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August 2013
An opportunity to invest in a Community owned Co-operative to facilitate the purchase of The Crown Inn, Blencowe; a public house in
the heart of the community.
Opening date: September 9th 2013 Closing date: October 18th 2013
www.blencowecommunitypub.wordpress.com
BLENCOWE
COMMUNITY
PUB LTD. PROSPECTUS
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Introduction
We are seeking investors who wish to become members of a community co-operative that plans to buy The Crown Inn, Blencowe, Cumbria. We plan to re-open it as a pub, run for the benefit of the residents of the local villages and visitors to the area.
It will be a profitable business and while this is primarily a social investment it will offer modest returns to the members of the society.
It will provide a service to the village and visitors to the area and will support other local businesses and tourism in the northern Lake District; more importantly it will put the heart back into the village and provide a central place for local gatherings, cultural activities, a place to meet people and exchange information promoting a cohesive and friendly community in the area. It is intended that the pub will work closely with, and in support of, other community facilities and specifically the village hall.
If you make an investment you will become a member of Blencowe Community Pub Ltd. We are an Industrial and Provident Society for community benefit, a co-operative run for the benefit of the local community. You will have a say in how the business is run and who runs it. You will be a co-owner of a traditional Cumbrian public house in a beautiful setting on the village green. You will always receive a friendly welcome in the pub that you own. All shareholders will receive commemorative certificates. ‘The Pub is the Hub’ is not just a good slogan, it’s a philosophy. We will be looking to members to support local societies mid-week, to promote use as a library or to organise pensioners specials at lunchtimes; to use the pub as the bar for local events organised by the community, as a venue for music and poetry reading, for local history and book clubs – organised by members of the community, not the landlord, because it is the community’s pub.
Members are asked to invest a minimum of £250. Each member will have an equal say in the enterprise. The initial directors that have formed the society are accountable to the membership and will, in future, be elected by them. Members will receive a regular newsletter and be entitled to attend the Annual General Meeting and other special general meetings that may be called from time to time.
We aim to raise £250,000 from members. This sum will be supplemented by grant aid and/or loans that we have received or expect to receive and will be used to purchase the property and refurbish it ready for re-opening.
The Society will agree lease terms with a tenant who will run the licensed business selling food and drink in our premises. They will pay rent to the cooperative at a level commensurate with the profitability of their business. The rental income will provide the interest to be paid to our members / investors. We firmly believe the business will make a profit but, if it fails to do so, the Society will own a valuable asset – the building and land associated with it – which can return funds to the members. Your investment is in the buildings and land, the bricks and mortar, not the licensed business. This is a great opportunity to invest in a worthwhile community enterprise which will provide a valuable service to its members and users.
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Summary Information
This document details and contains an invitation to subscribe for shares in the Society. It is a community benefit Society registered under the Industrial and Provident Societies Act 1965.
The objects of the Society are "to carry on any business for the benefit of the people of Blencowe and the surrounding villages, by acquiring and developing facilities for the community, which promote social gatherings, employment and tourism within the community and to provide services and events".
The Society shall be owned and controlled by its members on a fair and equitable basis. Each member shall have one vote irrespective of the number of shares held.
The information contained in this Share Offer has been prepared by the Founder Members of the Society, who take responsibility for its contents. To the best of their knowledge, all information is reasonable and not misleading at the time the Share Offer was issued.
This Share Offer is exempt from the Financial Services and Markets Act 2000, or subsidiary regulations. This means that you have no right of complaint to an ombudsman. An Industrial and Provident Society is registered with, but not authorised by, the Financial Conduct Authority (previously the Financial Services Authority) and therefore the money you pay for your shares is not safeguarded by any depositor protection scheme or dispute resolution scheme.
Interest on share capital: Each year, the directors will recommend what interest rate should be paid on share capital. This recommendation will be voted on at the annual general meeting. Interest is paid gross and is taxable. It is your responsibility to declare these earnings to HMRC.
Share price: Withdrawable share capital is non-transferable, which means that the value of shares is not subject to speculation. Shares remain at their paid-up value, unless the directors decide to write-down the value of shares, in order to protect the financial stability of the Society.
This summary should be read as an introduction only. As a prospective investor, you should read the whole of this Share Offer and be aware of any risks involved in making an investment. You should also read the Rules of the Society which are available for viewing on our web site www.blencowecommunitypub.wordpress.com
An investment in the shares offered in this Share Offer carries risks and you may lose the value of your investment. If you have any doubts or questions, you should seek independent financial advice.
The share offer period is open from Monday 9th September 2013.
It will close on Friday 18th October 2013.
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Description of the Business
The Crown Inn is the only pub in Blencowe. Since 2006 it has been owned and run by Susan
Carroll. Susan and partner Adrian invested in the business and the pub originally traded well
offering excellent food and hospitality to the village and surrounding area. Due to family
issues the business became more and more difficult to maintain and the pub was closed in
September 2012. It has been marketed by PF&K in the time since closure, but the capital
cost of purchase and operation has limited the interest from outside buyers.
The first recorded evidence of an Inn at Blencowe is in 1753, when a licence was granted to
John Stockdale. However, there had probably been an alehouse of some description on the
site for a great many years prior to this. A record of all the landlords exists from that date.
