewable Energy VCT2 plc

Financial

StatementsGovernanceOverview

Year ended 30September 2022 Year ended 30September 2021

Note

Revenue

£’000

Capital

£’000

Total

£’000

Revenue

£’000

Capital

£’000

Total

£’000

Income 3 712 – 712 591 – 591

Gain/(loss) on investments 10 – 512 512 – (2,628) (2,628)

712 512 1,224 591 (2,628) (2,037)

Investment advisory fees 4 (202) (67) (269) (221) (74) (295)

Other expenses 5 (430) – (430) (347) – (347)

(632) (67) (699) (568) (74) (642)

Profit/(loss) on ordinary activities before tax 80 445 525 23 (2,702) (2,679)

Tax on total comprehensive income/(loss) and

ordinary activities 7 – – – – – –

Profit/(loss) for the year and total

comprehensive income/(loss) 80 445 525 23 (2,702) (2,679)

Basic and diluted earnings/(loss) per share:

Ordinary Share 9 0.3p 1.7p 2.0p 0.1p (10.3p) (10.2p)

‘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 April 2021) 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.

Income Statement

For the year ended 30 September 2022

Gresham House Renewable Energy VCT2 plc

2022 2021

Note £’000 £’000 £’000 £’000

Current assets

Investments 10 27,980 27,400

Costs incurred on sale of VCT’s assets 11 480 181

Debtors 12 124 176

Cash at bank and in hand 1 30

28,585 27,787

Creditors: amounts falling due within one year 13 (2,542) (1,461)

Net current assets 26,043 26,326

Creditors: amounts falling due after more than one year 14 (2,162) (2,970)

Net assets 23,881 23,356

Capital and reserves

Called up Ordinary Share capital 15 29 29

Called up ‘A’ Share capital 15 42 42

Share premium account 16 9,734 9,734

Treasury Shares 16 (3,403) (3,403)

Special reserve 16 4,813 4,813

Revaluation reserve 16 16,869 15,054

Capital redemption reserve 16 1 1

Capital reserve – realised 16 (3,617) (2,247)

Revenue reserve 16 (587) (667)

Total Shareholders’ funds 23,881 23,356

Basic and diluted net asset value per share

Ordinary Share 17 91.2p 89.2p

‘A’ Share 17 0.1p 0.1p

The financial statements of Gresham House Renewable Energy VCT2 plc on pages 50 to 68 were approved and authorised for issue by the Board of

Directors and were signed on its behalf by:

Christian Yates

Chairman

Company number: 07378395

Date: 30 January 2023

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

Balance Sheet

As at 30 September 2022

Gresham House Renewable Energy VCT2 plc

Financial

StatementsGovernanceOverview

Called

up share

capital

£’000

Premium

Account

£’000

Treasury

£’000

Funds

held in

respect

of Shares

not yet

allotted

£’000

Special

reserve

£’000

Revaluation

reserve

£’000

Capital

redemption

reserve

£’000

Capital

reserve

realised

£’000

Revenue

reserve

£’000

Total

£’000

At 30 September 2020 71 9,734 (3,403) – 6,394 16,891 1 (1,433) (639) 27,616

Total comprehensive loss – – – – – (2,644) – (7) (28) (2,679)

Transfer of net realised loss

to Capital reserve-realised – – – – – 807 – (807) – –

Transactions with owners

Dividend paid – – – – (1,581) – – – – (1,581)

At 30 September 2021 71 9,734 (3,403) – 4,813 15,054 1 (2,247) (667) 23,356

Total comprehensive income – – – – – 1,815 – (1,370) 80 525

At 30 September 2022 71 9,734 (3,403) – 4,813 16,869 1 (3,617) (587) 23,881

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

Statement of Changes in Equity

For the year ended 30 September 2022

Gresham House Renewable Energy VCT2 plc

Note

Year ended

30September

2022

£’000

Year ended

30September

2021

£’000

Cash flows from operating activities

Profit/(loss) for the financial year 525 (2,679)

(Gain)/loss arising on the revaluation of investments 10 (512) 2,628

Dividend income (659) (522)

Interest income (54) (69)

Interest income – written off 79 –

Increase in debtors (2) (2)

Increase in creditors 83 148

Net cash outflow from operating activities (540) (496)

