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Financial performance

This bond offer aims to raise £4.5m to fund Our Power's working capital to help deliver a profitable business with a £100m turnover by 2021. 

Annual return

Our Power CBS aims to pay bondholders a return of 6.5% gross interest per year, fixed and payable (net of UK basic tax rate) in arrears from January 2019. 

Tax relief

The bonds are eligible for Social Investment Tax Relief (SITR). For those investors eligible to claim SITR, which depends on an investor’s personal circumstances, current legislation and the company’s compliance with the rules, this produces a forecast Internal Rate of Return (IRR) of 13.5%.

Important notice: Under current HMRC rules only the first £300,000 of qualifying investment is eligible for SITR. This threshold is due to change to £1.5 million under the terms of the 2017 Finance Bill currently going through Parliament, once the Bill is passed the £1.5 million threshold will be backdated to April 2017. However, until such time as the Bill passes only the first £300,000 of qualifying investment into the Our Power 2017 Bond will be eligible for SITR.

Business plan

Investment in this bond offer will help Our Power to successfully achieve its business plan. Current targets to the end of 2021 are:

  • In year profit of £2.5m
  • £100m revenue
  • 240,000 meter points on supply, with smart meters
  • Five operating customer service hubs in regions of high unemployment providing 200 new jobs
  • Positioned as an influential player in Great Britain in the energy and social enterprise sector

Growing the business

Our Power Energy Supply has established a void utility service for its social housing members. This means that when a property becomes vacant it is switched to Our Power as the energy supplier. 

Currently, Our Power supplies to over 12,500 meter points (gas and electricity) and by the end of December 2017 expects that to be circa 30,000 meter points. With the launch of a low cost tariff and a presence on price comparison websites established in September 2017, Our Power has, over the first half of 2017, resourced the business to deal with the resulting growing customer numbers.

Our Power members collectively own housing stock in Scotland of 200,000 units. Annual property vacancies provide it with an opportunity for continued customer growth. The annual Scottish average rate for void turnaround is just over 8%, meaning that around 16,000 void properties become available from this membership group. There are another 50 members on the prospective members list and converting these to current members would bring the same number of properties, and in turn, potential void properties, as Our Power's existing membership base. This unique model of customer acquisition has been embedded in Our Power’s business model. With a strategy of increasing membership amongst social housing providers in Scotland and more widely, this will provide further scope to expand the void utility service.

In order to maintain low prices and profitability an energy supply business needs a large and broad customer base. Therefore, a wider product offer has been made available through direct switch campaigns for both the enterprises core customer base as well as targeting a wider customer demographic.

This will include launching an ethical tariff which will be a green energy product in Scotland, as well as developing a white label/partnership service across Great Britain. The white label/partnership model is growing with a number of local authorities tendering for supply partners. Our Power has been successful in winning a number of tenders over the past 6 months for partnership supply offerings. These include a rural local authority in Scotland, a local authority in the South West of England, Community Energy South (England) and it expects to have its first social housing member in England – Joseph Rowntree Housing Trust with nearly 3,000 housing units in the near future.

Target raise

The minimum raise for the offer to proceed is £2m. The bond issue will not proceed unless the minimum amount is raised. This minimum will include investment from Big Society Capital in the form of match funding for investment that qualifies for Social Investment Tax Relief (SITR), subject to satisfactory confirmation of eligibility.

Unsecured debt

 The Bonds will be an unsecured debt in Our Power and are not guaranteed. In the event of Our Power entering into a formal insolvency process Bondholders will rank equally with other unsecured creditors of Our Power and behind secured creditors and may not recover their full investment.

Profit and Loss

A summary of the profit and loss forecasts to 2024 are as follows:

Profit and Loss 2017 £’000 2018 £’000 2019 £’000 2020 £’000 2021 £’000 2022 £’000 2023 £’000 2024 £’000
Net Sales 4,307 26,915 54,500 93,277 129,835 150,443 157,408 160,894
Cost of Sales (5,466) (24,961) (47,097) (77,602) (110,411) (127,059) (133,242) (136,548)
Gross Profit/(Loss) (1,160) 1,954 7,402 15,675 19,424 23,384 24,166 24,346
Gross Profit Margin % -26.9% 7.3% 13.6% 16.8% 15.0% 15.5% 15.4% 15.1%
Managed Services (627) (2,008) (3,203) (4,188) (5,103) (4,862) (4,902) (4,822)
Operating Profit/(Loss) (1,832) (55) 4,200 11,488 14,321 18,521 19,264 19,524
Overhead Costs (3,925) (4,592) (6,488) (8,501) (10,470) (11,384) (11,787) (12,098)
Profit/(Loss) before Interest and Taxation (5,756) (4,646) (2,289) 2,986 3,851 7,138 7,477 7,426
Operating Profit Margin -133.7% -17.3% -4.2% 3.2% 3.0% 4.7% 4.7% 4.6%
Financing Costs (560) (1,372) (1,820) (2,046) (2,141) (1,743) (1,275) (793)
Profit/(Loss) after Interest but before Taxation (6,317) (6,019) (4,109) 940 1,710 5,394 6,202 6,633
Corporation Tax 1,263 1,162 781 (179) (340) (971) (1,116) (1,194)
Profit/(Loss) after Interest and Taxation (5,053) (4,857) (3,328) 762 1,369 4,423 5,085 5,439
Profit/(Loss)% after Interest and Taxation -117.3% -18.0% -6.1% 0.8% 1.1% 2.9% 3.2% 3.4%

Past performance is not an indicator of future performance. Forward looking statements are merely forecasts and should not be relied upon as indicators of future performance.

Key assumptions

A full list of key assumptions can be found in the offer document.

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