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Investment Readiness CST
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Transcript of Investment Readiness CST
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8/14/2019 Investment Readiness CST
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Community Sector
TradingHugh RoloHead of Assets and Investment
Development Trusts Association
www.dta.org.uk
Chair The Key Fund Yorkshire
www.sykeyfund.org.ukDelivery Partner Adventure Capital Fund
www.adventurecapitalfund.org.uk
http://www.dta.org.uk/http://www.sykeyfund.org.uk/http://www.sykeyfund.org.uk/http://www.dta.org.uk/ -
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Core Ideas
How people learn /what people learn
Vision and leadership
Interrogating the business model Investment Readiness
Grow change or die: resilience
Pitching ideas Helping people is hard
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Maths
10 sq feet =1 sq metre
Construction Costs Land plus 70 per sq foot
100k costs roughly 13k per annum to repay
over 10 years at 6% fixed (surplus 3 x cover)
Base Rate is 1.0% per annum
Borrowing over base rate (2%)
Fixed rateslinked to Gilts (ACF/FB currently6%)
Borrowing periods 1,3,5,710,15,20,25
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Some basic concepts
Size matters (1mn generates 100K)
incremental growththe trend is your friend
capacity for abd (100k turnover+?)
Sweat equity (50k per 1mn)
Gross Margins (capital employed/value
added/cost of entry)
Organisational capacity (governance/finance)
Investment Readiness
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Quality of Income
Earned and grant
Established streams
Joe Public/commercial market
Diversity of income
Large and overlarge contracts
One trick pony
Rental income is potentially high margin
Pig on Pork
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Liquidity
Cash is king
Current Ratiocash flow
Dig below the numbers Cost control
Going concern ---trading when insolvent
Reserves
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Accounts and stuff
Limitations of Financial Accounts
Best we have got
Audited and management accounts Timely ability to produce and
understand own numbers
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Getting Investment
Building Confidence and Capacity
Understanding the market and
benchmarking against the best
Understanding the business
Being real about risk
Knowing the numbers
Selling- sound bites and stories
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Getting Investment
Building Confidence and Capacity
Integrating with Mission - your Vision,Strategy and Business Plan
Ownership of the Strategy your Board or
Trustees/stakeholders/staff
Preparing for the longer haul
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Investment finance
What Do You Want It For?
Development Finance grow change or die -
(for R&D, new project development, futureplanning)
Capital development acquiring assets - forrefurb, new build, equipment
Working Capital for early trading/monthlyturnover
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Types of Finance
Working Capital reserves, creditors/suppliers,
factoring, overdrafts
Equity selling part of the business as an
investment to others e.g. joint ventures andcommunity share issues
Debt borrowing (serviced financially) and
Programme Related Investment (serviced with
Social Returns)
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Borrowing and Quality
Revenue StreamsGearing
The amount of debt shown as a ratio of
business value. Some businesses cansustain more than others
Get it right - go further faster
Get it wrong - crash and burn
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Borrowing and Quality
Revenue StreamsSecurity and Servicing Debt
Tenure
Clawback
Quality of Revenue Streams - Pig on Pork,
multiple risk
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Social Returns on
Investment Know your neighbourhood and business
baseline statistics
Quantify the cost of doing nothing Methods of Measurement
Social accounting
SROIProve it
Change Check
Tell your story
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ABL
Managed workspace
Conference space
Community Facilities
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ABL Bradford
ABL
Rent 190,000
Service Charges 250,000 (in and out)
Sessional rental 140,000Total (Turnover) c600,000
Asset Value:190k + 140K = 330K x 10YP = 3.3mDebt: 800k (300k ACF (PRI element), 250k
Barclays, 250k BMDC)
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Where from ?
Borrowing Own Bank
Sector Specialists-Triodos/Unity/CharityBank/SELF/CDFI/Co-op/Futurebuilders/Adventure Capital Fund/Community
Builders/Department of Health Fund Regional Development Funds
Equity Share Issues
Venture capital funds
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Share and Bond
Issues
Shares and Bonds are different
Legal Structures not all organisations can doit
Raising money in campaign mode can help
build support for projects
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Growth in community investment
Community investment practices date back to the
nineteenth century. There has been a revival of
interest in the last ten years.
0
20
40
60
80
100
1987 1993 1998 2003 2008
No. of cases
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Trade activities
3Other
1Fair trade
2Football2Utilities
2Farming
2Transport (heritage railway preservation)
5Regeneration, land, buildings7Community finance
8Community retail store
9Renewable energy
Number oforganisations
Trade activities of organisations issuingcommunity shares or bonds since 1999
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Basic facts and figures
At least 84 cases of enterprises with more
than 10,000 of community investment
Total community investment is 298m
Combined membership over 6 million
41 new cases in last 10 years, raising
over 45m from 63,4000 members
Median amount raised is 135,000
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Headingley Development
Trust
IPS community benefit
society registered 2005
790 members: min.
shareholding 5
Withdrawal notice six
months
Campaign to raise
capital for enterprise
and arts centre raised
105,000 in member
share capital
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Westmill Wind Farm
Co-operative
IPS co-operative registeredin 2004
Raised 4.4m from 2,382members buyingtransferable share capital
through a fully authorisedshare launch Projected interest on
capital of 5% pa rising toaverage of 12% pa over 25years
Investors qualified forEnterprise InvestmentScheme tax relief
Cost of share offer150,000
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Contact
Hugh Rolo [email protected]
www.atu.org.uk
www.communityshares.co.uk
mailto:[email protected]://www.atu.org.uk/http://www.communityshares.co.uk/http://www.communityshares.co.uk/http://www.atu.org.uk/mailto:[email protected]