Cash flows from investing activities

Proceeds from sale of investments/loan note redemptions 10 – 139

Purchase of investments 10 (68) (13)

Cost incurred as part of the sale of VCT’s assets 11 (109) (19)

Interest received 29 184

Dividend income received 659 315

Net cash inflow from investing activities 511 606

Net cash (outflow)/inflow before financing activities (29) 110

Cash flows from financing activities

Dividends paid – (1,581)

Proceeds from loans – 1,447

Net cash outflow from financing activities – (134)

Net decrease in cash (29) (24)

Cash and cash equivalents at start of year 30 54

Cash and cash equivalents at end of year 1 30

Cash and cash equivalents comprise

Cash at bank and in hand 1 30

Total cash and cash equivalents 1 30

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

Cash Flow Statement

For the year ended 30 September 2022

Gresham House Renewable Energy VCT2 plc

Financial

StatementsGovernanceOverview

1. General Information

Gresham House Renewable Energy VCT2 plc (VCT) is a Venture Capital Trust established under the legislation introduced in the Finance Act 1995 and

is domiciled in the United Kingdom and incorporated in England and Wales under the Companies Act 2006.

Basis of preparation - financial statements prepared on a basis other than going concern

During the financial year the Shareholders of the VCT resolved to seek to sell the VCT’s assets and distribute the proceeds in due course. The VCT has

incurred some additional costs since the beginning of the Managed Wind-Down process in July 2021 up to this year end, and post year end, related

to the sale of its assets. Should the sale of these assets fall through, the VCT will need to pay abort costs. The Board and Investment Adviser have

plans in place to manage this scenario should this occur. At the General Meeting on 13 July 2021 a formal decision was made to wind the VCT up,

therefore as last year the Financial Statements have been prepared on a basis other than going concern for the year ended 30 September 2022. No

further adjustments are required in respect of this. Liquidation costs cannot currently be reliably estimated but are not considered to be material.

Investments held at fair value through profit or loss are held as current assets, there have been no further effects noted.

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 April 2021 (SORP) as well as the Companies Act 2006.

The VCT implements new Financial Reporting Standards (FRS) issued by the Financial Reporting Council when they become effective. No new FRS

were implemented during the year.

The financial statements are presented in Sterling (£).

Presentation of income statement

In order to better reflect the activities of a Venture Capital Trust and in accordance with the SORP, supplementary information which analyses the

Income Statement between items of a revenue and capital nature has been presented alongside the Income Statement. The net revenue is the

measure the Directors believe appropriate in assessing the VCT’s compliance with certain requirements set out in Part 6 of the Income Tax Act 2007.

Investments

All investments are designated as “fair value through profit or loss” assets due to investments being managed and performance evaluated on a fair

value basis. A financial asset is designated within this category if it is both acquired and managed on a fair value basis, in accordance with the VCT’s

documented investment policy. The fair value of an investment upon acquisition is deemed to be cost. Thereafter investments are measured at fair

value in accordance with the International Private Equity and Venture Capital Valuation Guidelines (IPEV) together with FRS 102 sections 11 and 12.

For unquoted investments and subsequent to acquisition, fair value is established by using the IPEV guidelines. The valuation methodologies for

unquoted entities used by the IPEV to ascertain the fair value of an investment are as follows:

Æ multiples;

Æ net assets;

Æ discounted cash flows or earnings (of underlying business);

Æ discounted cash flows (from the investment); and

Æ industry valuation benchmarks.

Of the valuation methodologies above, the multiples and discounted cash flow approaches are applied to the VCT’s investments. 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 Advisor 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.

Notes to the Accounts

For the year ended 30 September 2022

Gresham House Renewable Energy VCT2 plc

2. Accounting policies (continued)

The methodology applied takes account of the nature, facts and circumstances of the individual investment and uses reasonable data, market

inputs, assumptions and estimates in order to ascertain fair value.

Gains and losses arising from changes in fair value are included in the Income Statement for the year as a capital item and transaction costs on

acquisition or disposal of the investment are expensed. Where an investee company has gone into receivership or liquidation, or administration

(where there is little likelihood of recovery), the loss on the investment, although not physically disposed of, is treated as being realised.

