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Energy Garden

Community Bond Offer

£50 minimum

Risk factors

The Board of Directors believes the following risks to be the most significant for potential investors in Energy Garden. However, they do not necessarily comprise all those associated with an investment in the Bonds and you should consider your own risks associated with any investment in Energy Garden. The listing of the risks below is not intended to be presented in any assumed order or priority.

All investment and commercial activities carry risk, and investors should take appropriate advice and make their own risk assessment whilst bearing in mind the social and environmental aspects of this investment opportunity.

If you are in any doubt about the contents of the Offer Document or the action you should take, you are strongly recommended to consult a professional adviser authorised by the Financial Conduct Authority (FCA) to advise on investment in unlisted debt, shares and other securities.

This offer is not covered by the Financial Services Compensation Scheme.

General investment risks

a. Capital Risk: Investment in smaller, new and unquoted businesses is likely to involve a higher degree of risk than investment in larger, established companies and those traded on a stock exchange. Investing in bonds is not the same as depositing money in a bank account as your capital is at risk and you could lose up to, but no more than, your entire investment. Repayment of Bond capital is dependent on sufficient Available Funds in each year, and there is no guarantee that there will be sufficient Available Funds to make capital repayments in each year. If there is outstanding capital due on the Bonds at the Maturity Date, that outstanding capital will be cancelled and those monies outstanding will NOT be repaid to investors.

b. Interest: The Board of Directors is committed to managing Energy Garden’s business with a view to ensuring that it has a range of options available to pay interest on the Bonds. Available Funds to pay interest each year will be decided by the Board of Directors.

c. Closing Date and interest accrual: The Offer is not guaranteed to close on 27 July 2018 and so the date on which Bond interest starts to accrue may be delayed. However, the Offer must close by 31 December 2018 and so interest will accrue from when the Bonds are issued, which will be no later than 31 January 2019.

d. Liquidity: Whilst Bonds are transferable, investors should be aware that there can be no guarantee that a market for their Bonds will develop. It is not expected that they will be able to sell their Bonds for more than they paid for them and they may need to be sold for less than was paid for them. The bonds will be available to trade on the Ethex secondary market. Investors can buy transferable bonds when there is someone who wants to sell, and vice versa, and where buyer and seller can agree on the price.

e. Long-term commitment: Applicants should consider investment in the Bonds as a medium to long-term commitment as the repayment of capital invested will only be available from surplus cash flows. Energy Garden is projecting full return of capital over 20 years, but there can be no certainty that it will generate sufficient surplus cash flow to do so.

f. Security: The Bonds will be an unsecured obligation of Energy Garden. The Board of Directors may take on additional debt obligations (secured or unsecured) in accordance with the Rules, which may affect the security of your investment.

g. Compensation: The Bonds are not covered by the Financial Services Compensation Scheme (FSCS) – this means that if Energy Garden does not pay interest or repay capital there is no right to compensation from FSCS.

h. Past performance is not necessarily a guide to future performance: Events in the past, or experience derived from these, or indeed present facts, beliefs or circumstances, or assumptions derived from any of these, do not determine future performance.

i. Financial projections: Hopes, aims, targets, projections including the financial projections include in the Offer Document), plans or intentions contained in the Offer Document are no more than that and should not be construed as forecasts or assurances of any future financial performance

Energy Garden Risks

a. Failure to raise Maximum Total Subscription: The financial projections included in the Offer Document have been prepared on the assumption that £16.5 million is raised to purchase solar PV assets and Energy Garden may not be able to raise that amount in full. The Minimum Total Subscription required to fund the energy garden programme is £2 million and the Directors have reviewed financial projections and considerations based on raising £2 million, £9 million and £16.5 million.

b. Failure to acquire renewable energy assets: Energy Garden has identified a pipeline of assets that it believes are currently for sale at prices and on terms which would fulfil the criteria set out in the “Criteria for a successful site” section on page 34, but there can be no certainty that such assets will not be withdrawn from sale, re-priced or sold elsewhere, or fail our due diligence. Returns to investors may be lower than projected if Energy Garden: cannot buy any or enough assets; cannot buy assets at currently projected prices; or buys assets later than projected. Energy Garden and its Directors maintain continuous dialogue with vendors based on industry-standard business practices to ensure its market and buying position. The Directors have reviewed financial projections and considerations based on raising £2 million, £9 million and £16.5 million to prepare for different acquisition scenarios and ensure adequate cashflow for the energy garden programme.

c. Management Risks: Energy Garden is dependent on its management for the implementation of its business plan. Loss of key individuals within the team may impact Energy Garden’s performance and they would ideally be replaced with candidates with equivalent skills and experience.

Project Risks

a. Mechanical failure: Installations will be insured for damage, breakdown and loss of income in line with standard industry practice. However, there may be interruptions to the generation of electricity from the installations once built, caused by damage to or mechanic/electrical failure of equipment.

b. Solar PV performance: Energy Garden’s assumptions around energy generation levels each year and the prices paid for assets will be based on site capacity and yield calculations. These calculations, and the solar radiation data behind them, will be reviewed and verified by technical experts during the due diligence process. However, long-term changes to weather patterns and/or equipment underperformance may result in lower levels of electricity generation and therefore income.

c. Government legislation: The solar projects to be acquired initially will have been accredited with Ofgem which means that the ROC or FiT tariffs will have been fixed for 20 to 25 years from each project’s installation, as appropriate. However, future changes in Government legislation may affect the profitability of any renewable energy projects undertaken by Energy Garden.

d. Electricity prices: If the electricity prices for which projects can sell their electricity fall, Energy Garden will generate less revenue than expected. The financial projections included in the Offer Document, including any assumption related to future electricity prices, are not forecasts or assurances of any future prices.

Applied for to date, of
£2,000,000 target
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Minimum IFISA investment is £1,000

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