St Michael & All Angels ChurchBrampton Abbotts, Herefordshire

Transformation to Artisan Bakery

BUSINESS PLAN

2017

The Daily BreadTHE PROJECT

• To transform St Michaels Church Brampton Abbotts (Grade 2* listed) into a multi-use building to create:

• An artisan bakery and coffee shop: “The Daily Bread” (“the Business”)

• A community area that can be used by local residents and visitors

• A place with regular public access for personal meditation and prayer with public worship taking place at least six times a year

• St Michaels has been closed to the public since 2011. The condition of the church is deteriorating. The project will:

• Save this medieval church from falling into a non-recoverable state of disrepair

• To breathe life into a rural community by creating a hub to the village

THE DAILY BREAD 2

HISTORYYear Events

2011 Church closes due to lack of a congregation

2012 Brampton Abbotts Church Regeneration Group (“BACRG”) formed to investigate potential uses for the church, develop support for the project and promote the regeneration of the village of Brampton Abbotts

2013 Options appraisal led by BACRG setting out a range of uses for the church:• Option 1: Microbrewery• Option 2: Artisan bakery• Option 3: Restaurant• Option 4: Events venue• Option 5: Biomass Facility• Option 6: Accommodation pods

2015 Two consultation events held with key stakeholders (the local community, Diocese of Hereford, the Church Commissioners, The Churches Conservation Trust) which result in Artisan Bakery being selected

2015 Business plan and financial model developed by BACRG

2016 Circa £250k funding secured from Heritage Lottery

2016 RRA architects appointed and project planning initiated

The Daily Bread

Church objectives

• Access will be available for members of the public to the chancel for prayer and contemplation

• The church will hold at least six services a year, and these will be planned in advance and consented by the incumbent and the Bishop

• Design should allow for use of the community as well as the commercial enterprise

Community Objectives

• To provide a much needed hub for the village and surrounding area

• To host coffee mornings and evening events i.e. pizza evenings that could potentially by paired up with music/ cultural events

• To be play a role within the wider community by (for example) working with local schools to run baking sessions, to act as a hub for artisan, food-based markets, to promote the region’s reputation for quality food and drink

• To save an important and much loved building

THE DAILY BREAD 3

OBJECTIVES

Commercial Objectives

• The key objective is to create a viable space that can be used by businesses who will pay rent to BACRG. BACRG will use this income to maintain the church, thus saving this valuable medieval church

• Any surplus income that BACRG receives will be used for community events and initiatives

The main business that will use the space is an artisan wholesale bakery:The Daily Bread. The church renovation must therefore be able to be used to:

• To enable a staff of circa 5 operate the bakery on full and/ or part time basis

• The bakery is predominantly wholesale i.e. delivering finished goods to local businesses, plus a retail element of a coffee shop for community events and for customers to use when collecting their bread/ cakes and to attract tourists/ walkers to the church

• To enable the bakery to run baking courses of up to 10 delegates

• To be able to seat up to 30 in the coffee shop

• That the bakery can be used for wider commercial kitchen uses i.e. pop-up restaurant

• To provide a venue that could be used for regional events and festivals such as the Borderline Film Festival and h.Art (Herefordshire Art) week

The Daily Bread

THE DAILY BREAD 4

CORPORATE STRUCTURE

BACRG

• BACRG is a Community Interest Company. It is limited by guarantee

• The directors of BACRG are all local residents – summary biographies are overleaf

• BACRG’s objectives are to generate income which will be used to preserve and maintain the church and to create a social hub for the village. BACRG’s Articles of Association state: ‘The Company is not established or conducted for private gain: any surplus or assets are used principally for the benefit of the community.’

• Income will be generated through leasing the church to businesses. It is envisaged that the anchor tenant will be the company that runs the bakery, but BACRG will retain the option to rent space to other businesses on a flexible basis i.e. ‘pop-up’ restaurants, food/ drink/ craft retailers etc.

• BACRG is effectively, therefore, a landlord that will lease the church to businesses that are viable and that meet the social and operating requirements of BACRG (see later in this document)

BACRG

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The Daily Bread

BACRG DIRECTORS

Who is responsible for the running of BACRG?