The investee companies held by the VCT are treated as a portfolio of investments and are therefore measured at fair value in accordance with section

9 of FRS 102. The results of these companies are not incorporated into the Income Statement except to the extent of any income accrued. This is in

accordance with the SORP and FRS 102 sections 14 and 15 that does not require portfolio investments, where the interest held is greater than 20%, to

be accounted for using the equity method of accounting.

Income

Dividend income from investments is recognised when the Shareholders’ rights to receive payment have been established, normally on the ex-

dividend date.

Interest income is accrued on a time apportionment basis, by reference to the principal sum outstanding and at the effective interest rate applicable

and only where there is reasonable certainty of collection in the foreseeable future.

Expenses

All expenses are accounted for on an accruals basis. In respect of the analysis between revenue and capital items presented within the Income

Statement, all expenses have been presented as revenue items except as follows:

Æ expenses which are incidental to the disposal of an investment are deducted from the disposal proceeds of the investment; and

Æ 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.

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 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 realised or unrealised appreciation of the VCT’s investments which arises.

Deferred taxation, which is not discounted, is provided in full on timing differences that result in an obligation at the balance sheet date to pay more

tax, or a right to pay less tax, at a future date, at rates expected to apply when they crystallise based on current tax rates and law. Timing differences

arise from the inclusion of items of income and expenditure in taxation computations in periods different from those in which they are included in the

accounts.

Other debtors, other creditors and loan notes

Other debtors (including accrued income), other creditors and loan notes (other than those held as part of the investment portfolio as set out in

Note10 are included within the accounts at amortised cost.

3. Income

Year ended

30September

2022

£’000

Year ended

30September

2021

£’000

Income from investments

Loan stock interest 53 69

Dividend income 659 522

712 591

Gresham House Renewable Energy VCT2 plc

Financial

StatementsGovernanceOverview

Notes to the Accounts (continued)

4. Investment advisory fees

The investment advisory fees for the year ended 30 September 2022, 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 2022 Year ended 30September 2021*

Revenue

£’000

Capital

£’000

Total

£’000

Revenue

£’000

Capital

£’000

Total

£’000

Investment advisory fees 202 67 269 221 74 295

5. Other expenses

Year ended 30September 2022 Year ended 30September 2021

Revenue

£’000

Capital

£’000

Total

£’000

Revenue

£’000

Capital

£’000

Total

£’000

Administration services 96 – 96 98 – 98

Directors’ remuneration 103 – 103 102 – 102

Social security costs 3 – 3 5 – 5

Auditor’s remuneration for audit 48 – 48 37 – 37

Non audit services – Agreed upon procedures – – – 3 – 3

Interest written off 79 – 79 – – –

Other 101 – 101 102 – 102

430 – 430 347 – 347

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 2022,

the annual running costs came to 2.3% of net assets (2021: 2.4%), 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 on page 39.

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.

Gresham House Renewable Energy VCT2 plc

7. Tax on ordinary activities

Year ended

30September

2022

£’000

Year ended

30September

2021

£’000

(a) Tax charge for the year

UK corporation tax at 19% (2021: 19%) – –

Charge for the year – –

(b) Factors affecting tax charge for the year

Profit/(loss) on ordinary activities before taxation 525 (2,679)

Tax/(tax credit) calculated on loss on ordinary activities before taxation at the applicable rate of 19%

(2021: 19%) 100 (509)

Effects of:

UK dividend income (125) (99)

(Gains)/losses on investments (97) 500

Excess management expenses on which deferred tax not recognised 122 108

Total tax charge – –

Excess management fees, which are available to be carried forward and set off against future taxable income, amounted to £4,485,000 (25%) (2021:

£4,697,000) (25%). The associated deferred tax asset of £1,121,000 (2021: £1,174,000) has not been recognised due to the fact that it is unlikely that the

excess management fees will be set off against future taxable profits in the foreseeable future. The prospective corporation tax rate of 25% is due to

be effective from 1 April 2023.

8. Dividends

No Dividends were paid during the year (2021: nil). However, a dividend in respect of the year ended 30 September 2022 was declared and was paid to

Shareholders on the Register on 6 January 2023, on 27 January 2023.

