(An Industrial and Provident Society for Community Benefit ... · LYVENNET COMMUNITY PUB LTD (An...
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LYVENNET COMMUNITY PUB LTD
(An Industrial and Provident Society for Community Benefit)
Register No. 31175R
2014 Prospectus
September 2014
An opportunity to invest in a Community Enterprise in the Cumbrian
Village of Crosby Ravensworth
HISTORY
The Butcher’s Arms is the only pub in the village and parish of Crosby Ravensworth. The pubinitially closed on the 26th September 2009 although it re-opened for a period over thesummer of 2010.
The proposal to form a Community Benefit Society to purchase and re-open the Butcher’s
Arms was initiated by Lyvennet Community Trust. The Trust was established in January 2009
following the publication of the Community Housing Needs
Survey. The Trust had been working on a number of
initiatives including the provision of affordable housing in the
area. At a public meeting held in February 2010 it was
agreed to launch the campaign to acquire the Butcher’s
Arms through a community share issue and, at that meeting,
50 individuals offered to join and invest. The campaign
stepped up a gear in March 2011 with the launch of a formal
Prospectus and the formation of Lyvennet Community Pub
Ltd.
An offer of £255,000 was made to purchase the building on
the 4th March 2011 and was accepted by the vendor. By late
May sufficient funds were received from investors to allow
purchase of the building on 7th June.
Over the next 9 weeks in excess of 4000 hours of volunteers time working alongside a smallgroup of tradesmen saw the downstairs of the building transformed. The works included:
Re-plastering walls and ceilings throughout the downstairs area
Complete rewire of the building
New heating and plumbing systems
Removal of walls to create an open plan lounge / dining and community area andenlarging the kitchen area
Installation of a commercial kitchen, new bar, solid fuel stoves, underground gas tank
Painting, decorating and new floor coverings.
Our MP, Rory Stewart, was, and remains, a key
supporter of the pub. He had brought a stream of
Government Officials and Cabinet Ministers to the
parish and on 18th August 2011 Prime Minister
David Cameron duly arrived for lunch with the
Directors. LCP Ltd had been asked to allow him to
open the pub, but other arrangements were in place
so we refused, but offered the option of pulling the
1st pint or the last bit of painting before allowing him
to open the bar instead as a concession.
David Cameron has also subsequently recounted his visit to the pub during Prime Ministers
Question Time.
The Grand opening took place on the 27th August 2011 with our Australian investor, John
Stubbs, flying in to officiate. This was really fitting because he grew up in the pub as his
mother had owned the premises from 1958 to 1978. He had emigrated over 40 years earlier
and this was his first return visit. Over 200 people attended the opening and we even had our
own ballad produced by John’s family: the ‘Ballad of the Butcher Arms’.
LOCATION
Crosby Ravensworth lies between the Yorkshire Dales and Lake District National Parks. It is
situated in the beautiful Lyvennet Valley and is a popular area for tourists, in particular
walkers and cyclists. There are currently proposals to extend either the Lake District or
Yorkshire Dales National Park to include the Orton Fells area in which Crosby Ravensworth
lies. Natural England has held a year-long consultation on these proposals and is now
awaiting a government decision.
Crosby Ravensworth is a rural community, which along with the villages of Reagill and
Maulds Meaburn make up the parish of Crosby Ravensworth which in turn, forms part of the
Lyvennet Valley. The population of the parish is around 530 and the community is based
largely around agriculture. The area is fortunate that unemployment and crime levels are
extremely low. There is one other local pub in the valley; the White Horse in Kings Meaburn,
approximately 5 miles north.
The map below shows Crosby Ravensworth’s proximity to the Lake District National Park and
to the M6 and A66. Inclusion within a National Park will bring more tourists and visitors to the
area. Crosby Ravensworth is at the centre of a network of paths and is close to the Coast-to-
Coast Walk which crosses the fell about 2 miles south of the village.
There are larger communities nearby; Shap is four miles to the west Appleby is six miles to
the north east and Penrith is 15 miles to the north.
Crosby Ravensworth has a village hall, but no shop, post office, or commercial facility. The
re-opened Butcher’s Arms provides an alternative meeting venue that works in conjunction
with existing community facilities in the village, and also Maulds Meaburn and Reagill. In this
way it is possible to ensure that the villages benefit from a far wider range of services and
venues for social gatherings. There is a post office in the nearby village of Maulds Meaburn.