• The directors are local residents who have a vested interest in saving the church and making the project a success. They are summarised below:

THE DAILY BREAD 5

Stuart Fraser

• Founder and owner of Avail Vehicle Contracts Ltd, a vehicle leasing business

• Stuart has run the business for 40 years, leading a team of up to 35 people

• Stuart has strong leadership and sales experience

Jo Pilkington

• Founder and co-owner of Mad Dogs & Vintage Vans, a glamping site based in Brampton Abbots

• Jo leads the business with a particular strength in marketing and public relations

Tom McCarthy

• Director and co-owner of Odyssey Corporate Finance

• Tom advises on mergers, acquisitions, management buy-outs and fundraising

• Tom’s skills include financial modelling, structuring and negotiating deals

Janet Fraser

• Janet is retired and was previously registrar of births, marriages and deaths for the local area

• Janet’s expertise is in information management and accounts

Oliver Marshall

• Director and co-owner of the Woodlands Nursery Group

• Oli is responsible for the running of the group’s nurseries with a particular focus on building development and project management

Sue Marshall

• Founder and co-owner of the Woodlands Nursery Group

• Sue founded this successful childcare business over 30 years ago and has been responsible form making it the leading independent nursery business in Herefordshire

Combined expertise in: strategy, sales, marketing, finance, project management, property, negotiation and purchasing built over years of running successful businesses

The Daily Bread

OWNERSHIP

Who will run The Daily Bread?

• The Daily Bread will be owned and operated by a third party: BACRG envisage a single entrepreneur or group of entrepreneurs running the Business

• It is envisaged that The Daily Bread will be a limited company although other trading entities will be considered

How will the Owners of The Daily Bread be identified?

• BACRG will run a national tender with the winning bidder being selected to run The Daily Bread (“the Owner”)

• The artisan bread community is strong with good communication, particularly through social media. Key organisations such as the www.realbreadcampaign.org will be used to market the opportunity to run The Daily Bread

• Local and national press will also be contacted to help generate interest in the project

THE DAILY BREAD 6

How will the Owners of The Daily Bread be identified? (continued)

• BACRG will provide information packs to interested parties summarising the opportunity including:

• Details on the local area

• Financial commitments including rent

• Key ‘Code of Conduct’ of operation i.e. to comply with low noise/ disruption to the village and that usage of the building is sympathetic to its historical and cultural importance

• Based on the above, BACRG will request initial plans and financial details from interested applicants

• A shortlist of applicants will be made by BACRG and the successful shortlist will be interviewed by the BACRG committee

• A winner will be selected

• Heads of Terms will be agreed between BACRG and the winning applicant with full legal documentation to be agreed between the parties before the winning applicant takes over the running of the Business

• It is envisaged that the winning applicant will initially take ownership of The Daily Bread for a 3 year period with an opportunity to extend the agreement at the end of this period subject to agreement between the parties

The Daily Bread

FUNDING

• The project to transform St Michaels is subject to securing grant funding

• BACRG have applied for initial funding through the Heritage Lottery Fund Grants for Places of Worship (“G-Pow”) scheme: https://www.hlf.org.uk/looking-funding/our-grant-programmes/grants-places-worship-england

• There are two elements to the project which are summarised in the table, below:

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Project Name Notes Estimated Budget Status

Structural Repairs To make the church structurally sound

£262k Initial approval with further assessments to be made through 2017

The Daily Bread To transform the ‘shell’ of the church into The Daily Bread

BACRG aim to raise circa £300k through further funding applications

BACRG to raise funds following on from expected positive response to the G-Pow application

The Daily Bread

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INITIAL DESIGNS

• Based on the initial assessment and planning by RRA Architects, BACRG are proceeding on the basis of the designs, right and below:

• The bakery will be placed at the Western end of the nave along with storage accessed via steps to mezzanine level

• A presentation/ display area will be in front of the baking area. This will be used for displaying retail items and for demonstrations during baking courses

• The remainder of the nave will be for mixed use: seating for the café when the bakery hosts coffee mornings/ evening events, space for worship/ seminars/ community events