9. Basic and diluted earnings per share

Weighted

average number

of shares

in issue

Revenue

profit

£’000

Pence

per share

Capital

profit/

(loss)

£’000

Pence

per share

Year ended 30 September 2022 Ordinary Shares 26,133,036 80 0.3 445 1.7

‘A’ Shares 39,463,845 – – – –

Year ended 30 September 2021 Ordinary Shares 26,133,036 23 0.1 (2,702) (10.3)

‘A’ Shares 39,463,845 – – – –

As the VCT has not issued any convertible securities or share options, there is no dilutive effect on earnings per Ordinary Share or ‘A’ Share. The

earnings per share disclosed therefore represents both the basic and diluted return per Ordinary Share or ‘A’ Share.

Gresham House Renewable Energy VCT2 plc

Financial

StatementsGovernanceOverview

Notes to the Accounts (continued)

10. Investments

2022

Unquoted

investments

£’000

2021

Unquoted

investments

£’000

Opening cost at start of the year 13,152 13,700

Unrealised gains at start of the year 14,248 16,893

Opening fair value at start of the year 27,400 30,593

Movement in the year:

Purchased at cost * 68 228

Disposals proceeds/redemption of loan notes * – (793)

Realised (losses)/gains in the income statement (1,303) 16

Unrealised gains/(losses) in the income statement 1,815 (2,644)

Closing fair value at year end 27,980 27,400

Closing cost at year end 13,220 13,152

Permanent impairment in cost of investments as at 30 September 2022 (1,303) –

Unrealised gains at year end 16,063 14,248

Closing fair value at year end 27,980 27,400

* The 2021 purchase and disposal of assets includes non-cash transactions.

During the year, the VCT received £nil (2021: £775,000) from the disposal of investments comprising of both equity and loan notes. The cost of these

investments at the start of the year was £nil (2021: £775,000). These investments have been revalued and measured at fair value over time, and up

until the point of disposal any realised and 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 2 Level 3 2022 Level 1 Level 2 Level 3 2021

£’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000

Unquoted loan notes – – 960 960 – – 1,893 1,893

Unquoted equity – – 27,020 27,020 – – 25,507 25,507

– – 27,980 27,980 – – 27,400 27,400

During the years ended 30 September 2022 and 30 September 2021 there were no transfers between levels.

Gresham House Renewable Energy VCT2 plc

10. Investments (continued)

A reconciliation of fair value for Level 3 financial instruments held at the year end is shown below:

Unquoted

loan notes

£’000

Unquoted

equity

£’000

Total

£’000

Balance at 30 September 2021 1,893 25,507 27,400

Movements in the income statement:

Unrealised gains in the income statement – 1,815 1,815

Realised losses in the income statement (933) (370) (1,303)

960 26,952 27,912

Additions at cost – 68 68

Balance at 30 September 2022 960 27,020 27,980

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 2022 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 18.

11. Cost incurred on sale of VCT’s assets

Since the beginning of the Managed Wind-Down in the previous financial year, the VCT has capitalised the professional fees in relation to the sale of

assets. The costs are directly attributable to the sales process and have been recognised as part of the asset value.

2022

£’000

2021

£’000

Cost incurred on sale of VCT’s assets 480 181

480 181

12. Debtors

2022

£’000

2021

£’000

Prepayments and accrued income 124 176

124 176

Gresham House Renewable Energy VCT2 plc

Financial

StatementsGovernanceOverview

Notes to the Accounts (continued)

13. Creditors: amounts falling due within one year

2022

£’000

2021

£’000

Other loans 1,935 1,071

Taxation and social security 3 3

Accruals and deferred income 371 387

Creditors 233 –

2,542 1,461

The balance of other loans is made up of amounts borrowed from the underlying portfolio companies. All loans are interest free. Other loans falling

due within one year are repayable as follows:

Investee company Repayment date

2022

£’000

2021

£’000

Hewas Solar Limited n/a^ 131 131

Gloucester Wind Limited n/a^^ 100 100

Penhale Solar Limited n/a ^^ 105 105

Minsmere Power Limited n/a^^ 65 52

HRE Willow Limited n/a ^^ 336 292

St Columb Solar Limited n/a^ 60 21

Lunar 2 Limited n/a^ 768 –

n/a^^ 370 370

1,138 370

Amounts repayable within one year 1,935 1,071

^ The lender may demand full repayment of all amounts outstanding at any time after 5 years and 1 day from the date of the initial drawdown of the loan. The loans are interest free.