Over the years the pub has been the hub of the village, hosting darts and domino teams,
quiz nights, cheese and wine nights, carol services (since the Methodist chapel closed in
1999) senior citizen parties, family history classes, fancy dress nights, charity events and
village barbeques. A commitment to the pub has remained strong in the village and it is a
much missed facility and meeting place. A number of local individuals and groups have
considered purchase but no successful outcome has resulted.
The proposal to form a community benefit Society to purchase and re-open The Crown Inn
was initiated by a group of local residents in early April 2013 and a public meeting to
propose the initiative was held in the Blencowe village hall on April 10th. Expressions of
interest forms were distributed and pledges of c£75,000 were received within 10 days,
increasing to c£100,000 at this time. Interest has come from both home and abroad, with
enquiries from all over the world.
With the launch of this prospectus and the associated publicity we aim to substantially
increase the level of interest and meet our investment target.
Our plan is to operate as a Free House, selling local ales from local brewers, good quality
food from local suppliers, a venue for traditional pub sports and pastimes supporting local
games leagues and events, celebrations, music and culture. Blencowe is directly on the
Coast to Coast (C2C) cycle route through the county [Sustrans] and we hope to have an
attractive outdoor terrace adjacent to the road to facilitate passers-by. It is anticipated that
we will offer take-away food for residents of Blencowe and surrounding villages without
facilities. Blencowe Hall is a quality self-catering facility, 5 minutes’ walk from The Crown
Inn. We hope our facilities will be an attraction to them.
The Crown Inn has two upstairs rooms suitable for Bed and Breakfast accommodation,
which may be marketed through the local tourist board, dependent upon the tenant’s
wishes.
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The Society will own the land and buildings and we will set attractive tenancy terms which
make all these activities beneficial to the licensee, encouraging local usage and involvement
and our intent is to increase the return to members over time as the business flourishes.
Blencowe has a village hall but no longer a shop, post office, church or any commercial
facility. The re-opened Crown Inn will provide an alternative meeting venue working in
partnership with the village hall. The adjacent villages of Laithes, Johnby, Ellonby, Lamonby
and Newbiggin no longer have public houses and all have communities who will benefit
from the services offered.
The Crown Inn is an attractive building with two linked public spaces on the ground floor,
currently designated as bar area and pool room. There is also a good sized and well
equipped kitchen. These rooms are in good decorative order and no major expenditure is
foreseen in updating the fabric or surroundings of the building. We believe some re-
arrangement of the kitchen and toilets is needed with a bright and airy colour scheme
throughout. We believe it is important to the community to see the re-launch as a fresh
start with modernised facilities.
Re-launch of The Crown Inn
The precise opening times of the pub will be a matter for the tenant who will run the
licensed business but we will be looking for a licensee who will open the pub seven days a
week. We anticipate that during winter months (October to March) it may only be open
weekday evenings, but all day (12 noon to 12 midnight) at weekends. During the summer
months it should open for a lunchtime period also. We are aware from local survey that a
consistency and reliability of opening times is a key issue for village residents and we will
make clear to the tenants that opening times must be well advertised and adhered to.
We also know from survey information that it is essential the pub provides good quality
food, available on demand and for take-away. The aim is to build up food sales by
generating a reputation for simple fare using local produce, and we hope to move towards
food sales representing a minimum of 45% of the tenant’s income.
Once re-opened the pub will quickly attract local users from its former customer base and
with over 100 local people becoming members of the Society and shareholders in the
business we believe they will be both committed to visiting regularly and bringing with them
family and friends. Building a good reputation will not happen overnight but we hope within
a year this should be re-established.
It is proposed that the re-opening of The Crown Inn should happen as quickly as possible
after purchase. Many local people expressing interest in becoming shareholders have
offered time and support to help in the refurbishment process. We envisage that the
community spirit of enterprise and re-vitalisation will come to the forefront, enabling much
progress with little direct cost outlay.
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Our Tenants
We have decided to let the pub to tenants rather than appoint a manager. The appointment
of a suitable tenant is a crucial step and publicity to attract suitable candidates will begin
immediately. The advantage of this arrangement for the Society is that the tenant carries
the operational business risk and rent increases as the business grows. The advantage for
the tenant is that they will enjoy a remuneration package heavily linked to generated
profits. They will have every incentive to ensure that the pub thrives and grows. It will be
their business as well as ours.
We will be inviting tenants, who wish to lease the premises from us, to submit and present
their business proposals to us. We will select the tenant who best meets the following
criteria:
o They should preferably have at least five years’ experience in the licensed trade, and
specifically in a rural setting.
o They must demonstrate how they intend to build up the business and in particular
their plan to provide good quality, competitively priced food that can represent 45%
of their revenue.
o They must demonstrate how they will provide a venue for village events and support
local cultural and sporting activities.
o They must present evidence of their marketing plan.
o They must convince the Society that they can provide a warm and welcoming
atmosphere in the pub that is safe and friendly.
o They must convince the Society that they will work harmoniously with us, and listen
to our advice and suggestions.
