Investment Readiness CST

8/14/2019 Investment Readiness CST

1/24

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/


2/24

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


3/24

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


4/24

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


5/24

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


6/24

Liquidity

Cash is king

Current Ratiocash flow

Dig below the numbers Cost control

Going concern ---trading when insolvent

Reserves


7/24

Accounts and stuff

Limitations of Financial Accounts

Best we have got

Audited and management accounts Timely ability to produce and

understand own numbers


8/24

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


9/24

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


10/24

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


11/24

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)


12/24

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


13/24

Borrowing and Quality

Revenue StreamsSecurity and Servicing Debt

Tenure

Clawback

Quality of Revenue Streams - Pig on Pork,

multiple risk


14/24

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


15/24

ABL

Managed workspace

Conference space

Community Facilities


16/24

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)


17/24

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


18/24

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


19/24

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


20/24

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


21/24

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


22/24

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


23/24

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


24/24

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]

Documents

Investment Readiness CST