^^ The VCT and the indicated SPV’s (the lender) entered into loan agreements whereby the lender, at any time, without having to provide any reason, by one or several demands

require immediate repayment of all or any part of the Loan and all or any accrued interest thereon. The loans are interest free.

Gresham House Renewable Energy VCT2 plc

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

2022

£’000

2021

£’000

Other loans 2,162 2,970

2,162 2,970

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. All loans are interest free.

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

Investee company Repayment date

2022

£’000

2021

£’000

St Columb Solar Limited 2 February 2023 – 40

Lunar 2 Limited 13 February 2023 – 768

18 December 2024 1,481 1,481

14 January 2025 356 356

1,837 2,605

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 one year 2,162 2,970

15. Called up share capital

2022

£’000

2021

£’000

Allotted, called up and fully-paid:

26,133,036 (2021: 26,133,036) Ordinary Shares of 0.1p each 29 29

39,463,845 (2021: 39,463,845) ‘A’ Shares of 0.1p each 42 42

71 71

The VCT’s capital is managed in accordance with its investment policy as shown in the Strategic Report, in pursuit of its principal investment

objectives as stated on page 3. 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 2022 the VCT did not

repurchase any Ordinary Shares or any ‘A’ Shares.

Gresham House Renewable Energy VCT2 plc

Financial

StatementsGovernanceOverview

Notes to the Accounts (continued)

15. Called up share capital (continued)

During the year ended 30 September 2022 the VCT issued no Ordinary Shares and no ‘A’ Shares.

The holders of Ordinary Shares and ‘A’ Shares shall have rights as regards to dividends and any other distributions or a return of capital (otherwise

than on a market purchase by the VCT of any of its shares) which shall be applied on the following basis:

1) unless and until Ordinary Shareholders receive a dividend of at least 5.0p per Ordinary Share, and one Ordinary Share and one ‘A’ Share has a

combined net asset value of 100p (the Hurdle), distributions will be made as to 99.9% to Ordinary Shares and 0.1% to ‘A’ Shares;

2) after (and to the extent that) the Hurdle has been met, and subject to point 3 below, the balance of such amounts shall be applied as to 40% to

Ordinary Shares and 60% to ‘A’ Shares; and

3) any amount of a dividend which, but for the entitlement of ‘A’ Shares pursuant to point 2 above, would have been in excess of 10p per Ordinary

Share in any year shall be applied as to 10% to Ordinary Shares and 90% to ‘A’ Shares.

If, on the date on which a dividend is to be declared on the Ordinary Shares, the amount of any dividend which would have been payable to the ‘A’

Shares (the ‘‘A’ Dividend Amount’), together with any previous amounts which were not paid as a result of this clause (the ‘‘A’ Share Entitlement’),

wouldtogether:

a) in aggregate be less than £5,000; or

b) be less than an amount being equivalent to 0.25p per ‘A’ Share

then the ‘A’ Dividend amount shall not be declared and paid, but shall be aggregated with any ‘A’ Share Entitlement and retained by the VCT until either

threshold is reached. No interest shall accrue on any ‘A’ Share Entitlement.

The VCT does not have any externally imposed capital requirements.

16. Reserves

2022

£’000

2021

£’000

Share premium account 9,734 9,734

Treasury shares (3,403) (3,403)

Special reserve 4,813 4,813

Revaluation reserve 16,869 15,054

Capital redemption reserve 1 1

Capital reserve – realised (3,617) (2,247)

Revenue reserve (587) (667)

23,810 23,285

The Special reserve is available to the VCT to enable the purchase of its own shares in the market. The Special reserve, Capital reserve – realised

and Revenue reserve are all distributable reserves from which dividends could be paid. At 30 September 2022, distributable reserves were £609,000

(2021: £1,899,000).

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.

Gresham House Renewable Energy VCT2 plc

16. Reserves (continued)

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:

Æ gains and losses compared to cost on the realisation of investments; and

Æ expenses, together with the related taxation effect, charged in accordance with the above accounting policies.

Revenue reserve

This reserve accounts for movements from the revenue column of the Income Statement and other non-capital realised movements.