We will agree a three-year rolling lease with our tenant, based upon the rental levels
illustrated below. The Society will monitor the tenant’s financial performance. We will
ensure an “open book” policy is in place, run through mutually appointed accountants. This
will enable full confidence in the financial reports and statements provided. The lease will
also allow for increased rental payments should turnover exceed expectations [or reduced if
less so].
The tenant will be running their own business in our premises and as such will carry all the
risk of failure and debt. If for any reason the business were to fail there would be no legal
access to the Society's assets.
Location
The village of Blencowe is approximately four and a half miles north west of the market
town of Penrith and lies just beyond the northern boundary of the Lake District National
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Park. It is a mile and a half north east of Greystoke in the county of Cumbria and sits
historically on the edge of the Inglewood Forest.
The river Petteril flows on an easterly course through Blencowe, naturally dividing it into
two hamlets. To the north, within the parish of Greystoke, is Little Blencowe. To the south,
within the parish of Dacre, is Great Blencowe.
There is historical evidence of a Roman road from Plumpton to Ambleside, running
approximately 200 yards to the north of the village. Blencowe Hall on the Greystoke side of
the river is a 15th century example of a fortified manor or “Pele” and still shows evidence of
battle scars from the parliamentary army during the Civil War. Ennim on the Dacre side of
the river is a 19th century mansion, once owned and resided in by William [1st Viscount]
Whitelaw until his death in 1999; there are many other buildings of notable architectural
and historical interest in the village.
The C2C cycle route passes through the village and a string of horses from the nearby racing
stables of Nicky Richards can often be seen on summer mornings.
The pub will attract visitors to the area to use its services by building up a reputation as a
friendly place to find good food and beer.
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Industrial and Provident Society (IPS) Structure
We have established a co-operative that is called an IPS for community benefit. We are
being advised by Co-operatives UK on the registration of the Society with the Financial
Conduct Authority [FCA] and we have adapted model rules provided by them to create our
own rules for the Society. The rules are a binding contract between a society and its
members.
The Society is called the Blencowe Community Pub Ltd. and it is structured so that
members are shareholders. We believe there is sufficient interest from the community and
supporters of the Society to recruit up to 200 members. The IPS structure allows any person
who buys a share to become a member of the Society and each member has one vote.
Membership Shares
These are available to individual and corporate members alike and each share costs £1. Due
to the amount of money required, we have determined that a minimum investment will be
£250 and the rules dictate a maximum investment of £20,000. We hope publicity will
encourage each member to invest more than the minimum, and anticipate a combination of
amounts to achieve our target.
Shares are 'Withdrawable' on 3 months' notice subject to Board approval. On withdrawal
the shareholder will be entitled to the return of their initial investment. The value of the
shares will not increase. The Board has determined that shares must be held for at least 18
months from purchase before being withdrawn. These shares are called ‘Membership
Shares’ hereafter in this document.
The Society’s rules will give the directors the right to refuse withdrawal if it would endanger
the business. It is not our intention to use these powers unless absolutely necessary. We
want investors to know their funds are safe and money is available if needed.
The Society’s intention is that it will pay interest to its shareholders at least equivalent to
what they would receive from an ordinary bank deposit account.
We hope to exceed our investment target and will keep a waiting list of new members ready
to replace those who wish to leave the Society. Whilst we anticipate the business will be
profitable, the Society will not be seeking to pay any interest until the second year of
incorporation.
Membership Shares are redeemable as set out above. However, they are not transferable
and cannot be sold privately to others. This arrangement allows the Society to be exempt
from the Financial Services and Markets Act for society share issues.
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Corporate Sponsorship
The directors wish to offer corporate sponsorship packages, customised to suit the
requirements of a small number of interested suppliers and partners who wish to be
associated with the aims of the Society. Such sponsors may also be holders of Membership
Shares. Packages may consist of point-of-sale information in the pub, acknowledgement on
the website, priority product placement in the bar, special fare and produce evenings to
promote a food type or brand, etc. Please contact us if you wish to discuss such an
arrangement.
A board of directors will manage the Society. Initial directors are those who were the
founder members of the society and its secretary. Directors will be the first investors of the
Society to invest the initial working capital. They will be accountable to the membership and
will report via a newsletter and Annual General Meeting (AGM). After the first year two
directors will stand down for re-election or replacement. The board of directors for year one
is as shown below.
The Society will lease the business to the tenant, who will run the pub and pay rent to the
Society; the board will set the broad policy direction for the business and agree targets with
the tenant. Beyond this the tenant will be free to manage their own business as they see fit.
The board will not interfere in the day-to-day running or attempt to micro manage the pub.
The Society will pay a competitive level of interest gained from rent paid by the tenant, and
other income made through sponsorship. Interest paid is gross and taxable and it is the
members’ responsibility to declare any earnings to HMRC if applicable.
The Society’s rules determine that any surplus profits made by the Society after interest is
paid are re-invested in the business or used for the benefit of the local community or for
charitable purposes. Directors and members are forbidden from any benefit in the activities
of the society.
It is the intention of the Society to continue to operate the Blencowe Community Pub for
the benefit of the community for the foreseeable future. If, however, the membership
should choose to vote to dispose of the property in the future, any surpluses made must be
used for charitable purposes. Directors can choose to reflect any profitable sale of the
business in the level of interest paid to its members in its final year of operation, provided
the interest level is reasonable.
