FREQUENTLY ASKED QUESTIONS
The information below is designed to give simple answers to some common questions.
In making any decision to invest you should rely only on the information set out in the Offer Document rather than on this leaflet. It is important that you read and consider the Offer Document as a whole with care, ensuring particularly that you understand the risks and that you take financial and other advice as necessary.
Who are the main players in all this?
- Energy4All Ltd is a company set up by the successful Baywind Energy Co-op in Cumbria to help other communities own a share in renewable energy projects. Energy4All negotiated the deal with NRG and has advised and supported the board of the Drumlin Co-op. Once Drumlin Co-op is up and running, Enery4All will provide management services to support its operation.
- NRG Solutions. Andrew McMurray formed NRG solutions, which have provided technical electrical expertise on over 500MW of renewable projects in Ireland, as well as developing a portfolio of 250kW Wind turbine projects. NRG solutions will provide project management monitoring services to Drumlin Wind Co op.
- The Drumlin Wind Energy Co-operative Limited. This was created by Energy4All and is run by a board of directors from the N Ireland community and from Energy4All who have been appointed to launch the Share Offer. The current board of directors will serve for a term of two years, thereafter, directors of the Co-op will be elected by the members.
How does a Co-op work?
- Co-ops are run on the basic principles of democracy, fairness and ethical behaviour.
- Everyone who invests in the Drumlin Co-op becomes a member.
- Each member has a single vote at General Meetings of the Co-op.
- In other respects, the Co-op is like any business and seeks to run efficiently and profitably.
How much will the Co-op need to raise?
- This depends on how much people choose to invest. If Drumlin Wind raises the Minimum Capital sum of £1.5 million it will install two Wind turbines.
- Capital of £2.1 million is sufficient to install three Wind turbines.
- Adding the fourth Wind turbine requires total capital of £2.8 million.
- Adding the fifth Wind turbine requires total capital of £3.4 million.
- However additional work needs to be done on the last two sites to determine final costs and outputs. It is anticipated that this work will be completed while the share offer is open. Information on progress on these sites will be made public as soon as it is available.
What happens if the Co-op fails to raise the Maximum £3.4 million?
- If less than the Maximum Capital sum is raised through this offer, the Board will decide in its discretion which sites Drumlin Wind will use to construct and install wind turbines and any excess over the amount of capital required for those sites which are chosen will be returned to Members in proportion to Members’ shareholdings.
What happens if the Co-op fails to raise the Minimum £1.5 million?
- Every Co-op launched so far by Energy4All has reached its target. If it happened, everyone who invested would get all their money back.
How much can I invest?
- Shares are £1 each. There is a legal maximum of £20,000 per investor and for administrative reasons the Co-op has set a minimum investment of £250. You apply by reading the Offer Document and completing the application form at the end of the Document or by downloading the application form from the website. Joint applications are not possible.
EIS Tax Relief on Shares
- Drumlin Wind has received advance assurance from HM Revenue & Customs that the shares will qualify for tax relief under the Enterprise Investment Scheme ('EIS'). Under EIS, income tax relief is available to individuals who subscribe for ordinary shares. The relief is equivalent to 30 per cent of the cost of the shares. It is expected that most Members will qualify for this relief, however no assurance can be given to individual Co-op Members and it is recommended that advice is taken if in doubt.
- The shares must be held for a certain period or income tax relief will be withdrawn. Generally, this is three years from the date the Shares were issued. But if the qualifying trade starts after the Shares were issued, the period is three years from the date the trade actually starts. In the case of Drumlin Wind its trade will start when the first Wind Turbine starts to generate electricity. This is expected to be February 2013.
Claiming EIS Tax relief
- Once four months of trading has passed, Drumlin Wind will send you an EIS3 form which you will then submit to HMRC. The tax relief can be claimed against your Self Assessment tax return for the tax year in which the shares were issued or an adjustment to any Self Assessment payment on account due. You will have to make the claim itself on your tax return when you get it. If you pay your income tax through PAYE you can request a change to your tax code. Claims to relief can be made up to five years after the first 31 January following the tax year in which the investment was made.
Can I put in money for my children?
- Yes, many parents (and grandparents) like to invest for their (under 18) children, but you cannot do this as a means of investing more than £20,000 in total for yourself. If a person applies for shares on behalf of a child nominee, EIS tax relief is not available. You are recommended to take financial and tax advice if you have any queries on this.
Will I get priority if the offer is over-subscribed?
- There is priority for people who are residents of Northern Ireland.
- There is a secondary priority for Directors, employees and associates of Drumlin Wind, Energy4All and Members of Energy Prospects. The Board has the final say.
When does the Offer close?
- The Offer is open from 25th June to 21st September 2012, although it may be extended at the Board's discretion.
What is the minimum return I shall receive?
- Year 1 returns are projected to be 3.5% (or 5% with EIS tax relief). Through a combination of increasing profits and returning capital to Members, the return rate increases over the 20 year life of the project. The average of the annual rates of return over 20 years is 7.2%. The table at page 14 of the Offer document gives a more detailed breakdown of the projected returns and return of capital. EIS tax relief increases the returns and assuming the tax relief is treated as a return on capital, the averaged return rate with EIS is 10.3%
- Returns are entirely dependent on the profits earned by Drumlin Wind. The financial projections used in the Offer document are based on estimates and assumptions and the judgement of Energy4All about future performance, but actual outcomes could differ significantly from the projections shown.
When will I get my first payment?
- Payments must be approved by Co-op members at the AGM. The AGM will take place in September 2014 after the close of the Co-op’s financial year on 31st March. Therefore the first payments will probably be in October 2014 and regularly at annual intervals after that.
Will I get my money back?
- As outlined in the Share Offer, it is intended that all capital will be repaid over the life of the project starting in year 2016 at a rate of 15% and then at between 4% and 10% per annum. The projected returns take into account this repayment of capital in working out the rate of return. Return of original capital is not subject to income tax or capital gains tax; tax arises if there is income from the asset or if the amount returned is over the original amount subscribed.
Can I get my money out early?
- Currently, Members do not have the right to withdraw Shares and no withdrawals will be permitted during the EIS period (three years) as this could prejudice the tax relief for all Co-op Members. However, the Board has the power to permit Shares to be withdrawn at a later date and in accordance with any conditions the Board may decide.
What happens if I die?
- A member’s shares in the Co-op are treated just like any other asset if someone dies.
Will the Co-op get involved in other activities?
- Drumlin Wind intends to pay £2,000 per Site per annum (inflation linked) each year to a fund to benefit the Northern Irish community and in particular to undertake primarily educational activities.
Visit www.Drumlin.coop or ring 0845 3733612 for further information