Stephen Widdison EGM Presentation Notes (Read in conjunction with - - PDF document

Stephen Widdison EGM Presentation Notes (Read in conjunction with slides) Slide No.1 Firstly a very big welcome to everyone, and it is absolutely right that there should be such a great turn out tonight, as Nigel has said to make a decision on what is without doubt, a Project that will shape the Club’s future and therefore in due course create its history. It is without doubt my pleasure and honour to make this presentation to you tonight. So, without further adue, we will commence. 2 Starting very simply as you look at the building from the outside. It will simply look very much like a bigger version of what we have now. I’ll talk more on the design and planning later on, but basically, we are adding around 200 square metres to the foot print of the building. 3 Tonight you will get me talking you through the key aspects of the Expansion Proposal that has been on general distribution for the last month. I cannot go in to the level of detail that the written document does,

• therwise it would be a long, very long, night.

I am assuming that everyone can see either the screen or a printed version of the slides, it is not my intention to read what is on every slide, just add a bit of background in some cases and put in context in others. 4 A small team under the direction of the Management Committee have been working on the Project, and therefore tonight’s proposal, for well

• ver a year.

I will give more detail of that work as I talk through the following slides. As I have said, I will not repeat what you can see on the slides, just refer to them, clarify them and, where I think necessary, amplify them. Given the number of people in the room, I will work my way through the presentation in the order on this slide, which as you can see, gives you the chance to ask questions at the end before you will be asked to vote. 5 It was important early on to ensure we had the full support of the Parish Council, who, for those that don’t know, are our landlords. I did make a presentation to the Parish Council AGM last year, which I know a few of you attended, and our plans were well received. Firstly, it was important that the Parish Council agreed what we propose fitted in with their vision for the Club and there was nothing in our plans that went against their wider view and their vision for the villages of Collingham & Linton. Secondly, the extension needed the Parish Council to agree to lease us the additional land we required to build on. I am pleased to advise that the Council, have fully supported us along the way and shown that support by agreeing to add the land for the extension, to our lease, without any change to the rent we pay. We have obtained the necessary planning approval for the extension, and after a lift to enabled disabled access to the first floor was added to the scope of the Project, three weeks ago we secured an additional approval to extend the building by a further two metres to incorporate the lift. I am frequently asked “surely we should be able to get a grant for part of the work”. The simple answer is the chances of obtaining a grant are

• slim. So far I have applied for two large grants of £140k and £36k and

several smaller grants in £500 to £1,000 range. In the last five years the grant situation has moved on, we are not inner city, we are not regeneration and we are not catering for a disadvantaged group, so quite simply I was delighted when Sport

England declined the £140k grant ….. But said they would consider an application for £50k. I know there have been a lot of comments about the costs, the risks of going over budget and the level of contingency in the budget. With the help primarily of Matt Fergusson, and using his significant number of contacts in the building industry, since the AGM in November we have been able to spend a lot of time talking to a small group of specialists (i.e. architects, quantity surveyor and builders) to give us a high degree

• f confidence with the figures. A couple of you here have asked for the

detailed costings provided by the quantity surveyor and they have stood the test of scrutiny when examined by those people. Since early in the Project we have been discussing the gym in all of its aspects with a range of people. This includes Harrogate Squash & Fitness Club which operates a similar model of 4 courts, a gym and a multifunction room. A thankyou to James the General Manager there who has given me unqualified access to all their management information, both numbers and pounds value. Matt and Gemma Fergusson have also enabled me to access a few gyms in and around this area and a bit further afield to be able to put with confidence some

• f the detail in to this Proposal.

6 I think there is now a fairly good level of knowledge about what is being proposed, but for the sake of clarity I will run through it again now.

• 1. A gym. A gym that will be 135 square metres in size. In the

Proposal there is an artist’s impression of what it could look like

• inside. The size is correct, the finishings and equipment are to be
• finalised. The end result will be a top quality gym with a good cross

selection of equipment with round and about 20 exercise stations.

• 2. The fourth squash court is in the great scheme of things

reasonably straight forward. It will be a glass back with a small amount of seating downstairs and a viewing gallery upstairs.

• 3. The multifunction room will be exactly that. It will have the ability to

provide fit-for-purpose facilities for a range of activities, including; fitness classes, parties, meetings of clubs and societies and because of the good specification of audio visual equipment provide a perfect place to watch televised sporting events.