This proposal is not regulated by the Financial Services and Markets Act 2000 because the
shares in the cooperative are not 'securities' for the purpose of those regulations. If the
business fails there is no right of complaint to the Financial Ombudsman or the Financial
Services Compensation Scheme.
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Initial Directors
There are three initial directors of the Blencowe Community Pub Ltd. and a Company
Secretary. They all live within the community in either the parishes of Dacre, Greystoke or
Catterlen and come from a variety of backgrounds with a range of relevant experience.
In support of the directors is an active steering group, from whom the initial directors have
been selected, Supporters and volunteers have also been instrumental in creating this
opportunity. Any Society member can ask to join the steering group or act to volunteer
support.
A brief outline of each is given below.
Adam Fawcett – Director and Steering Group Chair
Adam is a local Councillor for the parish of Greystoke and is involved locally in many organisations including Skelton Show, Penrith Auction Mart and his own family farm in Little Blencowe. He is 48 years of age, married with two boys, and has much experience in business and local community negotiation.
Ross Pearson – Director and Steering Group Treasurer
Ross is a retired accountant, having run his own accountancy practice from 1981 to 2010 and has an honours degree in Economics. He is 63 years of age, married with two sons and has been a resident of the village for 39 years.
Shirley Brooke – Director and Steering Group Secretary
Shirley worked in a senior secretarial position in Local Government for 22 years in Leicestershire before semi retiring to the Lake District in 1998. She has lived in Laithes for 12 years and has been a member of the Village Hall Committee. She is a volunteer for the Eden branch of Riding for the Disabled. She enjoys walking, cycling and spending time with her two grandsons.
Chris Bolton – Company Secretary
Chris currently runs a Design and Management consulting business from home, and has been involved in forming and acting as director for 7 manufacturing and technology businesses previously, both in the UK and abroad. Chris has been involved in raising over $20m in private equity finance and was instrumental in floating a UK plc. on the LSE AIM listing in 2000. He is 52 years of age and has an 8 year old boy with partner Susan.
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Blencowe Community Pub Steering Group
Nick Smith – Steering Group Member
Marketing and Publicity
Aged 61, married to Rosemary, both residents of Blencowe for over 20 years. Chairman of Blencowe & Laithes Village Hall, a former steamer captain on Ullswater for 15 plus years, now part of the marketing/events team at Ullswater Steamers.
Keith Brooke – Steering Group Member
Self-employed Planning Consultant has lived in Laithes for 12 years, previously worked in planning at Carlisle City Council and Cumbria County Council. Greg Wilson – Steering Group Member
Events and PR Local professional musician, founding member of the Blencowe Matters Community Group that launched the Community Pub initiative, strong advocate of “the Pub is the Hub”.
Supporters and Volunteers
Alan Rich
Richard Anderson
Martin and Jeanette Armstrong
Susan Clough
Margaret Baxter
The Blencowe Village Hall Committee
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Business Strengths, Weaknesses,
Opportunities and Threats (SWOT)
Analysis
Strengths
Excellent location at the centre of the village and close to towns – Penrith and
Keswick, close to the Lake District National Park, and the second largest lake,
Ullswater.
On the route of the C2C cycle route which passes through the village.
Close to tourist attractions, Rheged Visitor Centre, Up Front Gallery, Hutton-in-the
Forest historical home of Lord Inglewood, hosting Pot-Fest annually.
A past history of good quality food.
A base of regulars who will quickly return to The Crown Inn.
The commitment of the wide membership base to use what will be their business and
who will encourage their friends to use the facilities.
The business will have little or no loans to service.
The business will be freehold and not tied to any particular brewery and is therefore
free to negotiate the best deals.
The Society will appoint an experienced licensee, with the approval of the
membership, as the tenant to run the business and take the operational risk.
The Society will have the secure income of rent from the tenant.
Weaknesses
The pub has been closed for some months during the past year and has lost its
clientele to other venues.
The pub is not on any major through routes for traffic and a little off the major tourist
routes.
There is no beer garden or adjacent outside space at present.
Opportunities
To build up a new reputation from scratch, with a new tenant and staff team.
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To develop new customer bases including cyclists – with a "Rides from The Crown Inn"
booklet or similar, specialist beer introductions, etc.
Bed and Breakfast accommodation for a limited numbers of guests utilising the
existing en-suite rooms upstairs.
The parking area at the front on the village green could be re-formatted as an outside
space to attract both passers-by and bring locals together in the summer months.
As the business becomes established as a community enterprise, run for the benefit of
the residents of the Petteril Valley, it will access grant aid to assist with the further
development and establishment of the facilities.
The proposed programme of events will attract new and old customers to use the
pub.
Threats
The Society is unable to generate sufficient interest from potential investors.
It takes longer than expected to attract a suitable tenant, or the Society is unable to
select a tenant who meets their requirements.
Once established several shareholders may withdraw their investment at the same
time.
Despite all the work and effort of the management team the economic downturn may
lead to insufficient use of the pub and the business proves not to be viable.