17. Basic and diluted net asset value per share

2022 2021 2022 2021

Shares in issue Net asset value Net asset value

Pence

per share £’000

Pence

per share £’000

Ordinary Shares 26,133,036 26,133,036 91.2 23,842 89.2 23,317

‘A’ Shares 39,463,845 39,463,845 0.1 39 0.1 39

The Directors allocate the assets and liabilities of the VCT between the Ordinary Shares and ‘A’ Shares such that each share class has sufficient net

assets to represent its dividend and return of capital rights as described in Note 15.

As the VCT has not issued any convertible shares or share options, there is no dilutive effect on net asset value per Ordinary Share or per ‘A’ Share. The

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

18. Financial instruments

The VCT held the following categories of financial instruments at 30 September 2022:

2022

Cost

£’000

2022

Value

£’000

2021

Cost

£’000

2021

Value

£’000

Assets at fair value through profit or loss 13,220 27,980 13,152 27,400

Other financial (liabilities)/assets (492) (492) (221) (221)

Cash at bank 1 1 30 30

Other loans (4,097) (4,097) (4,041) (4,041)

Total 8,632 23,392 8,920 23,168

The VCT’s financial instruments comprise investments held at fair value through profit or loss, being equity and loan stock investments in unquoted

companies, capitalised costs in relation to sale of VCT’s assets (Note 11), 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.

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Financial

StatementsGovernanceOverview

Notes to the Accounts (continued)

18. Financial instruments (continued)

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:

Æ market risks;

Æ credit risk; and

Æ liquidity risk.

The Board regularly reviews these risks and the policies in place for managing them. There have been no significant changes to the nature of the risks

that the VCT was expected to be exposed to over the year and there have also been no significant changes to the policies for managing those risks

during the year.

The risk management policies used by the VCT in respect of the principal financial risks and a review of the financial instruments held at the year end

are provided below:

Market risks

As a Venture Capital Trust, the VCT is exposed to investment risks in the form of potential losses and gains that may arise on the investments it

holds in accordance with its investment policy and since 13 July 2021, with reference to the New Investment Policy. The management of these

investment risks is a fundamental part of investment activities undertaken by the Investment Adviser and overseen by the Board. The Adviser

monitors investments through regular contact with management of investee companies, regular review of management accounts and other financial

information and attendance at investee company board meetings. This enables the Adviser to manage the investment risk in respect of individual

investments. Investment risk is also mitigated by holding a diversified portfolio spread across various operating sites across several asset classes.

The key investment risks to which the VCT is exposed are:

Æ investment price risk; and

Æ 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 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 2022, the unquoted portfolio was valued at £27,980,000 (2021: £27,400,000). The key inputs to the 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.

Gresham House Renewable Energy VCT2 plc

18. Financial instruments (continued)

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:

Input Base case

Change in

input

Change in

fair value of

investments

£’000

Change in

NAV per

pence

Discount rate 7.00% - 8.25% +0.5% (648) (2.5)

-0.5% 688 2.6

Inflation 3.0% - 14.0% +1.0% 1,774 6.8

-1.0% (1,627) (6.2)

Irradiation 785 - 1,270 kWh/m

+1.0% 621 2.4

-1.0% (617) (2.4)

Degradation 0.30% - 0.40% +0.1% (723) (2.8)

-0.1% 737 2.8

Power prices £32 - 212/MWh +10.0% 774 3.0

-10.0% (782) (3.0)

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, reserves are in place for renewing key equipment as and when required.

Key equipment of 3 solar sites were repowered in 2021. 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

is that the asset lives are equal to the length of the relevant leases and the Board does not consider it appropriate to disclose a sensitivity analysis in

respect of asset life.

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:

Æ “Fixed rate” assets represent investments with predetermined yield targets and comprise certain loan note investments and preference shares;

Æ “Floating rate” assets predominantly bear interest at rates linked to The Bank of England base rate or LIBOR and comprise cash at bank; and

Æ “No interest rate” assets do not attract interest and comprise equity investments, certain loan note investments, loans and receivables and

other financial liabilities.

Average

interest rate

Average period

until maturity

2022

£’000

2021

£’000

Fixed rate 8% 2,286 days 668 533

Floating rate 0% 1 30

No interest rate 22,723 22,605

23,392 23,168

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.

