Outline Business Plan Introduction Hastings Pier was closed in 2006. Subsequent local campaigning for its re-opening led to the conclusion that the only viable option was for Hastings Borough Council to purchase the Grade II Listed Pier from its offshore owner through a compulsory purchase order (CPO) and then to transfer ownership to a Charity that could restore and run the Pier for the benefit of the People of Hastings and St Leonards and the wider community. The community’s efforts to save the Pier were disrupted by the major fire in 2010 that destroyed virtually all of the Pier’s superstructure. Nonetheless a development plan was put forward to the Heritage Lottery Fund who grant-funded the project feasibility work in 2011. Hastings Pier Charity (HPC) was set up in 2011 as the organisation to take ownership of the Pier, to drive its restoration and manage its future through a sound commercial plan. The Organisation HPC is shortly to convert to a Community Benefit Society (Bencom) with exempt charity status. This Charity will hold the freehold ownership of the Pier and will retain a statutory asset lock that will protect the ownership of the Pier for the benefit of the community over the long term. The Bencom has been created to ensure the development of an active membership committed to continuing the charitable aims of HPC. The rules state that the purpose of the Charity is the preservation, protection, restoration and improvement of buildings and structures of historic or architectural merit for the public benefit in the White Rock area of Hastings and in particular Hastings Pier. In line with these objectives, the Charity will have direct responsibility to the Heritage Lottery Fund, which is providing £11.4m of the funding needed, for the £14m project to restore the Pier. HPC currently has 8 Trustees including the Chair and employs 7 full time staff. The chart at appendix one illustrates the structure of the organisation for the two year project delivery phase. The Charity has two wholly owned subsidiaries that are intended to support commercial activities once the restoration project has been delivered. The first is the Pier Works Company Limited which will be used to supply our proven restoration expertise to other interested parties. There is no income assumed from this activity in the current business plan forecast. The second subsidiary is the People’s Pier (Hastings) Limited which will be responsible to the Charity for the commercial operations on the Pier. The planned structure of the organisation in its operational phase is shown at appendix two. Development Activity There are two proposed phases for the regeneration of the Pier and this Business Plan assumes only the first phase is delivered. The scope of the £14m project is primarily determined by the need to address 30 years of neglect. The substructure restoration will include the replacement of corroded metal trusses and beams, missing bracing, damaged columns and missing deck sections. There will also be a new steel structure put in to support the Visitor Centre building above. It is proposed to retain and repair the Edwardian balustrade at the Parade Extension, but the remainder will be replaced with a new contemporary design. The Western Pavilion is the only building to survive the 2010 fire and this will be restored and extended to create a profitable restaurant and bar facility which will also provide structured training opportunities and a good quality offer utilising local, ethically produced ingredients. The Charity will develop the new visitor centre - a 450m2, two-storey building in the centre of the Pier. This will provide flexible spaces for education, events and heritage interpretation which will include a digital archive celebrating the significant history of the Pier. It will also include a second café area, some retail space and toilet facilities. The roof terrace will give views to the sea and back to Hastings and St Leonards. This diagram shows the timeline for the restoration and the phase one development work. Business Plan The following grant agreements and loan facilities have been secured to fund the capital works and to support the project cashflow: Heritage Lottery Fund Grant Coastal Communities Grant Hastings Borough Council Grant COMA Grant via Social Investment Business Community Builders AHF Loan CAF Venturesome Loan As part of the development process the HPC has recruited a specialist professional team including dRMM Architects, Ramboll Structural Engineers and PT Projects Quantity Surveyors. This team designed and costed the restoration scheme which was then thoroughly appraised by the Heritage Lottery Fund as part of their process for assessing major capital funding applications. The spending of this capital grant will be monitored by both the professional team and the Heritage Lottery Fund. The Charity has also employed specialist leisure consultants, Leisure Development Partners (LDP), to develop the commercial operation of the business. Their research for the project has been far reaching and goes beyond Piers to look at successful visitor and education centres, music festivals, outdoor cinema events, fishing and diving activities. They have identified examples of destinations which have created a high profile through a strong strategic vision. LDP has used established leisure industry methodology to estimate resident and tourist market sizes. They have reviewed the current market context in terms of competition and potential uses including food and beverage, together with a review of comparable Pier case studies. On completion of the HLF-sponsored project the Charity will operate the Pier for use as a public amenity, leisure and events venue. The restaurant and visitor centre will also be a focus for training, education and learning, volunteering and community use. The HLF-sponsored project provides the funding for only the initial development work and the Charity will operate the Pier as a start-up enterprise. It is therefore critical for the Charity to secure financial resilience through additional capital investment. The underlying basis of the business plan is that the Pier should attract 325,000 visitors annually, each spending an average of £4 on the Pier. The current assumption is that 68% of revenues will come from food and beverage sales, 17% from entertainment and events income and 15% from other visitor centre operations such as venue hire and merchandise sales. The capital resulting from the sale of Community Shares will be used for three distinct purposes: To provide the last component of the £14m capital project funding, to support additional development work that will enhance the Pier’s commercial performance and to provide additional working capital to the business. To