Competition
The Crown Inn is the only pub in Blencowe village with no direct competition. There
are competitive establishments in Greystoke, "The Boot & Shoe", approximately 1.5
miles, “The Sun Inn” at Newton Reigny approximately 2.5miles (which is currently
closed), and “The Clickham Inn” approximately 1.5miles. Whilst these are some
distance away, they are competitors for the tourist market and visitors to the area
looking for a country pub to walk to or for a meal out.
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Addressing the Weaknesses and Threats
Attracting Trade
The villages of Blencowe and Laithes have a population of approximately 200 people; there
are other local villages without their own facilities within a short distance drive. The results
of a community survey conducted in April 2013 [information available on the website]
indicate that most residents would use the pub were it to re-launch. This is consistent with
past experience.
Once the pub is owned by the village, and we expect up to 50 households to become
members, the commitment to use the pub and to encourage family and friends to use it will
be considerable. We estimate that in an average week up to 60 adult residents will visit the
premises and of these 50% will visit more than once. In addition, the pub is situated in an
attractive area, close to the Lake District National Park. There are other businesses in the
village that attract tourists to Blencowe to use the pub. In the past the pub has attracted
visitors on holiday and many locally from Penrith and beyond, drawn by the good food and
friendly welcoming atmosphere. We believe this can be revived.
As a group we are aware that marketing activity should play a key and sustained part in the
following aspects of this venture:-
Publicity prior to the opening to focus on the campaign to raise funds to acquire the
pub. This will draw public attention to the plan to re-open The Crown Inn.
There will be a re-launch/ opening event that will build upon existing marketing/PR
activity and attract press and local TV/radio coverage. This will be supplemented by
advertisements in the local and county press.
Regular updates will be made on the pub website which will provide a fully informed
view of what is happening at The Crown Inn. This will include food, drink, events and
activities.
Social media websites and services will be utilised to the maximum to generate
interest in day-to-day activities and key events. Comments and suggestions will be
sought and welcomed to encourage constant improvement and visibility.
Regular entries in the press advertising "what's on" and stressing the traditional Cumbrian
pub welcome that you will find at The Crown Inn.
Directional Signage and Parking
It is common practice for pubs that are not directly on main routes to erect advertising
boards and directional signage from these routes to the premises. We will seek permission
to locate attractive sign boards on the A66 adjacent to the Newbiggin turn, on the B5288
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approaching Clickham crossroads, and on the B5305 at Catterlen turn and Hutton-in-the-
Forest.
There is plenty of parking around the village green adjacent to the pub, even if the existing
direct parking area opposite is re-configured as a garden.
Outside Space
It was noted from the questionnaires that an outside space is desirable to residents and it is
an important aspect of drawing in passing trade, in particular that of cyclists travelling the
C2C. The car parking opposite is currently hard standing for up to 4 cars with two picnic
tables. This is a perfect space that would lend itself to simple landscaping and some tub or
raised-bed planting for sitting outside. A scheme will be developed, in collaboration with
residents facing the green, to carefully site tables and chairs in an environment that blends
into the green.
Inability to Attract Sufficient Investment
If the proposed enterprise does not attract the anticipated interest then the proposed
purchase will not go ahead. If, at the deadline set of 18th October 2013, insufficient shares
have been purchased, the share issues will be halted and all those who have invested will
have their money returned to them.
Difficulties finding the right tenant
Research has indicated that there is an active recruitment market.
We intend to market the opportunity to run the pub to manager couples throughout the UK
and attract the best people available. It is the belief of the Society that the offer of a low
rental cost, high quality accommodation in a beautiful rural setting and outstanding
community support will be of substantial interest.
Expert advice has been taken in where to most effectively advertise, and we have
assembled an experienced interview panel, including previous owner / operators, to
consider the applicants' suitability and proposals.
It is vital we find the right tenant and do not rush to appoint due to timescale pressures.
Short term arrangements are possible if the right tenant cannot be attracted immediately.
Shareholder Withdrawal
The directors will aim to sell shares and attract grant aid leading to a sum raised that is
greater than 10% more than the purchase price of the property and its re-launch costs. At
the end of the first year the reserves of capital should stand around £10,000, this fund will
be added to in subsequent years to reach around £16,000 at the end of year three. The
reserve fund will be kept separately in an interest earning account and not used to develop
the business. It may be needed to balance any losses made in the event of delayed
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establishment of the business as planned. It is intended to continue to add surplus revenue
to the reserve each year, once loans have been repaid, to a maximum of £20,000.
Shareholders must agree not to withdraw funds for the first 18 months of the operation of
the business allowing it to establish itself. After this time they can give the directors three
months’ notice of their intent to withdraw, in effect guaranteeing 21 months operation with
the entire initial share funding in place. If a shareholder gives notice, then shares of the
same value will be marketed or offered to any waiting list of investors. Alternatively existing
shareholders may apply to increase their share investment accordingly.
Provided that the business is successful and pays a competitive rate of interest, it is unlikely
that numerous members would wish to withdraw from the Society at the same time. If this
were to happen for any reason, the Directors may have to call a Special General Meeting to
determine whether the assets of the business are sold and investments returned. Our plan
demonstrates that this is an unlikely scenario as the business has every chance of success; a
safe investment in a community facility that you want to use and support.
