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View Full Version : (CrowdCube) Forest Fuels Renewable Heat



Lelocks Trent
08-05-2012, 08:26 AM
Forest Fuels Renewable Heat
Investment target:£ 350,000

http://www.crowdcube.com/investment/forest-fuels-renewable-heat-10502

About the pitch

Forest Fuels Ltd is an established and profitable renewable energy business supplying premium grade wood fuel for large boilers which are used to heat buildings. Wood chip and wood pellet are a very efficient replacement for oil or gas and wood fuel is currently the highest growth renewable energy technology in the UK. Award winning and market leading, Forest Fuels operates from 11 depots throughout South West and Southern England and the North Midlands, holding long-term contracts for supplying mainly public sector customers such as schools and hospitals. It has a strong and experienced management team.
Forest Fuels is positioned as a leading wood fuel supply company, and is probably the largest Premium Grade wood fuel supplier in the UK following the acquisition of a business in South Yorkshire in summer 2011 and over 50% sales growth year on year over the last few years. The company has been at the forefront of the industry since its inception in 2000 and is set to take advantage of the government-led growth in renewable heat.
We are offering a “kicker”

1. On the first 3 investments of £10,000 or more – instead of £10,000 purchasing 0.33% of the company, it will purchase 0.4%.
2. On investments of £100,000 or more, a company valuation of £2m - ie £100,000 buys 5%.
Clients include the MOD, NHS (where the company has a 15 year contract), most of the local authorities in the South West and South Yorkshire, over 20 schools, and a wide range of private and charitable organisations. Some other clients are Bristol & Bath Science Park (a beacon of technological advancement, where sustainability is the driving force behind the design, and they chose our wood fuel to heat the state of the art buildings), The Eden Project (an inspirational centre for engaging with environmental issues), RSPB, Social Housing providers in Yorkshire and a wide range of other customers.
The predicted increases in gas and oil prices over the next few years are encouraging people to consider wood fuel as a viable alternative.
In addition, the government’s recently launched Renewable Heat Incentive (“RHI”) pays owners of renewable heat technology (including wood fuel boilers) a payment per unit of heat generated. The RHI is a 20 year contract, with annual price increases, and has a committed budget of £860 million. The rates for certain boiler sizes are very generous, allowing short paybacks on boiler purchase.
This is already growing the market for wood fuel very considerably. The government have set ambitious and legally binding targets for renewable energy – 12% of heat is to be generated from renewable sources by 2020, up from 1% in 2010. There have been 3,000 biomass boilers installed to date and there are 40,000 predicted by 2020 (source: Biomass Energy Centre) - a thirteen fold increase. Our market is predicted to be c.£500million by 2020.

In addition to the growth opportunities for fuel supply, the RHI revenue provides an opportunity to act as an Energy Supply Company (ESCO) and offer Heat Service Contracts, where Forest Fuels owns and installs a boiler and charges the customer for the heat produced.

Forest Fuels aims to build upon its prominent position in the market through growth in existing geographical areas, by expanding organically into new areas, and where opportunities arise by undertaking further acquisitions.
As a fuel supplier Forest Fuels will benefit from the longevity of biomass boiler installations – every boiler that is installed will need fuel for at least the next 20 years. Should there be a downturn in the number of installations, Forest Fuels will not be affected in the way that an installer of hardware would be - this makes the business model very robust.
There is a significant buzz of interest about wood fuel heat – both in the marketplace and in the City among investors. Significant players are entering the market – the McAlpine Group purchased boiler installer Wood Energy Ltd and in December 2011 British Gas paid £6.5million in cash for 81% of Econergy (Econergy are wood fuel boiler installers, having installed 500 systems since the company was founded). We believe that serious players like this coming in illustrate the likely growth in the market, and the opportunities for a business such as Forest Fuels with its current market positioning. These serious players also offer possible future exit opportunities for a sale of the business and return for investors.
Forest Fuels is predicted to grow from sales of £1.03 million in the year ended March 2011 up to £6.9 million in 2015. Net profit is predicted to reach £1.367 million in 2015 with strong cash generation.
The company is raising a minimum of £125,000 and up to £350,000. We plan to use the money raised for building timber stock; developing the HSCo business; working capital for further organic growth, focussing on building of a profitable long-term order book; and, if the opportunities arise, for acquisitions. If we raise more than £125,000 we will be able to accelerate our growth strategy even more. We are offering between 4.17% equity for £125,000 and 11.67% for the maximum £350,000. The company is EIS eligible.

Investors will receive "Investor Newsletters" giving an update on progress. The strategy is to build the company in a way which maximises shareholder value. We expect Investors to have the opportunity to exit within the next 5 years, either through a trade sale, secondary fundraising round or Management Buyout.

We believe that Forest Fuels is very well positioned to maintain its leading position throughout the exponential growth in the market that will come in the next few years.
More information is available in the attached Business Plan which can be downloaded from the bottom of the page, or from peter.solly@forestfuels.co.uk

About Peter Solly and Sam Whatmore
Managing Director Peter Solly (37) heads up the business. Peter joined Forest Fuels Ltd in early 2010 and made a significant investment in the company. Peter was previously a founder member of the management buy-out team of www.silvanus-services.co.uk (http://www.silvanus-services.co.uk), a countryside contracting business.
As a Director there, Peter was instrumental in the expansion of Silvanus Services Ltd from sales of £1.5m to £5.5m both organically and by acquisition, seeing it grow to 5 offices covering the area from Cornwall to Nottingham and employing 130 staff. Silvanus was sold to a national competitor in 2007. Peter brings general business and operational management to Forest Fuels, specific knowledge and experience of buy-and build expansion, and achieving an exit by trade sale. He is also a qualified forester.

Since joining Forest Fuels, Peter has lead the expansion of the company from £500k turnover to its current level of approx £1.5m, and the acquisition of a business in Yorkshire.
Director and Founder Sam Whatmore (44) has been involved in the wood fuel industry since 2000 and is recognised as an industry expert.
Sam was named “Sustainable Energy Champion of the Year 2011” in the Green Energy Awards in November. He sits on one of the Expert Joint Planning Groups (EJPG), part of the C Change Project (www.cchangeproject.org (http://www.cchangeproject.org)) , is Vice Chair of the Woodfuel Suppliers Group and a Fellow of the Royal Society of Arts.

Sam is a qualified forester and before founding Forest Fuels he ran a successful woodland management and contracting business.
In addition to Peter and Sam, the business has a strong team of 11 people in total.