Ecological Land Co-operative - OFFER CLOSED

Financial performance

The Ecological Land Co-operative is looking to raise £340,000 through this offer to purchase two additional sites and develop them into providing six affordable, low impact smallholdings for ecological agriculture.

Project costs

The approximate purchase price of each site will be £144,000, with development costs of £72,000 to install the necessary infrastructure for each site to support three smallholdings. Any shortfalls in funding will be made up through grants and social investment loans.

Project income

The Ecological Land Co-operative will generate income through the sale or rental of the smallholdings, of which there will be three at each site. There are three models of smallholder ownership; initial premium; 25 year investment scheme or ongoing monthly charge:

  • Initial premium - the cost of a smallholding leasehold is £110,000
  • 25 year investment scheme - the smallholder pays a much reduced premium of £22,000, then 5 year monthly charge of £430 followed by 20 years monthly charge of £625
  • Ongoing monthly charge - the smallholder pays £400 per month

 

Annual return

The Ecological Land Co-operative will pay an interest rate of 3% per annum. The first interest payment will be made on 31st December 2017, with a pro rata amount for the year being paid from the point at which the shares are allocated by the Board once the offer has closed.

Investors can opt to pay a reduced interest rate in order to further support the work of the Ecological Land Co-operative, this will be arranged directly with the Co-operative once the offer has closed.

Profit and Loss

A summary of the Co-operative's actual profit and loss for 2015-2016 plus the projected profit and loss figures for 2017-2020  is shown in the table below:

2015 2016 2017 2018 2019 2020
Total revenue £17,803 £62,196 £30,877 £390,782 £408,489 £439,145
Total direct costs £20,812 £9,663 £16,644 £258,980 £264,694 £275,044
Gross profit (£3,009) £52,532 £14,233 £131,802 £143,795 £164,101
Total operating costs £66,306 £58,505 £66,414 £70,450 £77,855 £84,810
Member interest payments £8,629 £17,000 £17,000 £22,900 £22,900
Operating profit/loss (£69,315) (£14,602) (£69,181) £44,352 £43,041 £56,391

 Note

  • Forward-looking statements are merely unaudited projections based on a number of assumptions and should not be relied upon as indicators of future performance. There is no guarantee these projections will be achieved.

Key assumptions

 The key assumptions underlying these projections are as follows:

  • Land is purchased at £8,000 per acre;
  • Each smallholding has on average of 6 acres of land;
  • We will be able to raise the share capital and secured and unsecured loans we need by 2020;
  • Our business plan assumes average interest paid at 2.5% overall for share capital and 2% for debt financing and that we will pay interest on share capital annually;
  • In our business model we have allowed ourselves 24 months to go from the point of identifying a site to selling the smallholdings;
  • At a sales price of £110,000 per smallholding, after overheads and interest on shares and loans, the profit margin on a site of three smallholdings is 24% (although this margin is only achieved at the end of the entire 27 payment lifetime of a site); and
  • At £400 per month, rising annually with inflation, the first year’s rent yield from rental properties represents 5% of the total costs. Both overhead and per-site costs are fully recouped after 25 years

 

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