• The Chancel at the Eastern end of the church will be used for occasional worship

• The Vestry will house the toilets with additional seating space

The Daily Bread

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INITIAL DESIGNS

• The diagram, right, summarises the intended usage of the church and surrounding grounds

• The car park is owned by the Herefordshire Diocese. This area is critical to the success of The Daily Bread for both logistics purpose (goods in/ goods out) and for occasional use for revenue generating exercises such as food / craft markets

• BACRG are working with the Diocese to agree the transfer of ownership of the car park to BACRG so that it can be included in The Daily Bread project

The Daily Bread

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The Market

Craft Bakery Association UK Forecast sales for 2014-2019:

Artisanal bread: £683-£781m

Artisanal cakes: £786m -£823m

Artisanal pastries: £179m- £205m

Circa 4,500 craft bakeries nationwide

Between 2009 and 2013, more than 10,000 children in over 120 schools in England learned to bake thanks to the Real Bread’s Campaign's Lessons in Loaf™

Nationally • There are circa 23,500 residents in the Ross-on-Wye locality

• The table below shows the number of businesses with local primary trading addresses that are potential customers of The Daily Bread (Source: FAME database, Bureau van Dijk using UK SIC Codes to identify the chosen sectors)

• Accommodation includes Hotels, Holiday & Other Short Stay businesses, Camping Sites and Other Accommodation as defined by UK SIC Codes

Locally

Herefordshire Worcestershire Gloucestershire Monmouthshire

Bread & Cake Retailers 10 16 29 3

Accommodation * 90 162 235 26

Pubs 71 197 217 39

Restaurants 102 428 522 76

273 803 1003 144

The Daily Bread

THE DAILY BREAD 11

The Market

Locally

• In addition to the businesses listed on the previous page, there are regular farmers’ markets, with Herefordshire’s events listed in the table, right:

• Ledbury Food Group, a local organization that ‘helps you discover the local ‘heroes’ who produce our food’, identify 15 bakers across Herefordshire as shown in the diagram, below right

• The businesses are small scale independents with just one based within 5 miles of Brampton Abbotts

• Details of the individual bakers can be seen at:http://www.ledburyfoodgroup.org/bakers-baked-goods/

• Based on the above research, BACRG believe that the local businesses and residents provide ample opportunity to create a successful, thriving artisan bakery

Location Frequency

Hereford Weekly on a Thursday, monthly on 1st Saturday

Ross-on-Wye Monthly

Leominster Monthly

Belmont Monthly

Ledbury Monthly

The Daily Bread

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Risks

• The table below summarises the key risks to the Project along with mitigation of those risks:

Risk Mitigation

The Daily Bread Fails • A rigorous selection process will be used to try to ensure that only top quality candidates are granted the opportunity to run The Daily Bread

• Food, drink and hospitality are a key part of Herefordshire’s economy. There are a large number of customers for the owners of The Daily Bread to target with few artisan bakeries in the immediate region

• The Daily Bread is assumed to be the anchor tenant but the lease agreement will be drafted so that BACRG has the right to rent the space to other businesses when not being used by The Daily Bread

• If the Business does fail, the pod design ensures that the church can be used for other uses which widens the market for new tenants

Disruption to Brampton Abbotts • The Daily Bread is not a large-scale business. Traffic in the village is envisaged to be impacted but only to the extent of additional Transit/ Sprinter type vans using the roads, not articulated lorries. The vans used will be significantly smaller than the farm machinery that currently uses the roads around Brampton Abbotts

• BACRG will work with the wider community to define a Code of Conduct (including, for example, noise levels, environmental practice, hours of operation etc.) which will be a key part of the legal agreement between BACRG and the tenants. Drafting will be such that tenants will face penalties and ultimately termination of the lease if they do not comply with the Code of Conduct.

