Investors

Investors in the co-operative will receive a fair return on their investment – initially anticipated to be more than 5% per annum in the first full calendar year (2012) and increasing to more than 6% on the sum remaining invested after the third full year, and increasing each year after that. When returns exceed 6% the excess will be shared between investors and the schools.

We have now received advance assurance from HM Revenue & Customs that our Share Offer will qualify for tax relief under the Enterprise Investment Scheme (EIS); the minimum investment on which an investor can receive tax relief is £500. This reduces the effective net cost to income tax paying investors by 30% to £350. Although the Co-operative does not anticipate paying interest in respect of its first year, those of its shareholders who pay income tax should receive this tax relief on their initial investment under the EIS representing 30% of this sum within six months of investing.

For Co-operative members who receive EIS tax relief (which reduces their income tax by an amount equal to 30% of the amount invested by them) a 6% return is worth more than 8.5% on the amount invested net of tax relief.

The Feed In Tariff

The Feed in Tariff (often referred to as the FIT or FITs) is a payment made by the electricity industry to generators of renewable electricity; it is paid at the rate of 32.9p per kilowatt hour of electricity generated for installations of the size the Co-operative intends to install and is RPI linked, increasing with effect from 1st April in each year by the rate of inflation in the previous calendar year. The Feed In Tariff will be the principal source of the Co-operative’s income. The Feed In Tariff ceases 25 years after the solar panels have been commissioned, but at that stage the panels could still have considerable life left in them. At that date the panels will be given to the schools on which they are installed free of charge. The Cooperative will then be wound up.

Repayment of Capital

The investment in principle is for 25 years, and has to be for a minimum of three years in order to retain EIS tax relief. After three years the Co-operative intends to repay 12% of its capital back to investors, and thereafter to repay 4% of the original capital in each subsequent year. Those who wish to receive their investment back in full will be given priority, with the balance of the 4% used to withdraw (ie buy back) shares from all investors pro rata to their original investment. The effect of returning capital in this way is to return all capital by the end of 25 years and to increase the return for long term shareholders on the capital they have remaining invested in the Co-operative.

The Co-operative will receive income from the Feed in Tariff (a premium price paid by electricity companies for renewable energy) and from selling half the electricity generated at market price through the electricity grid; the other electricity generated will be given to the schools and used by them or sold through the electricity grid by the Co-operative on their behalf.

Investors in the Co-operative can invest between £250 and £20,000. They will receive a fair return on their investment- anticipated to be at the rate of approximately 5% per annum on the sum invested for the first three complete calendar years starting in 2012. After three years it is anticipated that investors capital will start being returned and returns on the capital remaining invested will exceed 6% and should increase each year thereafter. If the Co-operative makes a return of more than 6% on its capital, which is anticipated to happen in 2015 and subsequent years the excess will be shared equally between investors and the schools. For co-operative members who receive EIS (Enterprise Investment Scheme) tax relief (which reduces their liability to income tax by an amount equal to 30% of the amount invested by them) a 5% return is worth more than 7% on the amount invested net of tax relief.

The investment in principle is for 25 years, and is for a minimum of 3 years in order to retain EIS tax relief.