Whilst the Society asks members not to withdraw funds prior to the 18 month anniversary,
if there is a critical reason a member requires repayment, the board of directors have the
power to allow this and will make every effort to do so.
The Business is not viable
In the unlikely event that after raising the required funds, purchasing and renovating the
property, attracting a suitably enthusiastic and hospitable tenant and re-launching within
the community, the business proves not to be viable, a number of options are available to
the Society:
It will be offered for sale as an ongoing established business to anyone making an
offer acceptable to the Society, and investment funds returned to the Society
members. In this situation the value of return investment may be reduced.
The property has previously been granted planning permission for change of use to a
domestic dwelling. This option may be taken advantage of, alterations made in
accordance with the consent, and the property marketed as such. Investment funds
would be returned to the Society members and the value of the investment may be
reduced.
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The Business Case
Required Funds
We estimate that a total of £325,000 will be required to purchase the property and put it
back into good condition fit for purpose, and launch the re-opening. Beyond that a full
refurbishment could be completed over a period of years, using various sources of income
from loans, shares, future grant income and retained profits.
We must raise at least £300,000 in shares and loans from this offer for the purchase to go
ahead. This minimum sum would cover the purchase and the essential repairs required to
allow the pub to begin to trade.
In order to demonstrate commitment to the project at least £200,000 of this must come
from shares. If we raise that amount we will require a commercial mortgage and/or other
loans for the balance of £120,000. Loans would be repayable over a five year term and not
exceed 6% interest payable.
Our target plan is to exceed the minimum and raise £250,000 from members' investment,
with loans not exceeding £70,000. The Society will continue to accept new members and
investment after the acquisition to an estimated value of the refurbished property at the
end of year one, a maximum of £300,000. This will further build the reserve allowing for
some member repayment after 21 months of operation, if requested.
It is anticipated that we can initially re-open using the existing fixtures and fittings and that
no further expenditure will be required. Some refurbishment and re-upholstery of the
furniture may be required.
Refurbishment and Decoration
The building is in a good condition. The accommodation upstairs is ready to move into and
in good decorative order. A professional clean will be undertaken prior to inviting tenants to
view. The customer toilet facilities are somewhat outdated and the arrangement not best
suited to modern requirements. Some re-arrangement and new sanitary fittings will need
to be installed. Volunteer support has been offered and will be used where possible to
complete the re-decoration and to give a general facelift of the public spaces.
Society Income
The Society’s main sources of income will be the rent paid by the tenant, corporate
sponsorship and interest on the reserves. The Society will also negotiate the purchase of
local beers on behalf of the tenant and with their support, re-selling this to the tenant at a
nominal profit for the Society.
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We intend to set the first year rental income at the extremely attractive rate of £8,000 as an
inducement to obtain the best possible tenant. After this period it will be set as a proportion
of sales achieved by the tenant, assumed at 9% and anticipated to reach £18,000 by year
five.
Our plan with the member investment target described is to maintain a reserve from which
early year losses can be supported. We plan to break even by year five with the repayment
of loans required for the property purchase; following this plan we will pay interest on
shares in the second year in the region of 3% rising to 4% in year three. This will be worth
more to taxpayers who qualify for EIS relief. However, it is for individual investors to
ascertain if this will be available to them.
The exact amount of interest payable will be set by the Board, following analysis of the first
year results.
If the plan is exceeded, with membership share sales above £250,000, we would achieve
profitability earlier than year five, and member returns of a higher percentage could be
considered.
Blencowe Community Pub Ltd.
Income for the Society
Member Share Purchase 250,000.00£ 5,000.00£ 5,000.00£ -£ -£
Grant Aid 5,000.00£ -£ -£ -£ -£
Corporate Sponsorship 8,000.00£ 12,000.00£ 12,000.00£ 12,000.00£ 15,000.00£
Interest on reserves -£ 347.00£ 363.00£ 372.00£ 343.00£
Loans 70,000.00£ -£ -£ -£ -£
Rent 8,000.00£ 13,532.00£ 14,885.00£ 16,374.00£ 18,011.00£
Beverage Sales 28,560.00£ 44,880.00£ 49,368.00£ 54,305.00£ 59,735.00£
369,560.00£ 75,759.00£ 81,616.00£ 83,051.00£ 93,089.00£
Expenditure for the Society
Acquisition Costs [est.] 277,500.00£ N/A N/A N/A N/A
Fees - IPS and Consulting 5,000.00£ N/A N/A N/A N/A
Fees - Legal /Accountancy 10,000.00£ 2,000.00£ 2,000.00£ 2,000.00£ 2,000.00£
Insurances 1,200.00£ 1,200.00£ 1,200.00£ 1,200.00£ 1,200.00£
Maintenance 1,500.00£ 1,500.00£ 1,500.00£ 1,500.00£ 1,500.00£
Renovation / Decoration 5,000.00£ 1,000.00£ 1,000.00£ 1,000.00£ 1,000.00£
Beverage Procurement 28,000.00£ 44,000.00£ 48,400.00£ 53,240.00£ 58,564.00£
Loan Repayment 14,000.00£ 14,000.00£ 14,000.00£ 14,000.00£ 14,000.00£
Loan Interest 4,200.00£ 3,360.00£ 2,520.00£ 1,680.00£ 840.00£
Interest to Members N/A 7,650.00£ 10,400.00£ 10,400.00£ 10,400.00£
Corporation Tax -£ -£ -£ -£ 717.00£
Funds to reserves 23,160.00£ 1,049.00£ 596.00£ 1,969.00-£ 2,868.00£
369,560.00£ 75,759.00£ 81,616.00£ 83,051.00£ 93,089.00£
2016/17 2017/18Financial Year 2013/14 2014/15 2015/16
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Frequently Asked Questions [FAQs]
1. Why should I become a shareholder?
It is important that as many members of the community as possible take part in this venture
and help to raise the funds needed to purchase The Crown Inn. Levels of future profitability
will increase as more shares are invested and our need for raising finance reduces.