The local villages also have their share of bed and breakfast and self-catering holiday homes.
DirectionsFrom the north (Penrith) head south on the A6 and drive to Shap. In the village of Shap, turn
left, signposted to Crosby Ravensworth. Drop down the hill into the village and turn right at
the T-junction and the Butcher’s Arms is approximately 100yds along on your right.
From the South (M6) leave the motorway at Junction38 taking the 1st exit on the roundabout
signposted to Appleby. Follow the road through Orton and up Orton Scar turning left just after
the cattle grid signposted to Crosby Ravensworth. Follow this road for a further 2 miles until
you arrive in the village. The Butchers Arms is on the left half way through the village.
PREMISES
The pub is a free house with the ‘bricks and mortar’ owned by LCP Ltd. The building is
leased to our tenants; currently Andy and Michelle Davies.
In 2010 the pub was valued at £275k by Sidney Phillips. A building survey carried out at the
same time highlighted various issues which were all, bar one, captured and resolved during
the extensive refurbishment post purchase. As usual with buildings of this age the surveyor
recommended stripping and re-slating the roof within the next 5 years. Further investigation
and experience with the building since purchase have shown that this work is not urgent. The
cost associated with this work has been incorporated into future budget projections and will
be done when necessary and budget provision allows.
The Butcher’s Arms is a substantial detached property,
traditionally constructed in local stone under a pitched
slate roof. The main property is over two storeys, with a
two storey extension to the southern elevation along with
a detached stone built outhouse in an enclosed yard to
the rear.
To the southern elevation there is an alleyway leading to
a five bar gate and the rear yard/outside beer garden. On
the northern elevation a roadway leading down to a
footbridge over the Dalebank Beck allows access by a
second 5 bar gate to the rear of the property. This access
is utilised for deliveries to the kitchen and to the cellar via
a beer drop. All elevations of the building are rendered
and pebble dashed
Internally the ground floor is open plan albeit set out in three distinct areas; a bar area, dining
area and community/games room. With all tables used there are covers for 44 diners. There
is also a good sized and fully equipped commercial kitchen along with toilets for customer
use. The building has a substantial cellar for barrel and drinks storage.
The upstairs incorporates 2 bedroomed tenant accommodations with bathroom and a large
kitchen / sitting room. There is also a further licenced dining / meeting room with covers for
an additional 24 diners.
The business is thriving, employing two full time and 10 part time staff, and providing good
food in a warm and pleasant environment. The tenants have created the right balance
between attracting diners, drinkers and individuals simply coming in to meet socially, take
part in activities or to catch up on the latest local news. The pub has now become a vibrant
community hub.
The pub during its two full operating years has built a reputation for good food, fine ales
(always 3 real mostly Cumbrian ales on tap) and wines. There are regular social gatherings,
quizzes, domino tournaments, drinks evenings, parties, hunt sing songs, along with the
Tuesday night musicians (fiddle, accordion, mouth organ, guitars and bodrum), Wednesday
evening walking group during the summer months and pub pool teams.
Statistics reported to 2012 LCP AGMCategory Percent
%Footfall come to eat 60Non-local eaters 70Turnover Food 50Turnover Drinks 50
Drinks linked to food 50
Drinks not linked to food 50
Statistics presented to 2013 LCP AGMCategory 2011-12 2012-13Pints 25,500 26,880Wine £20,000 £19,435Food – Mains (No.) 11,100Food – Deserts(No.)
3,500
Top sellers Carling (6,147) Lancashire Amber (3,915)
Hours authorised by Premises LicenceDays Supply of alcohol
for consumptionon or off thepremises
Opening Hours
Monday – Thursday 11:00 – 24:00 11:00 – 01:00Friday & Saturday 11:00 – 01:00 11:00 – 02:00Sunday 11:00 – 24:00 11:00 – 01:00
Days Indoor sporting eventMonday – Sunday 19:00 – 23:00
Days Live MusicMonday – Sunday 19:00 – 24:00
Current operating hours (by agreement with the LCP).