No suitable Owners are found to run The Daily Bread

• The space is deliberately designed to be multi-purpose. Alternative uses will be proposed, thus widening the pool for potential candidates/ types of business

The church is not structurally viable • BACRG have taken professional advice from RRA and are undertaking all of the necessary surveys and assessments

The Daily Bread

• The estimated cost of the items above is circa £20k and is excluded from the total fundraise package

• Contingency costs are built into the financial model summarised later in this document

THE DAILY BREAD 13

REQUIREMENTS

The Bakery

• The Bakery will be fitted out as part of the internal works of The Daily Bread project. The fit out will include items, as listed in the Appendices: Architect’s Summary, so that the space can be used for commercial baking and cooking

• The owners of The Daily Bread will be required to purchase their own specific baking machinery. We assume that the items listed in the table, right, will be required. These items are included in The Daily Bread financial model later in this document

• As with the overall design, a key element is flexibility: it is intended that the bakery will be the main user of the space but care must be taken to ensure that:

• If the Bakery were to fail that the equipment provided can be used for other food-based businesses

• That if the Bakery tenant does not want to renew at the end of the lease, and a suitable successor cannot be found that the equipment provided can be used for other food-based businesses

• That the space can be used for other food-based businesses during the tenure of anchor tenant. This will enable the church to be used for other revenue generating projects which could include: pizza evenings, pop-up restaurants, films or concerts

Items

Mixer Coffee Machine

Ovens Small items

Provers Contingency

The Daily Bread

THE DAILY BREAD 14

FINANCIALS

Summary of the BACRG Financial Model

• BACRG’s responsibility is to ensure that the church is maintained and preserved

• As such, BACRG aims to create a workspace that allows entrepreneurs to run a commercially viable business which will pay rent to BACRG

• BACRG have produced a financial model which assesses the:

• Potential revenues and type of revenues

• Forecast costs, both direct and indirect

• Ongoing capital expenditure

• It should be noted that BACRG is not responsible for how the Owners of The Daily Bread (or additional tenants) will run their business, nor is it responsible for the success of failure of the business

• The forecasts summarised in this document are therefore indicative only and should not be interpreted as being the definitive forecasts or performance of The Daily Bread

Summary of the BACRG Financial Model (continued)

• It is assumed that the Owner of The Daily Bread will work in the Business and will initially employ one other person

• The investment that the Owner will need to make is in funding the operation of the Business in its early phase in terms of acquiring the necessary equipment and providing working capital

• The financial model assumes that the Owner will invest £25k into the business and will secure hire purchase facilities for the necessary equipment

• These funds will be used to pay trade creditors, salaries and taxes until the Business itself is cash generative

• The model assumes three main forms of revenue:

• Bread sales based on a wholesale model

• Bread making courses

• Events

• Cost of Sales has been assumed at 15% based on comparative research of other small scale bakeries

• Rent payable to BACRG is assumed to be £12k per annum

The Daily Bread

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Summary of the BACRG Financial Model (continued)

• The tables, right, summarise the Profit and Loss and Balance Sheet for the first three years of trading along with a breakdown of revenue streams

• The figures used as assumptions i.e. insurance, IT expenses etc. are indicative: it will be the responsibility of the Daily Bread’s Owner to create their own business plan and to manage the finances of the Business

• Rent is assumed to be £12k per annum: there is some flexibility in this figure in that BACRG understand the maintenance costs for the Church to be somewhere between £7k and £12k per annum

• No dividends are assumed in the first three years but, again, this will be the decision of the Owner. The financial model indicates that there would be surplus cash available for dividend payments

Profit and Loss Year 1 Year 2 Year 3

£ £ £

Revenue

Sales 83,100 126,911 156,814

83,100 126,911 156,814

Cost of sales

Gross purchases 12,153 17,734 22,224

Gross profit 70,947 109,177 134,590

85% 86% 86%

Overheads

Wages 36,000 46,350 57,289

Rent 12,000 12,000 12,000

Rates 6,000 6,000 6,000

Utilities 5,000 5,150 5,305

Insurance 1,500 1,545 1,591

Maintenance (Machinery) 1,000 1,030 1,061

Telephone 500 515 530

IT Expenses 750 773 796

Distribution 5,000 6,750 8,400

Marketing 5,000 5,150 5,305

Accountancy 1,000 1,030 1,061

Sundry expenses 5,000 5,150 5,305

Depreciation 5,138 5,438 5,738

78,750 91,443 104,641

EBT (7,803) 17,734 29,948

-9% 14% 19%

HP Interest 652 506 360

Dividends - - -

Corporation Tax 2,459 (2,336) (4,237)

