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Gawcott Fields - OFFER CLOSED

Financial performance

This Bond Offer is being launched to help raise £500k towards the capital needed to build the 4.17MW community solar project.

Projected income and costs

The community solar farm will generate income from the sale of electricity and the Feed-in Tariff (FiT) payments. Surplus income after operating and finance costs and building up reserves will be used support the Company’s community purpose including providing grants to community organisations and projects in the Local Community and funding for low carbon infrastructure, community energy generation, fuel poverty and energy efficiency initiatives in the Local Community.

Community surplus

The base case business plan uses the technical advisor’s estimate for long-term average annual electricity generation and an average inflation of 1.5% for the first 2 years and an average of 2% thereafter. 

Base Case
Revenue £464 £10,988 £3,176
Operating costs £119 £3,331 £1,955
Santander Loan Interest (circa 4%*) 97 791 Nil
Bondholder Interest (6%) 65 1,101 Nil
Anticipated Community Surplus 20 550 1500

 *Indiciative rate

Key assumptions

The base case financial projections are based on the following Key Assumptions:

  • The total cost of developing, financing and constructing the community solar farm is around £4.5 million.
  • The community solar farm will generate an average of 4,100MWh per year. This is the long-term average yield as advised by the Company’s technical advisors.
  • Maximum degradation in solar panel performance is 0.4% per year.
  • Inflation (RPI) is 1.5% for the first 2 years and averages 2% thereafter.
  • The FiT generation and export tariff both increase annually with RPI.
  • The Santander loan is secured in line with terms set out in this Offer.
  • Corporation tax and capital allowances remain at similar levels to the time of the Offer.

Interest rate

The Directors expect Bondholders to receive an average of 6% interest over the 20 year term of the Bonds, although some variation in the level of interest payments from year to year may occur.

If interest is not paid at 6% in any year, the relevant shortfall will roll over until the shortfall is paid or the 20 year term of the Bonds comes to an end. If a bad year is followed by a good year, this means that interest paid on Bonds could fluctuate from, for example, 4% in the bad year to 8% in the good year. However, the Directors generally expect to be able to pay interest on the Bonds at or close to 6% in most years and do not expect large variations in interest payments over the term of the Bonds.

If at the end of the term a shortfall(s) remain, then the relevant shortfall(s) will be cancelled and will no longer be due to Bondholders. There is therefore a risk that the average interest rate paid to Bondholders over the term of the Bonds may be less than the 6%. Bondholders will not earn interest on any shortfall whilst such shortfall is outstanding.

Illustrated Bondholder interest and capital return over 20 years

The table below sets out the anticipated cash returns per £1,000 subscribed on the basis that the Bondholder is repaid their capital at the end of year 20.

Time Accumulated Bond Holder Interest if at 6% per year Capital Repayments Cumulative cash received
Years 1-5 £300 £300
Years 6-10 £300 £600
Years 11-15 £300 £900
Years 16-20 £300 £1,000 £2,200

Tax relief

Under withholding tax rules, interest payments will be paid to Bondholders net of tax at the basic rate for income tax (currently 20%). Gawcott Fields CIC will pay the deducted tax amount to HMRC and arrange for tax statements to be issued to all Bondholders. Applicants should be aware that they may need to declare the interest they have received to HMRC, and use the tax statement issued to them by Gawcott Fields CIC to do so. If Applicants are in any doubt about their tax position they should consider taking appropriate financial and other advice from a suitably qualified professional.

Bank Loan

A loan offer from Santander was accepted by the Directors in November for a higher amount (just over £3million) and lower cost than the Directors could assume in June. This has enabled the target for the Bond Offer to be reduced from £2 million to £500k, and has a positive impact on the financial projections. Santander have now completed due diligence and loan contract process. The Bond Offer will not be closed until the Bank Loan is ready for drawdown, which is expected to be at the end of March 2017.

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