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Electric Blue

Electric Blue 2018 Cambridge Bonds

£500 minimum (£250 for Cambridge investors)

Risk factors

All investment and commercial activities carry risk, and investors should consider whether Electric Blue's 5% 2024 Bond is a suitable investment for them in light of their own personal circumstances.

This offer is not covered by the Financial Services Compensation Scheme, or any other compensation scheme.


General investment risks

Capital risk
Investment in smaller, new and unquoted businesses such as Electric Blue 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 investing money in a bank account as your capital is at risk and you could lose up to, but no more than, your entire investment.
 
Redemption of Bonds
The bonds are contractually due for repayment at the end of their term on 18th January 2024. It is not guaranteed that the company will have sufficient funds or access to financial resources available in order to repay the bonds on their due date, though the directors are confident of their ability to plan and execute the business strategy and manage financial resources of Electric Blue, such that they will have a range of options available to them to repay the bonds on their due date.
 
Unsecured
The bonds are an unsecured investment and will rank behind secured or preferential creditors in Electric Blue. In the event of Electric Blue’s financial failure, the bonds would have the status of an unsecured creditor. That means any secured creditors would receive their money ahead of bondholders and so bondholders may not be capable of being repaid in full or at all should the proceeds from a sale of Electric Blue’s assets fail to cover all unsecured liabilities.
 
Liquidity
The bonds will not be traded on a recognised exchange and are therefore non-readily realisable. Bondholders may be able to buy and sell bonds on a matched bargain basis via ethex.org.uk, but applicants should be aware that there is no guarantee that a willing buyer will be found.
 
No Financial Services Compensation Scheme cover
The bonds are not covered by the Financial Services Compensation Scheme. This means if Electric Blue does not fulfil the terms of the bond instrument there is no right to compensation from the Financial Services Compensation Scheme.
 
Financial projections
Hopes, aims, targets, projections (including the financial projections in this offer), plans, expectations or intentions contained in this document are no more than that and should not be construed as forecasts or as having any inherent certainty.
 
Taxation
Information regarding taxation is based upon current UK taxation legislation and HM Revenue and Customs practice. Tax law and practice is subject to change. Any changes in the level and basis of taxation, in tax reliefs or in HM Revenue and Customers practice may affect the value of an investment in the bonds and returns to bondholders.

Operational risks

Electric Blue’s wider business 

The funds raised by this bond offer will be used for The Cambridge EV Charger Network Project. However, that project is only part of Electric Blue’s overall business and so a failure in other areas of the business could affect Electric Blue’s ability to make interest and capital payments on the bonds. Before raising any additional debt funding for the purpose of Electric Blue’s wider business the directors will thoroughly analyse how any such funding would affect the overall business model and how it might affect the bondholders. The board would consider whether any such funding places bondholders and bond payments at greater risk and whether it is possible to remove any such risk. The board would not raise additional debt funding, in addition to the bonds, if in the board’s reasonable view it would materially adversely affect Electric Blue’s ability to pay interest or repay principal in relation to the bonds. However, as stated above, all business activities involve a degree of risk, and there is a risk that Electric Blue’s wider business activities and any additional debt funding it takes on might adversely affect its ability to pay interest or repay principal to the bondholders

Loss of Key Management
The directors are all shareholders in the business, and as such they also have a vested interest in the success of the business. The company is dependent, to a certain extent, upon the contribution of the directors for its success. If any of them were no longer involved with the company in the future, this may have a material negative impact upon thecompany’s financial performance.

Equipment and technical failure
There are risks associated with operating any equipment, particularly in a public space, where an accident or an incident could result in the equipment being shut down for investigation and / or repair. In addition, equipment failure or vandalism may result in a charger being unavailable for a period of time. The equipment  (the EV charge points) supplied by APT Controls has been thoroughly tested over 3 years, with 5,000 units installed (including 300 rapid chargers). Electric Blue have had APT Controls equipment installed and running since February 2015, and all the Cambridge network equipment will be covered by a rolling maintenance contract. It is anticipated that availability of equipment installed across Cambridge will be in excess of 99% - as of September 2018, Electric Blue is currently running at 99.95% charger availability. However, a risk remains that a technical fault might mean that chargers develop faults and so cannot produce revenue for Electric Blue until the fault is rectified. Charger Utilisation The business plan for Cambridge (and other charger networks) necessarily assumes certain rates of charger utilisation and associated sales revenues, which arise, primarily, from the uptake of e-Taxis. Should the uptake of e-Taxis be slower than projected, it would negatively impact charger utilisation and so would pose a threat to revenue generation. In developing the business model, the directors have built on the Energy Saving Trust report and the commitments made by Cambridge City Council to support the take-up of e-Taxis, to form the opinion that users of the Cambridge EV Charger Network will increase as outlined in the financial information in this offer document. However, there is no guarantee that charger utilisation will increase as the directors expect.

Charger Roll Out Execution
The directors do not consider the timeline for installing the chargers to pose a significant risk to the successful conclusion of the Cambridge project. However, any failure, or delay, in installing the Cambridge EV Charger Network would pose a threat to the revenue derived from users paying to use the chargers. There is a risk that, despite Cambridge City Council’s expectation that the network would be completely installed by 2019, unforeseen delays mean this is not completed and so Electric Blue’s revenues are less than expected.

Policy environment
As described in this offer document, Cambridge City Council wishes to promote the increase in e-taxis. However, if there is any adverse change to the current policy environment regarding the promotion of e-taxis, this may lead to lower than expected take up of e-taxis.

Increasing Power Cost
The project margins are dependent on the direct costs of electricity sold through the chargers. An increase in the cost base will reduce the profit margin.

Increasing Business Costs
The costs of warranty and maintenance which represent the majority of indirect costs are fixed for the period of the bond. Other costs such as insurance and back office represent the minority of indirect costs, and the directors project that these will trend downwards as economies of scale are realised. However, an increase in costs is likely to result in a reduction in the profit margin.

Competition
Our model assumes an element of risk to our margins from other charging point providers who may compete with Electric Blue. However it is important to note that other providers would need to find funding for the capital cost of the chargers. For the Cambridge EV Charger Network, Electric Blue has the advantage of only paying part of the funding (the other part being met by Cambridge City Council), in addition to paying zero rent on the land. Furthermore, Electric Blue has the right to manage 18 Rapid Chargers and 3 Fast Chargers in the next two years which is to meet demand for the next 5 years. Electric Blue’s existing relationship with the Council also means it will have an advantage in placing the chargers in the most attractive locations for e-taxi drivers

 

£36,05010%
Applied for to date, of
£350,000 target
or
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