Days Operating hoursMonday ClosedTuesday – Thursday 18:00 – 23:00Friday 12:00 – 15:00 and 18:00 – 23:00Saturday 12:00 – 24:00Sunday 12:00 – 23:00
Articles about the Butchers Arms regularly appear in local, national, and international papersand magazines and Directors of the LCP have presented at numerous national conferencesand as well as in Amsterdam and Burlington, USA. Recent articles have included pieces inthe New York Times, Shelterforce (USA housing Institution magazine) and Cumbria Life.
The pub has also been successful in achieving various awards:
2011 Crosby Ravensworth Show
Environmental Award
2012 Countryside Alliance Enterprise Award
North West Regional winner
National finalist
2012 Cumbria Social Enterprise Partnership Award
Co-operative of the Year – Joint Winner
2012 Eden District Council - Local Heroes
Business Award
Excellence in Social Enterprise Awards 2012
NW Finalist
Excellence in Social Enterprise Awards 2014
Co-operative of the Year – Highly Commended
LYVENNET COMMUNITY PUB LTD
The LCP is established as a co-operative, an Industrial and Provident Society (IPS) forCommunity Benefit. The Directors were advised by Co-ops UK on the registration of theSociety with the Financial Services Authority and have adapted model rules provided by Co-ops UK to draw up the LCP’s rules.
IPS structure
Lyvennet Community Pub Ltd is registered under the Industrial and Provident Society Act1965; Register No. 31175 R, dated 10 February 2011, and is regulated by the FinancialConduct Authority.
The objects of LCP Ltd are to ‘carry on any business for the benefit of the Parish ofCrosby Ravensworth by acquiring the freehold premises of the Butcher’s Arms Public
House, Crosby Ravensworth to provide a venue for the community which promotessocial gathering, employment and tourism within the community, event facilities andadditional services for the community’.
The key rules are as follows:
The Society has the power to do all things necessary or expedient for the fulfilment ofits objects
A board of directors comprising up to nine members will manage the Society. They willbe accountable to the membership and will report to them via a newsletter and anAnnual General Meeting. After the first year, one third of the directors will stand downeach year and may be re-elected or replaced by new directors.
The Society’s rules determine that any surplus made by the Society after it has paiddividends to its shareholders must either be reinvested in the business or used for thebenefit of the local community or for another charitable or community purpose.
A Member shall cease to be a member if they resign or cease to hold the minimum£250 shareholding.
An AGM shall be held within 6 months of the close of each financial year. Shares of the Society shall have a nominal value of £1.00. The minimum shareholding
has been set at £250.00 with an individual maximum holding of £20,000. Irrespectiveof shareholding value Members receive a single vote.
Share withdrawal requires 3 months notice but is not permitted within the first 12months.
Share value upon withdrawal shall be the amount paid. Share values do not increaseor decrease.
The shares that Members buy are redeemable in the way set out above, but they arenot transferable.
Annual interest payable to Members of the Society will be determined at the AGM andwill be payable in line with individuals share capital. Interest is paid gross and istaxable. It is the member’s responsibility to declare any such earnings to HMRC ifapplicable.
Interest is paid following an AGM decision on interest payable in any one year. Individual shareholding must have been held for 12 months before interest payments
become payable.
A copy of the full Rules of LCP can be requested via the contact details at the end of thisdocument or by visiting the LCP website at www.lyvennetcommunitypub.com.
Initial Funding
The initial funding for acquisition and refurbishment was as follows:
Shareholders £300k
Key Fund £22k - (£2k grant, £10k loan + £10k equity)
Cumbria County Council £15k grant
Eden District Council £6k grant
Coops £2k grant
TOTAL £345k
The Key Fund loan of £10,000 was fully repaid at the end of July 2013.
In addition LCP took out a further £15,000 from the Cooperative Loan Fund in August 2011 tocover cash flow during refurbishment until receipt of VAT refund. This loan was fully repaid inFebruary 2012.
Refurbishment costs were as follows;
Expenditure (round figures)
Pub Purchase (incl legals + stamp duty) £259,000
Electrical £17,500
Fire (extinguishers + alarm system) £3,500
Engineering works £8,000
Building Materials £8,150
Plastering + Ceilings £2,750
Plumbing + heating £4,500
Bar £7,500
Catering Kitchen £22,250
Floor + Wall coverings £12,750
Furniture + Fittings £2,750TOTAL £348,650
Since opening in 2011 a further grant from the Big Lottery Awards for All programme allowedthe conversion of part of the outside garage into a dry store for food, bottled stock andcatering equipment. In addition two of the upstairs bedrooms were converted into anadditional dining/meeting space with the addition of a fire escape from the stair half landing.
