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FLETCHER IN RYE CIC - PROJECT SUMMARY

JUNE 2013

An exciting opportunity to help breathe life into the centre of Rye and make a return on your funds
WHO ARE WE?
FLETCHER IN RYE CIC A group of local residents with experience in Business, Banking and the Entertainment industry, who came together originally to try to establish a theatre in Rye. One of the aims was to promote the name of John Fletcher Jacobean playwright, and colleague of Shakespeares, who was born in Rye. The groups focus switched to Lion Street when the site was threatened with redevelopment. In taking on part of the Lion Street site we can help preserve Ryes heritage by establishing a creative and sustainable use for this historic but potentially redundant building For more information, go to www.etcherinrye.co.uk

In March 2010 - it became clear that part of the Library site in Lion Street, Rye was threatened with demolition. Furthermore this muchloved building was to be lost to the people of Rye and would become unaffordable housing. After a public campaign, a Community Interest Company - Fletcher in Rye CIC - was set up to work with St Marys Church to buy the whole site and then to turn some of the Victorian buildings into the entertainment hub of the town. In July 2012, after 2 years of negotiation and thanks to the generosity of the people of Rye, Fletcher in Rye CIC (FIR) acquired the freehold of the old Library. FIR has set-up a subsidiary company - Fletcher Centre Properties - to manage the development of the site into a 2-screen cinema and restaurant complex with established and proven local cinema operator Kino Digital under a long-term tenancy agreement. A memorandum of understanding has been signed between FIR and Kino and financial projections are included within this summary. Planning Permission, Listed Building Consent and an Alcohol License have been granted and Archeological and Structural Surveys have been conducted.

Fletcher Centre Properties is now looking for funders to bring this project to reality

WHAT IS A CIC?

A CIC is a Community Interest Company - it can trade like a conventional business, but its assets have to be locked-in to a local charity - in this case The Rye Fund - part of Sussex Community Foundation
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Contents
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! ! ! ! ! ! ! ! ! ! ! ! ! Page 1! ! Page 2! ! Page 2! ! Page 3! ! Page 4! ! Page 5! ! Page 6! ! Page 7! ! Page 8! ! Page 9! ! Page 10! Page 11! Page 12! Page 13! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! Headlines Contents The Concept Business Structure Estimated Construction Cost Kino Digital - Financial Summary and Business Case Fletcher Centre Properties - Financial Summary and Business Case How can you get involved? Appendix i - Summary of Kino (Hawkhurst) Performance 2009-11 Appendix ii - Profit and Loss summary for Kino Digital Limited (Rye) Appendix iii - Cash Flow Summary for Fletcher Centre Properties Limited Appendix iv -Plan of development Appendix v - Plan of development - Cinema in detail Environmental Policy Statement

The Concept
The essence of the project is to convert the existing buildings into a two screen venue with a large front-of-house space comprising lounge, box-ofce and bar. The land and buildings owned by FIR are indicated on the plans in Appendices iv and v. The larger auditorium will have a capacity of 102 seats - the smaller one will hold up to 49 people. Both auditoria will be suitable for live performances and will be available for private hire as well as screening alternative digital content such as live and recorded by-satellite broadcasts. Kino Digital - www.kinodigital.co.uk - has been approached to operate the venue as they have a proven track-record in delivering a high-quality and imaginative experience. The relationship between Fletcher Centre Properties Limited (FCP), and Kino Digital is illustrated on page 3.

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FLETCHER IN RYE CIC - PROJECT SUMMARY


JUNE 2013

Business Structure
! The business has been structured as illustrated below

Fletcher in Rye CIC


(Freehold owner)

Ground Rent

Head Lease

Royalty

Fletcher Centre Properties Limited (99 year lease)

Rent Sub Lease

Kino Digital Limited


(25 Year Lease - Fully Repairing)
upward only rent review

Kino Hawkhurst

Kino Rye

FCP has been established with two classes of Shares - A Shares, which are restricted to ownership by FIR, and B Shares which will be available to those lending more than 5,000 to Fletcher Centre Properties.

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FLETCHER IN RYE CIC - PROJECT SUMMARY


JUNE 2013

Estimated Construction Cost

Based on the current plans from our architects, Jonathan Dunn Architects Ltd, advice from quantity surveyors, structural engineers and building contractors, it is estimated that the total project cost (excluding VAT) will be in the region of 1.45m . Of this, approximately 900,000 is construction and the responsibility of Fletcher Properties Ltd. The remaining 550,000 is for the tting-out of the venue and is the responsibility of Kino Digital.

Fletcher Centre Properties


Construction of Shell and Services Design Risk Allowance (Contingency) - Construction Phase - 10% Fees Sub Total 750,000 75,000 75,000 900,000

Kino Digital
Fit-Out, Fixtures and Fittings Equipment Contingency (Fit-Out Phase) - 10% Sub Total 235,000 277,600 23,500 536,100 1,436,100

Total

Fletcher Centre Properties is looking to nd 900,000 - this is broken down in more detail on page 6. These gures are estimates - but the preparatory work being undertaken at the moment is specically to make the estimates as accurate as possible, reducing risk of over-run.

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Kino Digital - Financial Summary and Business Case


Kino Digital successfully built up the Hawkhurst operation and gained much experience in the marketing and operation of Concept Cinemas as shown in Appendix i on Page 8. The company was therefore ready to expand to new sites and the Fletcher Centre development in Rye was a very clear opportunity to kickstart their growth and build on their reputation. The Rye facility will provide much more scope for revenue development as it will have signicantly larger front of house facilities as well as 2 screens giving a 70% increase in maximum capacity compared with Kino Hawkhurst. Kino Digital has shown commitment to bringing this to reality by agreeing to invest some 550,000 in the tting-out of the facility. The detailed Prot and Loss and Cashow projections for Kino Rye (Appendix ii - Page 9) are based on the gures achieved by Kino in Hawkhurst. It shows that Kino Digital will be in a strong nancial position to pay its rent and royalty to FCP.

It is the intention of Kino Digital to fund its investment in Rye by raising new equity (100,000), a term loan and asset nancing. The operating assumptions behind the Kino (Rye) projections as well as the CVs of the Directors are available on request.

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FLETCHER IN RYE CIC - PROJECT SUMMARY


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FCP - Financial Summary and Business Case


a! Income Kino Digital will sign a 25 year lease agreement and will pay rent to FCP and royalties to FIR which will be assigned to FCP until the mortgage is redeemed. The projected amounts are included within the detailed Prot and Loss Accounts for Kino Digital (Rye), shown in Appendix ii b! Financing structure It is currently envisaged that the nancing structure for the 900,000 required by FCP to undertake its part of the conversion will be as follows

Commercial Loans - Financial Institutions Private Loans Equity, Donations and Grants

400,000 350,000 150,000

Clearly if the capital from private sources can exceed the above expectation, that would be welcomed as the portion sought from commercial lenders would be reduced.

c!

Cashow Summary The projected Cashow Summary of FCP is in Appendix iii. It is illustrative, based on the following assumptions:

FCP takes out a commercial loan, structured as a 15 year repayment mortgage Interest on all Private Loans is paid annually (being one of the options proposed) the resulting surplus funds are shown in the column Cash balance. These surplus funds are available to repay Private Loans when scheduled, to pay dividends to equity-holders when approved by the Board and to pay for other objectives of FIR and FCP.

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FLETCHER IN RYE CIC - PROJECT SUMMARY


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How can you get involved?


Fletcher Centre Properties is seeking to raise 900,000 as has been outlined in the earlier pages. Although we welcome donations and grants, our cash ows and projections are based on providing funders with a nancial return as well as playing a part in bringing this really important new facility to Rye. The options available are as follows.

1. LONG TERM COMMERCIAL LOAN/MORTGAGE


Fletcher Centre Properties is seeking 400,000 with a 15 year term with capital repayment commencing in Year 2 with a xed interest rate and a rst charge on the assets of the Fletcher Centre

2. PRIVATE LOANS
Fletcher Centre Properties is seeking 350,000 of Loans with a maturity of 5 and 10 years with interest rates payable of: 5 year loans!! ! ! ! 10 year loans! ! ! ! ! ! ! Interest Payable Annually - 4% pa Interest paid on maturity - 5% pa compounded Interest payable annually - 5% pa Interest paid on maturity - 6% pa compounded Loans over @ 100,000 - 7% pa

Those lending more than 5,000 will be able to purchase one B Share, at par, for every 1,000 lent. If lending for 10 years, two shares at par will be available for each 1,000 lent.

For more information email info@etcherinrye.co.uk or phone Michael Eve ! ! ! ! ! Stuart Harland ! ! ! ! Hugh Kermode! ! ! !
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Chair! ! ! ! Director! ! !

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! ! ! ! ! !

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01797 225026 or 07714 329136 01797 222410 or 07818 402450 01797 280393 or 07961 367462
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Creative Director! ! ! !

FLETCHER IN RYE CIC - PROJECT SUMMARY


JUNE 2013

Appendix i - Summary of Kino (Hawkhurst) Performance 2009 - 11

Revenue Mix

Cinema 65%

Advertising Private Hire 2% 2%

Membership and Email Subscribers (current) approx 1,200 paid members over 8,000 email subcribers

Caf-bar 27%

Membership 4%

Cinema Tickets

2011 2010 2009

55,000 46,000 49,000

+19% -5% +26%

Margin

Gross 2011 33% 213k 2010 25% 124k

EBITDA*

Net 8% 51k -1% (7k) -1% (6k)

20% 134k 13% 68k 15% 75k

Sales

2011 2010 2009

650k 503k 505k

+29% -0.4% +41%

2009

26% 133k

* Earnings Before Interest, Tax, Depreciation and Amortization NB 2010 figures were adversely affected by severe winter weather at the end of the year

Source: Management Accounts


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Kino Digital Ltd


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Kino Digital Ltd Rye Profit & Loss Account - Summary v36 2014 Total 537,730 268,865 20,833 833 6,667 16,667 851,595 941,050 969,282 998,360 1,028,311 1,059,160 1,090,935 1,123,663 596,467 298,233 21,458 858 6,867 17,167 614,361 307,180 22,102 884 7,073 17,682 632,792 316,396 22,765 911 7,285 18,212 651,775 325,888 23,448 938 7,503 18,758 671,329 335,664 24,152 966 7,728 19,321 691,468 345,734 24,876 995 7,960 19,901 712,212 356,106 25,622 1,025 8,199 20,498 733,579 366,789 26,391 1,056 8,445 21,113 1,157,373 Total Total Total Total Total Total Total Total 2015 2016 2017 2018 2019 2020 2021 2022

2013

2023 Total 755,586 377,793 27,183 1,087 8,698 21,746 1,192,094

Total

INCOME Cinema Cafe - Bar Membership Retail Private Hire Advertising

132,362 66,181 5,128 205 1,641 4,103

FLETCHER IN RYE CIC - PROJECT SUMMARY


Total

209,620

EXPENDITURE

Site-related Cost of Sales (493,809) 357,786 (79,658) (126,392.0) (206,050) 151,736 18% (61,450) 90,286 (67,000) 23,286 2.73% 60,812 6.46% 74,685 7.71% (76,000) (76,000) 136,812 150,685 190,967 (76,000) 114,967 11.52% (54,014) (48,438) (26,750) 190,826 20% 199,123 21% 217,717 22% 230,361 22% (9,400) 220,961 (76,000) 144,961 14.10% (86,716) (129,194.0) (215,910) (88,479) (132,080.1) (220,559) (89,633) (125,683.7) (215,317) (90,823) (125,622.5) (216,445) (97,047) (129,801.2) (226,848) 234,162 22% (9,400) 224,762 (76,000) 148,762 14.05% 406,737 419,682 433,034 446,806 461,010 (534,314) (549,600) (565,326) (581,505) (598,150) (615,274) 475,661 (98,309) (133,049.5) (231,358) 244,303 22% (9,400) 234,903 (76,000) 158,903 14.57% (632,892) 490,771 (99,608) (136,395.2) (236,003) 254,768 23% (9,400) 245,368 (76,000) 169,368 15.07% (651,017) 506,356 (100,946) (139,841.3) (240,787) 265,569 23% (9,400) 256,169 (76,000) 180,169 15.57% (669,664) 522,430 (102,324) (143,390.8) (245,715) 276,715 23% (9,400) 267,315 (76,000) 191,315 16.05%

Total

(164,667)

Gross Margin

44,953

Site-related Overheads Rent & Royalties Other Total

(28,979) (69,819.0) (98,798)

EBITDA *

Finance Costs

(53,845) -26%

Total

(35,930)

Profit Before Contribution to Central Overheads

(89,775)

Contribution to Central Overheads

Profit After Contribution to Central Overheads

(89,775)

Appendix ii - Prot and Loss summary for Kino Digital Limited (Rye)

* Earnings Before Interest, Tax, Depreciation and Amortization

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Appendix iii - Cash Flow Summary for Fletcher Centre Properties Limited

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ASSUMPTIONS and CASHFLOW SUMMARY

Fletcher Centre Properties Ltd

Project cost: Income:

Tax:

900,000 less ESCC grant of 100,000 In accordance with Memorandum of Understanding Rent review 5-yearly - increase of 10% Current rates No Capital Allowances assumed Tax allowable expenses within Project cost of 70,000 Term: No repayment Subject to re-financing 15 years, equal repayment Fluctuating

FLETCHER IN RYE CIC - PROJECT SUMMARY


Funding sources:

Interest rate pa:

ESCC grant Local bonds Mortgage Bank - overdraft Bank - credit interest Funding sources

100,000 350,000 400,000

0% 6.00% 7.00% 6.00% 1.00%

Project cashflow

Total finance

Year 0 -1,250 -8,406 -8,764 -8,877 -8,993 -9,613 -9,737 -9,864 -9,995 -10,129 -10,818 -10,818 -10,818 -10,818 -10,818 -10,818 2014 -3,000 12500 -1250 2015 -3,000 84064 -8406 2016 -3,000 87642 -8764 2017 -3,000 88771 -8877 0 -38,175 -50,046 -48,383 -46,487 -44,595 -43,052 -41,406 -39,652 -35,896 -33,237 -30,420 -26,161 -23,632 -19,062 -15,550 -10,601 -43,333 45,583 1,586 167 53 54 281 57 59 61 63 312 0 0 0 0 0 0 0 0 0 0 -3,859 -6,744 -8,174 -8,730 -9,316 -10,435 -11,091 -13,030 -13,764 -14,278 -15,326 -15,913 -260,000 -517,675 24,198 27,662 30,460 29,541 34,003 35,108 37,450 41,802 44,556 53,166 55,174 56,969 61,025 63,489 67,852

Project costs Bond

Fees payable

Property income

Head lease rent payable VAT payable Corp tax payable Net cashflow

Net interest payable

Mortgage 0 -396,179 -380,213 -363,100 -344,757 -325,096 -304,022 -281,433 -257,222 -231,271 -203,455 -173,640 -141,683 -107,429 -70,714 -31,360 0

Bank cash balance 90,000 -31,496 -23,264 -12,715 -598 9,281 22,210 34,730 47,969 13,820 30,560 3,911 27,128 49,843 24,153 48,288 34,780 -260,000 -777,675 -753,477 -725,815 -695,355 -665,814 -631,811 -596,703 -559,253 -517,451 -472,895 -419,729 -364,555 -307,585 -246,560 -183,072 -115,220

2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029

-266,667 -533,333

0 -3,000 -3,000 -3,000 -3,000 -3,000 -3,000 -3,000 -3,000 -3,000 -3,000 -3,000 -3,000 -3,000 -3,000 -3,000 -3,000

50,000 12,500 84,064 87,642 88,771 89,934 96,132 97,366 98,637 99,947 101,295 108,184 108,184 108,184 108,184 108,184 108,184

-350,000 -350,000 -350,000 -350,000 -350,000 -350,000 -350,000 -350,000 -350,000 -300,000 -300,000 -250,000 -250,000 -250,000 -200,000 -200,000 -150,000 2018 2019 2020 -3,000 -3,000 -3,000 89934 9613297366 -8993 -9613 -9737

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Year Project cashflow Project costs Fees payable Property income Head lease rent payable

2013 -266,667 0 50000 0

2021 -3,000 98637 -9864

2022 -3,000 99947 -9995

2023 -3,000 101295 -10129

2024 -3,000 108184 -10818

2025 -3,000 108184 -10818

FLETCHER IN RYE CIC - PROJECT SUMMARY


JUNE 2013

Appendix iv - Plan of Development

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FLETCHER IN RYE CIC - PROJECT SUMMARY


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Appendix v - Plan of Development - Cinemas in detail

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FLETCHER IN RYE CIC - PROJECT SUMMARY FLETCHER IN RYE CIC - PROJECT SUMMARY

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Environmental Policy Statement

Fletcher in Rye CIC and Fletcher Centre Properties Ltd believe that responsible businesses should achieve good environmental practice and operate in a sustainable manner. We are therefore committed to reducing our environmental impact and to improve our environmental performance as an integral and fundamental part of our business strategy and operating methods. A detailed environmental policy statement will be formulated with key partners during the development process.

The printed version of this Project Summary has been produced with a reduction of 50% of paper and removal of all plastics compared with the previous version. An electronic version can be downloaded at www.etcherinrye.co.uk

This is a QR (Quick Response) Code - if you have a smartphone with a QR reader, scanning this code will take you straight to the Fletcher in Rye website. QR readers are free from your App Store and work across all smartphone platforms

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