Post Tax Profits (4,692) 15,904 26,071

57,000

79,259

101,592

21,600

33,372

40,102

4,500

14,280

15,120

Y E A R 1 Y E A R 2 Y E A R 3

Wholesale Retail Courses

Balance Sheet Year 1 Year 2 Year 3

£ £ £

Fixed assets

Tangible fixed assets 21,363 17,425 13,188

Current assets

Trade debtors 7,524 7,926 10,159

Cash at bank 4,503 17,512 41,841

12,027 25,438 52,000

Current liabilities

Trade creditors 5,631 5,871 6,543

PAYE/NIC 900 1,159 1,432

VAT 2,451 2,884 3,663

Corporation tax (2,459) (122) 4,115

6,523 9,792 15,752

Net current assets 5,504 15,646 36,248

Total assets less current liabilities 26,866 33,071 49,435

Long term liabilities

Hire Purchase 13,000 9,750 6,500

13,000 9,750 6,500

Net assets 13,866 23,321 42,935

Capital and reserves

Ordinary Shares 25,000 25,000 25,000

Profit and loss account (11,134) (1,679) 17,935

Shareholders' funds 13,866 23,321 42,935

The Daily Bread

THE DAILY BREAD 16

Summary of the BACRG Financial Model (continued)

• Cashflow is summarised in the chart below. The cash balance is at its lowest point is June 2020 – assuming a January 2020 start to the Business

• The cash balance is prior to any dividend that the Owner may choose to make

Summary of the BACRG Financial Model (continued)

• Cashflow could be eased by a number of measures:

• It is assumed that the Owner will pay themselves an £18k per annum salary and that they will draw this from the start of trading. It could be that the Owner delays these payments initially and then makes catch up payments

• BACRG could allow a rent holiday during the initial phases of the Business’ development

• An additional member of staff is assumed to be employed from the start of the Business: this position could be phased in at a later date

• Assuming that the Business generates good quality wholesale customers, the Owner could secure invoice discounting to assist with cashflow

