Prospectus and Application Form. Albion Community Power PLC Offer for Subscription 2013/14

Transcription

1 Prospectus and Application Form Albion Community Power PLC Offer for Subscription 2013/14

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3 THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION. If you are in any doubt about the contents of this document or the action you should take, you should immediately consult a person authorised for the purposes of the Financial Services and Markets Act 2000 (the FSMA ) who specialises in advising on the acquisition of shares and other securities. This document, which comprises a supplemental prospectus (the Supplemental Prospectus ) has been prepared in accordance with the prospectus rules made under Part VI of FSMA (the Prospectus Rules ), and has been approved for publication by the Financial Conduct Authority. This Supplemental Prospectus is supplemental to, and should be read in conjunction with, the prospectus dated 6 June 2013 (the Prospectus ), issued by Albion Community Power PLC (the Company ), relating to the Offer for Subscription 2013/2014 for up to 25,000,000 Shares (the Offer ). Except as expressly set out herein, or unless the context otherwise requires, the definitions used or referred to in the Prospectus also apply in this Supplemental Prospectus. The Company, whose registered office appears on page 26 of the Prospectus, and its Directors (as amended by this Supplemental Prospectus), whose names appear on page 26 of this Prospectus, accept responsibility for the information contained in this Supplemental Prospectus. To the best of the knowledge and belief of the Company and its Directors (as amended by this Supplemental Prospectus) (who have taken all reasonable care to ensure that such is the case), the information contained in this Supplemental Prospectus is in accordance with the facts and does not omit anything likely to affect the import of such information. Albion Ventures LLP, which is authorised and regulated by the Financial Conduct Authority, is acting as promoter for the Company in connection with the Offer and is not advising any other person or treating any other person as a customer in relation to the Offer and will not be responsible to any such person for providing the protections afforded to customers of Albion Ventures LLP or for providing advice in connection with the Offer. Bird & Bird LLP, which is regulated in the United Kingdom by the Solicitors Regulation Authority, is acting as legal adviser to the Company and Albion Ventures LLP and no one else and will not be responsible to any other person for providing advice in connection with any matters referred to in this Supplemental Prospectus. ALBION COMMUNITY POWER PLC (Registered in England and Wales under the Companies Act 2006 with number ) SUPPLEMENTAL PROSPECTUS Supplement to the Prospectus dated 6 June 2013 relating to an Offer for Subscription 2013/2014 of up to 25,000,000 Shares of 1 penny each at pence per Share Subject to the right to withdraw, the Offer is being made on the terms and subject to the conditions set out in full in the Prospectus. Investors who have already submitted applications for Shares may withdraw such applications until 5pm on 25 June Investors should seek their own legal advice with regard to such withdrawal rights. Investors who wish to withdraw their applications or indicate their acceptance should contact Albion Ventures LLP at 1 King s Arms Yard, London EC2R 7AF or by telephone on (no investment advice can be given). Withdrawal of applications can be made by telephone or post.

4 Events arising since publication of the Prospectus This Supplemental Prospectus is being published in relation to the Offer. The Supplemental Prospectus is a regulatory requirement under the Prospectus Rules and section 87G of FSMA. The Prospectus Rules and section 87G of FSMA require the issue of a supplemental prospectus if, in the relevant period (being, for these purposes, the period up to the closure of the Offer), there exists or is noted a significant new factor, material mistake or inaccuracy relating to the information included in the Prospectus. This Supplemental Prospectus has been approved for publication by the FCA. Significant new factors On 12 June 2013, Timothy Yeo non-executive director and Chairman of the Company submitted, and the Company accepted, his resignation with immediate effect. The Company will pay Mr Yeo the director fees payable to him in lieu of his three month notice period as provided for in his letter of appointment referred to on page 55 of the Prospectus. The Company subsequently appointed its existing non-executive director Robert Armour as Chairman with immediate effect and accordingly the terms of the non-executive letter between the Company and Mr Armour referred to on page 55 of the Prospectus has also been amended to increase the fees payable to him to 15,000 and 0.035% of the Net Asset Value, provided the total fees payable shall not exceed 50,000. The Company intends to appoint a further non-executive director with experience in the sector as soon as is reasonably practicable. This new non-executive director will be appointed to the Company s audit and remuneration committees referred to on page 62 of the Prospectus in substitution for Mr Yeo. The Offer Agreement referred to on page 59 of the Prospectus will also be amended to remove Mr Yeo as a party. Furthermore, Mr Yeo will not be investing in Shares in the Company as provided for on page 56 of the Prospectus; it is expected that the new non-executive director to be appointed by the Company would invest in Shares. Documents on display The following documents will be available for inspection free of charge during normal business hours on any weekday (Saturdays, Sundays and public holidays excepted) for the life of the Prospectus from the Company s registered office and the offices of Bird & Bird LLP: the Articles of the Company; the material contracts listed in paragraph 7 (pages 59 and 60) of the Prospectus; the Prospectus; and this Supplemental Prospectus. Dated 18 June 2013

5 THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION. If you are in any doubt about the contents of this document or the action you should take, you should immediately consult a person authorised for the purposes of the Financial Services and Markets Act 2000 (the FSMA ) who specialises in advising on the acquisition of shares and other securities. This document, which comprises a prospectus (the Prospectus ) relating to Albion Community Power PLC (the Company ) dated 6 June 2013, has been prepared in accordance with the prospectus rules made under Part VI of FSMA (the Prospectus Rules ), and has been approved for publication by the Financial Conduct Authority as a Prospectus under the Prospectus Rules on 6 June The Company, whose registered office appears on page 26 of the Prospectus, and its Directors, whose names appear on page 26 of the Prospectus, accept responsibility for the information contained in the Prospectus. To the best of the knowledge and belief of the Company and its Directors (who have taken all reasonable care to ensure that such is the case), the information contained in the Prospectus is in accordance with the facts and does not omit anything likely to affect the import of such information. Although the whole text of the Prospectus should be read, the attention of persons receiving the Prospectus is drawn, in particular, to the section headed Risk Factors contained on pages 15 to 19 of the Prospectus. All statements regarding the Company s business, financial position and prospects should be viewed in light of the risk factors set out on pages 15 to 19 of the Prospectus. Albion Ventures LLP, which is authorised and regulated by the Financial Conduct Authority, is acting as promoter for the Company in connection with the Offer and is not advising any other person or treating any other person as a customer in relation to the Offer and will not be responsible to any such person for providing the protections afforded to customers of Albion Ventures LLP or for providing advice in connection with the Offer. Bird & Bird LLP, which is regulated in the United Kingdom by the Solicitors Regulation Authority, is acting as legal adviser to the Company and Albion Ventures LLP and no one else and will not be responsible to any other person for providing advice in connection with any matters referred to in the Prospectus. PricewaterhouseCoopers LLP, which is a member of the Institute of Chartered Accountants in England and Wales, is acting as tax adviser to the Company and Albion Ventures LLP and no one else and will not be responsible to any other person for providing advice in connection with any matters referred to in the Prospectus. The share capital of the Company is not presently listed or dealt in on any stock exchange and no application for admission of the share capital to listing or dealing has been made. ALBION COMMUNITY POWER PLC (Registered in England and Wales under the Companies Act 2006 with number ) Offer for Subscription 2013/2014 of up to 25,000,000 Shares of 1 penny each at pence per Share Promoted by Albion Ventures LLP Share capital immediately following the Offer, assuming that the Maximum Subscription is achieved: Issued and to be issued fully paid No. of Shares Nominal Value Ordinary Shares 25,000, A Ordinary Shares

6 The subscription list for the Shares, all of which are being offered to the public under the Offer, will open at 10 a.m. on 10 June 2013 and may be closed at any time thereafter. Applications in respect of the first allotment of Shares must be received by no later than 12 noon on 30 September 2013 or such earlier or later date as the Board may resolve and the final date for receipt of applications for the final allotment is by no later than 12 noon on 30 April 2014 or such earlier or later date as the Board may resolve. The terms and conditions of the Offer are set out on pages 65 to 66 of the Prospectus followed by an Application Form for use in connection with the Offer. The distribution of the Prospectus in certain jurisdictions may be restricted by law and therefore persons into whose possession the Prospectus comes should inform themselves about and observe any such restrictions. Prospective investors must comply with all applicable laws and regulations in force in any jurisdiction in which they purchase, offer or sell the Shares or possess or distribute the Prospectus and must obtain any consent, approval or permission required for purchase, offer or sale of the Shares under the laws and regulations in force in any jurisdiction to which they are subject or in which they make purchases, offers or sales. Any failure to comply with these restrictions may constitute a violation of the securities laws of any such jurisdiction. The Offer is not being made, directly or indirectly, in or into the United States, Canada, Australia, New Zealand, Japan or the Republic of South Africa or their respective territories or possessions, and documents should not be distributed, forwarded or transmitted in or into such territories. The Shares have not been and will not be registered under the United States Securities Act of 1933 (as amended) and may not be offered, sold or delivered, directly or indirectly, in or into the United States, Canada, Australia, New Zealand, Japan or the Republic of South Africa.

7 Table of Contents Summary 4 Risk Factors 14 Expected Timetable 20 Definitions and Terms 22 Directors and Advisers of the Company 25 PART I ALBION COMMUNITY POWER PLC 27 Introduction 28 Investment Proposition 28 Management 28 Renewable Energy Sectors 29 Market Overview 30 ACP s Strategy in the Renewable Energy Sectors 33 Project Pipeline 37 ACP s Operations 37 Board of Directors 40 Albion Ventures 41 Inheritance Tax and Business Property Relief 44 Share Redemptions 44 Borrowings 45 Dividends 45 Offer Price, Costs of Offer, Minimum Investment and Working Capital 45 PART II TAXATION 47 PART III STATUTORY AND GENERAL INFORMATION 49 PART IV TERMS AND CONDITIONS OF APPLICATION 64 NOTES ON COMPLETION OF THE APPLICATION FORM 67 APPLICATION FORM 71

8 4 Summary

9 Summary Summaries are made up of disclosure requirements known as Elements. These Elements are numbered in Sections A to E. This Summary contains all of the Elements required to be included in a summary for the type of shares being issued pursuant to the Prospectus and the Company. Some of the Elements are not required to be addressed and, as a result, there may be gaps in the numbering sequence of the Elements. Even though an Element may be required to be inserted in this Summary, it is possible that no relevant information can be given regarding that Element. In these instances, a short description of the Element is included, together with an appropriate Not applicable statement. Section A Introductions and Warnings A.1 Warning This Summary should be read as an introduction to the Prospectus. Any decision to invest in the securities should be based on consideration of the Prospectus as a whole by the investor. Where a claim relating to the information contained in the Prospectus is brought before a court, the plaintiff investor might, under the national legislation of the Member States, have to bear the costs of translating the Prospectus before the legal proceedings are initiated. Civil liability attaches only to those persons who have tabled the summary including any translation thereof, but only if the summary is misleading, inaccurate or inconsistent when read together with the other parts of the Prospectus or it does not provide, when read together with the other parts of the Prospectus, key information in order to aid investors when considering whether to invest in such securities. A.2 Use of Prospectus by intermediaries The Company and the Directors consent to the use of the Prospectus, and accept responsibility for the content of the Prospectus, with respect to subsequent resale or final placement of securities by financial intermediaries, from the date of the Prospectus until the close of the Offer. The Offer is expected to close on or before 12 noon on 30 April 2014, unless previously extended by the Directors but may not extend beyond 31 May There are no conditions attaching to this consent. In the event of an Offer being made by a financial intermediary, the financial intermediary will provide information to investors on the terms and conditions of the Offer at the time the Offer is made. Any financial intermediary using the Prospectus must state on its website that it is using the Prospectus in accordance with the consent set out in the Prospectus. 5

10 Section B Issuer B.1 Legal and commercial name Albion Community Power PLC B.2 Domicile and legal form The Company was incorporated in England and Wales on 3 October 2012, with registered number as a public company limited by shares under the Act. The principal legislation under which the Company operates is the Act. B.3 Key factors relating to the nature of the Company's current operations and its principal activities The Company has yet to start trading. The Company's objective is to seek to become an independent UK generator of renewable energy. The Company intends to develop, control and operate community scale renewable energy projects, concentrating in the areas of solar, mid-scale wind, biogas, biomass and hydroelectricity. The Company s renewable energy projects will often be operated in conjunction with a partner, which will be an expert in the renewable energy sector involved. The Company will either own the project entirely or control the majority of the project if it is made through a separate subsidiary. B.4a Significant recent trends affecting the Company and the industries in which it operates The Company will develop, control and operate renewable energy projects. The Government is actively encouraging the increase of renewable energy generation through its promotion of FiTs and ROCs and the introduction of the RHI scheme. B.5 Group description Not applicable. The Company is not part of a group. In due course, however, it is anticipated that projects will be undertaken by majority owned subsidiary companies. B.6 The name of any person who, directly or indirectly, has an interest in the Company s capital or voting rights which is notifiable under the Company s national law, together with the amount of each such person s interest At the date of the Prospectus, Patrick Reeve is a director and the sole shareholder of the Company having subscribed for shares on its incorporation. There are no different voting rights for Shareholders. As at the date of the Prospectus the Company is controlled by Patrick Reeve. The Company is not aware of any person or persons who following the Offer will or could, directly or indirectly exercise control over the Company. Whether the Company s major shareholders have different voting rights if any To the extent known to the Company, state whether the Company is directly or indirectly owned or controlled and by whom and describe the nature of such control 6