that end, once £200,000 has been raised as the final element of the capital project funding, the goal is to raise an additional £300,000 the majority of which will be invested in further revenue generating opportunities to build financial resilience. The following options are being considered for investment: Merchandising Operation – The current business plan assumes total annual revenues from memorabilia to be approximately £15,000 which represents a visitor spend per head of just less than 5 pence. With a well designed and executed product range we could substantially improve this performance and so we are planning an investment of circa £75,000 towards merchandise development and execution. This could potentially improve forecast annual revenues by at least a factor of 5. Food and Beverage - Our consultants have identified a potential 15% improvement in food and beverage revenues if we create a substantial unique selling point around the offer, including a proposed Microbrewery. We have allocated approximately £50,000 to this investment option. Children’s Play Area – Our research suggests that a children’s play area would be a significant attraction for families. This would drive repeat visitation and increased length of stay on the Pier, helping to unlock our potential 15% improvement in revenue performance. We could potentially invest in the region of £100,000 in a well-designed and attractive range of features. Deckchair Rental – The current business plan assumes that this service is supplied by an outside operator. This returns minimal revenue to us and brings no added value. In keeping with our strategy to make the Pier a destination and increase the length of stay by visitors we would invest around £20,000 in the development and production of a bespoke product which could then be operated in house. The Charity would also retain a certain amount of the share issue proceeds as additional working capital to assist with cashflow and the management of the business. In the development of any business there are risks that things will not go according to plan. There are clearly risks associated with both the capital development phase and the operational phase but as mentioned earlier both have been developed, and contingencies allowed for, by experienced professionals with relevant experience, assessed thoroughly by outside investors and will be managed by an experienced staff team. The following cashflows assume the Charity has raised only the minimum £200,000 towards the capital project through the share issue and do not include the increased revenues generated by the additional investment described above. The first cashflow illustrates the overall income and expenditure for the project over the next 5 years detailing the capital grant income and the corresponding expenditure on the Pier restoration and redevelopment. It includes the operating surplus which is generated from year 3 onwards. The second cashflow illustrates the anticipated operating income and expenditure of the business which is derived from the commercial activity of the Pier. This generates the operating surplus figures that appear from year 3 in the first cashflow. CASHFLOW FORECAST Hastings Pier Charity 5 Year Project Cashflow 2013/14 OPENING BALANCE 2014/15 2015/16 2016/17 2017/18 5,000 365,294 100,517 168,980 170,680 1,841,394 373,000 250,000 60,000 497,500 0 200,000 0 0 3,221,894 8,899,157 373,000 0 240,000 0 100,000 362,551 0 0 0 0 0 151,611 0 0 0 0 0 155,711 0 0 0 0 0 400,000 0 10,012,157 0 0 362,551 0 0 151,611 0 0 155,711 2,936,600 10,236,772 22,500 67,662 10,326,934 330,324 0 115,992 446,316 184,892 0 115,992 300,884 189,892 0 115,998 305,890 285,294 -314,777 -83,765 -149,273 -150,179 Income (revenue) Operating surplus from year 3 Unrestricted Income* Total Revenue Income 0 75,000 75,000 0 50,000 50,000 77,228 75,000 152,228 85,973 65,000 150,973 78,974 55,000 133,974 Operating Surplus/Deficit 75,000 50,000 152,228 150,973 133,974 365,294 100,517 168,980 170,680 154,475 Capital Project - Income HLF capital grant Coastal Communities Grant Hastings BC Grant East Sussex Invest Grant (ESCC) COMA Grant Community Builders Grant Community Shares Investment (min) Community Builders/AHF Loan AHF/Venturesome Bridging Loan Total Income Capital Project - Expenditure Expenditure (capital) Interest on AHF/Venturesome loan Community Builders /AHF repayment Total Expenditure Surplus/(deficit) BALANCE CARRIED FORWARD * 2,936,600 0 This income is generated from charitable fund raising, building on our existing track record in three areas: o o o Small and medium-sized grant funding (grants from organisations such as The Pilgrim Trust and The Architectural Heritage Fund have already raised over £45,000 in the current financial year) A variety of fund raising events (The comedy night headlined by Jo Brand raised over £21,000) Structured and marketed options for participation (‘Adopt A Plank’ has raised nearly £20,000 to date) CASHFLOW - Hastings Pier Charity Operational Activities 2013/14 2014/15 2015/16 2016/17 2017/18 OPENING BALANCE 0 0 0 77,228 163,201 Income (revenue) Entertainments and Events Visitor Centre Revenues Café/Restaurant Revenues Other income Project income 0 0 0 0 0 0 0 0 0 0 202,692 366,933 624,537 38,874 141,685 209,879 382,965 655,803 39,846 151,611 215,954 399,377 689,003 40,842 155,711 TOTAL INCOME 0 0 1,374,721 1,440,104 1,500,887 0 0 0 0 0 0 0 0 0 0 78,285 205,987 65,020 680,273 0 82,248 216,415 66,864 699,620 0 86,412 227,371 68,761 719,435 0 0 0 0 0 0 0 0 0 267,928 0 0 0 288,984 0 0 0 304,934 15,000 0 0 TOTAL EXPENDITURE 0 0 1,297,493 1,354,131 1,421,913 Operating Surplus/Deficit 0 0 77,228 85,973 78,974 BALANCE CARRIED FORWARD 0 0 77,228 163,201 242,175 Expenditure (revenue) Visitor centre cost of sales Café/Restaurant cost of sales Retail cost of sales Operating costs Delete row Contribution to fixed costs/loan repayment Distribution to share holders Corporation Tax VAT APPENDIX ONE Hastings Pier Charity (Bencom) Board (Founder Members) Sub-Committees: Finance Chair Project Fundraising & Community Engagement CEO Financial Controller Education & Learning Manager Activity Partners Education & Volunteer Organiser Construction Project Manager Project Engineer Contracts Administrator Volunteers Hastings Pier Charity – Organisation Chart Project Phase APPENDIX TWO Hastings Pier Charity (Bencom) Board (Founder Members) Chair CEO Financial Controller External Services Providers Admin & Marketing Assistant Volunteers Events Manager Security Staff x 2 Cleaning Staff x 2 Chief Engineer Visitor Centre Staff Engineers x2 Learning & Education Manager Education & Volunteer Organiser Apprentices Volunteers Hastings Pier Charity – Organisation Chart Operational Phase Restaurant Manager Activity Partners Staff x 12