• 4. Early in the Project it was decided that if the new sport and fitness

facilities were to be provided, then gutting out the existing changing rooms and showers was a must. Again answering questions that have been asked, all four changing rooms will be larger in area than they are now. In addition for male squash and racketball, and gym users, there will be more ready access to a second changing room when there are no cricket players in action. There have been questions over the size of the changing rooms. I can tell you that Ladies goes from 11 to 15 square metres. Gents from 14.6 to 16.6 and cricket away from 16 to 17. The fourth changing room, used by cricket at cricket time, albeit in a different place, remains the largest at over 20 square metres, but bearing in mind its poor layout at present it will feel significantly

• bigger. The sizes all exclude shower space.

7 So to recap the Project:

• 1. New facilities.
• 2. Upgrading existing facilities. This includes removal of asbestos

from the downstairs area. It is adding £71k to the costs of the project and this should not be overlooked in the contexts of the

• verall cost of the Project, the payback period and solving a costly

problem that would need to be addressed at some time in the future.

• 3. This third point is important. Whilst the original proposal did not

include or require disabled facilities, the Management Committee believe now is the ideal time to add in a disabled toilet and a lift suitable for disabled person use. The reality is that these facilities are adding approximately £50k to the costs of the Project. As with the point above this should not be overlooked in the contexts of the

• verall cost of the Project, the payback period and it solving a

costly problem that would need to be addressed at some time in the future.

• 4. I appreciate that to many the structure and internal workings of

CALSA is a mystery, a mystery complicated enough to be

justifiable as an Agatha Christy novel. If I can simplify it as much as I can. The Association is a unified body of four different sporting sections, brought together in a building that provides cohesion, and provides a meeting place for local people of all ages to enjoy safely a wide range of social activities reflecting modern day society. 8 I was always taught as I went through the education system, that the question WHY ? was the most important question you could ever ask ….. and answer. And those of you that are a parent, or a coach, or an employer…….. that it can also be the most demanding question you ever get asked. On that basis, for this presentation it deserves a slide all

• f its own.

Quite simply there is a growing demand for the facilities we have on offer already, and the potential to tap in to demand for facilities we can offer, and I would argue we are best placed to offer. We can’t deny we are in an affluent growing area. The demand will grow not decline. To some degree, I believe we have an obligation as the primary sports club in the area to put ourselves out of our comfort zone and offer more. The 4th court is simply down to numbers, demand outstrips supply. We can redress that imbalance. It is not a question of having to seek demand, it is there waiting to be harnessed. I have a little announcement to make. Here is what I believe is the first Soccersquash ball to arrive in this country. It will provide a great crossover for footballers to utilize squash courts. It brings footballers in to the building, it uses squash courts when they are sat not earning money. Google Soccersquash, I’ll be announcing more in the coming weeks. It is a fact of modern day life that gyms are a significant part of many people’s lives. You look around the room and you see people who already use a gym. There are non members who travel away from the village to use a gym. There are people who drive past this building on their way to and from work who use a gym. You have parents who drop

• ff and collect their children from school. Quite simply there is a great
• pportunity to make money from one of modern day societies

phenomenon's, the gym. It will also create another facet to our integrated sports and leisure and socializing offering.

In some respects the multi function room is something for next to

• nothing. If you are building a box, then you may aswell build a taller box

is what any self respecting builder will tell you. And what is proposed for that space, that room, seems logical and again profitable. And yes fits in with the integrated sports, leisure and socializing theme. If we vote yes tonight, we can start planning in detail for the room. 9 I think the different sections or parts requiring the funding have been referred to several times. The building extension, is the amount required to put up the new three walls, the roof and put in the necessary infrastructure including such things as drains and car park. Once the building has been built it can then be passed over to a couple

• f specialist contractors who will do their bit. So the squash court people

take over a shell with lighting and put in the floor, glass back and plaster the walls. The finishings are put in place for the function room so they have the required air conditioning, flooring, walls and audio visual set up that is required. The existing downstairs refit is a two part process, starting with the removal of the ceilings which has low grade asbestos in the artex, and stripping clean the walls for a similar reason. Access to the changing rooms and showers will not be possible for up to 6 weeks, during this time access to all changing rooms and showers may not be possible and for a period players may need to come ready to play. Squash team games will be organised so that away matches are played in the first half

• f the season. The plan is to start as near as possible to the end of the

cricket season. The cost of the lift is for the actual lift itself, the cost of building the lift shaft and access is included in the first figure. I think it is worth stressing at this point that the lift is adding around £50k to the overall cost of the project, so that needs to be fully understood when looking at the total amount required for the Project and the time it will take to repay the borrowings.

In a similar vain, the downstairs refurbishment is something that is not strictly required for the new facilities, but it makes sense to do the work at the same time. Effectively, therefore, there are £121k of improvements that the Club is immediately funding from the additional income generating facilities. There are a variety of Professional Fees that are inevitable for this

• Project. There are the ones you would normally expect in a project of

this type i.e. Architect, Quantity Surveyor and Structural Engineer, but there are others such as drainage consultants and solicitors which are also included in this figure. As with all of the figures in this list, they are based on either fixed price quotes or given by the Quantity Surveyor as very achievable. Finally we have a figure for contingency. This is to cover two areas of

• expenditure. Firstly unexpected costs along the way. In reality, given the

level of detail we already know (soil type, electric capacity), the use of fixed price contracts, these will be minimal. In fact the quantity surveyor has talked in terms of being comfortable with using a figure of 5% and just on the £229k and £71k figures. That leaves the second reason for contingency; change of scope, change of specification. There is a chance that along the way we may want to add something to the agreed scope or simply increase the specification of some detail. 10 Having dealt with the total cost that could be incurred, we now look at how those funds needed to pay for the Project are to be raised. I am fully aware of this is where there are some concerns amongst members, questions of whether we are overstretching ourselves, and therefore putting the whole Club at risk. I will come on to the financial projections, what the cash flow should look like once things are up and running. Firstly I will look specifically at the sources of funds. The first two items are in effect done deals; monies are already sat in bank accounts. The specified loan is a well off, local guy, who is interested in making sure local communities survive and thrive. He had originally planned to invest in a bigger project in Wetherby at the request of someone he

knew who wanted to open a gym and fitness centre. When that project fell away because of planning, it coincided with this opportunity which in comparison is cheaper, easier and less risky. But having said that the loan is to CALSA and is not tied in to the gym, other than relying on its success as the primary source of repayment. And no, he will have no say over the running of the gym or CALSA. This was an idea I have copied from Leamington Spa Squash & Tennis

• Club. Promissory notes, as opposed to a simple loan, make it simpler

from a legal point of view. I have already been in discussions with squash & racketball members to get a feel for the appetite for such an

• ffering. If the Project is approved tonight, all members will have the
• ption to apply for the Notes from tomorrow. The list of subscribers will

remain private at the subscribers request. There will be a four year and five year option for repayment and interest will be paid gross annually. The Promissory Notes are unsecured. Legal consultation has taken place over the loans and specifically on the Promissory notes, the end result is a health warning which appears on the Ballot Form. The grant has taken 5 months of discussions and negotiations with Sport England to get approval at the end of last week. The conditions regarding procedures, policies, reporting and documentation are significant, but doable. You can take confidence from the fact that Sport England have looked in detail at the project and analysed the projections as much as anyone. They like the ideas, they like the Proposal. The brewery have already indicated they will lend us £25k if we need it. No onerous requirements or security required. The Bank have said £25k is available straightaway without security or guarantees. 11 This slide is a summary of the expected scenario taken from the Expansion Proposal document. As you can see there is a heavy dependency on the gym, but the gym plan is as robust as possible. The financial plan has been put together with a significant amount of help from Jon Spooner, in order that it is the work of someone with the

skills and the day-to-day experience of analyzing financial plans. It has also been independently reviewed by another qualified accountant. To achieve these targets we need 200 gym members by around the end

• f the first year and increase that to 350 by the end of year 3 and from

then on. Starting with the member base we have, the size of the catchment area and the quality of gym we are proposing then these are seen as realistic. If the membership stayed at around 200, the venture is still profitable, but repayment of all the debt could stretch out to year 8, without taking anything out of the existing CALSA annual surpluses. But then there is also the other elements of the project which will provide additional income. Squash and Racketball is thriving at present, the Squash & Racketball Committee are very confident those funds shown will be delivered, and can be guaranteed now for years 1 and 2. There are plans to showcase and trial a new sport to the UK – Soccersquash – this could well lead to another sport and another income stream The multifunction room is a very low target figure. Typical hire out charges of a room of that standard, for say a keep fit class, would be £15-20 per hour. I’ll let you think for yourself if 2 bookings a week at £15 per hour is achievable. You will have seen in the full Expansion Proposal the schedule for the equivalent for Harrogate; they presently have 48 bookings a week. Lets just say there is great potential there. I believe it is inevitable that the three aspects talked about already will lead to increased bar sales. The figure quoted for year 1 in CALSA income represents the profit on about 40 pints a week. I will talk when we get to a later slide about what if those figures are not achieved. 12 We know what we will be getting from a physical point of view. The plans have been on display for a couple of months now. They are in effect signed, sealed, approved and awaiting delivery. 13 It is quite right that no one goes in to a project of this size without looking for, and looking at, the potential problems, the things that could stop everything working as we planned.

The way we do that is to take as many steps as possible now to reduce the potential problems happening and have a plan for dealing with the problem if it does happen. There are several which relate to the building phase and for them it is a question of picking the right people and having the right controls in

• place. That will be the case.

Looking at the four on the slide that people will be able to relate to. We have been talking to a small number of builders for around 6 months, we have had the services of a quantity surveyor who has experience of this type of build. We will ensure the tender process is detailed and managed to manage this risk. We will be using fixed price contracts. This together with the detail in the tender process means the contingency shouldn’t be needed for increased prices. To the Management Committee this is important. I’ll not going in to the details of compliance etc, just say that as a result we don’t pay rates, we have a favourable vat status, we don’t pay corporation tax and can claim gift aid. In total worth at least £15k and probably nearer £20k in a typical year, and hopefully a lot more going forward. And now the key one. I’ll start with doomsday scenario. I’ve touched on it

• already. A gym with no members, a squash & racketball club with

drastically reducing numbers. No contribution from other areas of CALSA, the bar, cricket, football, hockey, the function room and the bar. At that point we could cover the interest payments but not repay the

• debt. Could all of those things happen ? Would we not just have an

unmanned gym and get some income, would we not find alternate uses for the unused squash courts, that is for you to assess. Quite clearly I don’t believe it will happen. In a few years the gym culture may disappear. Numbers fall off. We will have warning. We can take action. Drastic action if necessary. We go to a PT (personal trainer only model for the gym). This just extends the repayment period for the members Promissory Notes. Or we look for a bigger contribution from the sporting sections. However please don’t lose sight of us by then having a broader sporting and member base.

Also keep in focus what happens if all goes well, and all debt is repaid in 6 years (with business as normal in the meantime), surpluses of £50k to £75k a year to spend on facilities and sport. 14 So, as I bring my presentation to a conclusion I will recap on the justification for the Project ……… We will extend one existing facility, squash courts. We will introduce a new modern facility, the gym. We will make ourselves more attractive from a social membership perspective. We will spend approximately £121k on facilities that will meet our social responsibilities and ensure all the sports and activities using the changing rooms and changing rooms have the most modern and appropriate facilities in the area. So we enhance our position as the go to place in the local vicinity for sport, leisure and social facilities. All the necessary controls will be in place to deliver the Project on time and within budget. 15 The main question that has cropped up when I have been chatting to people and holding the workshops is what happens if it all goes wrong. Hopefully I have answered that when talking about the risks. But just to remind everyone, Squash & Racketball would be able to repay the debt in 10 years by contributing as they do now. But the Club in the meantime still has a new changing rooms it wouldn’t have had, it has disabled facilities it wouldn’t have had, it has a function room it wouldn’t otherwise have had. Is that such a bad doomsday scenario…… it is for you to decide, do you think people in this Club, the people who are your neighbours, the people who pass everyday would use a gym ? If so forget the doomsday scenario. Do you think the membership

numbers of squash and racketball are going to collapse, is demand for courts fall signicantly. The Joint and Several liability question has been the hottest topic of the last week. J & S liability means that each is responsible for all. We are a members Club not a limited company with shareholders and limited

• liability. Solicitors can only tell you that you could be liable for the whole

debt, they will tell you the worse possible situation, not its likelihood or the circumstances to get you there. My final couple of points to put this matter in context, who are the members of CALSA, from a legal position no one at this moment in time will tell you. Is it someone who has a membership card (over 1000 of those), is it just those that have a vote tonight, approaching 500. Or is it some other definition. At what point is a member liable or not liable. You may get opinions, there is only one place it will get decided, a court of law. Rest assured if doomsday is forthcoming I won’t be seeking to take legal action against myself, my wife, my son or my daughter. Back to a practical question. Will the Club function as normal during the projects duration ? Well you may not be able to get showered, you will be able to go to the toilet, and you will always be able to use the bar

• area. So there will be impacts, but not on the income generating parts of

the business. 16 So now we move on to the critical part of the night ………. the vote. Shortly Graham as Secretary and Returning Officer will explain how that will take place. The business decision is to give Management Committee the authority needed to deliver the Proposal you have read and heard about tonight. That needs the passing of the Resolutions. 17 ….. And in detail what you will be voting on are these Resolutions…… and these are all repeated on the Ballot Paper itself. It is all in favour, or all against, as simple as that. 18

And now I will run through the voting procedures. All four Sections have already submitted their members list so we know who is eligible to vote. The Proxy Votes have already been collected. Ballot papers will now be distributed. What we would like you to do is vote on the ballot paper and hand the ballot paper in to Graham as the Returning Officer. There will be a break of up to 30 minutes, hopefully less, as the votes are counted and checked against the members lists already referred to. Tonight’s votes will be added to Proxy votes and then the result will be announced. 19 So, if you bring your Ballot Paper to this table we will commence the

• count. Please feel free to get yourself a drink and Graham will announce

the result of the vote as soon as possible.