11 B.7 Key financial information B.8 Selected key pro forma financial information, identified as such B.9 Where a profit forecast or estimate is made, state the figure B.10 Description of the nature of any qualifications in the audit report on the historical financial information B.11 If the Company's working capital is not sufficient for the issuer's present requirements an explanation should be included B.40 A description of the applicant's service providers including the maximum fees payable. B.41 The identity and regulatory status of any investment manager, investment adviser, custodian, trustee or fiduciary (including any delegated custody arrangements). Not applicable. The Company has not yet commenced trading. No pro forma financial information is included in the Prospectus. The Offer will, however, constitute a gross significant change to the assets of the Company if the: (i) Minimum Net Proceeds are received as the assets of the Company will increase by 1.5 million; and (ii) Maximum Net Proceeds are received as the assets of the Company will increase by 24.4 million. The Company expects that the Offer proceeds will be used to undertake projects that will be earnings enhancing. Not applicable. There are no profit forecasts or estimates in the Prospectus. Not applicable. The Company has not yet commenced trading. After taking into account the Minimum Net Proceeds, the Company is of the opinion that it has working capital sufficient for the twelve month period from the date of the Prospectus. Albion Ventures will provide staff and advisory and administrative services to the Company pursuant to the Management Services Agreement. The annual fee payable to Albion Ventures by the Company will be equal to 2 per cent. of the Net Asset Value, less the cost of salaries paid by the Company to the executive directors and managers (who will be made available by Albion Ventures). The total central overheads of the Company will be capped at 2.5 per cent of Net Asset Value. The Company does not have an investment manager as it will be a trading entity. Albion Ventures will provide staff and advisory and administrative services to the Company pursuant to the Management Services Agreement. Albion Ventures is registered in England and Wales as a limited liability partnership under number OC Albion Ventures was incorporated as a limited liability partnership on 6 November 2008 and is authorised and regulated by the Financial Conduct Authority, with registered number Albion Ventures operates under the Limited Liability Partnership Act 2000 and the Act. 7

12 Section C Securities C.1 Type and class of securities C.2 Currency UK Pounds Sterling. C.3 The number of securities issued and fully paid and issued but not fully paid. The par value per share, or that the shares have no par value C.4 A description of the rights attached to the securities C.5 A description of any restrictions on the free transferability of the securities C.6 An indication as to whether the securities offered are or will be the object of an application for admission to trading on a regulated market and the identity of all the regulated markets where the securities are or are to be traded C.7 A description of dividend policy The Shares being offered are ordinary shares of 1 penny each in the capital of the Company. The Company has 100 A Shares issued, which are fully paid up. The par value of the A Shares is 1 penny. No Shares have been issued by the Company as at the date of the Prospectus. The par value of a Share is 1 penny. Each Share will: rank pari passu with regard to dividends and other distributions (on a winding-up or otherwise); be entitled to one vote; be freely transferable; and be redeemable upon the terms set out in the Articles. The A Shares have the same rights as the Shares but are not redeemable. The Shares will be freely transferable. It is not intended that the Shares will be traded on a regulated market, although it may in the future be decided to seek a quotation on AIM (which is not a regulated market and would not affect the treatment of Shares for the purpose of Business Property Relief). It is the intention of the Company to pay dividends twice a year following the publication of the annual audited and interim unaudited accounts to shareholders who have been on the register for the previous 12 months. The target is for annual dividends of approximately 3 pence per Share, although this should not be regarded as a dividend or profit forecast. The dividends actually paid will be dependent on the Company generating distributable profits. 8

13 Section D Risks D.1 Key risks that are specific to the issuer or its industry The business plan of the Company is based upon the key assumption that Government legislation will continue to actively encourage the increase of renewable energy generation through its promotion of FiTs, ROCs and the introduction of the RHI scheme. Any changes to those Government incentives could have a material adverse effect on the business strategy of the Company. The success of the Company s business is dependent upon it being able to secure suitable renewable energy projects to develop and operate. The Company s success depends upon its ability to retain the executive directors who have particular expertise in the renewable energy sector. There is no guarantee that the Company s business strategy will be successful. The Company operates within a sector which attracts governmental scrutiny on a national and local level. The ability of the Company to identify and develop suitable renewable energy projects depends inter alia on planning consent for such projects. Should the Company be unable to secure sufficient projects for which planning consent has been granted, the Company s financial results may be adversely affected and therefore the value of the Shares. There can be no guarantee that legislation favourable to the Company s business will remain in place and changes could be applied on a retrospective basis. For example FiTs could be reduced or cancelled for particular projects undertaken by the Company, which would affect its business strategy and profitability and therefore the value of the Shares. There are circumstances in which an investor could cease to qualify for the taxation reliefs offered by Business Property Relief, for example by not holding the Shares for a two year period before death or transfer or on disposal of the Shares. This could result in no relief or only partial relief from Inheritance Tax being available. The Company has taken advice from its tax advisers, PricewaterhouseCoopers LLP, regarding the Company s status for Business Property Relief purposes and believes that the proposed business activities should be regarded as trading activities and therefore a Qualifying Trade. If the Company ceases to carry on the business outlined in the Prospectus during the Relevant Period, this could prejudice its qualifying status for Business Property Relief. The situation will be closely monitored with a view to preserving the Company s qualifying status but this cannot be guaranteed. A failure to meet the qualifying requirements for Business Property Relief could result in no relief or only partial relief from Inheritance Tax. The Company may be unable to secure the timely supply of the equipment required for projects, or such equipment may be subject to mechanical failure or underperformance. 9

14 Projects may be subject to construction or grid connection delays which could have a material adverse impact on the profitability of the Company. Adverse or extreme weather may affect the success of solar, wind and hydroelectricity projects and therefore the profitability of the Company. D.3 Key risks that are specific to the securities An investment in the Company should be viewed as a medium to long-term investment and may not be suitable for all recipients of the Prospectus. There is no formal market in the Shares and it may be difficult for investors to realise their investment. Investments in unquoted shares may carry a higher risk than investments in quoted shares. No investors compensation scheme or similar arrangement is available for claims relating to investments in the Company. The Offer is subject to the Minimum Subscription being achieved. If the Minimum Subscription is not achieved by 30 September 2013 or such later date as the Board may resolve, subscription monies will be refunded, without interest, within 14 days thereof. An investor will not qualify for Business Property Relief if he or she dies before the expiry of the two year qualifying period. 10

15 Section E Offer E.1 Net proceeds and costs of the issue The estimated net proceeds from the Offer are estimated to be: (i) 1.5 million if the Minimum Subscription is achieved; and (ii) 24.4 million if the Maximum Subscription is achieved. The issue costs in relation to the Offer have been fixed at 2.5 pence for every pence raised. Any excess costs will be borne by Albion Ventures. Albion Ventures is the promoter of the Offer and will receive fees and be granted Warrants to subscribe for one Share for every five new Shares issued at a strike price equal to the Net Asset Value of the Company at the time of issue of the Warrants (as adjusted in certain circumstances). E.2a Reasons for the Offer and use of proceeds The reason for the Offer is to raise funds for the Company to undertake individual renewable energy projects. The Company intends to use the proceeds initially to develop and operate projects in the wind and solar sectors. The Company has identified several possible projects in the wind, solar, hydroelectricity and anaerobic digestion sectors. However, no firm commitments have been entered into by the Company. The Company intends to undertake its first project following receipt of the Minimum Net Proceeds. 11

16 E.3 A description of the terms and conditions of the Offer The subscription list for the Shares, all of which are being offered to the public under the Prospectus, will open at 10 a.m. on 10 June Applications in respect of: (i) the first allotment of Shares must be received by no later than 12 noon on 30 September 2013 or such earlier or later date as the Board may resolve; and (ii) the final allotment of Shares must be received by no later than 12 noon on 30 April 2014 (or such earlier or later date as the Board may resolve). The Offer is subject to the Minimum Subscription being achieved. If the Minimum Subscription is not achieved by 30 September 2013 or such later date as the Board resolves, subscription monies will be refunded, without interest, within 14 days thereof. The Offer will be closed upon the Maximum Subscription being achieved. The Board reserves the right to close the Offer earlier or to extend the closing date of the offer to a date no later than 31 May 2014 and to accept applications and issue Shares at any time. The Company s business activities will commence as soon as the Minimum Net Proceeds are received. The first 1,500,000 Shares will be allotted at 100 pence per Share with Albion Ventures waiving its fee of 2.5 pence per Share. Thereafter, Shares in the Company are being offered at pence per Share. The issue costs of the Offer, including professional fees and printing costs, will be borne by Albion Ventures, for which it is entitled to a fee of 2.5 pence for each Share issued. Thus the opening Net Asset Value of the Company will be 100 pence per Share. Save in respect of applications from the Directors and members and employees of Albion Ventures (and their connected persons), the minimum amount of any application under the Offer is 25,000. Applications for the Offer must be made via the Application Form attached to the Prospectus and sent to Albion Ventures. Acceptance of applications under the Offer will be conditional upon an agreement entered into between: (i) the Company; (ii) Albion Ventures; and (iii) the Directors dated 30 May 2013 (the Offer Agreement ), pursuant to which Albion Ventures has undertaken to: (i) procure subscribers under the Offer for up to 25 million before expenses; and (ii) underwrite up to 500,000 under the Offer becoming unconditional in accordance with its terms. 12

17 E.4 A description of any interest that is material to the issue/offer including conflicting interests Albion Ventures is the promoter of the Company and will provide staff and advisory and administrative services to the Company pursuant to the Management Services Agreement. Albion Ventures manages a number of Venture Capital Trusts which have a maximum capacity for investments in renewable energy projects of 42.5 million, of which approximately 32 million has been invested or is in the process of being invested, while a further 11 million of projects have been identified for the Venture Capital Trusts. Consequently (subject to the Venture Capital Trusts not selling any of their investments), it is intended that all further projects beyond these will be allocated to the Company to develop and operate as part of its business. Patrick Reeve, David Gudgin and Isabel Dolan who are Directors of the Company are also partners in Albion Ventures, which, in addition to up-front and annual fees, is receiving Warrants as disclosed in Element E1 above. The Company represents a new business activity for Albion Ventures as certain of its senior personnel will be acting as executives of the Company rather than in an investment management role. E.5 Name of the person or entity offering to sell the Shares E.6 The amount and percentage of immediate dilution resulting from the Offer E.7 Estimated expenses charged to the investor by the issuer or the offeror Not applicable. There are no selling Shareholders. Not applicable. The Company has only issued 100 A Shares on incorporation. Save in respect of the first 1,500,000 Shares, the issue costs in relation to the Offer have been fixed at 2.5 pence for every pence raised pursuant to the Offer. Any excess costs will be borne by Albion Ventures and not by the investors. Investors who have invested in the Offer through a financial intermediary and have received advice will be responsible for fees relating to that advice. They may, should they wish to do so, elect for the Company to facilitate payment of fees direct to their advisers by way of deduction from their subscription monies and accordingly the number of Shares issued to those investors will be reduced. 13

18 14 Risk Factors

19 Risk Factors Prospective investors should be aware that the value of the Shares, which will be unquoted, can fluctuate. In addition, there is no certainty that investors will get back the full amount which they invest. Having regard to the Company s business strategy and the tax reliefs available, Albion Community Power should be considered as a medium to long term investment. An investment in Shares is subject to a number of risks. Before making any investment decision, prospective investors should consider carefully the factors and risks attaching to an investment in Shares, together with all other information contained in the Prospectus, including, in particular, the risk factors described below. The information below does not purport to be exhaustive. Additional risks and uncertainties not presently known to the Company, or that the Company currently deems immaterial, may also have an adverse effect on its business. Prospective investors should consider carefully whether an investment in Shares is suitable for them in the light of the information in the Prospectus and their personal circumstances. Prospective investors should carefully review the risks associated with investing in Shares with their professional advisers. Risks relating to the Company The value of Shares may go up or down. An investor in the Company may not get back the full amount invested; consequently, they may lose some or all of the funds invested. There is no guarantee that the Company s business strategy will be successful. The Company operates within a sector which attracts governmental scrutiny on a national and local level. The ability of the Company to identify and develop suitable renewable energy projects depends inter alia on planning consent for such projects. Should the Company be unable to secure sufficient projects for which planning consent has been granted, the Company s financial results may be adversely affected and therefore the value of the Shares. There can be no guarantee that legislation favourable to the Company s business will remain in place and changes could be applied on a retrospective basis. For example FiTs could be reduced or cancelled for particular projects undertaken by the Company, which would affect its business strategy and profitability and therefore the value of the Shares. Although it is intended that, following the first anniversary of allotment, upon being given three calendar months notice by a Shareholder the Company will (subject to the terms of the Articles, the Act and any regulatory requirement) redeem Shares, there is no guarantee that there will be sufficient liquidity for it to do so and therefore Shareholders may not be able to have their Shares redeemed by the Company. 15

20 Risks relating to Business Property Relief and the qualifying status of the Company There are circumstances in which an investor could cease to qualify for the taxation reliefs offered by Business Property Relief, for example by not holding the Shares for a two year period before death or transfer or on disposal of the Shares. This could result in no relief or only partial relief from Inheritance Tax being available. The Company has taken advice from its tax advisers, PricewaterhouseCoopers LLP, regarding the Company s status for Business Property Relief purposes and believes that the proposed business activities should be regarded as trading activities and therefore a Qualifying Trade. If the Company ceases to carry on the business outlined in the Prospectus during the Relevant Period, this could prejudice its qualifying status for Business Property Relief. The situation will be closely monitored with a view to preserving the Company s qualifying status but this cannot be guaranteed. A failure to meet the qualifying requirements for Business Property Relief could result in no relief or only partial relief from Inheritance Tax. Risks relating to the trading nature of the Company As an operator of renewable energy projects, the success of the Company s business is dependent upon the continuing availability of FiTs, ROCs and RHIs; any changes could have a material adverse effect on the Company s business strategy affecting its profitability and therefore the value of the Shares. The performance of the Company may be affected from time to time by factors outside the control of the Directors, such as adverse weather conditions (for example lower levels of sunshine affecting the return of solar assets), or a general downturn in the economy, affecting the usage of electricity and the increase in RPI, which could have a material adverse effect on the Company s business strategy affecting its profitability and therefore the value of the Shares. It may not be possible to identify and develop sufficient renewable energy projects which meet the requirements laid down by the Board. If the Company cannot identify sufficient renewable energy projects, the Company s strategy could not be effectively implemented and this would affect its profitability and therefore the value of the Shares. The past performance and experience of the executive Directors and of Albion Ventures and its management team are not a guide to the future performance of the Company or the returns an investor may expect from the Shares. The Company s success depends on its ability to retain the executive directors. If one or more of the current senior executive Directors were in the future unable or unwilling to continue in his or her position, the Company s business could be disrupted and it might not be able to find replacements on a timely basis or with the same level of skill and experience, which could affect the profitability of the Company and the value of the Shares. Whether or not the Company is profitable and regardless of how much is raised under the Offer, the Company is required to meet certain fixed costs, including administrative and operating expenses and advisory fees, which could lead to a decline in Net Asset Value and therefore the value of the Shares. 16

