High risk investment
important information

Risk warnings

You should not rely on the information or opinions set out here before making an investment or other decision but should obtain appropriate and specific professional advice of your own. Nothing contained in this notice constitutes or should be construed to constitute investment, legal, tax or other advice. The information supplied is not and in no way should be construed to constitute a recommendation with respect to the purchase or sale of any investment.

In particular:
Existing tax rules and legislation may change over time and changes can be retrospective. The value of any tax reliefs depends on the personal circumstances of the investors, who should consult their own tax advisers before making an investment.

Whilst the contents of this notice are provided in good faith for information purposes only, no representation or warranty, express or implied is given by Gresham House Asset Management Limited (Gresham House or the Manager) or by any of its directors, members, or employees as to its accuracy or completeness or that it is up to date, and it should not be relied on as such.

To the fullest extent allowed by law and the rules and regulations of the Financial Conduct Authority, Gresham House Asset Management Limited and its directors, members and employees shall not be liable, whether in contract, tort (including negligence) or otherwise howsoever, for any losses, damages, costs or expenses of whatever nature (including (without limitation) any consequential, indirect or unforeseeable loss or loss of bargain, opportunity or profit) incurred or suffered by you or any third party arising out of or in connection with the use of the contents of this notice.

For a full list of risks, please see the Information Memorandum.

Gresham House Wind Energy 1 plc (the Company)

Investment in the Company carries a high degree of risk, including but not limited to the risks referred to below. If any of the risks referred to here below were to occur, the financial position and prospects of the Company could be materially and adversely affected. If that were to occur, the value of the “A” Shares and/or the level of dividends or distributions (if any) received from the “A” Shares could decline significantly and investors could lose all or part of their investment.

The risks referred to below are the risks which are considered to be material but are not the only risks relating to the Company and the “A” Shares. There may be additional material risks that the Company and the Manager do not currently consider to be material or of which the Company and the Manager are not currently aware. Potential investors should review this document carefully, and in its entirety, and consult with their professional advisers before acquiring any “A” Shares.

The following is a list of potential risk factors that investors should be aware of. This list is not exhaustive.