-

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

45,000

50,000

Jan2020

Mar2020

May2020

Jul2020

Sep2020

Nov2020

Jan2021

Mar2021

May2021

Jul2021

Sep2021

Nov2021

Jan2022

Mar2022

May2022

Jul2022

Sep2022

Nov2022

Monthly Closing Cash Forecast

The Daily Bread

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APPENDICES

Architect’s Costings Summary£ 300,000.00£ Contract Value 100% £ / sqm Rates

1 Enabling Works

Opening up and removal 1,000.00£ item

Scaffold hoarding 3,000.00£ item

Clearance of debris 500.00£ item

Temporary works onsite 500.00£ item

Enabling Sub Total 5,000.00£

2 Sub Structural

Archaeology 3,500.00£ item

Services Trenches 5,500.00£ item

Foundations / lintels 2,500.00£ item

BWCW 1,150.00£ 10%

Structure Sub Total 12,650.00£

3 Super Structure

Structural Framing 11,000.00£ 45.00£

Ceiling structure 2,500.00£ 45.00£

Floor structure 6,500.00£ 65.00£

Internal walls / Doors 1,400.00£ item

Staircase 4,500.00£ item

External Doors / Gates 1,500.00£ item

BWCW 2,740.00£ 10%

Structure Sub Total 30,140.00£

4 Internal Finishes

Wall finishes 23,000.00£ 350.00£

Floor Finishes 8,500.00£ 85.00£

Ceiling Finishes 1,000.00£ 65.00£

Trims and edgings 1,500.00£ item

BWCW 3,400.00£ 10%

Finishes Sub Total 37,400.00£

5 Fittings & Furnishings

Ironmongery 750.00£ item

Light fittings 3,500.00£ item

Bakery fitout 10,000.00£ item

Alarm / door counter system 2,000.00£ item

WC sanitary access pack 3,000.00£ item

Signage 750.00£ item

Furniture 8,000.00£ item

BWCW 2,800.00£ 10%

Fittings Sub Total 30,800.00£

6 Services

M&E 7,500.00£ item

Plumbing 2,500.00£ item

Underfloor Heating 4,500.00£ item

Trading Services Systems 1,500.00£ item

Utilities connections 6,500.00£ item

Gas boiler 3,500.00£ item

BWCW 2,600.00£ 10%

Services Sub Total 28,600.00£

£ 300,000.00£ Contract Value 100% £ / sqm Rates

7 External Works

Signage 750.00£ item

Footway lighting 2,500.00£ item

Landscaping 4,500.00£ item

Carpark surface and marking 30,000.00£ item

Sewer connections 6,500.00£ item

BWCW 4,500.00£ 10%

External Works Sub Total 48,750.00£

8 Prelims Overheads 30,000.00£ 10.0%

9 Sub Total 1 to 9 223,340.00£

10 Fees / All Consultants 32,700.00£ Architect, Struct.Eng, QS

11 Sub Total 9 to 10 256,040.00£

12 VAT 51,208.00£ 20%

13 Project Total 307,248.00£

14 Quinnquennial Works 262,000.00£ Grant Funding

15 Grand Total 569,248.00£

The Daily Bread

THE DAILY BREAD 18

APPENDICES

BACRG Financial Summary

• The tables summarise BACRG’s income and expenditure based on rent received from The Daily Bread and expected maintenance costs of £8k per annum which increases with inflation

• It is assumed that in addition to the annual maintenance charge, capital expenditure will be needed in Year 3. An assumed £2.5k is used in this example, but as shown from the Cashflow table, BACRG will have surplus cash at this stage which could either be used for further capital expenditure/ repairs or using for community events/ projects

Profit & Loss Year 1 Year 2 Year 3

Income

The Daily Bread 12,000 12,000 12,000

Others

Total Income 12,000 12,000 12,000

Repairs & Maintenance 8,000 8,240 8,487

Accountancy & Professional 750 773 796

Grant Income - Property (15,929) (15,929) (15,929)

Grant Income - Plant (6,810) (6,810) (6,810)

Depreciation 22,739 19,784 17,261

EBT 3,250 5,942 8,195

Tax 618 1,129 1,434

Post Tax Profits 2,633 4,813 6,761

Cashflow Year 1 Year 2 Year 3

Receipts 12,000 12,000 12,000

Payments

Suppliers 8,750 9,013 9,283

VAT 1,750 1,803 1,857

VAT Recovery - (1,750) (1,803)

Capital expenditure - - 2,500

Corporation Tax - 618 1,129

Cash inflow/(outflow) 1,500 2,318 (966)

Opening bank 6 1,506 3,824

Closing bank 1,506 3,824 2,857

The Daily Bread

THE DAILY BREAD 19

APPENDICES

BACRG Financial Summary

• The fixed assets are calculated using the architect’s costings as summarised earlier in the Appendices

Balance Sheet Opening Balances Year 1 Year 2 Year 3

Fixed Assets

Property Depreciation (15,929) (14,336) (12,902)

Plant & Equipment Depreciation (6,810) (5,448) (4,358)

Additions - - 2,500

Fixed Asset Value Property 159,290 143,361 129,025 116,122

Fixed Asset Value Plant & Equipment 34,050 27,240 21,792 17,434

193,340 170,601 150,817 136,056

Current Assets

Trade Debtors - - - -

Grant - Property 159,290 159,290 159,290 159,290

Grant - Plant 34,050 34,050 34,050 34,050

Cash 6 1,506 3,824 2,857

Current Liabilities

Trade Creditors - - - -

VAT (1,750) (1,803) (1,857)

Deferred Income - Property 159,290 143,361 127,432 111,503

Deferred Income - Plant 34,050 27,240 20,430 13,620

Corporation tax 618 1,129 1,434

Net Current Assets 6 25,378 49,975 71,497

Net Assets 193,346 195,979 200,792 207,553

Capital and reserves

Ordinary Shares 6 6 6 6

Revaluation Reserve 193,340 193,340 193,340 193,340

Profit and loss account - 2,633 7,446 14,207

Shareholders' funds 193,346 195,979 200,792 207,553