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Ecological Land Cooperative

2020 Share Offer - OFFER CLOSED

£500 minimum

Risk factors

All investment and commercial activities carry risk, and investors should consider whether the Ecological Land Cooperative (ELC) is a suitable investment for them in light of their own personal circumstances.

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


General investment risks

Investing in Ecological Land Cooperative shares 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.

It is important that you understand the following general points about holding community shares in Ecological Land Cooperative:

  • As a Registered Society under the Co-operatives and Community Benefit Societies Act 2014, ELC is registered with, but not authorised or regulated by, the Financial Conduct Authority. Any money you pay for shares is not safeguarded by any depositor protection or dispute resolution scheme. In particular, you have no right of complaint to the Financial Ombudsman Service, nor any access or entitlement to the Financial Services Compensation Scheme.
  • An investment in community shares is an at-risk investment in a trading business, not a loan or a deposit, and rates of return are not guaranteed. This investment should be considered as a medium to long term investment with a primarily social objective. Your shares may not be readily convertible to cash should you need to withdraw them.
  • As a member and shareholder of ELC you could, if the business is unable to meet its debts or other liabilities, lose some or all of your investment held in shares. However, your liability is limited to the amount that you have paid for your shares. Whilst it is the Society’s intention to pay interest on shares at the rate advertised in this offer, community shares do not enjoy any capital growth.

Planning Risks

ELC were granted temporary planning permission for their first site by the Planning Inspectorate at appeal. Should the Planning Inspectorate have also refused to grant the project, ELC would have had the option to challenge the decision at the High Court. Obtaining planning permission at the earliest stage within the process is preferred as it dramatically reduces associated staff costs. ELC's second planning application was determined by an officer delegated decision and ELC hope that this will be the case for future applications

Risk: Refusal of planning consent

This could include: initial planning application refused, necessitating appeal process; appeal refused, necessitating recourse to High Court; possibility of total refusal of planning consent.

ELC plan to mitigate this risk by reducing the likelihood of adverse planning decisions at all stages of the process. This approach will govern the whole of their application process, including:

  • Opening dialogue with stakeholders, local and otherwise, and with the planning authority early in the process, through personal contact and presentations
  • Addressing concerns raised by stakeholders;
  • Ensuring that planning application documentation is of high quality, linked to planning policy and evidence-based;
  • Capitalising on the success of our current projects to build stakeholder trust and confidence;
  • Continuing to build brand presence and credibility through strong reporting and PR, as well as networking and co-working within the sector, to further develop stakeholder confidence; and finally,
  • Through maintaining relationships with planning consultants, solicitors and barristers, with pro-bono support to keep costs to a minimum. ELC now have an in house low impact planning expert on our staff team to enable us to increase the number of applications we are making at a reasonable cost.

Whilst processing planning applications ELC can rent the site for grazing, education or ecotourism to cover the costs of site maintenance. Delays in decision making pose the risk of locking capital away and this would be a problem for the cooperative where capital is a constraint. If capital is not a constraint, holding onto agricultural land is not a problem unless the cost of the capital exceeds the increase in the value of the land.

ELC aim to be a part of evolving planning policy by participating in local planning policy consultations and working with planning officers to help them understand low impact development projects. Multiple planning applications would add to the costs associated with developing a site although we would seek to minimise further expenditure.

If it became clear that ELC would never obtain planning permission on a particular site then they would sell the land. Any money recouped from such land sales would be used to purchase and develop new sites for ecological small farms.


People Risks

Risk: Failing to attract potential smallholders that suit our offering 

Selecting the right stewards for ELC farms is very important. The ability to secure permanent planning permission for sites which have initially been granted a temporary permission, relies on evidence of the financial viability of farmers’ businesses. ELC need to attract people with the skills, determination and tenacity to develop their business into a viable enterprise. They also need to attract those who are interested in the wider objectives of the cooperative; the farmers must be amenable to the required site monitoring.  They should also be keen to host Work Days and more generally be advocates for, and of, the cooperative.

ELC will mitigate against the risk of attracting incompatible stewards through the following measures:

  • Developing a rigorous selection process, including defined selection criteria and involving the input of sector experts.
  • Expanding of ELC's already considerable network of contacts and supporters, ensuring that opportunities are widely publicised within the community.
  • Initiating relationships with key groups of potential new farmers, such as with Soil Association Apprentices and Kindling Trust FarmStart Growers and inviting them to work alongside ELC at Work Days and in the office.
  • Continuing with ELC's programme of volunteer work days, enabling them to build relationships with potential smallholders.