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Financial

StatementsGovernanceOverview

Notes to the Accounts (continued)

18. Financial instruments (continued)

It is estimated that an increase of 1% in interest rates would have increased profit before tax for the year by £10 (2021: £300). As at 30 September

2022 the Bank of England (BoE) base rate was 2.25%, the base rate having increased from 1.75% to 2.25% on 22 September 2022. The BoE base rate

further increased by 0.75% to 3.00% on 3 November 2022 and by 0.50% on 15 December 2022 to the current base rate of 3.50%. Any potential further

change in the base rate, at the current level, would be likely to 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:

2022

£’000

2021

£’000

Investments in loan stocks 960 1,893

Cash and cash equivalents 1 30

Interest, dividends and other receivables 115 169

1,076 2,092

The Investment Adviser manages credit risk in respect of loan stock with a similar approach as described under “Market risks”. Similarly, the

management of credit risk associated with interest, dividends and other receivables is covered within the investment advisory procedures. The level of

security is a key means of managing credit risk. Additionally, the risk is mitigated by the security of the assets in the underlying investee companies.

Cash is held by the Royal Bank of Scotland plc which is an investment grade rated financial institution. Consequently, the Directors consider that the

credit risk associated with cash deposits is low.

There have been no changes in fair value during the year that are directly attributable to changes in credit risk. Any balances that are past due are

disclosed further under liquidity risk.

Three of the VCT loan investments were extended at the same terms 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.

The VCT’s creditors at year end were £607,000 (2021: £390,000) of which £ 352,000 related to the costs incurred on sale of VCT’s assets and has

both short-term and long-term loans from investee companies (see Note 13 for an analysis of the repayment terms), which are expected to be repaid

by way of future dividends from, or the sale of, these companies, being £4,097,000 (2021: £4,041,000). The Board therefore 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.

Gresham House Renewable Energy VCT2 plc

18. Financial instruments (continued)

The following table analyses the VCT’s loan payables by contractual maturity date:

As at 30September 2022

Due in

less than

1 year

£’000

Due between

1 year and

5 years

£’000

Due after

5 years

£’000

Total

£’000

Loans payable to investee companies 1,935 2,162 – 4,097

1,935 2,162 – 4,097

As at 30September 2021

Due in

less than

1 year

£’000

Due between

1 year and

5 years

£’000

Due after

5 years

£’000

Total

£’000

Loans payable to investee companies 1,071 2,970 – 4,041

1,071 2,970 – 4,041

Although the VCT’s investments are not held to meet the VCT’s liquidity requirements, the table below shows an analysis of the assets, highlighting the

length of time that it could take the VCT to realise its assets if it were required to do so.

The carrying value of loan stock investments held at fair value through the profit and loss account at 30 September 2022 as analysed by the expected

maturity date is as follows:

As at 30September 2022

Not later

than

1 year

£’000

Between

1 and

2 years

£’000

Between

2 and

3 years

£’000

Between

3 and

5 years

£’000

than

5 years

£’000

Total

£’000

Fully performing loan stock 960 – – – – 960

Past due loan stock – – – – – –

960 – – – – 960

As at 30September 2021

Not later

than

1 year

£’000

Between

1 and

2 years

£’000

Between

2 and

3 years

£’000

Between

3 and

5 years

£’000

than

5 years

£’000

Total

£’000

Fully performing loan stock 1,893 – – – – 1,893

Past due loan stock – – – – – –

1,893 – – – – 1,893

19. Capital management

The VCT’s objectives when managing capital are to safeguard the VCT’s ability to provide returns for Shareholders and to provide an adequate return

to Shareholders by allocating its capital to assets commensurately with the level of risk.

By its nature, the VCT has an amount of capital, at least 80% (as measured under the tax legislation) of which is and must be, and remain, invested

in the relatively high risk asset class of small UK companies within three years of that capital being subscribed. The VCT accordingly has limited

scope to manage its capital structure in the light of changes in economic conditions and the risk characteristics of the underlying assets. Subject

to this overall constraint upon changing the capital structure, the VCT may adjust the amount of dividends paid to Shareholders, return capital to

Shareholders, issue new shares, or sell assets if so required to maintain a level of liquidity.