• Gresham House does not provide tax advice and Shareholders should be aware that the taxation treatment (including Inheritance Tax) of the Company and/or its investments could change in the future. Information regarding taxation is based upon current UK taxation legislation and published HM Revenue and Customs (HMRC) practices. Tax law and practice is subject to change. Any changes in the level and basis of taxation, in tax reliefs or in HMRC practices, may affect the value of shares in the Company and returns to Shareholders. Shareholders should seek their own advice on the taxation consequences of investment in the Company.
• The treatment of Capital Allowances by HMRC may vary from time to time or may disappear altogether. Accordingly, the extent to which the Company is subject to corporation tax, and the amount of distributable profits available to pay dividends, may vary.
• An investment in the Company will generally be illiquid. It is not anticipated that a public market for shares in the Company will develop. A Shareholder may not be able to sell their shares at an acceptable price, or at all. In addition, it may be difficult for a Shareholder to obtain reliable information about the value of a share in the Company or the extent of the risks to which such an investment is exposed. There is no guarantee that the valuations provided will accurately reflect the realisation proceeds that may be obtained. As with all valuations, the valuations are based only on the valuer’s professional opinion on a stated date.
• The level of any planned dividend may vary or may not be paid at all.
• Although the Company will insure the assets against standard insurable risks, damage or loss could be caused by events outside the cover, which could affect the value of the Company’s portfolio, or the profits/losses from the Company.
• The Company cannot guarantee that electricity prices or demand will increase to the extent expected, or the industry forecast used by the Manager may prove to be inaccurate, reducing the return to Shareholders below the target. There is thus no certainty that the target IRR will be achieved.
• At present the Company does not own any investments which benefit from the Feed-in Tariff (FiT) or CfD mechanism and currently onshore wind cannot compete for such subsidy unless they are to be built on remote islands, such as in Scotland.
• However, if the Company were to invest in FiT or CfD projects in the future, any incorrect assumptions made by the Manager as to the market reference price under the FiT or CfD could negatively impact the Company’s performance.
• Power production may fall below the forecast levels due to events such as equipment failure, grid constraint or adverse weather conditions. These events could impact on the target IRR being achieved.
• Whilst projects that have been accredited under the Renewables Obligation (RO) prior to the scheme’s closure continue to receive support through ROCs, the Government could decide to change its policy and apply adverse retrospective changes to the levels of support for RO accredited projects in which the Company has (or acquires) a financial interest. This would negatively impact on achievement of the target IRR.
• Ofgem’s review of the current charging framework is ongoing. Although embedded benefit revenue has not been included by the Manager in forecasts or valuations (see Section 2.6.2 of this Information Memorandum), other changes proposed by Ofgem could result in renewable generators having to pay out more in charges. This has the potential to impact on the target IRR.
• Increased tariffs as a result of Brexit and the removal of the UK from the single market could affect the import of wind turbines and equipment from Europe making potential repairs and any future repowering of existing projects more expensive.
• There is no guarantee that extended power generation beyond the initial term of the existing projects can be achieved as this depends on extensions to the existing leases and planning permissions being granted.
• The Company is classified as a Non-Mainstream Pooled Investment and an AIF for regulatory purposes, and the UK Financial Services Compensation Scheme is not generally applicable to claims relating to such assets. Shareholders should seek advice from their Financial Adviser. Consequently, a Shareholder may lose the full amount of their capital in the Company.
• The success of the Company depends on the ability of the Manager to identify and acquire appropriate investment opportunities. There is no guarantee that suitable investments will or can be acquired at prices and on terms to meet the target IRR on assumptions set out in this Information Memorandum or be realised as and when required.
• Any figures set out in this Information Memorandum are prepared on the assumptions stated. These are for illustrative purposes only and do not constitute forecasts.
• Shareholders have no rights to participate in the day-to-day management of the Company or of any of its assets, including any investment or disposal decisions. Gresham House has been appointed to operate and manage the Company. The directors or employees of the Manager who are responsible for decision making and strategy may change from time to time.
• There is no guarantee that the objectives of the Company will be achieved, and the value of its shares may go down as well as up. Past performance is not an indicator of future performance.
• Any forced change in the Manager, or in the management of the Company or in any of the projects in which it invests, could adversely affect the service provided to the Company and the implementation of its strategy.
• The opportunity described in this Information Memorandum may not be suitable for all recipients. The Company is a long-term investment. It is not suitable as a short-term investment. Any prospective investor who has any doubt about the suitability of the Company should consult an independent financial adviser regarding all aspects of the investment, including taxation and National Insurance Contribution matters, prior to committing to invest in the Company.
• Any increase in projected costs of running each wind farm or the overheads of the Company may adversely affect the projected returns from the Company.
• A significant proportion of annual operating costs are maintenance and repair or replacement of the turbines and other infrastructure. The actual level of expenditure will be determined by events during the anticipated lifespan of each development. Other costs out of the control of the Company, such as business rates or use of system charges payable to the grid company for the use of the electricity network at each development, may rise.
• The underlying wind farm assets may employ gearing or other financing. If interest rates are not fixed and they change over their lifetime, financing costs may rise, affecting the ability of the Company to pay dividends. Banking covenants in relation to such financing may also affect the ability of the Company to make dividends or return capital to Shareholders.
• There is no certainty that the Company will be able to sell or refinance all or any part of its portfolio, if so required on termination. In these circumstances, the Company may have to continue to hold the wind farm assets until the end of commercial generation and the sites being reinstated in accordance with planning requirements, which may require the Shareholders to agree to extend the term of the Company.
• Ofgem or other regulators may seek to change the methodology for charging for grid services, such that embedded benefits or any other benefits may change or be removed altogether.
• The macroeconomic effect of Brexit on the value of the Company’s investments in the energy sector is unknown. Brexit could also have an impact on power prices, which form part of the Company’s revenue stream.
• In view of the factors set out above, there can be no guarantee that the Company will be in a position to make dividends to Shareholders and the level of any dividends may fluctuate significantly.
• Constraints on the availability of bank debt and its pricing as a result of prevailing market conditions may affect the ability of Gresham House plc (the Group) to raise or to refinance debt.
• The Group may have to offer security over its underlying assets in order to secure indebtedness. Any failure by the Group to fulfil obligations under any related financing documents (including repayment) may permit a lender to demand repayment of the related loan and to realise its security. In the event that such security involves the lender taking control (whether by possession or transfer of ownership) of the Group’s underlying assets, the Group’s returns may be adversely impacted.