2. Who will benefit from this venture?
The community of Blencowe and the surrounding areas will benefit by securing the pub's
existence for the long term as a community asset.
3. Who are the people organising this?
The project was initially started by the Blencowe Matters Community Association following
a public meeting at the village hall in April 2013. Since the creation of the Society formed to
make the purchase, i.e. Blencowe Community Pub Ltd. the directors, steering group and
supporters have led the negotiations and planning. The group has a wealth of commercial
and financial experience. They do not have a personal interest in this project beyond the
amount they have invested themselves. They will receive no remuneration.
4. Are there any restrictions to becoming a member?
Yes. Members must be 16 or over. There is no requirement to be a resident in the
community, just a desire to support the cause.
5. What’s the difference between being a member and a shareholder?
Purchase of 250 £1 shares automatically confers membership. Being a Member confers
rights under the rules of the Society.
6. What voting rights do I have as a shareholder?
All members have one vote, regardless of how many shares they have. Members will have
the right to attend any general meeting and to take part in the election of the members of
the board, by both proposing and voting.
7. What is my liability should I invest?
Your liability is limited to the value of your shares.
8. How much can I invest?
You can invest any amount between £250 and £20,000 in Withdrawable shares. There is a
limit of £20,000 in share investment, but if you want to invest more than £20,000 in the
Society, please contact us for an individual discussion. You must bear in mind that your
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investment is potentially at risk, if the business fails you may lose some or all of your money.
You should carefully consider the risk factors identified in this document and seek further
professional advice if required.
9. Will my membership shares increase in value?
You can lose the money you have paid for shares (should the business fail), but they cannot
increase in value above their original share price. This applies to all co-operatives.
10. Can I sell my shares on?
No. The Withdrawable shares cannot be sold. The only way to recover their value is to
apply to withdraw your shares, and this will be at the entire discretion and prior approval of
the board.
11. What happens if I die?
Under current legislation you have the right to nominate any other person or persons to
whom shares can be transferred in the eventuality of death.
12. How can I get my money back when I need it?
To enable the business to build up sufficient reserves it will be at least 18 months before the
directors are able to authorise you to withdraw your shares. However, to qualify for EIS tax
relief you will have to hold your shares for at least 3 years in any event. The board will
endeavour to build up a reserve to deal with any applications for share withdrawals and
maintain a waiting list of potential new members. Please note that the Society cannot
guarantee that you will obtain EIS Tax Relief and you should take independent advice as you
deem necessary.
13 What happens if we don’t raise enough money to enable the fre ehold purchase to take place?
If this share issue does not raise the sum required, as set out in this document, all those who
have invested will be reimbursed entirely, (subject to any administration costs), and the
share issue will be deemed to have failed.
14 Will my shares attract interest?
Yes. The Society will endeavour to pay interest. However, there is no intention to declare
any interest in the first year. You should regard your investment primarily as a social
investment, for the benefit of the community, rather than a purely financial investment.
15 How will the interest be determined?
Each year the board of directors will decide what interest rate should be paid on share
capital based on trading results. Gross dividends will be paid out to you accordingly and are
taxable. It is your responsibility to declare these earnings to HMRC.
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A Brief Explanation of EIS Tax Relief
We will be applying to HMRC for advance assurance that the offer shares will qualify for tax
relief under the Enterprise Investment Scheme, a government scheme that provides a range
of reliefs for investors who subscribe for qualifying shares in qualifying companies.
Under this relief an individual with no more than 30% interest in a company can reduce
their income tax liability by up to 30% of the amount invested. The shares must be held for
at least three years from the date of issue. The minimum subscription is £500 per company
and the maximum is £500,000. If you want to apply for this tax relief please say so in the
application form provided and we will supply you with the Form EIS3 enabling you to make
your claim.
Please note that if advance assurance is given, the Society cannot guarantee EIS tax relief as
this is dependent on individual circumstances.
Full details of this scheme can be found on the EIS Association website www.eisa.org.uk or
from HMRC.
The Society offers neither tax advice nor planning and you should take appropriate financial
advice before proceeding.
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Timeline
The Society’s plan to return The Crown Inn to an operating establishment within the
Community is as follows:
Share issue opening date is 9th September 2013.
Share Issue closing date is 18th October 2013.
Secure loan facilities by end of September 2013.
Issue share certificates and bank all funding prior to completion by the end of October
2013.
Property purchase completion by early November 2013.
Tenancy appointment by early November 2013.
Volunteer cleaning and refurbishment during November 2013.