As the Investment Policy implies, the Board would consider levels of gearing. As at 30 September 2022 the VCT had loans from investee companies

of £4,097,000 (2021: £4,041,000). 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.

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20. Contingencies, guarantees and financial commitments

At 30 September 2022, conditional on the achieved sale price, VCT had financial commitments towards the external advisors used for the sale of the

VCT’s assets.

21. Controlling party and related party transactions

In the opinion of the Directors there is no immediate or ultimate controlling party. For total Directors’ remuneration during the year, please refer to

Note 5 as well as the Directors‘ Remuneration Report on pages 39 to 41.

22. Significant interests

Details of shareholdings in those companies where the VCT’s holding, as at 30 September 2022, 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 on pages 14 to 21. 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.

Company

Registered

office

Class of

Number

held

Proportion of

class held

Capital and

reserves

Profit/(loss)

for the year

Penhale Solar Limited EC4A 3TW Ordinary 299,601 50% £596,000 £25,000

Minsmere Power Limited EC4A 3TW Ordinary 200,001 50% £93,000 (£13,000)

Small Wind Generation Limited EC4A 3TW Ordinary 840,001 50% (£539,000) (£27,000)

Lunar 3 Limited EC4A 3TW Ordinary 100 50% £nil £nil

Explanatory notes

The financial information, Capital and reserves and Profit/(loss), has been sourced from the statutory accounts of the underlying investee companies.

The financial information disclosed relates to accounting year ending 31 March 2022.

23. Net debt reconciliation

1 October 2021

£’000

Cashflows

£’000

30 September

2022

£’000

Cash at bank and in hand 30 (29) 1

Other loans 4,041 56 4,097

24. Events after the end of the reporting period

The Chancellor announced at the Autumn Statement 2022 the introduction of the Electricity Generator Levy. The EGL is an exceptional and time-

limited measure that responds to the effect that unique geopolitical events, when combined with structural challenges within the UK market, are

having on the prices being paid for electricity in the UK.

The EGL has been introduced from 1 January 2023 and will remain in force until April 2028, as announced at Autumn Statement.

The EGL replace the proposal for the Cost Plus Revenue Limit (CPRL) which was announced in October 2022, powers for which were taken in the

Energy Prices Act 2022. The CPRL will not be taken forward.

The EGL is limited, through a threshold, to those groups, or stand-alone companies, generating more than 50 Gigawatt-hours (GWh) per annum

of electricity from in scope generation assets in a qualifying period. On an ongoing basis, the EGL does not impact the VCT, however its impact on

potential realisation proceeds has been incorporated into the valuation of the portfolio at 30 September 2022.

No further significant events have occurred between the statement of financial position date and the date when the financial statements have been

approved, which would require adjustments to, or disclosure in the financial statements.

Notes to the Accounts (continued)

Gresham House Renewable Energy VCT2 plc

Registered number

07378395

Directors

Christian Yates (Chairman)

Matthew Evans

Andrew Donovan

Giles Clark (resigned – 30 September 2022)

Company Secretary and Registered Office

JTC (UK) Limited

The Scalpel, 18th Floor

52 Lime Street

London EC3M 7AF

Investment Adviser

Gresham House Asset Management Limited

5 New Street Square

London EC4A 3TW

Tel: 020 3837 6270

www.greshamhouse.com

Administrator

JTC (UK) Limited

The Scalpel, 18th Floor

52 Lime Street

London EC3M 7AF

Tel: 020 7409 0181

www.jtcgroup.com

Auditor

BDO LLP

55 Baker Street

London W1U 7EU

VCT status advisers

Philip Hare & Associates LLP

Hamilton House, 1 Temple Avenue

London EC4Y 0HA

Registrars

Link Group – trading name of Link Market

Services Limited

10th Floor

Central Square

29 Wellington Street

Leeds LS1 4DL

Solicitors

Dickson Minto LLP

Level 13, Broadgate Tower

20 Primrose Street

London EC2A 2EW

Bankers

Royal Bank of Scotland plc

London Victoria Branch

119/121 Victoria Street

London SW1E 6RA

Corporate Broker

Panmure Gordon (UK) Limited

One New Change

London EC4M 9AF

Company

Information

Gresham House Renewable Energy VCT2 plc

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StatementsGovernanceOverview