This additional space is flexible allowing a further 24 dining covers and use for meetings orgatherings. It has easily accommodated 34 people for a wine tasting.
The £300,000 investment by shareholders is in the ‘bricks and mortar’. The building wasvalued at £275,000 as a pub on purchase and has been both significantly upgraded. Theaccounts also now show a thriving business. The valuation for shareholders purposes hasalways, however, been based on a worst case scenario of business failure and the sale ofthe building for housing in which case the property value is well in excess of the £300,000
figure ensuring financial security for investors. Purchase of the pub as a community assetwas the driver and its continuing success as such remains the Directors and shareholdersdriver..
Current Directors
The LCP currently has 9 Directors all elected at the 2013 AGM.
David Graham (Chair) – David is a civil engineer having recently retired after 34 years
managing highway maintenance in both the private and public sector. He was previously
accountable for a £62m turnover highways maintenance business employing 560 and
delivering works to local government and private sector clients.
Christine Smith (Secretary) – Kitty has run her own business for 25 years, has good
communication skills and is very involved in local issues. Until recently she was an active
member of the Parish Council and school governor. She was heavily involved in producing
the community plan and has lived in the village all her life.
Judy (Judith) Fraser – has spent her working life in the world of advertising and marketing
in the corporate environment, in advertising agencies and in small businesses. Latterly she
started and ran her own businesses the most of significant of which grew from a start-up to
over £3 million turnover globally.
Joan Raine – Joan is a District Councilor and Chair of the Parish Council.
Steve Holroyd - Steve is a solicitor who lives next door to the Butcher’s Arms and is an
enthusiastic supporter of the pub.
Cameron Smith (Treasurer) - Cameron is Managing Director of a forestry management and
contracting company with accountability for a turnover of up to £10 million and responsible for
around 50 staff. He has extensive experience of producing and working to budgets, financial
control and experience of current health and safety requirements.
Doug Henderson - Doug is a business consultant who runs his own company providing
management development workshops and training for various national companies and
universities.
Glenn Walsh - For the last 4 years has been Head of Technology for Rocket Consulting Ltd,
advising on all aspects of technology strategy. Directly responsible for setting up and running
the company’s research and development program in partnership with Cumbria University. In
previous years he has also been a director of a software consulting company and worked in
various consulting roles.
Daphne Baird – runs her own business in the village and has been heavily involved with the
pub from day one.
Shareholders
There are currently 303 shareholders investing between £250 and £20,000 made up asfollows:
Graph 1 – Number of shares by value
Graph 2 – Total investment by share value
56% of shareholders are local to Crosby Ravensworth and the Butcher’s Arms, the chartoverleaf gives the headline percentage of shareholders by location.
LCP has shareholders from every corner of the UK; from the Isle of Harris to Kent andPowys, and worldwide from America; California, Vermont and Alaska, to Singapore, Spain.France, Netherlands and Australia.
0
20
40
60
80
100
120
Share No's
£0
£10,000
£20,000
£30,000
£40,000
£50,000
£60,000
Share value £
In addition the LCP maintains a register of potential future investors. Any shareholdinginterest is logged by date of submission and should any shares become available these willbe offered to potential investors who have been on the waiting list longest.
Since the initial share issue in 2011 shareholders have withdrawn £13,500 of shares andthese have been resold to individuals on the waiting list. This share movement is less thananticipated.
Reporting
The Industrial and Provident Society is controlled by its members with every member having
one vote. All members are provided with an Annual Report which sets out how LCP has
developed its activities over the previous year and details of the audited accounts.
Members are also invited to the Annual General Meeting at which the report is presented and
discussed. At each AGM, one third of the directors stand down and may be re-elected or
replaced by new directors elected 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 this is required.