Launch party.
Operational period during December leading up to Christmas and New Year.
Closure for specific refurbishment and re-decoration January and February 2014.
Full re-opening in March 2014.
These preliminary dates are subject to achieving the Society’s planned funding targets and
with the understanding and agreement of the tenant.
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Applying for Shares
Your Application
Your application for shares in Blencowe Community Pub Ltd is subject to the terms and
conditions contained in this document. The Rules of the Society are available for inspection
and download on our web site. The application form is attached to this document. You
cannot withdraw your application for shares once received.
The board reserves the right to refuse an application for shares. In its absolute discretion it
may decide not to issue shares to an individual or may allocate fewer shares than applied
for. The board does not have to give their reason for this decision.
Applications will be considered for approval at the first board meeting after the closing date
for the offer and therefore there may be some delay in responding to your application.
Your Payment
The board will acknowledge receipt of your application and cheque as soon as possible after
receipt. The board may cash your cheque when it is received but it will be held in a separate
account on trust for you until your application is dealt with. Provided that our target has
been received your application for membership will be processed.
The board will endeavour to return your money to you within 14 days of the board meeting
in the event of it deciding not to issue shares to you or will return the balance of your
money if it decides to issue fewer shares than you applied for.
As soon as shares are issued to you, or you are registered in our share account, as a holder
of shares, the money paid for such shares will be released to Blencowe Community Pub Ltd.
You will be entitled to receive a share certificate in respect of your shares in the Society.
If by the closing date, the board decides in its absolute discretion that the value of the total
number of shares applied for together with other sources of funds would not provide
sufficient capital to proceed with the project and complete on the deal, it will endeavour to
return all monies to applicants within 14 days of the decision not to proceed.
Asset Lock
You must be aware that the Society can only use its assets for the benefit of the community
and therefore the business and its assets cannot be sold on for private gain or for the gain of
its current members. The full explanation of this Asset Lock is set out in Section 96 of the
Society’s Rules.
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Advice
Prospective investors should not in any way treat the contents of this document as legal, tax
investment or other advice. Prospective investors should consult their own professional
advisers and make their own enquiries as to the legal, tax and financial implications when
investing in Blencowe Community Pub Ltd.
Registered Office:
Blencowe Community Pub Ltd. c/o Hilltop, Blencowe, Penrith, Cumbria CA11 0DB Society registration number: 32192R Registered in England with the Financial Conduct Authority [FCA] under the Industrial and Provident Societies Act 1965. Bankers: The Society’s bankers will be:
The Cumberland Building Society, Middlegate, Penrith, Cumbria Reporting to Members
The Industrial and Provident Society is controlled by its members with every member having
one vote. All members will be provided with a set of the Rules of the Society and an Annual
Report which sets out how the enterprise has developed its activities during the previous
year including audited Accounts. Members will be invited to the Annual General Meeting at
which the Directors Report will be presented and discussed. Two board members will retire
at each AGM and may be re-elected or replaced from amongst the membership.
The rules of the Society also provide for a number of other ways in which the membership
may hold the directors accountable for the running of the Society, including the calling of a
Special General Meeting, if required.
Advisors
Dave Hollings Co-operative and Mutual Solutions Limited Registered Office: Duke of York Cottage, Johnson Road, Waterside, Darwen, Lancashire, BB3 3NS Registered in England and Wales: 29378R http://www.cms.coop
Gerard Devlin Cooperatives UK Ltd. Holyoake House, Hanover Street, Manchester, M60 0AS
Viv Lewis SECOD Social Enterprise and Cooperative Development Ltd.
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Blencowe Community Pub Ltd. Share Application Form - Society Reg. No. 32192R
Important: Before completing this Application Form you must:
Read the accompanying Share Offer Document.
Pay special attention to the Risks set out in this Share Offer.
Consider whether you need to take further legal or financial advice.
Read the Rules of Blencowe Community Pub Ltd available at: www.blencowecommunitypub.wordpress.com or by request from 01768 483111
Application and cheques must be received by 18/10/2013 [unless otherwise extended]. Application must be made in this form and must be accompanied by a cheque for payment in full.
Please use capitals and black ink:
Name:
Full Address [incl. postcode]:
Email Address:
Telephone Number[s]:
Number of Membership Shares Requested: [between 250 and 20,000]
Do you wish to claim EIS tax relief at 30% Please circle If you do want to apply we will issue an EIS 3 form to each individual investor who wants to claim tax relief. It is then the responsibility of each investor to submit the relevant claim.
YES NO
Please enclose a cheque with this form made payable to:
Blencowe Community Pub Ltd.
and send to: Blencowe Community Pub Ltd. c/o Hilltop, Blencowe, Penrith, Cumbria CA11 0DB
Receipts will be issued by email wherever possible By requesting to become an investing member of Blencowe Community Pub Ltd, I agree to my name, address, phone numbers and e-mail address and the number of shares I wish to purchase being held by Blencowe Community Pub Ltd. I consent to you holding information in accordance with the Data Protection Act 1998. I understand that this information will be used for the purpose of maintaining a register of members and potential members as required by the Rules of the Society for posting notices regarding the activities of the Society and will not be passed on to third parties without my consent.
Signed:
Dated: