1. 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 predetermine the future. Hopes, aims, targets, plans or intentions contained in this document are no more than that and should not be construed as forecasts.
2. Redemption of Bonds
An investment in Thera will be in the form of Bonds, which are contractually due for repayment at the end of their term on 31 March 2024. It is not certain that Thera will have sufficient funds or access to financial resources available in order to repay the Bonds on their due date.
The Directors are confident of their ability to plan and manage the business and financial resources of the Charity such that they will have a range of options available to them to repay the Bonds on their due date.
3. Unsecured Debt
The Bonds will be an unsecured debt of the Charity and are not guaranteed. In the event of the Charity entering into a formal insolvency process Bondholders will rank equally with other unsecured creditors of the Charity and behind secured creditors and may not recover their full investment.
The Directors consider that Thera is a financially sound business with a proven sustainable business model based on long term income streams. As a result, they consider the risk of an event occurring which would lead to an insolvency of the Charity to be remote.
4. Market Liquidity
The Bonds have a fixed repayment date and investors will have no ability to require the Charity to repay their capital before the repayment date.
Although the Bonds are transferable, they will not be listed on a recognised stock exchange. Bonds can be sold via the Ethex Bulletin Board, if there are willing buyers. There is no guarantee what price a willing buyer might pay.
At the Charity’s discretion, Bonds can be repaid on the death of a Bondholder or in other exceptional circumstances subject to there being sufficient cash available.
5. No Access to the Financial Services Compensation Scheme
Investing in the Bonds is not the same as depositing money in a bank account as capital is at risk and an Investor may not get back the full amount that they invested. The Bonds are not covered by the Financial Services Compensation Scheme – or any compensation scheme – and in the event of the Charity being unable to pay either the capital or interest payments an investor will not be entitled to make a claim against the scheme.
6. Availability of Bank Debt
Any bank which lends to the Charity may choose to withdraw from lending due to changes in their own banking policy or an inability to agree on future lending terms. Were this to happen, it may not be possible to replace the bank loans on such favourable terms, or at all, in which case the development, profitability or solvency of the Charity might be adversely affected.
The Charity attempts to mitigate against such risks by taking out long term loan facilities on sustainable terms. The Charity has a long-standing relationship with its principal lender, Barclays.
7. Loss of Key Management
The Charity is dependent, to a certain extent, upon the contribution of the Directors and the senior management team. If any of them were no longer involved with the Charity in the future, this may have a material negative impact upon the Charity’s financial performance.
In the event of a loss of any member of the current Board of Directors or senior managers in individual companies. The board has an active succession planning process in place and the Directors are confident that Thera would be able to attract the right calibre of individual to join as a replacement.
8. Interest Rates
An increase in interest rates could impact the profits generated by the Charity and its ability to service the debt, or restrict its ability to raise bank debt in future. The Charity’s current borrowing is in the form of long term loans with a combination of fixed and variable interest rates.
Thera and its subsidiary companies are members of several defined benefit pension schemes. A number of these schemes continue to accrue additional defined benefits in respect of some employees. However, in all but one case, the relevant local authority has agreed either to underwrite any debt on withdrawal liability or higher employer contributions for these schemes. In the remaining instance, Thera holds a creditor on its balance sheet in respect of the estimated debt on withdrawal.
There is a risk that the future cost of pension contributions may increase under legislative change on employer obligations, or following changes in pension scheme valuations which are dependent upon market conditions and the actuarial methods and assumptions used, in addition to other factors outside of their control. Exceptionally in the case of the Local Government Pension Scheme (and in certain circumstances, the NHS Pension Scheme), additional contributions may be payable in limited circumstances where staff are made redundant or receive early access to their retirement benefits on grounds of ill health. A requirement for Thera to make increased pensions contributions under the schemes it participates in may affect Thera’s ability to repay its debts.
The Charity makes an annual pension charge for these schemes which is based on a full actuarial valuation or otherwise as disclosed in the financial statements. Contributions for these schemes are set by either the Government Actuary or a qualified actuary.
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 Customs practice may affect the value of an investment in the Bonds and returns to Bondholders.