Tenants
LCP has taken the tenancy approach rather than that of appointing a manager or running the
pub as a community using volunteers. The appointment of a tenant to run the business was
a crucial step. The advantage of this arrangement for LCP is that the tenant carries all the
business risk. The attraction for the tenant is that they will benefit directly from the
profitability of the business. Therefore they will have every incentive to ensure that the
Local56%
Cumbria Other10%
England Other30%
UKOther
2%
WorldOther
2%
% Shareholders by Location
business thrives and grows. The aim in selecting a tenant is always to employ an
experienced licensee who has a track record of running profitable public house businesses.
The criteria for selection are as follows:
1. They should preferably have at least five years’ experience in the licensed trade, andin particular in a village/rural setting.
2. They must demonstrate how they intend to build up the business and in particularhow they will provide good quality, competitively priced food that will eventuallyprovide at least 45% of the sales income.
3. They must demonstrate how they will provide a venue for village events and supportlocal cultural and sporting activities (quoits, darts, dominoes, folk club, quizzes andothers).
4. They will need to provide evidence of their marketing plan.
5. They will need to convince that they will provide a warm, welcoming and friendlyatmosphere in the pub.
6. They will need to convince us that they will work harmoniously with the board ofdirectors and listen to their advice and suggestions.
LCP will agree a three-year rolling lease with their tenant based on an agreed rental formula:
basically the rent percentage reduces as turnover increases. The Society will monitor the
tenant’s financial performance through an “open book” policy.
The tenant will be running their own business within our premises and, as such, will carry all
the risk of failure and debt. If the business were to fail there would be no legal recourse to
LCP’s assets.
Our current tenants Keith Taylor and Bev Percy came with an excellent reputation within the
hostelry trade. Keith was a joint owner of the Greyhound Inn, Shap where between 2000 and
2008 he and his partner increased the turnover by 622%, the business value by 400% and
increased staffing from 2 to 33 full and part time.
At the time of updating this prospectus the Directors are midway through the process of
seeking new tenants. As anticipated and from experience from the Old Crown, at Hesket
Newmarket, the first cooperative pub in England, the interest levels are high with 31
applications to date.
The current tenants came with a 3 year business plan and intend going on to new ventures.
Budget Forecast
The following 3 year budget assumes a marginal increase in turnover throughout the periodand allows for an interest return to shareholders of 3%. Interest payments will be determinedthrough a proposal and resolution at Annual General Meetings and are obviously subject toactual annual finances.
An allowance for maintenance has been included but in line with the community ownershipphilosophy it is hoped that this expenditure will mostly be for materials with any associatedlabour being provided by shareholders as has been the case to date.
2013/14 2104/15 2015/16
Income
Grant aid £10,000 £2,000 £7,500
Loans
Rent £16,500 £17,300 £18,200
Insurance £1,350 £1,400 £1,450
TOTAL £27,850 £20,700 £27,150
Expenditure
General Maintenance £2,500 £2,500 £2,500
Dry Store / dining room £12,000
Tenant Accommodation upgrade £4,000
Toilet upgrade/entrance porch £10,000
Interest to Members £9,000 £9,000 £9,000
Premises Licence £225 £240 £255
Buildings insurance £1,350 £1,400 £1,450
Accountants £1,500 £1,500 £1,500
Administration/ website/FCA etc £500 £525 £550
TOTAL £27,075 £19,165 £25,255
Reserves £775 £1,535 £1,895
RUNNING TOTAL £775 £2,311 £4,206
All the above figures exclude VAT.
The lease to tenants requires reimbursement of building insurance premiums. Rent iscalculated on a sliding scale as a percentage of the previous year’s turnover. As turnoverincreases the percentage charged reduces.
The overall aim of the lease calculator is twofold:1) The rent is set below open market equivalents matching the overall aim of retaining a
rural pub / community hub2) To ensure there is sufficient opportunity for the tenant to run a successful business
and make a reasonable return.
Further information
Additional Information is available on our website at www.lyvennetcommunitypub.com
Correspondence should be addressed to the Registered Office at:
Lyvennet Community Pub LtdGlebe HouseSilver StreetCrosby RavensworthPenrithCumbria CA10 3JA
Or by email to: [email protected]
Upstairs Dining / Meeting Room Upstairs Dining / Meeting Room
Tenant sitting room / kitchen
Main Bar Main Bar
Photographs of the Butchers Arms