Risk: Failing to attract and retain suitable staff

The cooperative’s success to date has been primarily due to the hard work and determination of a small team of highly committed individuals.

As ELC grows, it is crucial that they attract and retain staff who share their collective vision and who are similarly inspired by and committed to the project. ELC also needs to maintain a staff and Board team with a balance of skills, experience, and availability which ensures that their business has the right leadership and operational components to be a robust and sustainable organisation. A failure to attract and retain suitable staff members and successfully share and utilise the experience gained by their current team would impair their ability to deliver to their plan.

Through ELC's strategic planning processes they have redefined staff roles and identified necessary changes that have been made to the Board and to decision making and lines of responsibility. These changes have allowed ELC to recruit staff and Board members with the skills that the organisation needs to continue its growth. They have a talented staff team who are all experts in their specific area of work whilst also being part of the team that runs the operation. The Board meet regularly to work on the strategic development of the cooperative.


Financial Risks

Risk: Rising land prices

ELC's financial modelling assumes average land costs of £8,000 per acre, rising with inflation. If land prices rise sharply the cost of small farms could increase, potentially compromising their objective of providing affordable land. The ELC model can be applied anywhere in England and Wales, so they can develop clusters in the first instance in more affordable locations where there is also demand. ELC have also taken the following steps:

  • ELC have been able to secure charitable loan funding at preferential interest rates to purchase land.
  • They are proactively seeking donations of land and money to buy land.
  • Should it become necessary to increase the cost of smallholdings, ELC can support farmers in developing diversified business activities to increase their income such as educational courses or camping.
  • ELC apply for grant funding to contribute to the cost of developing new sites or to ongoing costs to the smallholders.

Risk: Failure to meet grant targets

ELC have set themselves realistic grant targets per site, based on their performance to date. ELC will continue to develop this income stream through further developing their fundraising strategy, and continuing to build relationships with key potential funders. ELC are currently meeting their fundraising targets, having employed a dedicated fundraiser in 2018.

Risk: Failure to attract sufficient financing

ELC's business plan requires substantial input of shareholder funds between now and 2020. If they cannot attract those funds, the viability of their proposition would be compromised. ELC intend to mitigate this risk through:

  • Seeking out opportunities to diversify financing. For example, once ELC are granted permanent planning permission, they can apply for mortgages and release share capital for the purchase and development of new sites;
  • Build long-term relationships with key potential finance partners.
  • Continuing to grow their brand presence and credibility, attracting new potential investors through our networks, press coverage and track record.
  • Staggering ELC's funding drives into manageable chunks, balancing the costs of planning and implementing regular share offers with the cost of servicing shareholder funds held for long periods.

Risk: High cost of borrowing

ELC's business plan assumes average interest paid at 2.5% overall for share capital and 2% for debt financing. This is based on actual figures up to 2019. ELC are fortunate to have a number of shareholders who have fixed their rate of interest at between 0% and 2%. They also have committed charitable loan funders who have fixed the interest rate for their loans at 2% to enable the cooperative to buy land.

ELC will continue to seek social investors whose primary focus is on social and environmental returns, allowing them to successfully offer relatively modest interest rates on share capital. To date, gifts of time and resources have played a significant part in enabling ELC to keep the cost of holdings as low as possible.

However, if necessary, ELC can offset any increase in cost of borrowing by commensurately increasing the cost of holdings. The extremely low projected price of ELC smallholdings in comparison with market value means that they have some flexibility in the level of their lease price before their affordability aims are compromised. Over the long term, ELC will start to reduce the equity stake in the business through buying out shareholders who wish to exit using company profits, rather than issuing new shares. This will steadily reduce the total cost of borrowing to the business.

Risks associated with this Share Offer

As with any community Share Offer, risks include:

  • The cooperative may not be in a position to pay interest.
  • The cooperative may have to suspend your rights to withdraw shares.
  • You may lose some or all of the money you pay for your shares.

As the cooperative is incorporated with limited liability, each Member’s liability is limited to the amount paid for their shares. If the cooperative is ever wound up, its assets will first be used to meet its liabilities; next to repay members for their shares; finally any surplus remaining will be passed onto a nominated organisation with similar objectives.

The cooperative has paid a maximum of 3% interest on community share investments for the past five years, however past performance does not guarantee future performance.

Offer Closed

 As of 14th May 2020 this offer is closed.

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