21 Specific industry risks The Government is undertaking the Electricity Market Reform and may abandon, reduce, or change the terms of renewable energy subsidies, which may impact the profitability of the Company if it is unable to undertake and operate renewable energy projects on the same terms as those that have been modelled, or at all. Factors that could materially affect renewable energy projects include, but are not limited to: Changes to subsidy rules and rates. There is a risk that subsidy reviews may take place before the subscription monies are fully invested or where projects have not been connected to the grid. In this case, a reduction in, or a withdrawal of, subsidies for projects not yet connected to the grid could have a material negative impact on the performance of projects and therefore the overall profitability of the Company. In addition, it is possible that the price paid for ROCs may decline. Availability of supply of equipment. The Company will need to acquire equipment for certain projects; it may be unable to secure the timely supply of such equipment. This could delay the installation of projects and increase the capital cost of projects and therefore delay or reduce the performance of a project and therefore the overall profitability of the Company and the value of the Shares. Reliability of equipment. Mechanical failure or other defects or accidents which result in non-performance or under-performance of equipment acquired by the Company for projects could have a negative impact on the revenue and profitability of the Company and therefore the value of the Shares. Warranties. The Company may be the beneficiary of warranties or guarantees given by an equipment supplier, but warranties and guarantees typically only apply for a limited duration and can exclude some causes of project non-availability, such as scheduled and unscheduled grid outages. Component suppliers may be unable to meet their warranty obligations in respect of components, in whole or in part, because of production, economic or financial difficulties, or other reasons. Such circumstances could cause the Company to experience increased costs which could have a material adverse effect on the performance of a project and the overall profitability of the Company and therefore the value of the Shares. Many of the suppliers of smaller scale renewable power generation methods, particularly in the wind sector, are relatively small companies, which may be unable to provide spare parts or meet warranty claims if their renewable power generation method fails. The Company will seek to mitigate this risk by aiming to use suppliers where this risk is considered to be lower. Construction. Prior to the construction and operating phase of a project the Company will enter into agreements with third-party professionals and independent contractors and other companies to provide the required construction, installation and maintenance services for a project. If such contracted parties are not able to fulfil their contractual obligations, the Company may be forced to provide additional resources to complete the work, or to engage other companies to complete the work, which may be on less beneficial terms. Any financial difficulty, breach of contract or delay in services by these third-party professionals and independent contractors could have a material adverse effect on the performance of a project and the overall profitability of the Company and therefore the value of the Shares. Grid connection. Renewable energy projects are connected to the distribution or transmission grid to sell the energy output. Therefore, the distribution network operators will be required to connect the projects developed by the Company to the electricity grid. The Company will not be the owner of, or control, the transmission or distribution facilities except those needed to connect projects to the electricity network. In the event of a failure of the distribution network operator to connect the projects developed by the Company to the electricity grid, the Company may suffer economic losses. Such losses could have a material adverse effect on the overall profitability of the Company and therefore the value of the Shares. 17

22 Third party claims. The Company or its subcontractors may cause damage to a landlord s or tenant s property on a site leased by the Company for a project, resulting in claims being made against the Company (e.g. for roof repairs as a result of poor installation of solar panels on roofs, etc). It is intended that the Company will have insurance to cover these risks as well as having contracts enabling it to make a claim against its subcontractors. However, in the event of a claim being made against the Company, the insurance may not cover the Company s total financial loss, or the sub-contractor may not be able to meet its liabilities, resulting in an adverse effect on the overall profitability of the Company and therefore the value of the Shares. Early termination of leases. The Company s assets (i.e. generating equipment) may be located on sites which are leased. Rental contracts and/or easements regarding land and properties where installations are located may be subject to early termination in certain circumstances. Such early termination would require transfer of the installation to another site causing: (i) costs for deconstruction and reconstruction; (ii) costs for rebuilding on alternative sites (subsidies may not be available on the new site); (iii) transportation costs; (iv) installation costs; and (v) opportunity costs for the interruption of electricity production, etc. Therefore, the early termination of rental contracts and/or easements by landlords is likely to have a material adverse effect on the overall profitability of the Company and therefore the value of the Shares. Access. Landlords or tenants, in respect of a project site leased by the Company, may refuse access to a site to enable equipment to be repaired and/or maintained. Whilst such action would be in breach of contract, the Company may need to resort to the courts to obtain access to the site, and this cost may fall on the Company. During the period of any dispute with a landlord or tenant, the Company may suffer economic loss as a result of the sub-optimal performance of the equipment on the site. This loss may not be recoverable in full from either the defaulting landlord or tenant or the Company s insurer and could therefore affect the profitability of the Company and the value of the Shares. Insurance. The equipment owned by the Company for use in respect of its projects may be damaged as a result of, inter alia, natural disasters (e.g. lightning strikes), accidents (e.g. fire), or vandalism. It is intended that the Company will insure against these risks where it considers this to be appropriate to seek to mitigate any financial loss to the Company. However, in the event of the capital equipment being damaged the insurance may not cover the Company s total financial loss, resulting in a material adverse effect on the overall profitability of the Company and therefore the value of the Shares. Project partners. The projects developed by the Company are likely to be constructed and operated in co-operation with a number of project partners. Such project partners may be involved in sourcing opportunities, in submitting planning applications, or in the supply, operation and maintenance of equipment. The ability of the Company to maintain existing partnerships and develop new partnerships will be key to the performance of a project. If disputes were to occur between the Company and one or more of its partners, or if one or more partnerships were to terminate, this could have a material adverse effect on the overall profitability of the Company and therefore the value of the Shares. Permits and authorisation. As the operator of a renewable energy business the Company will require various permits and authorisations. Generally the Company will take only limited development risk prior to construction. However, certain issues may arise after construction has commenced and the Company has committed funds, e.g. local wildlife protection groups could delay completion or the efficient operation of a renewable energy project. This could have a material adverse effect on the return from a project and the overall profitability of the Company and therefore the value of the Shares. Having received the required permits, the Company may fail to comply with the necessary conditions of the permits and a permit could be revoked, suspended or delayed. The loss or suspension of a permit for the Company could have a material adverse effect on the return from a project and the overall profitability of the Company and therefore the value of the Shares. 18

23 Environmental claims and liabilities. It is intended that the Company will make provisions to meet all known and anticipated environmental claims and liabilities, if any, but there can be no assurance that additional costs and liabilities will not be incurred in the future, or that injunctions by environmental regulators will not result in business interruptions, and that these factors, either in isolation or together, may have a material adverse effect on the overall profitability of the Company. More generally, environmental laws and regulations will have an impact on the activities of the Company. It is not possible accurately to predict the effects of future changes in such laws and regulations on the financial condition and results of the Company. There can be no assurance that material costs and liabilities will not be incurred, which would affect the value of the Shares. General Risks The information in the Prospectus is based upon current taxation and other legislation and any changes in the legislation or in the levels and basis of, and reliefs from, taxation may affect the value of an investment in the Company. The tax reliefs referred to in the Prospectus are those currently available and their value depends on the individual circumstances of investors. The subscription for Shares and the performance of Shares will not be covered by the Financial Services Compensation Scheme or by any other compensation scheme. If the Minimum Subscription is not achieved by 30 September 2013 or such later date as the Board resolves and the Offer is not extended, no Shares will be issued and investors monies will be returned without interest. The investment described in the Prospectus may not be suitable for all investors. Investors are accordingly advised to consult an investment adviser authorised under the Financial Services and Markets Act 2000, and an appropriately qualified taxation adviser, prior to investing. 19

24 20 Expected Timetable

25 Expected Timetable The Offer Publication of Prospectus 6 June 2013 Latest time for receipt of Application Forms for the first allotment 12 noon on 30 September 2013 Allotment and issue of Shares for the first allotment 30 September 2013 Despatch of Share certificates for the first allotment by 14 October 2013 Latest time for receipt of Application Forms for the final allotment 12 noon on 30 April 2014 Allotment and issue of Shares for the final allotment 30 April 2014 Despatch of Share certificates for the final allotment by 14 May 2014 Each of the times and dates in the above timetable is subject to change at the discretion of the Board. All times are London times (unless otherwise stated). If the Minimum Subscription is achieved but the Offer is not fully subscribed, the Directors may keep the Offer open at their discretion, but for no longer than 12 months after the date of the Prospectus. Offer Statistics Offer Price (per Share) for the first 1,500,000 Shares Thereafter Minimum gross proceeds (assuming the Minimum Subscription is achieved) Maximum gross proceeds (assuming the Maximum Subscription is achieved) Expected total expenses of the Offer (assuming the Minimum Subscription is achieved) Expected net proceeds of the Offer (assuming the Minimum Subscription is achieved) Expected total expenses of the Offer (assuming the Maximum Subscription is achieved) Expected net proceeds of the Offer (assuming the Maximum Subscription is achieved) 100 pence pence 1.5 million 25 million Nil 1.5 million 0.6 million 24.4 million 21

26 22 Definitions and Terms

27 Definitions and Terms A Shares non-redeemable A ordinary shares of 0.01 each in the capital of the Company Act AIM Albion Ventures or Promoter Articles Board or Directors Business Property Relief or BPR Company or ACP or Albion Community Power Feed in Tariffs or FiTs FSMA Government GW HMRC IHT kw Management Services Agreement Maximum Net Proceeds Maximum Subscription Minimum Net Proceeds Minimum Subscription the Companies Act 2006 (as may be amended from time to time) the market operated by London Stock Exchange PLC Albion Ventures LLP which is authorised and regulated by the Financial Conduct Authority means the articles of association of the Company (as amended from time to time) the board of directors of the Company, whose names appear on page 26 business property relief as set out in the Inheritance Tax Act 1984 Albion Community Power PLC means the system introduced by the Government pursuant to powers in the Energy Act 2008 to incentivise low carbon electricity generation the Financial Services and Markets Act 2000 (as may be amended from time to time) the UK Government and the Scottish Government or either Government as the context permits Gigawatt, a standard unit of electricity power equal to 1 million kilowatts HM Revenue & Customs Inheritance Tax Kilowatt, a standard unit of electricity power equal to 1,000 watts the agreement between the Company and Albion Ventures governing the management services to be provided by Albion Ventures to the Company, as detailed in paragraph 7.2 of Part III in aggregate, 24.4 million 25,000,000 Shares in aggregate, 1.5 million 1,500,000 Shares MW Megawatt, a standard unit of power equal to 1,000 Kilowatts 23

28 Net Asset Value or NAV Offer Offer Agreement Qualifying Trade Relevant Period or Two Year Period Registrars RHIs ROCs RPI Shares Shareholders SiPPs Venture Capital Trust or VCT Warrant Instrument Warrants the net asset value of the Company attributable to holders of Shares adjusted for the revaluation of projects as determined by independent third party professional valuations the offer of Shares the offer for subscription agreement between the Company, the Directors and Albion Ventures as detailed in paragraph 7.1 of Part III is any business so long as it is carried on with a view to making a profit and does not consist wholly or mainly of dealing in land and buildings, stocks and shares, or making or holding investments the period beginning on the date on which the Shares are issued and ending two years after that date or two years after the commencement of the Company s trade, whichever is later Share Registrars Limited Renewable Heat Incentives Renewables Obligation Certificates The Retail Prices Index redeemable ordinary shares of 1 penny each in the share capital of the Company holders of Shares Self-invested personal pension schemes a company approved as a venture capital trust under section 274 Income Tax Act 2007 the warrant instrument pursuant to which the Company will issue warrants to Albion Ventures and certain third party investors, as detailed in paragraph 7.3 of Part III the warrants to subscribe for Shares issued by the Company under the Warrant Instrument 24

29 Directors and Advisers of the Company 25

30 Directors and Advisers of the Company Directors Secretary Registered Office Timothy Stephen Kenneth Yeo MP (Non-Executive Chairman) Robert Malcolm Armour (Non-Executive) Patrick Harold Reeve (Chief Executive) David Gudgin (Managing Director) Isabel Ann Dolan (Finance Director) Albion Ventures LLP 1 King s Arms Yard, London EC2R 7AF Telephone Number Promoter Registrars Auditors Taxation Advisers Solicitors to the Promoter and to the Company Albion Ventures LLP of 1 King s Arms Yard, London EC2R 7AF Share Registrars Limited of Suite E, First Floor, 9 Lion and Lamb Yard, Farnham, Surrey GU9 7LL Moore Stephens of 150 Aldersgate Street, London EC1A 4AB PricewaterhouseCoopers LLP of 1 Embankment Place, London WC2N 6RH Bird & Bird LLP of 15 Fetter Lane, London EC4A 1JP 26

31 Part I Albion Community Power PLC 27

32 Part I Albion Community Power PLC Introduction The core nature of the Company s business will be to generate power. ACP is a newly incorporated company which will identify, develop, construct, commission, register and subsequently operate renewable energy projects in the UK. The focus will be on community-scale (i.e. smaller) renewable projects principally in the solar, mid-scale wind, biogas, biomass and hydroelectric sectors. In due course, the Company will consider raising further funding of up to 100 million in aggregate provided it believes that further suitable renewable energy projects are available. Albion Community Power will have three executive Directors and two non-executive Directors who have considerable experience in the renewable energy sector. The executive Directors services are being made available by Albion Ventures, a substantial venture capital investment business which has some 230 million under management and a strong expertise in renewable energy projects. Albion Community Power has not commenced operations and, as at the date of the Prospectus, no financial statements, interim or audited financial information have been made up. Investment Proposition As an unquoted trading company, it is intended that shares in ACP will be eligible for Business Property Relief and that therefore an investment in the Company by a UK tax payer should obtain relief from Inheritance Tax, once the Shares have been held for two years. Shares in ACP should also be suitable for SiPPs. The Company is targeting a dividend of approximately 3 pence per annum and a longer term total return (i.e. capital plus income) of approximately 6 per cent. per annum, although this should not be regarded as a profit or dividend forecast. Dividends made and returns generated will be dependent on the Company generating distributable profits. The Company may seek a quotation on AIM (which is not a regulated market and would not affect the treatment of shares for BPR) in due course, to provide additional liquidity for investors and potentially enable the Company to raise further funds. Management The executive management of the Company will be the responsibility of David Gudgin, Head of Renewables at Albion Ventures, who will be Managing Director of the Company reporting to Patrick Reeve, Managing Partner of Albion Ventures, who will be Chief Executive of the Company. Isabel Dolan, Operations Partner at Albion Ventures, will be Finance Director of the Company. David Gudgin was the lead investor for Foursome Investments Limited s (now Frog Capital s) Cleantech fund investing in renewable energy before joining Albion Ventures in It is expected Patrick Reeve and Isabel Dolan will devote approximately one day per week to ACP alongside their duties to Albion Ventures, while David Gudgin will devote at least 70 per cent. of his time to the Company alongside his duties to Albion Ventures. Albion Ventures will also make available two managers for the majority of their time, pursuant to the Management Services Agreement. David Gudgin and the two managers will be assisted by four other members of the Albion Ventures team specialising in particular renewable energy sectors. 28

33 Albion Ventures has a 17 year track record of investing in high yielding asset backed businesses. To date Albion Ventures has invested or is in the process of investing approximately 32 million in renewable energy projects. Of this 16 million is now producing energy and achieving an investment return of approximately 11 per cent. Albion Ventures is working with project partners on a number of renewable energy projects and further projects have been identified which will be suitable for ownership and operation by the Company. However, no firm commitments have been made. Renewable Energy Sectors ACP is not seeking to take technology risk. Instead, it will apply proven power generation methods to sites in the UK. The renewable energy sectors identified are: Solar Rooftop systems providing electricity to households and larger ground mounted systems selling electricity to commercial users and the National Grid. Wind Turbines on brownfield sites near existing developments such as industrial estates rather than greenfield developments in remote areas. Biogas A technology for converting organic matter (such as waste food or agricultural crops) into biogas, which can then be converted into electricity. This is sometimes called Anaerobic Digestion or AD. Biomass heat The use of sustainably sourced wood to generate heat, replacing oil or gas heating in industrial processes and commercial buildings. Hydroelectricity Power from water flow by diverting part of the stream from higher up a river and putting it through a turbine, before releasing it back into the river lower down. 29

34 Market Overview The Government has a long term commitment to the increased use of renewable energy. This is driven partly by commitments given to the European Union ( EU ), and partly by the needs of energy security. A potential shortage in supply towards the end of this decade also dictates an increase in renewable energy generation as part of the solution. The Government has given a commitment to the EU to generate 15 per cent. of all power from renewable energy by To meet the target the Government has identified wind, biogas and biomass as the main technologies to be built. It has also expressed an interest in vehicles powered by renewable sources of energy, small scale hydroelectricity and solar and marine electricity generation. To achieve the 15 per cent. target for all power, an increasing proportion of electricity will have to result from renewable generation. This is because the renewable energy technologies needed to substitute the fossil fuels used in transport and heating are at an early stage. Given the proportion of electricity within the total UK power consumption, this would require approximately 30 per cent. of electricity to be generated from renewable sources. In 2011, 3.8 per cent. of all power in the UK came from renewable sources. In the year to June 2012 renewable energy provided 10.4 per cent. of total UK electricity generation (compared to 9 per cent. in 2011). To encourage the generation of energy from renewable sources the Government has specific policies of incentives, in the form of Feed in Tariffs (FiTs), Renewables Obligation Certificates (ROCs) and Renewable Heat Incentives (RHIs), to encourage distributed efficient generation of electricity and heat at the point of use. ROCs, FiTs and RHIs offer long-term support to installations that are accredited for ROCs, FiTs or RHIs at pre-determined levels. While it is possible that these subsidy mechanisms may change in the future, the UK Government generally has a good record of not changing legislation retrospectively. In addition, it has always emphasised its commitment to the policy of grandfathering to ensure that installations that have been accredited for ROCs, FiTs or RHIs will always receive the tariff they were accredited at regardless of any falls or degressions to tariffs in the future. All three incentives are relevant to ACP. The chart below shows the proportion of renewable electricity generation in the UK in Renewables 11.3% Other 1.5% Coal 39.3% Gas 27.5% Nuclear 19.4% Oil 1.0% [Source: Department of Energy & Climate Change: Energy Trends: March 2013] 30

35 Feed in Tariffs The FiT scheme is a Government programme introduced by the Energy Act 2008 that is designed to promote the uptake of a range of small-scale renewable and low-carbon electricity generation technologies. The scheme is applicable to a range of eligible renewable technologies up to a maximum total installed capacity of 5MW. Under the FiT scheme, energy suppliers are required to pay a tariff to small-scale low-carbon electricity generators. Electricity suppliers must pay two types of tariff: a generation tariff for the energy generated from their installation; and, where a generator elects to export electricity back to the grid, an export tariff for electricity exported back to the grid. These tariffs provide for guaranteed, index-linked levels of revenues over 20 years from the date of accreditation under the FiT scheme, and can provide for a guaranteed base level generation tariff equal to between one and four times the wholesale price of electricity. Renewables Obligation Certificates The ROC scheme is currently the main mechanism in the UK for promoting and supporting the generation of renewable electricity. Under the Renewables Obligations Order 2009, energy companies must obtain an increasing number of ROCs each year. A fixed number of ROCs are earned by a renewable energy producer for each MW of electricity generated. The number of ROCs earned per MW of electricity depends on the technology used and has been set by the Department for Energy and Climate Change. ROCs can be traded separately from the electricity in respect of which they were issued (or together with it) with the ROCs ultimately being used by energy suppliers to demonstrate that they have met their obligations. There is therefore a market for ROCs, where the price of ROCs is determined by the supply of ROCs from renewable energy producers, and the demand for ROCs from energy companies or other third parties. The ROC market price is guided by a price set annually by Ofgem, referred to as the buyout price which increases each year in line with RPI. The ROC scheme is set to end for new installations in 2017 and is due to be replaced by the Feed in Tariffs with Contracts for Difference ( CfDs ). The enabling legislation to bring this into effect is yet to be passed. However, it is envisaged that the ROC Scheme will come to an end entirely by Renewable Heat Incentives The RHI scheme is a Department of Energy and Climate Change initiative aimed at promoting the uptake of renewable heat technologies through financial incentives and reducing the UK s carbon emissions. RHIs are paid by the Government for heat generated from proven renewable technologies, particularly biomass wood pellets, biogas and solar thermal, and the scheme works in a similar way to the FiT scheme. The RHI scheme is administered by Ofgem and paid by the Government under the Energy Act The RHI scheme provides for a guaranteed payment per kwh of heat generated from a qualifying source that is used for an eligible purpose which increases in line with RPI for the life of the installation or a maximum of 20 years from the date of accreditation. 31

36 Renewable Electricity Capacity Solar PV, wave and tidal Offshore wind Onshore wind Hydro Bioenergy and wastes 12 Installed capacity GW Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q [Source: Department of Energy & Climate Change: Energy Trends: March 2013] 32

37 ACP s Strategy in the Renewable Energy Sectors Albion Community Power aims to be one of the UK s largest producers of community scale renewable energy, via a variety of energy projects, building capacity of around 30 MW at a cost of 100 million. This would represent approximately 0.1 per cent. of the UK target by 2020, equivalent to powering some 35,000 homes. The chosen power generation methods are reviewed in more detail below: Solar (Photo-voltaic) Solar PV is the third largest renewable energy source in terms of global installed capacity. In the UK, installed capacity grew from 0.2 GW to 1.4 GW in the year to June 2012 [Source: Department of Energy & Climate Change]. Solar can either be installed on the ground, typically as a field of solar panels, or on a rooftop supplying that building. Companies in which Albion Ventures has invested have installed over 1,500 solar rooftop systems on houses and a number of larger commercial rooftop systems supplying commercial premises. A possible solar project partner is Regenerco Limited ( Regenerco ), although no firm commitments have been made by the Company. Details of a solar investment already made by Albion Ventures with Regenerco are shown in the table below: Regenerco Renewable Energy Limited Project Installation Sizes Partner (equity) Total Investment Estimated 25 year hold IRR Status Free solar PV on Domestic Roofs for South Cambridgeshire District Council <4kWp Regenerco 4.8m 10% Systems Operating 33

38 Wind Wind is the second largest renewable energy source in terms of global installed capacity. In the UK, onshore wind installed capacity grew from 4.2 GW to 5.3 GW in the year to June 2012 [Source: Department of Energy & Climate Change]. Single turbine or dual turbine sites, which were previously uneconomic to pursue, can currently attract returns of up to 15 per cent. per annum. It is ACP s intention for any installations to be on brownfield and industrial sites which ACP considers will often have local requirements for the power and tend to have more direct connections to the National Grid. Companies in which Albion Ventures has invested have already built two turbines in South Wales which are fully operational and it has invested to build two more turbines. ACP has identified Infinite Renewables Limited ( Infinite ) as a possible wind project partner, although no firm commitments have been made by the Company. Details of the first wind turbine investment made by Albion Ventures with Infinite are shown in the table below: Alto Prodotto Wind Limited Project Installation Sizes Partner (equity) Total Investment Estimated 20 year hold IRR Status Medium Scale Wind Development in Wales 3 x 500kWp Infinite Renewables 4.5m 15% Two turbines operating and one to be constructed 34

39 Biogas (Anaerobic digestion ( AD )) Biogas or AD is the process whereby organic matter decomposes in an airless atmosphere to produce methane, carbon dioxide, water and heat. The methane is then combusted in a turbine to produce electricity or injected into the National Gas Grid. AD can use organic matter from either agricultural crops or waste food from households and industry. Agricultural biogas is a well established technology with thousands of plants operating in continental Europe, but relatively few in the UK. Agricultural AD is more established than waste AD, but generates lower returns. There is potential to increase returns by adding waste at a later date. By using waste food, where the plant is paid a gate fee to take the waste, biogas can generate a higher return than agricultural AD. Primary challenges include finding projects with strong feed stock contracts for food waste and the requirement for operational expertise to manage the plant. TEG Group PLC has been identified as a possible AD partner for ACP, although no firm commitments have been made by the Company. Albion Ventures has invested in TEG Biogas (Perth) Limited which has built a waste food biogas plant in Scotland. The plant is fully operational, and details of the investment are shown in the table below: TEG Biogas (Perth) Limited Project Installation Sizes Partner (equity) Total Investment Estimated 20 year hold IRR Status Waste to energy anaerobic digestion 700kWp TEG 3.0m 14% Constructed, producing biogas 35

40 Biomass (heat) Biomass heat uses sustainably sourced wood to generate heat. Investment opportunities for Albion Community Power lie in building and operating its own biomass assets to provide heat to end users and in producing biomass fuel to be used in customers own biomass systems. Albion Ventures estimates that returns of approximately 15 per cent. per annum can be generated from the sale of the heat and RHIs. Hydroelectricity Hydroelectricity is the largest renewable energy source in terms of global installed capacity. To date, only a limited number of sites have been developed in the UK because of low returns without FiTs. Historically, projects tended to involve major reservoirs and dams, but the introduction of the FiT scheme in April 2010 has led to 1.5 GW of small scale hydro plant installed and commissioned on FiTs by the end of October 2012 [Source: Department of Energy & Climate Change]. These provide long term value as projects can last 40 years or more. Furthermore, hydroelectricity provides a natural weather hedge to solar and wind assets. ACP will work with experienced partners such as Green Highland Renewables Ltd, although no firm commitments have been made. Details of a hydroelectricity project in Wales being undertaken by a company in which Albion Ventures has invested are shown below: Dragon Hydro Limited Project Installation Size Partner (equity) Total Investment Estimated 50 year hold IRR Status Medium Scale Hydro in Wales 300kWp Dragon Hydro 1.3m 11% Under construction Other power generation methods In addition, ACP will also consider undertaking other power generation methods provided that the returns are attractive and the technological risk minimal. Over time the relative attractiveness of particular power generation methods is likely to change and ACP intends to keep the core power generation methods outlined above, as well as other options, under review. ACP may also acquire land to provide feedstock. 36

41 Project Pipeline Albion Ventures current pipeline potentially available to ACP includes the following projects: Solar 5 million for roof top solar. Wind up to 9 projects around the UK at a cost of 17 million. Biogas three projects around the UK at a cost of 14 million. Hydroelectricity four hydro schemes in England and Scotland at a cost of 17 million. ACP s Operations ACP will acquire freehold or leasehold interests in land and property on which it will develop and operate renewable energy projects through the installation of, for example, wind turbines or solar panels. It will also own or lease certain generating equipment in respect of projects, for example wind turbines and solar panels. ACP will control directly or indirectly, through subsidiary companies, all assets, including the generating equipment and leasehold or freehold land. ACP will register each project site for FiTs, ROCs or RHIs. Under the FiTs and RHIs the income rises in line with increases in RPI which will give ACP an element of protection from inflation. Environmental laws and regulations will have an impact on the activities of the Company and its tangible fixed assets (i.e. land and generating equipment). All of ACP s operations will hold local licences, permits and other permissions to operate and compliance with the conditions in such licences, permits and permissions is monitored by, inter alia, environmental regulatory agencies. In the event of non-compliance, the Company may receive notices from local authorities or such regulatory agencies. Commonly these notices specify actions to be taken and the associated timescales to remediate the non-compliance. If the Company fails to carry out the actions specified in such notices, the relevant agencies have the power to prosecute the Company or to revoke such licences, permits and permissions. The majority of projects will be at a post-planning stage because the Company does not generally wish to incur the costs or time commitment required in obtaining consents. Projects may be acquired by the Company at the post-planning but pre-construction stage or may be identified by third party project partners at an earlier stage and introduced to the Company by Albion Ventures. The Board will review and approve projects suitable for acquisition or development by the Company. Under no circumstances will Albion Ventures have discretion to approve projects on behalf of the Company. Once approved, a project will then be developed, either by the Company itself or through a newly-formed subsidiary undertaking (which may take the form of a company or partnership). Any subsidiary undertaking will be majority owned by the Company with the minority holding being held by the relevant project partner. Funds will then be utilised by the Company in developing and constructing the project. ACP will specify the equipment, run a tender process and agree commercial terms with the chosen supplier, negotiate and agree the lease with the landlord, check the planning conditions and grid connection offer, negotiate and agree the feedstock supply for biomass plants, negotiate and agree a management contract with partners (if any), run a tender process for engineering, procurement and construction contractors, appoint advisers (such as architects and quantity surveyors), and evaluate and agree power and heat off-take agreements. Once operational, the project will generate power which will be used locally or connected to the National Grid. At that point, the Company will qualify for the Government subsidies referred to above. A third party (typically the project partner) will normally be engaged to manage the day to day operation of the project (i.e. arrange maintenance and ensure that health and safety requirements are met, etc). The project manager will be required to report to the Board on a regular basis and will be entitled to performance 37

42 based fees. Albion Ventures will also have a hands-on role, including project development, administration and accounting. Once operational, it is intended that a project will be retained by the Company for an indefinite period and form part of its broader power generation activity. In contrast to a typical investment entity, there is no intention to seek to sell a project after a certain period. As all projects will be under the ownership or control of the Company, ACP will use synergies and central resources to ensure that the projects benefit from being part of a larger group. These will include understanding the different technologies on the market, aggregated purchasing arrangements and call-off contracts for equipment, the use of a common energy buyer, where appropriate (such as Good Energy), common operational and maintenance suppliers, shared planning and development resources and the potential for the use of shared sites (for instance, the combination of wind and solar). ACP s Strategic Objectives The Company s business plan is to develop, undertake and operate renewable energy projects, principally in the solar, mid-scale wind, biogas, biomass and hydroelectricity sectors. The business plan of the Company is based upon the key assumption that Government legislation will continue to actively encourage the increase of renewable energy generation through its promotion of FiTs, ROCs and the introduction of the RHI scheme. Any changes to those Government incentives could have a material adverse effect on the business strategy of the Company. Potential projects have been identified in these sectors (see ACP Strategy in the Renewable Energy Sectors and Project Pipeline on pages 33 to 37 of the Prospectus) although no firm commitment has been entered into by ACP in respect of any projects. The Company intends to undertake its first project following receipt of the Minimum Net Proceeds. The Company does not consider its business strategy is dependent upon any key individuals but rather the expertise of Albion Ventures in the renewable energy sector. The Company does not expect to be reliant on a limited number of suppliers and given the potential size of the renewable energy market does not believe that there are any significant competitors who could have a material impact on the Company s strategy. The Company will fund its day to day operations from the monies raised under this Offer. If the Company requires further funds, it will seek to raise this by making further offers of its Shares. Revenues generated by the Company s operations will be used to fund its ongoing operations and, to the extent the Board resolves, to pay dividends. Role and remuneration of Albion Ventures Albion Ventures current business is that of a fund manager, investing in and helping to develop early stage businesses. Through its VCT activities, Albion Ventures is also experienced in the management and administration of PLCs with multiple retail investors. ACP, however, will be a departure for Albion Ventures which will make its hands-on experience in developing renewable energy projects available to ACP. Three senior Albion Ventures partners will become executive directors of ACP and Albion Ventures will also provide staff and advisory and administrative services to the Company. These services will include: the provision of Marco Yu and another manager who will be seconded to the Company for the majority of their time and will assist with the day to day operation of the Company; advising the Board on identification of potential projects and monitoring of projects undertaken, including specifying equipment, running tender processes and agreeing commercial terms with chosen suppliers, negotiating and agreeing leases with landlords, checking the planning conditions and grid connection offers, negotiating and agreeing the feedstock supply for biomass plants, negotiating and agreeing 38

43 management contracts with partners, running tender processes for engineering, procurement and construction contractors, appointing advisers such as architects and quantity surveyors, evaluating and agreeing power and heat off-take agreements, arranging annual valuations by third party valuers such as PricewaterhouseCoopers LLP, and tendering and agreeing aggregated maintenance and service contracts; and the provision of accounting, secretarial and other administrative services. The appointment of Albion Ventures to provide these services will be for an initial period of 5 years. It will receive an annual fee for these services. The annual fee payable to Albion Ventures will be 2 per cent. of the Company s Net Asset Value, less the cost of salaries paid to the executive directors and managers provided by Albion Ventures. ACP s annual central overheads including such fee and salaries will be capped at 2.5 per cent. of Net Asset Value. The operating costs of the underlying renewable energy projects, however, will be accounted for separately. In addition, Albion Ventures will charge a one-off execution fee of 2 per cent. of the amount allocated by ACP in any project. These fees will be charged directly to the projects. Warrants Pursuant to the Warrant Instrument Albion Ventures will be entitled to Warrants to subscribe for one new Share for every five Shares issued under the Offer. The exercise price of each Warrant will be the Net Asset Value per Share on the date of issue of the Warrant, though the exercise price will be adjusted downwards, on a penny for penny basis, to the extent to which cumulative dividends thereafter exceed 3 pence per annum provided the exercise price shall never be less than the nominal value of a Share from time to time. Further Warrants will be issued on the same basis in respect of subsequent offers of Shares in future years, though these issues will be limited to the extent that Share redemptions would otherwise increase the proportion of Warrants in issue to over 20 per cent. of the issued share capital of the Company. The Warrants will have an exercise period of 20 years from issue. Some Warrants may, at the direction of Albion Ventures, be issued to third party investors (being certain institutional and family office investors and Directors and members of Albion Ventures and their immediate families) instead of to Albion Ventures. The Warrants will not be freely transferable. Corporate The Company s year end is 30 November. Third party professional valuations of all renewable energy projects will be undertaken as at that date once they have been fully operational for more than one year, which will in turn determine the Net Asset Value per share for the purpose both of new fundraisings and of liquidity in the event of a sale of Shares. Such Net Asset Value per share will be set out in the chairman s or directors report in the audited statutory accounts and unaudited interim report of the Company. Reporting to Shareholders The Company will send unaudited interim half-yearly reports to Shareholders in addition to the audited annual report and accounts. The first audited accounts will be for the period ending 30 November The first interim report will be in respect of the period ending 31 May

44 Board of Directors The board of directors of ACP consists of the following: Tim Yeo MP Non-Executive Chairman Currently chair of the Parliamentary Energy and Climate Change Committee, he has been an MP since 1983 and was Minister for the Environment and Countryside from In Opposition, he was shadow Secretary of State for Trade and Industry, Shadow Education and Health Secretary and Shadow Minister for the Environment and Transport. He is a Director of Groupe Eurotunnel SA and Chairman of TMO Renewables Limited and AFC Energy PLC. Robert Armour Non-Executive Director General Counsel of British Energy Group and its predecessors from 1990 to 2009, he was originally a partner in a Scottish legal firm acting for energy clients. Following the takeover of British Energy by EDF in 2009, he managed the sale of EDF Energy s UK electricity distribution interests (now UK Power Networks) to CKI. He is currently Chairman of Smarter Grid Solutions Ltd and three companies in which Albion Ventures VCTs have invested, he is a trustee of The Nuclear Trust, as well as a director of The Scottish Council for Development and Industry and Equiniti David Venus Ltd, a corporate governance consultancy; and is Senior Counsel at Gowlings, an international legal practice. He has an LLB and an MBA from Edinburgh University. Patrick Reeve Chief Executive A chartered accountant who qualified with Deloitte Haskins & Sells before joining Cazenove & Co where he spent three years in the corporate finance department. He joined Close Brothers Group in 1989, where he was a director of the private equity and corporate finance divisions. He established Close Ventures in 1996 and led the management buyout to form Albion Ventures in He has an MA in Modern Languages from Oxford University, and is on the board of the British Venture Capital Association, is a member of the audit committee of University College London and is a director of UCL Business, its technology transfer arm. It is expected that he will devote approximately one day a week to the Company 40

45 David Gudgin Managing Director He is the Head of Renewables at Albion Ventures, with particular expertise in biogas. David qualified as a management accountant with ICL and spent three years based at the BBC. In 1999, he joined 3i PLC as an investor in European technology based in London and Amsterdam. In 2002 he moved to Foursome Investments (now Frog Capital) as the lead investor for two funds, an environmental technology fund and a later stage development capital fund, before joining Close Ventures in He became a partner in Albion Ventures in David has a BSc in Economics from Warwick University. David has been investing in Cleantech since It is expected that he will devote at least 70 per cent. of his time to the Company. Isabel Dolan Finance Director A chartered accountant who qualified with Moore Stephens, she was Head of Recoveries at the Specialised Lending Services of the Royal Bank of Scotland PLC and was a Portfolio Director at 3i PLC. She joined Close Ventures in 2005, having previously been Finance Director for a number of unquoted companies. Isabel is Operations Partner at Albion Ventures. She has a BSc in Biochemistry with Pharmacology from Southampton University and an MBA from London Business School. It is expected that she will devote approximately one day a week to the Company. Albion Ventures Albion Ventures is one of the UK s larger venture capital managers. It was founded in 1996, as the venture capital arm of Close Brothers Group and became Albion Ventures in January 2009 following its MBO from Close Brothers. It manages seven VCTs with net assets of approximately 230 million and invests in a balance of lower risk, often asset-backed investments, including renewable energy projects and higher growth, technology investments. It is owned by its 9 partners, while Close Brothers also continues to have an interest in the business. Albion Ventures funds have returned approximately 124 million to investors through dividends. It has invested in 108 unquoted companies since 1996, with 52 exits at an average multiple to cost of 1.6 times. The Directors of the Company (or their connected parties) and staff of Albion Ventures are investing 150,000, in aggregate, in the Company and pursuant to the Offer Agreement Albion Ventures is underwriting up to a further 500,000 under the Offer to facilitate ACP reaching the Minimum Subscription. 41

46 Experience in the Renewable Energy Sector Albion Ventures, on behalf of the VCTs it manages, has invested or is in the process of investing approximately 32 million in renewable energy projects to date: 11.3 million in solar in over 1500 solar rooftop installations in southern England; 6.3 million in wind in four turbines in South and West Wales; 3 million in AD in one plant in Perth, Scotland; 10.3 million in hydroelectricity in one scheme in West Wales and another scheme in Scotland; and 1 million in biomass in England. The VCTs which Albion Ventures manages have a maximum allocation for renewable energy investments of 42.5 million and are precluded by VCT legislation from investing in further solar and wind projects. Therefore all potential solar and wind projects will be referred to ACP, together with all other renewable energy projects once the VCTs have reached the 42.5 million level. Albion Ventures believes it has already identified the requisite level of further projects to achieve that level. In the event that the VCTs sell any of their renewable energy investments Albion Ventures is required to offer the VCTs additional projects to enable the VCTs to maintain that level. Key executives responsible for renewable energy In addition to David Gudgin, the following are the Albion Ventures executives responsible for the sourcing, execution and monitoring of renewable energy projects: Marco Yu Manager Marco will be responsible, inter alia, for sourcing solar projects for ACP. He joined Close Ventures in 2007 and became an investment manager in Albion Ventures in Marco spent two and a half years at Bouygues (UK), before moving to EC Harris in 2005, where he advised senior lenders on large capital projects. Marco graduated from Cambridge University with a first class degree in economics and is a Chartered Surveyor. At Albion Ventures, Marco has worked on The Street by Street Solar Programme, Regenerco Renewable Energy, AVESI, Alto Prodotto Wind, Greenenerco and TEG Biogas (Perth) investments. It is expected that he will devote at least 70 per cent. of his time to the Company. 42

47 Emil Gigov Emil will be responsible for sourcing wind projects for ACP. He graduated from the European Business School, London, with a BA (Hons) Degree in European Business Administration in He then joined KPMG in their financial services division and qualified as a chartered accountant in Following this he transferred to KPMG Corporate Finance where he specialised in the leisure, media and marketing services sectors acting on acquisitions, disposals and fundraising mandates. He joined Close Ventures, the predecessor to Albion Ventures, in 2000 and has since made and exited investments in a number of industry sectors, including healthcare, education, technology, leisure and engineering. Emil became a partner in Albion Ventures in 2009 and is responsible for Albion Ventures wind investments. Christoph Ruedig Christoph will be responsible for sourcing hydroelectricity projects for ACP. He joined Albion Ventures as an investment manager in October He initially practised as a radiologist, before spending 3 years at Bain & Company. In 2006 he joined 3i working for their Healthcare Venture Capital arm. Most recently he has worked for General Electric UK, where he was responsible for mergers and acquisitions in the medical technology and healthcare IT sectors. He holds a degree in medicine from Ludwig-Maximilians University, Munich and an MBA from INSEAD. Recently he led the Dragon Hydro investment for Albion Ventures. Henry Stanford Henry will assist David Gudgin in sourcing AD projects for ACP. He qualified as a chartered accountant with Arthur Andersen before joining the corporate finance department of Close Brothers Group in He moved to Close Ventures in 1998, becoming an investment director and became a partner in Albion Ventures in 2009, where he has been responsible for much of the asset-based investment portfolio. He holds an MA degree in Classics from Oxford University. At Albion Ventures, he is currently on the boards, inter alia, of The Street by Street Solar Programme, Regenerco Renewable Energy and AVESI. Robert Whitby-Smith Robert will be responsible for sourcing biomass projects for ACP. After graduating in History at Reading University, Robert qualified as a chartered accountant at KPMG and subsequently worked in corporate finance at Credit Suisse First Boston and ING Barings, before joining Close Ventures in Robert became a partner in Albion Ventures in 2009 and is responsible for the Biomass Heat Sector. 43

48 Inheritance Tax and Business Property Relief The estates of UK domiciled individuals worth more than 325,000 are subject to IHT on the excess. Business Property Relief, however, which was first introduced in the 1976 Finance Act, is designed to encourage investment in unquoted businesses and to protect those businesses from having to be broken up to pay for IHT. It is intended that the Company will be structured and will operate in such a way as to qualify for Business Property Relief. In order to qualify, the Company must undertake a Qualifying Trade, be unlisted and Shares must have been held for two years or more at the date of death. Under these circumstances, Shares will benefit from up to 100 per cent. BPR, and their value will effectively be disregarded for IHT purposes. A Qualifying Trade is any business so long as it is carried on with a view to making a profit and does not consist wholly or mainly of dealing in land and buildings, stocks and shares, or making or holding investments. The Board considers that the business of ACP will therefore qualify. The two year holding period will begin on the latter of: (i) the date Shares are purchased; or (ii) the Company commences trading. BPR will not be available to the extent that the Company has any assets that: have not been used wholly or mainly for the business in the previous two years (or since acquisition if shorter); or are not required for the future use of the business. Under current legislation, proceeds received on exit from a company with a Qualifying Trade can be reinvested into shares in another company with a Qualifying Trade to maintain the relief from IHT provided that: the whole of the proceeds have been used to purchase the replacement shares; and the original and replacement shares have been held for a total period of at least two years out of the last five years. Share Redemptions It is not intended that Albion Community Power should have a limited life. The shares of the Company are unlisted, though it may in the future be decided to seek a quotation on AIM (which is not a regulated market and would not affect the treatment of Shares for BPR). In the meantime, Shareholders or their estates who wish to dispose of all or part of their holdings will be able to request that their shares are redeemed by the Company within three calendar months at any time after the first anniversary of allotment by serving a redemption request. The price at which the Shares will be redeemed by the Company will be the Net Asset Value per Share at the previous half year or year end (as stated in the chairman s statement or directors report in the most recent published annual audited accounts or unaudited interim accounts as at the date the redemption request was received by the Company), less a discount of one per cent. Share redemptions will be subject to the terms of the Articles, the Act, regulatory requirements and the availability of liquid funds. With effect from December 2014, the Board is aiming to retain approximately 10 per cent. of the Company s assets in liquid funds to facilitate this. In addition, the Company intends to apply to the Court to reduce its share premium account arising from the issue of Shares pursuant to the Offer and to establish a new special reserve, which may be treated as a distributable profit, out of which redemption of Shares could be made. The application to the Court is likely to be made shortly after closing of the Offer. Shares which are redeemed by the Company will be cancelled. 44

49 Borrowings It is not the Company s current intention to borrow and it has no bank facilities in place. However, to enable it to take advantage of market opportunities as they arise, the Company will have the power to raise external borrowings up to a sum equal to 25 per cent. of its Net Asset Value. Dividends Albion Community Power is targeting paying dividends of approximately 3 pence per Share per annum, although this should not be regarded as a dividend forecast or profit estimate. Any dividends will be dependent on the Company generating sufficient distributable profits. Dividends (if any) would be paid twice a year following the publication of the annual audited and interim unaudited accounts to those Shareholders who have been on the register for the previous 12 months. The Company will operate a dividend reinvestment scheme whereby Shareholders can elect to have their dividends reinvested in further Shares in the Company. Such dividends will be subject to income tax in the normal manner. Further information and the mandate form to join the scheme is available by ticking the relevant box in Section 1 of the Application Form. Offer Price, Costs of Offer, Minimum Investment and Working Capital The first 1,500,000 Shares will be allotted at 100 pence per Share with Albion Ventures waiving its fee of 2.5 pence per Share. Thereafter, Shares in the Company are being offered at pence per Share. The issue costs of the Offer, including professional fees and printing costs, will be borne by Albion Ventures, for which it is entitled to a fee of 2.5 pence for each Share issued. Thus the opening Net Asset Value of the Company will be 100 pence per Share. Notwithstanding the above, Albion Ventures may agree to waive its fee of 2.5 pence per Share in respect of applications received from certain institutional and family office investors. Such investors will therefore receive Shares again having an opening Net Asset Value of 100 pence per Share. Save in respect of the Directors and members and employees of Albion Ventures (and their connected persons), the minimum amount of any application under the Offer is 25,

50 Minimum and Maximum Gross Proceeds The minimum gross proceeds which must be received by the Company under the Offer are 1.5 million. The maximum gross proceeds to be received under the Offer are 25 million. No pro forma financial information is included in the Prospectus. The Offer will, however, constitute a gross significant change to the assets of the Company if: (i) the Minimum Net Proceeds are received as the assets of the Company will increase by 1.5 million; and (ii) the Maximum Net Proceeds are received as the assets of the Company will increase by 24.4 million. The Company expects that the Offer proceeds will be used to undertake projects that will be earnings enhancing. Working Capital After taking into account the receipt of the Minimum Net Proceeds, the Company is of the opinion it has sufficient working capital for its present requirements, that is for at least 12 months from the date of the Prospectus. 46

51 Part II Taxation 47

52 Part II Taxation 1. Introduction The value of any tax relief depends on a Shareholder s individual circumstances. The summary below does not set out all the rules which must be met by a Shareholder and the Company. It is intended only as a general guide and is not a substitute for obtaining professional tax advice. 2. Inheritance Tax and Business Property Relief BPR (as referred to on page 44 of the Prospectus) is expected to be applicable once a Qualifying Trade has been established for a minimum of two years. However, HMRC will not give guidance on whether or not a company has established a Qualifying Trade for IHT and BPR purposes. Consequently, there is no guarantee that the tax relief described above will be available to Shareholders. 3. Capital Gains Tax ( CGT ) A Shareholder who is an individual and who is resident or ordinarily resident in the UK who disposes of his or her Shares may have a liability to CGT on chargeable gains. The tax liability will depend on the availability of the annual exemption and of any tax reliefs/deductions such as capital losses. The current tax rate is 18 per cent. or 28 per cent. for individuals depending on their taxable income. A disposal by way of redemption of Shares by the Company may be subject to income tax instead of CGT. Income tax would be due on the amount by which the sale proceeds exceed the original subscription price paid for the Shares. That amount would be treated as a distribution, and subject to the rate of income tax applicable to dividends, which for higher rate (40%) income tax payers is 25% and for additional rate (45%) income tax payers is 30.6%. 4. Dividends The tax on net dividends will be a further amount of 25% for a higher rate (40%) income tax payer and 30.6% for additional rate (45%) income tax payers. No taxation will be withheld at source on any income arising from the Shares and the Company assumes no responsibility for such withholding. 48

53 Part III Statutory and General Information 49

54 Part III Statutory and General Information 1. The Company The Company was incorporated in England and Wales on 3 October 2012 (registered number ) under the Act as a public company limited by shares with the name Albion Community Power PLC. Subject to receipt of the Minimum Subscription, the Company will apply to the Registrar of Companies for a certificate under section 761 of the Act entitling it to commence trading. The liability of the members of the Company is limited. 2. Share Capital 2.1 The share capital of the Company on incorporation was one ordinary share of 1.00 in the capital of the Company, which was issued as fully paid to Patrick Reeve. 2.2 By ordinary and special resolutions passed on 30 May 2013: (a) (b) (c) the one issued ordinary share of 1.00 held by Patrick Reeve was subdivided into 100 ordinary shares of 0.01 each in the capital of the Company and those 100 ordinary shares of 0.01 each were redesignated into 100 A ordinary shares of 0.01 each in the capital of the Company; the Directors were generally and unconditionally authorised in accordance with section 551 of the Act to exercise all the powers of the Company to allot equity securities (as defined in section 560 of the Act) up to an aggregate nominal amount of 1.5 million, such authority to expire on the date which is the fifth anniversary of the passing of the resolution (unless previously revoked, varied or extended by the Company in general meeting); the Directors were empowered (pursuant to section 570 of the Act) to allot or make offers or agreements to allot equity securities (as defined in section 560 of the Act) for cash pursuant to the authority referred to in paragraph 2.2.(b) above as if section 561(1) of the Act did not apply to such allotment during the period commencing on the date of the passing of the resolution and ending on the date which is the fifth anniversary of the passing of the resolution. This power is limited to the allotment of equity securities in connection with: (i) (ii) (iii) (iv) any issue of Shares made pursuant to the Offer; an issue of Shares in connection with a dividend reinvestment scheme; an offer of securities by way of rights; and the exercise of Warrants issued pursuant to the Warrant Instrument; (d) (e) the Company adopted new articles of association; the amount standing to the credit of the share premium account that will be attributable to the Shares issued under the Offer will be cancelled. 50

55 2.3 Save as disclosed above, in paragraph 6 below and in respect of the Warrants referred to on page 39: (a) (b) since incorporation of the Company, there has been no change in the amount of the issued share or loan capital of the Company; and no share or loan capital of the Company is under option or has been agreed, conditionally or unconditionally, to be put under option. 2.4 There are no major Shareholders of the Company; the only shareholder at the date of the Prospectus is Patrick Reeve, who subscribed for shares on incorporation. All shares in the share capital of the Company carry the same voting rights. 2.5 There are no arrangements known to the Company, the operation of which may at a subsequent date result in a change of control of the Company. 2.6 There are no shares in the share capital of the Company not representing capital. 2.7 The Shares will be in registered form. No temporary documents of title will be issued and prior to the issue of definitive certificates, transfers will be certified against the register. It is expected that definitive share certificates for the Shares not to be held through CREST will be posted to allottees within 30 calendar days following the allotment of the relevant Shares. Shares to be held through CREST will be credited to CREST accounts on issue. CREST is a paperless settlement procedure enabling securities to be evidenced otherwise than by a certificate and otherwise than by a written instrument. The Articles permit the holding of shares in CREST. 3. Subsidiaries The Company has no subsidiaries. In due course, however, it is anticipated that projects will be undertaken by the Company through majority owned subsidiary companies. 4. Articles of Association The articles of association of the Company (the Articles ) which were adopted by a special resolution passed on 30 May 2013 contain, inter alia, provisions to the following effect: 4.1 Objects The Company has unrestricted objects. 4.2 Calling An annual general meeting must be called by giving at least 21 clear days notice and a general meeting (other than where special notice is required) may be called by giving at least 14 clear days notice. Notice shall be given in the form prescribed in the Articles. 51

56 4.3 Rights attaching to shares (a) Voting Subject to any special terms as to voting upon which any Share or A Share may be issued, or may for the time being be held (as to which there are none at present), on a show of hands every member who (being an individual) is present in person or (being a corporation) is present by a duly authorised representative, not being himself a member, shall have one vote, and on a poll every member present in person or by proxy shall have one vote for every Share or A Share held. (b) Dividends Subject to the provisions of the Act and of the Articles and to any special rights attaching to any Shares or A Shares (as to which there are none at present), the Company may by ordinary resolution declare dividends, provided that no such dividends shall exceed the amount recommended by the Directors. All dividends shall be apportioned and paid pro-rata according to the amounts paid up or credited as paid up (other than in advance of calls) on the Shares. Interim dividends may be paid in accordance with the Articles. No dividends in respect of a Share shall bear interest. All dividends unclaimed for a period of 12 years after having been declared shall be forfeited and shall cease to remain owing by the Company. (c) Winding-up On a winding up of the Company, the balance of the assets of the Company available for distribution shall, with the sanction of a special resolution of the Company, be divided amongst the Shareholders in such manner as shall be determined by the liquidator. (d) Redemption of Shares 4.4 Transfer of shares Subject to the provisions of the Act, the Articles and to any special rights attaching to the Shares, a Shareholder may give the Company notice requiring it to redeem his Shares and the Company will (subject to the terms of the Articles, the Act and any regulatory requirements) redeem those Shares within three calendar months after the first anniversary of allotment of Shares (subject to the Directors dispensation to direct earlier redemptions). Shares will be redeemed at a price equal to the Net Asset Value of the Shares at the previous half year or year end (as stated in the most recent published annual audited or unaudited interim accounts at the date of the redemption notice) less a discount of one per cent. Any Shares which are redeemed by the Company will be cancelled. The A Shares are not redeemable shares. All transfers of Shares and A Shares must be effected by an instrument of transfer in writing in any usual form or in any other form approved by the Directors. The instrument of transfer shall be signed by or on behalf of the transferor (and, in the case of a partly paid Share, also by or on behalf of the transferee). The transferor will be deemed to remain the holder of a Share or an A Share until the name of the transferee is entered into the register of members in respect of it. The Directors may refuse to register a transfer of Shares or A Shares in the following circumstances: (a) (b) where a Share or A Share is not fully paid up; where a transfer relates to more than one class of shares; 52

57 (c) (d) (e) where the Company has a lien over the Shares or A Shares; where the transfer is in favour of more than four transferees; and where the transfer is not duly stamped or certified as exempt from stamp duty or is not lodged at the registered office of the Company or is not accompanied by a share certificate (or a suitable form of indemnity) and such other evidence as the Board may require of the authority of the transferor to make the transfer. If the Board refuses to register a transfer it must, within two months after the date on which the transfer was lodged with the Company, send notice of the refusal to the transferee. The registration of transfers may be suspended by the Directors for any period (not exceeding 30 days) in any year. 4.5 Failure to Disclose Interest in shares If a member, or any other person appearing to be interested in Shares or A Shares held by that member, has been duly served with a notice under section 793 of the Act and has failed in relation to any Shares or A Shares (the Restricted Shares ) to give the Company the information thereby required within 14 days from the date of the notice the following sanctions shall apply: (a) (b) if the Restricted Shares represent less than 0.25 per cent of the issued shares of their class the holders of the Restricted Shares shall not be entitled to be present or to vote (either in person or by representative or proxy) at any general meeting or at any separate meeting of the holders of any class of shares or on any poll or to exercise any voting rights thereat; and if the Restricted Shares represent at least 0.25 per cent. of the issued shares of their class, the holders of the Restricted Shares shall not be entitled: (i) (ii) (iii) to be present or to vote (either in person or by representative or proxy) at any general meeting or at any separate meeting of the holders of any class of shares or on any poll or to exercise any voting rights thereat; to transfer any of those Restricted Shares or any rights in them; or to receive any dividend (or other monies payable in respect of the Restricted Shares). 4.6 Variation of Rights Subject to the provisions of the Act and of the Articles, the special rights attached to any class of shares in the Company (as to which there are none at present) may be varied or abrogated: (a) in such manner (if any) as may be provided by such rights; or (b) in the absence of any such provision either with the consent in writing of the holders of not less than three quarters in nominal value of the issued shares of the class or with the sanction of a special resolution passed at a separate general meeting of the holders of the shares of the class (but not otherwise). The quorum for such separate meeting of the holders of the shares of the class shall be so far as is applicable at least two persons holding or representing by proxy at least one-third in nominal value of the issued shares of the relevant class. 4.7 Directors (a) Interest in Contracts A Director may not vote on any resolution that in any way concerns or relates to a matter in which he has, directly or indirectly, any kind of interest whatsoever and if he shall vote on such resolution his vote shall not be counted (subject to the exclusions set out in the Articles). 53

58 Each Director shall disclose his interest in contracts in accordance with section 177 of the Act and the Articles. (b) Directors Remuneration The ordinary remuneration paid to Directors for their services in the office of director shall not exceed 225,000 per annum, or such greater sum as the Company may determine by ordinary resolution. Such remuneration shall be divided between the Directors as they shall agree, or failing agreement, equally. The Directors are entitled to be repaid all travelling, hotel and other expenses properly incurred by them in or about the performance of their duties as Directors and if in the opinion of the Directors it is desirable that any of their number should make any special journeys or perform any special services on behalf of the Company or its business, such Director or Directors may be paid such reasonable additional remuneration and expenses therefor as the Directors may from time to time determine. (c) Number and Share Qualification Unless and until otherwise determined by the Company by ordinary resolution the number of Directors (other than alternate directors) shall not be less than two. A Director is not required to hold any shares in the Company by way of qualification. The Directors shall be required to retire by rotation. (d) Retirement and Removal 4.8 Borrowing Powers At each annual general meeting one third of the Directors for the time being (or if their number is not a multiple of three, the number nearest to but not exceeding one third) must retire from office by rotation. The Articles do not require a Director to vacate his office on or by reason of attaining or having attained the age of 70. Without prejudice to any claim for damages which he may have for breach of any contract of service between him and the Company, any Director may be removed from office by an ordinary resolution of the Company in accordance with section 168 of the Act of which special notice has been given (in accordance with section 312 of the Act). The Directors may exercise all the powers of the Company to borrow money and to mortgage or charge all or any part of its undertaking, property and uncalled capital and, subject to the provisions of the Act, to issue debentures and other securities whether outright or as collateral security for any debt, liability or obligation of the Company or any third party. The aggregate amount for the time being outstanding in respect of monies borrowed or secured by the Company and its subsidiaries (exclusive of intra-group borrowings and after deducting cash deposited) shall not at any time, without the previous sanction of an ordinary resolution of the Company, exceed an amount equal to 25 per cent. of the Net Asset Value of the Company. 4.9 Pensions and Benefits The Directors may exercise all the powers of the Company to give or award pensions, annuities, gratuities, superannuation and other allowances or benefits to any person who is or has at any time been a director of or employed by or in the service of the Company or any subsidiary company of the Company and to any member of his family or any person who is dependent on him. For this purpose, the Directors may establish, maintain, support, subscribe and contribute to any scheme, trust or fund. 54

59 4.10 CREST CREST is a paperless settlement procedure enabling securities to be evidenced otherwise than by a certificate and transferred otherwise than by a written instrument. The Company s articles of association are consistent with CREST membership and allow for the holding and transfer of shares in uncertificated form pursuant to the Uncertificated Securities Regulations The Shares have been made eligible for settlement in CREST Electronic Communications The Articles will permit electronic communications with members subject to the provisions of the Act. 5. Directors Appointments and Remuneration The existing letters of appointment of the Directors are as follows: 5.1 Tim Yeo has been appointed as non-executive chairman of the Company. Pursuant to a letter of appointment dated 30 May 2013, Tim Yeo agreed to act as a non-executive Director and Chairman of the Company. The appointment is terminable by either party on three months written notice and is terminable immediately on retirement or rotation or if removed as a Director in accordance with the Articles and inter alia in the event of a serious breach by Mr Yeo. He will be entitled to a fee equal to the sum of 15,000 and 0.035% of the Net Asset Value, provided that the total fee payable shall not exceed 50,000. There is a right to pay Mr Yeo in lieu of fees during his notice period. Mr Yeo is not eligible to participate in any Company share bonus or pension schemes or other benefit in kind arrangements of the Company nor is he entitled to any compensation on loss of office. 5.2 Robert Armour has been appointed as non-executive director of the Company. Pursuant to a letter of appointment dated 30 May 2013, Robert Armour agreed to act as a nonexecutive Director of the Company. The appointment is terminable by either party on three months written notice and is terminable immediately on retirement or rotation or if removed as a Director in accordance with the Articles and inter alia in the event of a serious breach by Mr Armour. He will be entitled to a fee equal to the sum of 11,250 and % of the Net Asset Value, provided that the total fee payable shall not exceed 35,000. There is a right to pay Mr Armour in lieu of fees during his notice period. Mr Armour is not eligible to participate in any Company share bonus or pension schemes or other benefit in kind arrangements of the Company nor is he entitled to any compensation on loss of office. 5.3 Patrick Reeve has been appointed as Chief Executive of the Company. Pursuant to a service agreement dated 30 May 2013, Patrick Reeve agreed to act as Chief Executive of the Company. The appointment is terminable by either party on three months written notice and is terminable immediately on retirement or rotation or if removed as a Director in accordance with the Articles and inter alia in the event of a serious breach by Mr Reeve. He will be paid an annual salary of 5,000 where the Net Asset Value is equal to 1.5 million and 30,000 where the Net Asset Value is equal to or greater than 100 million. Where the Net Asset Value is between 1.5 million and 100 million he will be paid an annual salary pro-rata. There is a right to pay Mr Reeve in lieu of salary during his notice period. Mr Reeve is not eligible to participate in any Company share bonus or pension schemes or other benefit in kind arrangements of the Company nor is he entitled to any compensation on loss of office. 55

60 5.4 David Gudgin has been appointed as Managing Director of the Company. Pursuant to a service agreement dated 30 May 2013, David Gudgin agreed to act as Managing Director of the Company. The appointment is terminable by either party on three months written notice and is terminable immediately on retirement or rotation or if removed as a Director in accordance with the Articles and inter alia in the event of a serious breach by Mr Gudgin. He will be paid an annual salary of 10,000 where the Net Asset Value is equal to 1.5 million and 80,000 where the Net Asset Value is equal to or greater than 100 million. Where the Net Asset Value is between 1.5 million and 100 million he will be paid an annual salary pro-rata. There is a right to pay Mr Gudgin in lieu of salary during his notice period. Mr Gudgin is not eligible to participate in any Company share bonus or pension schemes or other benefit in kind arrangements of the Company nor is he entitled to any compensation on loss of office. 5.5 Isabel Dolan has been appointed as Finance Director of the Company. Pursuant to a service agreement dated 30 May 2013, Isabel Dolan agreed to act as Finance Director of the Company. The appointment is terminable by either party on three months written notice and is terminable immediately on retirement or rotation or if removed as a Director in accordance with the Articles and inter alia in the event of a serious breach by Ms Dolan. She will be paid an annual salary of 5,000 where the Net Asset Value is equal to 1.5 million and 30,000 where the Net Asset Value is equal to or greater than 100 million. Where the Net Asset Value is between 1.5 million and 100 million she will be paid an annual salary pro-rata. There is a right to pay Ms Dolan in lieu of salary during her notice period. Ms Dolan is not eligible to participate in any Company share bonus or pension schemes or other benefit in kind arrangements of the Company nor is she entitled to any compensation on loss of office. It is estimated that the maximum aggregate fees payable to the non-executive directors and salary payable to the executive Directors for the financial period from 1 December 2012 to 30 November 2013 under arrangements in force at the date of the Prospectus will not exceed 40, Directors and Other Interests in the Company 6.1 The interests of the Directors, their families and connected persons (as defined in section 252 of the Act) in the share capital of the Company (all of which are beneficial and are or will be fully paid up) immediately before and after the Offer are or will be as follows: Existing Following the Offer (assuming the Maximum Subscription is raised) Number of Shares and A Shares Percentage of issued Shares and A Shares Number of Shares and A Shares Percentage of issued Shares and A Shares Tim Yeo Nil Nil 10, % Robert Armour Nil Nil 10, % Patrick Reeve , % David Gudgin Nil Nil 25, % Isabel Dolan Nil Nil 10, % 56

61 6.2 Patrick Reeve, David Gudgin and Isabel Dolan are also partners of Albion Ventures. 6.3 The Directors currently hold, and have during the five years preceding the date of the Prospectus held, the following directorships and/or partnerships: Name Timothy Yeo Robert Armour Current directorships/ partnerships Adeptt Ltd AFC Energy PLC Anacol Holdings Ltd Education Link Trust Eurotunnel Group UK PLC Groupe Eurotunnel SA General Securities Register Ltd Locana Corporation (London) Ltd TMO Bio Tech Ltd TMO Renewables Limited TNU PLC AVESI Limited Equiniti David Venus Ltd Loricatus Ltd Regenerco Renewable Energy Ltd Smarter Grid Solutions Ltd The Scottish Council for Development and Industry The Street by Street Solar Programme Ltd Past directorships/ partnerships Eco City Vehicles PLC First London PLC (in voluntary creditors liquidation) ITI Energy Ltd Univent Ltd Waste 2Tricity Ltd Association of Electricity Producers Ltd British Energy Bond Finance PLC British Energy Direct Ltd British Energy Finance Ltd British Energy Generation (UK) Ltd British Energy International Holdings Ltd British Energy Investment Ltd British Energy Ltd British Energy Renewables Ltd British Energy Technical Services Ltd British Energy Trading and Sales Ltd British Energy Trading Services Ltd British Energy Treasury Finance Ltd British Energy Trustees Ltd District Energy Ltd EDF Energy Nuclear Generation Ltd Eggborough Power (Holdings) Ltd Eggborough Power Ltd Hunterston Properties Ltd Lewis Cable Ltd (Dissolved) Northern Power Ltd Nuclear Industry Association Stornoway Wind Power Ltd Western Isles Renewables Ltd (Dissolved) 57

62 Name Current directorships/ partnerships Past directorships/ partnerships Patrick Reeve Albion Ventures LLP Albion Investment Properties Ltd Albion Enterprise VCT PLC Evolutions Television Ltd Albion Income & Growth VCT PLC Kings Arms Yard VCT PLC Albion Prime VCT PLC Vealnamco (123) Ltd (in voluntary (in voluntary members liquidation creditors liquidation) following its merger with Albion Venture Capital Trust PLC) Albion Technology & General VCT PLC Bamboo Investments Ltd Bamboo Investments (No2) Ltd C Ventures Ltd Evolutions Group Ltd (in voluntary members liquidation) Healthcare & Leisure Property Limited Ferard-Reeve Publishing Ltd Opta Sports Data Limited The British Private Equity and Venture Capital Association UCL Business PLC David Gudgin Albion Ventures LLP Chichester Holdings Limited GB Pub Company VCT Limited Kensington Health Clubs Limited Mirada Medical (EBT) Limited Mirada Medical Limited Orchard Portman Hospital Limited Taunton Nursing Home Limited TEG Biogas (Perth) Limited The Weybridge Club Limited Tower Bridge Health Clubs Limited C Ventures Limited Greenenerco Limited Nelson House Hospital Limited Taunton Hospital Limited Isabel Dolan Albion Ventures LLP No 34 Brailsford Road Management Co. Ltd C Ventures Ltd 6.4 Save as disclosed in paragraph 6.3 above, as at the date of the Prospectus, none of the Directors: (a) (b) (c) (d) has any convictions in relation to fraudulent offences for the previous five years; has been bankrupt; was a director of a company or a partner of a partnership which suffered any bankruptcy, receivership or liquidation in the previous five years; or has been subject to any official public incriminations and/or sanctions of such person by statutory or regulatory authorities (including designated professional bodies) or has ever been disqualified by a court from acting as a director of a company or conducting the affairs of any company. 58

63 6.5 Save as disclosed in paragraph 6.2 above and paragraph 9 below there are no conflicts or potential conflicts between the duties owed to the Company by the Directors and their private interests. 6.6 There are no restrictions as to when the Directors may dispose of any Shares in the share capital of the Company held by them. 6.7 There are no amounts set aside or accrued by the Company to provide pension or similar benefits to the Directors. 6.8 Save for payment during respective notice periods, none of the Directors are entitled to a payment on termination of their letters of appointment. 7. Material Contracts 7.1 By an agreement dated 30 May 2013 (the Offer Agreement ) made between: the Company (1); Directors (2) and Albion Ventures (3), Albion Ventures has undertaken as promoter of the Company to assist in procuring subscribers under the Offer for up to 25 million before expenses and to underwrite up to 500,000 under the Offer. The fee arrangements under the Offer Agreement are as follows: (a) other than the first 1,500,000 raised, the Company shall pay to Albion Ventures an amount equal to 2.5 pence for every pence subscribed for Shares. Out of this amount, Albion Ventures shall pay (together with VAT where applicable): (i) (ii) all out of pocket expenses properly incurred by Albion Ventures in connection with its obligations hereunder; and all the other costs and expenses of the Offer including (without limitation) the fees and expenses of professional advisers, the cost of printing the Offer documents, share certificates and letters of acceptance, rejection and regret and the fees of the Registrars; Albion Ventures will reimburse the Company the amount of any such expenses which the Company may have paid. The Company may withhold any such amounts from any payment otherwise due to Albion Ventures pursuant to the Offer Agreement; (b) (c) The total costs payable by the Company, therefore, will be limited to approximately 2.3 per cent. of the gross proceeds of the Offer (assuming the Maximum Subscription). In the event that the fee payable to Albion Ventures is insufficient to pay the costs set out in the Offer Agreement, Albion Ventures has undertaken to pay any shortfall promptly on production to it of evidence of the amounts being due and payable. In respect of that part of the Offer to be underwritten by Albion Ventures, the Offer Agreement provides that Albion Ventures will apply for up to 500,000 Shares under the Offer if by 30 September 2013 (or such later date as the Board resolves) the Minimum Subscription is not achieved. The terms of the underwriting by Albion Ventures are as follows: (i) the number of Shares for which Albion Ventures will subscribe together with other applications received by the Company under the Offer as at 30 September 2013 (or such earlier or later date as the Board resolves) will be sufficient to satisfy the Minimum Subscription, provided that the number of Shares for which Albion Ventures will subscribe will not in any event exceed 500,000 Shares; 59

64 (ii) (iii) the price per Share to be paid by Albion Ventures will be 100 pence; and such Shares will not be issued to Albion Ventures to the extent that it will (together with persons acting in concert (as defined in the City Code on Takeovers and Mergers (the City Code )) with Albion Ventures) be interested in Shares carrying 30 per cent. or more of the voting rights of the Company save with the consent of the Panel on Takeovers and Mergers. 7.2 An agreement dated 30 May 2013 (the Management Services Agreement ) made between: the Company (1); and Albion Ventures (2), pursuant to which Albion Ventures has agreed to make available executive management and certain other services to the Company for a fee payable monthly in arrears in each year (together with any applicable VAT) at the rate of 2 per cent. per annum of the Net Asset Value of the Company less the amount of salaries paid by ACP to the executive directors and managers of the Company. The fee payable to Albion Ventures under the Management Services Agreement is in addition to the Warrants that will be issued under the Warrant Instrument as provided below. 7.3 A warrant instrument dated 30 May 2013 (the Warrant Instrument ) issued by the Company, pursuant to which the Company will issue Warrants over Shares to Albion Ventures or if directed by Albion Ventures to certain third parties as referred to on page 39 of the Prospectus. 8. Related Party Transactions Save as set out in paragraph 7 above, since incorporation the Company has not entered into any related party transactions. 9. Conflicts Of Interest Albion Ventures manages a number of VCTs and has to date invested or is in the process of investing approximately 32 million in renewable energy projects through those VCTs. The VCTs which Albion Ventures manages have a maximum allocation for renewable energy investments of 42.5 million and are precluded by VCT legislation from investing in further solar and wind projects. Therefore all potential solar and wind projects will be referred to ACP, together with all other renewable energy projects once the VCTs have reached the 42.5 million level. Albion Ventures believes it has already identified the requisite level of further projects to achieve that level. In the event that the VCTs sell any of their renewable energy investments Albion Ventures is required to offer the VCTs additional projects to enable the VCTs to maintain that level. Any investment made in a company in which a fund managed by Albion Ventures has invested or intends to invest will be approved by the Directors who are independent of Albion Ventures unless the investment is made at the same time and on the same terms or in accordance with a specific preexisting agreement between the Company and Albion Ventures. Patrick Reeve, David Gudgin and Isabel Dolan will not be able to vote on any resolution of the Board that in any way concerns or relates to a matter in which he or she has, directly or indirectly, any kind of interest whatsoever and if he or she shall vote on such resolution his or her vote shall not be counted (subject to the exclusions set out in the Articles). 60

65 10. General 10.1 Save as disclosed in paragraph 7.1 above, the Offer is not underwritten. The expenses of and incidental to the Offer and registration fees, printing, advertising and distribution costs, legal and accounting fees and expenses, will be borne by Albion Ventures out of the 2.5 pence per Share initial fee payable to Albion Ventures. The net proceeds will be applied in accordance with the Company s business strategy as described in the Prospectus The accounting reference date of the Company is 30 November. The first financial year end will be 30 November The registered office and principal place of business of the Company is at 1 King s Arms Yard, London EC2R 7AF. The Company has no subsidiaries or associated companies and is not part of a group The Promoter, marketing adviser and receiving agent is Albion Ventures, company number OC341254, whose registered office and business address is at 1 King s Arms Yard, London EC2R 7AF. Albion Ventures was incorporated in England and Wales on 6 November 2008 as a limited liability partnership. The Promoter, marketing adviser and receiving agent can be contacted on (calls to this number may be recorded for monitoring purposes) The Offer is promoted by Albion Ventures, which is authorised and regulated by the Financial Conduct Authority, with registered number The Company was incorporated on 3 October Since incorporation, the Company has not commenced operations and, as at the date of the Prospectus, no financial statements, interim or audited financial information have been made up Moore Stephens of 150 Aldersgate Street, London EC1A 4AB, have been the only auditors of the Company since its incorporation. Moore Stephens are registered as auditors by the Institute of Chartered Accountants in England and Wales As at the date of the Prospectus, the Company has not incurred any indebtedness. The Company has the power to borrow. Details are set out in the paragraph entitled Borrowings on page 45 of the Prospectus. As at the date of the Prospectus, the Company has no guaranteed, secured, unguaranteed or unsecured debt and no direct or indirect contingent indebtedness. Details of the Company s share capital are set out in paragraph 2 of this Part A typical investor for whom the Offer is designed is a person who is willing to invest a minimum of 25,000 in a renewable energy business which is expected to be eligible for Business Property Relief whether or not they are professionally advised Before deciding whether to apply for Shares under the terms of the Offer you are recommended to consult an independent adviser authorised under the FSMA and an appropriately qualified tax adviser As at the date of the Prospectus, the Company has no principal investments and no principal investments are in progress As at the date of the Prospectus, the Company has not made a firm commitment to acquire any principal future investments. 61

66 10.13 There have been no governmental, legal or arbitration proceedings (including any such proceedings which are pending or threatened of which the Company is aware) since the Company s incorporation which may have, or have had in the recent past, a significant effect on the Company s financial position or profitability The Company does not comply with the UK s corporate governance regime and will not be required to report on its compliance as it will not be a listed company The members of the audit committee of the Company will be determined by the Board from time to time but will initially comprise Timothy Yeo, Robert Armour and Patrick Reeve. The committee will be chaired by Timothy Yeo. The committee will have direct access to Moore Stephens, the Company s external auditor. The duties of the audit committee are, inter alia: (a) (b) (c) reviewing the appropriateness of the Company s accounting policies as may generally be applicable to the Company and making recommendations to the Board in connection therewith as appropriate; reviewing and approving the half yearly and annual results of the Company and the statutory accounts before submission to the Board; reviewing and approving the external auditor s terms of engagement and remuneration The Company shall also establish nomination and remuneration committees. The members of the remuneration committee of the Company will be determined by the Board from time to time, acting on the recommendation of the nomination committee; it will initially comprise Timothy Yeo, Robert Armour and Patrick Reeve. The duties of the remuneration committee are, inter alia: (a) (b) (c) determining and agreeing with the Board the framework or a policy for the remuneration of the non-executive directors; reviewing and monitoring the on-going appropriateness and relevance of the policy; and benchmarking the remuneration of the Company against other companies Save as set out in paragraph 2 of this Part, there are no Shares in the share capital of the Company under option or agreed conditionally or unconditionally, to be put under option The Shares and the A Shares will be subject to the rules regarding mandatory takeover offers set out in the City Code. Under Rule 9 of the City Code when: (i) a person acquires shares which, when taken together with shares already held by him or persons acting in concert with him, carry 30 per cent. or more of the voting rights of a company subject to the City Code; or (ii) any person who, together with persons acting in concert with him, holds not less than 30 per cent., but not more than 50 per cent., of the voting rights, then in either case that person together with the persons acting in concert with him is normally required to make a general offer in cash, at the highest price paid by him, or any person acting in concert with him, for shares in the company within the preceding 12 months, for all the remaining equity share capital of the company The Shares and the A Shares will be subject to the compulsory acquisition procedures set out in sections 974 to 989 (inclusive) of the Act. Under section 979 of the Act, where an offeror makes a takeover offer (as defined in section 974 of the Act) and receives valid acceptances in respect of, or acquires, 90 per cent. or more of the shares to which the offer relates, that offeror is entitled to acquire compulsorily those shares not assented to the offer. 62

67 11. Third Party Information All third party information in the Prospectus has been identified as such by reference to its source and in each instance has been accurately reproduced and, so far as the Company is aware and is able to ascertain from information published by the relevant party, no facts have been omitted which would render the reproduced information inaccurate or misleading. 12. Financial Intermediaries The Company and the Directors consent to the use of the Prospectus, and accept responsibility for the content of the Prospectus, with respect to subsequent resale or final placement of securities by financial intermediaries, from the date of the Prospectus until the close of the Offer. The Offer is expected to close on or before 30 April 2014, unless previously extended by the Directors but may not extend beyond 31 May There are no conditions attaching to this consent. Financial intermediaries may use the Prospectus in the UK. In the event of an Offer being made by a financial intermediary, the financial intermediary will provide information to investors on the terms and conditions of the Offer at the time that the Offer is made. Any financial intermediary using the Prospectus must state on its website that it is using the Prospectus in accordance with the consent set out in this paragraph Availability of Prospectus Copies of the following documents will be available for inspection free of charge during normal business hours on any weekday (Saturday, Sundays and public holidays excepted) for the life of the Prospectus from the Company s registered office and at the offices of Bird & Bird LLP: 13.1 the Articles of Association of the Company; 13.2 the material contracts listed in paragraph 7; and 13.3 the Prospectus. Dated 6 June

68 Part IV Terms and Conditions of Application 64

69 Part IV Terms and Conditions of Application (a) (b) (c) The contract created by the acceptance of applications under the Offer will be conditional upon the Offer Agreement described in paragraph 7.1 of Part III of the Prospectus dated 6 June 2013 ( the Prospectus ) becoming unconditional and not being terminated in accordance with its terms and the Minimum Subscription being achieved by 30 September 2013 or such later date as the Board resolves. The right is reserved by the Company to present all cheques and bankers drafts for payment on receipt, to retain surplus application monies pending clearance of successful applicants cheques and/or to make allotments at any time. The Company also reserves the right to reject, in whole or in part, any application. If any application is not accepted in full or if any contract created by acceptance does not become unconditional or the Minimum Subscription is not achieved by 30 September 2013 or such later date as the Board resolves or the Offer is oversubscribed the application monies or as the case may be the balance thereof, will be returned by bank transfer in favour of the applicant, within 14 days of the closing of the Offer. By completing and delivering an Application Form you: (i) (ii) (iii) (iv) (v) (vi) (vii) (viii) offer to subscribe for the number of Shares calculated by dividing the amount specified in your Application Form (or such lesser amount for which your application is accepted) by the Offer price of pence per Share (unless otherwise agreed with Albion Ventures) on the terms of and subject to the Prospectus, including these terms and conditions and the Articles; agree that, in consideration of the Company receiving your application, your application shall not be revoked and this paragraph shall constitute a collateral contract between you and the Company which will become binding upon despatch by post to, or (in the case of delivery by hand) on receipt by, Albion Ventures of your Application Form; warrant that your remittance will be honoured on first presentation; agree that any monies returnable to you may be retained by Albion Ventures pending clearance of your remittance and that such monies will not bear interest; authorise Albion Ventures to send a share certificate in respect of the number of Shares for which your application is accepted, by post, at the risk of the person entitled thereto, to the address of the person named as the applicant in the Application Form; agree that all applications, acceptances of applications and contracts resulting therefrom under the Offer shall be governed by and construed in accordance with English law, and that you submit to the exclusive jurisdiction of the English Courts and agree that nothing shall limit the right of the Company to bring any action, suit or proceedings arising out of or in connection with any such applications, acceptances of applications and contracts in any other manner permitted by law or in any court of competent jurisdiction; confirm that in making such application you are not relying on any information or representation in relation to the Company other than the information contained in the Prospectus and accordingly you agree that no person responsible solely or jointly for the Prospectus or any part thereof or involved in the preparation thereof shall have any liability for any such other information or representation; agree that, having had the opportunity to read the Prospectus, you shall be deemed to have had notice of all information and representations concerning the Company contained herein; 65

70 (ix) confirm and warrant that you have read and complied with paragraphs (d) and (e) below; (x) warrant that you are not under the age of 18; (xi) (xii) agree that all documents and cheques sent by post, by or on behalf of the Company or Albion Ventures, will be sent at the risk of the person(s) entitled thereto; and agree that the Application Form may only be submitted by an independent financial adviser. (d) (e) (f) (g) No person receiving a copy of the Prospectus or an Application Form in any territory other than the United Kingdom may treat the same as constituting an invitation or offer to him, nor should he in any event use such Application Form unless, in the relevant territory, such an invitation or offer could lawfully be made to him or such Application Form could lawfully be used without contravention of any registration or other legal requirements. It is the responsibility of any person outside the United Kingdom wishing to make an application hereunder to satisfy himself as to full observance of the laws of any relevant territory in connection therewith, including obtaining any requisite governmental or other consents, observing any other formalities requiring to be observed in such territory and paying any issue, transfer or other taxes required to be paid in such territory. The Shares have not been and will not be registered under the United States Securities Act of 1933, as amended, and may not be offered or sold in the United States of America, its territories or possessions or other areas subject to its jurisdiction (the USA ). In addition, the Shares have not been and will not be registered under the United States Investment Company Act of 1940, as amended. Albion Ventures will not be registered under the United States Investment Advisers Act of 1940, as amended. No Application will be accepted if it bears an address in the USA. Applicants are encouraged to submit their Application Forms early in order to be confident that their applications will be successful. In the event that applications are received for an amount in excess of the Maximum Subscription under the Offer, the Directors reserve the right to exercise their discretion in the allocation of successful applications although the allocation will usually be on a first come first served basis. The right is also reserved to reject in whole or in part any application or any part thereof and to treat as valid any application not in all respects completed in accordance with the instructions relating to the Application Form. Save where the context otherwise requires, words and expressions defined in the Prospectus have the same meaning when used in the Application Form and any explanatory notes in relation thereto. 66

71 Notes on Completion of the Application Form 67